Document:

exhibit101-101508.htm

    
      

    

    EXHIBIT
10.1 

    
      

    

     

    
 

    
      LOAN AGREEMENT

       

      BETWEEN

       

      PENNSYLVANIA
ECONOMIC DEVELOPMENT FINANCING AUTHORITY

       

      (THE
"ISSUER")

       

      AND

       

      THE
YORK WATER COMPANY

       

      (THE
"COMPANY")

       

      DATED
AS OF OCTOBER 1, 2008

      

      

      

      
        
          
             

          

           

        

        
          
          

          
            

          

        

        
           

        

      

      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 Local IDA. 

      SECTION 6.7.
Obligations of the Company Absolute and Unconditional. 

      SECTION 6.8. Option
to Prepay Amounts Under Loan Agreement in Certain Events. 

      SECTION 6.9.
Company's Performance Under Indenture.

      SECTION 6.10.
Covenants Regarding Tax Exemption. 

      SECTION 6.11. Bonds
Purchased in Lieu of Redemption. 

      SECTION 6.12.
Nondiscrimination – Sexual Harassment. 

       

      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. 

       

      EXHIBIT A – Project
Description

      EXHIBIT B –
Nondiscrimination/Sexual Harassment Clause

      

      
        
          
             

          

           

        

        
          
          

          
            

          

        

        
           

        

      

      LOAN
AGREEMENT

      

      This Loan Agreement dated as of October
1, 2008, between the Pennsylvania Economic Development Financing Authority (the
"Issuer"), a public instrumentality of the Commonwealth of Pennsylvania (the
"Commonwealth") and a public body corporate and politic organized and existing
under the Pennsylvania Economic Development Financing Law, as amended (the
"Act") of the Commonwealth, and The York Water Company, a Pennsylvania
corporation (the "Company"),

      

      WITNESSETH:

      

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

      

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

      

      WHEREAS, the Issuer has determined to
issue $15,000,000 aggregate principal amount of its Exempt Facilities Revