Document:

Exhibit 10.3

    Exhibit 10.3

    
 

    THE
      STEAK N SHAKE COMPANY

    

     

    

    SENIOR
      SERIES I NOTE 

    

    

    No.
      2006
      I-3         PPN:
      857873
      A@
      2

    ORIGINAL
      PRINCIPAL AMOUNT: $3,200,000.00

    ORIGINAL
      ISSUE DATE: October 27, 2006

    INTEREST
      RATE: 5.66% per annum

    INTEREST
      PAYMENT DATES: January
      27, April 27, July 27 and

    
      	
               

            	 	 	 	 	
              October
                27, commencing January 27, 2007

            

    

    FINAL
      MATURITY DATE: October 27, 2011

    PRINCIPAL
      PREPAYMENT DATES AND AMOUNTS: $1,066,666.67
      annually on

    October
      27th
      of each
      year, commencing 

    October
      27, 2009.

    

    

    FOR
      VALUE
      RECEIVED, the undersigned, Steak N Shake Company (herein called the "Company"),
      a corporation organized and existing under the laws of the State of Indiana,
      hereby promises to pay to UNITED OF OMAHA LIFE INSURANCE COMPANY, or registered
      assigns, the principal sum of THREE MILLION TWO HUNDRED THOUSAND DOLLARS
      ($3,200,000.00), payable on the Princi-pal Prepayment Dates and in the amounts
      specified above, and on the Final Maturity Date specified above in an amount
      equal to the unpaid balance of the principal here-of, with interest (computed
      on
      the basis of a 360-day year--30-day month) (a) on the unpaid balance thereof
      at
      the Interest Rate per annum specified above, payable on each Interest Payment
      Date specified above and on the Final Maturity Date specified above, commencing
      with the Interest Payment Date next succeeding the date hereof, until the
      principal hereof shall have become due and pay-able, and (b) on any overdue
      payment (including any overdue prepayment) of principal, any overdue payment
      of
      Yield Maintenance Amount and any overdue payment of interest, payable on each
      Interest Payment Date as aforesaid (or, at the option of the registered holder
      hereof, on demand), at a rate per annum from time to time equal to the greater
      of (i) 2% over the Interest Rate specified above or (ii) 2% over the rate of
      interest publicly announced by Morgan Guaranty Trust Com-pany of New York from
      time to time in New York City as its Prime Rate.

    

    Payments
      of principal, Yield Maintenance Amount, if any, and interest are to be made
      at
      the main office of Morgan Guaranty Trust Company of New York in New York City
      or
      at such other place as the holder hereof shall designate to the Company in
      writing, in lawful money of the United States of America.

    

    This
      Note
      is one of a series of Senior Notes (herein called the "Notes") issued pursuant
      to the Amended and Restated Note Purchase and Private Shelf Agreement, dated
      as
      of September 20, 2002 (as amended from time to time, the "Agree-ment"), between
      the Company, on the one hand, and The Prudential Insurance Company of America
      and each Prudential Affiliate (as defined in the Agreement) which becomes party
      thereto, on the other hand, and is entitled to the benefits
      thereof.

    

    This
      Note
      is subject to optional prepayment, in whole or from time to time in part, on
      the
      terms specified in the Agreement. 

    

    This
      Note
      is a registered Note and, as provided in the Agreement, upon surrender of this
      Note for registration of transfer, duly endorsed, or accompanied by a written
      instrument of transfer duly executed, by the registered holder hereof or such
      holder's attorney duly authorized in writing, a new Note for the then
      outstanding principal amount will be issued to, and registered in the name
      of,
      the transferee. Prior to due presentment for registration of transfer, the
      Company may treat the person in whose name this Note is registered as the owner
      hereof for the purpose of receiving payment and for all other purposes, and
      the
      Company shall not be affected by any notice to the contrary.

    

    In
      case
      an Event of Default shall occur and be continuing, the principal of this Note
      may be declared or otherwise become due and payable in the manner and with
      the
      effect provided in the Agreement.

    

    Capitalized
      terms used and not otherwise defined herein shall have the meanings (if any)
      provided in the Agreement.

    

    THIS
      NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF ILLINOIS AND SHALL BE CONSTRUED
      AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS (AS OPPOSED
      TO
      THE CONFLICTS OF LAW PROVISIONS) OF SUCH STATE.

    

    

    STEAK
      N SHAKE COMPANY

    

    

    

                  By: /s/
      Jeffrey A. Blade   

       
Name: Jeffrey
      A. Blade

                    Title:
      Senior Vice President, Chief Financial OfficerLoan Agreement - PEDFA & The York Water Company

    
      

    

    LOAN
      AGREEMENT

     

    BETWEEN

     

    YORK
      COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY

     

    (the
      "ISSUER")

     

    AND

     

    THE
      YORK WATER COMPANY

     

    (the
      "COMPANY")

     

    DATED
      AS OF OCTOBER 1, 2006

    

    
      
        
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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 Project

    SECTION
      3.1. Acquisition and Construction.

    SECTION
      3.2. Construction Fund.

    SECTION
      3.3. Establishment of Completion Date.

    

    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. Reserved.

    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 Issuer.

    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.

    

    ARTICLE
      VII Particular Agreements

    SECTION
      7.1. Indemnified Party's 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 Indebtedness.

    SECTION
      7.10. Limitation on Liens.

    SECTION
      7.11. Dividends, Stock Purchases.

    SECTION
      7.12. Termination of Pension Plans.

    

    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.

    

    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.

    

    
 

    
      
        
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    LOAN
      AGREEMENT

    This
      Loan
      Agreement dated as of October 1, 2006, between the York County Industrial
      Development Authority (the "Issuer"), a public instrumentality of the
      Commonwealth of Pennsylvania and a public body corporate and politic organized
      and existing under the Pennsylvania Economic Development Financing Law, as
      amended (the "Act") of the Commonwealth of Pennsylvania (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 Issuer has determined to issue $10,500,000 aggregate principal amount of
      its
      Exempt Facilities Revenue Bonds, Series 2006 (The York Water Company Project)
      (the “Bonds”) 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 Bonds (the "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 October 1, 2006 (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; and

    

    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:

    

    "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.

    

    "Consolidated
      Current Assets" and "Consolidated Current Liabilities" shall mean such assets
      and liabilities of the Company and its subsidiaries on a consolidated basis
      as
      shall be determined in accordance with generally accepted accounting principles
      to constitute current assets and current liabilities, respectively.

    

    "Costs
      of
      Issuance" means all costs and expenses incurred by the Issuer 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.

    

    "County"
      means the County of York, a political subdivision of the
      Commonwealth.

    

    "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.

    

    "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; or

     

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

     

    "Excepted
      Property" shall mean (a) cash, bonds, stocks, obligations and other Securities;
      (b) choses in action, accounts and bills receivable, judgments and other
      evidences of Indebtedness and contracts, leases and operating agreements; (c)
      stock in trade, merchandise, equipment, apparatus, materials or supplies
      manufactured or acquired for the purpose of sale and/or resale in the usual
      course of business or consumable in the operation of any of the Properties
      of
      the Company or held for the purpose of repairing or replacing (in whole or
      in
      part) any rolling stock, business, motor coaches, trucks, automobiles or other
      vehicles or aircraft; (d) timber, gas, oil, minerals (including developed and
      undeveloped natural gas reserves and natural gas in underground storage or
      otherwise), mineral rights and royalties; (e) materials or products generated,
      manufactured, produced or purchased by the Company for sale, distribution or
      use
      in the ordinary course of its business; (f) rolling stock, buses, motor coaches,
      trucks, automobiles and other vehicles and all aircraft; and (g) the Company's
      franchise to be a corporation.

    

    "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, whether or not included in
      Consolidated Current Liabilities, (b) all Capitalized Rentals, and (c) all
      Guaranties of Indebtedness of others.

    

    "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. For the purposes of all computations made under this Agreement, a
      Guaranty in respect of any Indebtedness for borrowed money shall be deemed
      to be
      Indebtedness equal to the principal amount of such Indebtedness for borrowed
      money which has been guaranteed, and a Guaranty in respect of any other
      obligation or liability or any dividend shall be deemed to be Indebtedness
      equal
      to the maximum aggregate amount of such obligation, liability or
      dividend.

    

    "Indebtedness"
      of any Person shall mean and include all obligations of such Person which in
      accordance with generally accepted accounting principles shall be classified
      upon a balance sheet of such Person as liabilities of such Person, and in any
      event shall include 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 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.

    

    “Inducement
      Resolution” means the resolution of the governing body of the Issuer adopted on
      February 7, 2006 granting initial approval of the financing of the
      Project.

    

    "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.

    

    "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.

    

    "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 financed with the proceeds of the Bonds and an equity contribution
      from the Company.

    

    "Project
      Costs" means all costs incurred by the Company, whether before or after issuance
      of the Bonds, with respect to the acquisition, construction and installation
      of
      the Project, including but not limited to, the following items:

    

    (i)  Obligations
      incurred or assumed for labor, materials and equipment (including obligations
      payable to the Company for expenditures made or costs incurred by the
      Company);

     

    (ii)  Costs
      of
      any performance, payment, or surety bonds and insurance deemed necessary or
      appropriate by the Company;

     

    (iii)  Costs
      of
      engineering and other services, including the costs incurred or assumed for
      preliminary design and development, surveys, estimates and plans and
      specifications, and for supervising construction and performing all other duties
      required by or consequent upon proper construction;

     

    (iv)  Costs
      which the Company shall be required to pay under the terms of any contract
      or
      contracts in connection with the construction, acquisition and installation
      of
      the Project;

     

    (v)  Amounts
      which are required to be paid for taxes, assessments and other similar charges
      payable during the period of construction;

     

    (vi)  Expenses
      incurred in seeking to enforce any remedy against any contractor, subcontractor
      or other provider of labor, materials, equipment or services, in respect of
      any
      default, breach or dispute relating to the Project;

     

    (vii)  Sums
      required to reimburse the Company for advances made for any of the above items,
      and for any other costs incurred for work done or caused to be done by the
      Company which are properly chargeable to the Project;

     

                        (viii)  Capitalized
      interest with respect to the Project;

     

    (ix)  To
      the
      extent authorized by the Act, costs of all other items related to the
      acquisition, construction and installation of the Project; and

     

        (x)  All
      Costs
      of Issuance.

     

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

    

    "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
      Underwriting 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, 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 will 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 will promote 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 is located within the boundaries
      of the Commonwealth and within the boundaries of the County, which organized
      the
      Issuer; and (iii) the Project will constitute a “project” within the meaning of
      the Act.

     

    (e)  Private
      Activity Bond Allocations.
      The
      Issuer has received a Preliminary Allocation of the tax-exempt private activity
      bond authority of the Commonwealth in an aggregate amount at least equal to
      the
      aggregate principal amount of the Bonds from the Department which certifies
      the
      preliminary approval of such allocation for the Project as required by Section
      146 of the Code. Simultaneously with the issuance of the Bonds, the Issuer
      shall
      request a Final Allocation from the Department which request will automatically
      convert the Preliminary Allocation to a Final Allocation of the Commonwealth's
      private activity bond authority to the Project.

     

    (f)  Project
      Approvals.
      The
      Project has been approved by (1) the Company, (2) the Commissioners of the
      County, as the "applicable elected representative," as that term is defined
      under the Code, of the Issuer after a public hearing held upon reasonable public
      notice, as required by the Code, and (3) the Issuer by adoption of resolutions
      including 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, the County 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 the Company's Annual Report on Form 10-K for the year ended
      December 31, 2005, 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 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 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 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 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, as provided under this Loan Agreement, will 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 will 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 Plant and other fixed property which is part of the Project is
      located within the boundaries of the County and has a substantial connection
      with the County. The Project is a "project" within the meaning of the Act and
      will be operated as such. 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 presently intends to use or operate the Project (or cause the Project
      to
      be operated) 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 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 proceeds of the Bonds will not exceed the Project Costs. The Costs
      of
      Issuance financed with proceeds of the Bonds, including any bond discount on
      the
      sale of the Bonds, will not exceed 2% of the proceeds of the Bonds.

     

    (j)  Commencement
      of Project.
      Prior
      to the adoption of the Inducement Resolution, no properties included in the
      Project, that are to be financed with the proceeds of the Bonds, had been
      acquired by the Company or any Related Person (as defined in the Code), and
      no
      physical work on the Project had been commenced by the Company or any Related
      Person, except to the extent permitted in such Inducement
      Resolution.

     

    

    ARTICLE
      III  

     

    The
      Project

     

    SECTION
      3.1.   Acquisition
      and Construction. 

     

    The
      Company (a) has acquired, or has the requisite legal power to acquire, all
      interests in land required for construction of the Project, and shall construct,
      install, equip and improve the Project with all reasonable dispatch and in
      accordance with the description thereof in Exhibit A attached hereto and
      applicable law, (b) shall procure or cause to be procured all permits and
      licenses necessary for the prosecution of the work, and (c) shall pay when
      due
      all costs and expenses incurred in connection with that acquisition,
      construction, installation, equipment and improvement from funds made available
      therefor in accordance with this Loan Agreement or otherwise. The Company will
      revise Exhibit A and such supplemental information from time to time as
      necessary to reflect material additions to, deletions from and changes in the
      Project and will notify the Issuer and the Trustee in writing of such
      modifications so that the Issuer and the Trustee will be able to ascertain
      the
      nature, location and estimated cost of the Project. It is understood that the
      Project is the property of the Company and that any contracts made by the
      Company with respect thereto and any work to be done on the Project is to be
      done by the Company in its own behalf and not as agent or contractor for the
      Issuer or the Trustee.

    

    In
      the
      event that Exhibit A
      hereto
      is to be amended or supplemented in accordance with the provisions of
      Section 9.3 of the Indenture, the Issuer will enter into, and will instruct
      the Trustee to consent to, an amendment of or supplement to Exhibit A
      hereto
      upon receipt by the Issuer and Trustee of:

    

    (i)  a
      certificate of an Authorized Company Representative describing in detail the
      proposed changes; and

     

    (ii)  a
      copy of
      the proposed form of amendment or supplement to Exhibit A
      hereto
      and such other documents, certificates and showings as may be required by
      counsel rendering the opinion in clause (iii) of this paragraph;
      and

     

    (iii)  an
      opinion of Bond Counsel to the effect that such amendment complies with the
      requirements of this Section 3.1, is in proper form for execution and
      delivery by the Issuer and will not adversely affect the validity of the Bonds
      or the exemption from federal income taxes of the interest thereon.

     

    The
      Company recognizes that since the Project has been or will be acquired,
      constructed and equipped by the Company and by contractors and suppliers
      selected by the Company in accordance with the plans and specifications, the
      Issuer makes no representation or warranty, express or implied, with respect
      to
      the merchantability, condition or workmanship of any part of the Project or
      its
      suitability for the Company's purposes or the extent to which proceeds derived
      from the sale of the Bonds will pay the costs to be incurred in connection
      therewith.

    

    SECTION
      3.2.   Construction
      Fund. 

     

    The
      Construction Fund shall be drawn on and used by the Company to pay the Costs
      of
      Issuance of the Bonds to the extent not paid from the settlement account
      pursuant to Section 2.1 of the Indenture and to pay other Project Costs
      when due and payable.

    

    Moneys
      in
      the Construction Fund shall be disbursed to the Company, or such other Person
      as
      may be designated, on requisitions substantially in the form of Exhibit C
      to the Indenture signed by the Authorized Company Representative and delivered
      to the Trustee, stating with respect to each payment to be made:

    

    (1)  The
      amount and general purpose of such disbursement; and

     

    (2)  That
      each
      obligation mentioned therein (i) has been properly incurred, (ii) is a proper
      charge against the Construction Fund in accordance with the provisions of this
      Loan Agreement, the Tax Documents and the Indenture, and (iii) has not been
      the
      basis of any previous requisition.

     

    The
      Trustee shall rely fully on any such requisition delivered pursuant to this
      Section and shall not be required to make any investigation in connection
      therewith.

    

    All
      moneys remaining in the Construction Fund after all Project Costs have been
      paid
      or provided for shall at the written direction of the Company be used in
      accordance with Section 3.3 hereof.

    

    If
      moneys
      in the Construction Fund are not sufficient to pay all Project Costs, the
      Company nonetheless shall complete the Project in accordance with Exhibit A
      attached hereto (as revised and amended in accordance with this Loan Agreement)
      and shall pay all such additional Project Costs. The Company shall not be
      entitled to any reimbursement for any such additional Project Costs from the
      Issuer, the Trustee, or any Registered Owner; nor shall it be entitled to any
      abatement, diminution or postponement of the Installment Loan Payments or other
      amounts payable hereunder.

    

    SECTION
      3.3.   Establishment
      of Completion Date. 

     

    As
      soon
      as practicable after the completion of construction of the Project, the Company
      shall furnish to the Trustee a certificate signed by an Authorized Company
      Representative stating (i) that construction of the Project described in
      Exhibit A hereto (as revised and amended in accord with this Loan
      Agreement) has been completed, and (ii) any portion of the Project Costs which
      has not yet then been paid. Such certificate may state that it is given without
      prejudice to any rights against third parties which exist at the date of such
      certificate or which may subsequently come into being.

    

    Moneys
      (including investment proceeds) remaining in the Construction Fund on the date
      of such certificate may be used, at the written direction of an Authorized
      Company Representative for the payment, in accordance with the provisions of
      this Loan Agreement, of any Project Costs not then paid as specified in such
      certificate. The Company agrees that any moneys (including investment proceeds)
      remaining in the Construction Fund on the date of the aforesaid certificate
      and
      not so set aside for the payment of such Project Costs shall be transferred
      or
      disbursed in accordance with Section 1.142-2 of the Regulations, or any
      successor thereto and that the Company shall give specific instructions to
      the
      Trustee as to the transfer or disbursement of such funds and certify that such
      transfer or disbursement complies with the provisions of Section 1.142-2 of
      the
      Regulations or any successor thereto at such time. The Company acknowledges
      that
      these provisions generally require that a portion of the Bonds be redeemed,
      or
      defeased to the first call date (with appropriate notice to the Internal Revenue
      Service), within 90 days of the earlier of (i) the date on which the Company
      determines that the Project will not be completed or (ii) the date on which
      the
      Project is Placed-in-Service (as defined in the Tax Agreement).

    

    ARTICLE
      IV  

     

    Loan
      And
      Repayment; Operation Of Project

     

    SECTION
      4.1.   Loan
      of Bond Proceeds. 

     

    To
      provide funds for the financing of Costs of Issuance and Project Costs, 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 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 acquire, construct, install, operate and maintain 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 Authority 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 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 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 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 acquisition, construction
      and
      installation of the Project, the Company shall complete the acquisition,
      construction and installation of the 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 to finance the acquisition, construction and installation
      of
      the Project, the Issuer, concurrently with the execution of this Loan Agreement,
      will sell, issue and deliver to the initial purchasers thereof the Bonds, all
      in
      accordance with the Indenture. The Issuer will thereupon cause the accrued
      interest, if any, received upon the delivery of the Bonds to be deposited in
      the
      Debt Service Fund and the balance of the proceeds received from the sale of
      the
      Bonds to be deposited in the Construction Fund.

    

    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.   Reserved. 

     

    SECTION
      5.4.   Investment
      of Funds. 

     

    The
      Issuer hereby gives its express written authority to the Company as provided
      in
      the Indenture to direct the investment of the Construction Fund, Debt Service
      Fund or any other 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 Bond Resolution and the Indenture. It
      is
      hereby agreed that the foregoing approval of the Bond Resolution and 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 Bond Resolution and
      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 three
      Business Days 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 fees
      and charges of the Trustee for services rendered as Trustee under the Indenture
      and its reasonable expenses incurred as Trustee under the Indenture, including
      reasonable fees and expenses of its counsel. 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.

    

    SECTION
      6.6.   Payments
      to Issuer. 

     

    The
      Company shall pay or cause to be paid all of the Issuer'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 .75% of the principal amount of the Bonds for issuing the Bonds,
      less an application fee of $1,500. 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 an
      annual audit/service fee.

    

    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, 6.10, 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 Debt Service 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 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 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 provide 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.

    

    SECTION
      6.11.   Bonds
      Purchased in Lieu of Redemption. 

     

    Pursuant
      to Section 5.5 of the Indenture, the Company is given the right to purchase
      Bonds in lieu of redemption, provided that Bonds so purchased shall be retired
      and not remarketed.

    

    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.

    

    ARTICLE
      VII  

     

    Particular
      Agreements

     

    SECTION
      7.1.   Indemnified
      Party's 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 expenses arising in connection with said
      contemplated transactions, including the reasonable fees and 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, reasonable expenses (including
      reasonable counsel fees), 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 Project or the financing
      or
      refinancing of the Project, and, without limiting the generality of the
      foregoing, arising from (i) the issuance, offering, sale, or delivery of
      the Bonds, the Indenture, the Underwriting Agreement and this Loan Agreement
      and
      the obligations imposed on the Issuer hereby and thereby and the Trustee's
      performance of its obligations under the Indenture; or the design, construction,
      installation, operation, use, occupancy, maintenance, or ownership of the
      Project; (ii) any written 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 Underwriting 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 gross 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 gross negligence of the Indemnified Party.

    

    The
      Company also agrees to pay the 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, (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, 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 45 days after the end of each quarterly
      fiscal period (except the last) of each fiscal year, duplicate copies
      of:

     

    (1)  a
      consolidated balance sheet of the Company as of the close of such quarter
      setting forth in comparative form the consolidated figures for the corresponding
      period of the preceding fiscal year,

     

    (2)  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

     

    (3)  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:

     

    (1)  a
      consolidated balance sheet of the Company as of the close of such fiscal
      year,

     

    (2)  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;

     

    (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 7.12,
      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
      Nationally Recognized Municipal Securities Information Repositories pursuant
      to
      the Company's continuing disclosure undertaking referred to in the Underwriting
      Agreement. Such statements and other information shall be filed with the
      Authority and the Trustee within ten (10) days of the filings made pursuant
      to
      such continuing disclosure undertaking.

    

    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 Trustee 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 or the
      Trustee to indemnification under Section 7.1 and payment of fees under
      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 opinion of Bond Counsel to be a “project” as such
      term is defined in the Act after such assignment; 

     

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

     

    (v)  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, resolutory
      condition, 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 Indebtedness.

     

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

     

    (1)  current
      operating liabilities and current or other obligations (other than for borrowed
      money) incurred in the ordinary course of business;

     

    (2)  Seasonal
      Indebtedness, provided that such Seasonal Indebtedness has not existed for
      a
      period of at least 30 consecutive days in the twelve preceding months;
      and

     

    (3)  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 having the Issuer issue in the future additional
      series of bonds or incurring other types of Funded Debt.

     

    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:

     

    (1)  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

     

    (2)  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

     

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

     

    (4)  the
      pledging by the Company of its revenues to the Pennsylvania Infrastructure
      Investment Authority pursuant to that certain Loan Agreement dated as of
      August 24, 1999 in order to secure a loan in the original aggregate
      principal amount of $800,000 made by such Authority to the Company, such loan
      having an outstanding principal balance of approximately $554,754 as of June
      30,
      2006.

     

    (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, the Company will make 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 all the Property, other than
      Excepted Property, owned by the Company just prior to the time such other lien
      shall have become a lien on any of the Property of the Company) prior to the
      lien or liens securing any and all such other Indebtedness. Compliance with
      the
      provisions of this paragraph shall not be deemed to constitute a waiver of,
      or
      consent to, any violation of Section 7.10(a). 

     

    (c)  The
      Company covenants that, so long as any Bonds shall be outstanding under the
      Indenture, if, upon any consolidation or merger of the Company with or into
      any
      other corporation, or upon any sale or conveyance of all or substantially all
      of
      the Property of the Company as an entirety, or upon any acquisition by the
      Company of the Property of another corporation substantially as an entirety
      or
      upon any merger of any other corporation into the Company, any of the Property
      (other than Excepted Property) owned by the Company just prior thereto, would
      thereupon become subject to any lien (other than Excepted Encumbrances), the
      Company, prior to such consolidation, merger, sale, conveyance or acquisition,
      will take appropriate action whereby the Bonds shall (so long as such Property
      shall be subject to such lien) be secured (along with any other Indebtedness
      similarly entitled to be equally and ratably secured) by a direct lien on such
      portion of the Property of the Company prior to all other liens, other than
      Excepted Encumbrances and other than any liens existing thereon just prior
      to
      such consolidation, merger, sale, conveyance or acquisition.

     

    (d)  Any
      mortgage created pursuant to the requirements of paragraphs (b) or (c) above
      shall contain reasonable and customary provisions for the enforcement of the
      lien thereby created and for the release of, or substitution for, the Property
      so mortgaged. Such direct lien shall be evidenced by an appropriate instrument
      or instruments executed and delivered to the Trustee.

     

    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.   Termination
      of Pension Plans.

     

    The
      Company will not permit any employee benefit plan maintained by it to be
      terminated in a manner which could result in the imposition of a lien on any
      Property of the Company pursuant to Section 4068 of the Employee Retirement
      Income Security Act of 1974, as amended.

    

    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, 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
      may be issued 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 7.12 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 is
      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 $250,000
      is or are outstanding against the Company or against any Property or assets
      of
      the Company and any one of such judgments has remained unpaid, unvacated,
      unbonded or unstayed by appeal or otherwise for a period of 60 days from the
      date of its entry; or

     

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

     

    (c)  Upon
      the
      occurrence of an Event of Default, 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.

    

    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.

    

    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:
      President

    Telecopy
      No. (717) 852-0058

    

    (b)  to
      the
      Issuer, to:

     

    York
      County Industrial Development Authority

    144
      Roosevelt Avenue

    York,
      PA
      17404

    Attention:
      Secretary

    Telecopy
      No. (717) 843-8837

    

    (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

    

    (d)  to
      the
      Bond Insurer, to:

     

    Financial
      Guaranty Insurance Company

    125
      Park
      Avenue

    New
      York,
      NY 10017

    Attention:
      Risk Management

    

    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
      Registered Owners, the Beneficial Owners, the Company, the Bond Insurer and
      their respective successors and assigns herein permitted, and not for any other
      third party or parties other than the Bond Insurer, as described below; 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 Registered Owners,
      the Beneficial Owners, the Company, the Bond Insurer and their respective
      successors and assigns herein permitted, any rights or remedies under or by
      reason of this Loan Agreement. The Bond Insurer is hereby explicitly recognized
      as a third-party beneficiary hereunder with the power to enforce any right,
      remedy or claim conferred, given or granted hereunder.

    

    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.

    

    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
      gross 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.

     

    
      
        38

        950615.7 10/25/06

        
        

      

      
        
          

        

      

      
        
        

      

    

    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.

    

    

     

      	 	 	 
	 	
              YORK
                COUNTY INDUSTRIAL DEVELOPMENT
                AUTHORITY

            
	 
Attest:	 
 	 
 
	
              By:
                /s/J. Kenetha Hansen

            	By:  	/s/John
              W.
              Krout 
	 J.
              Kenetha Hansen	John
              W. Krout 
	 Assistant
              Secretary	Chairman

    

     

     

    
 

    
      	 	 	 
	 	THE
              YORK
              WATER COMPANY
	 
 Attest:	 
 	 
 
	
              By:
                /s/Bonnie J. Rexroth

            	By:  	/s/ Jeffrey
              S. Osman
	Bonnie J.
              Rexroth 	
            	Jeffrey S. Osman
	 Assistant
              Secretary	President
              and
              CEO

    

     

     

    
Date:
      October 27, 2006

     

    
      
        
          38

          950615.7 10/25/06

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}]]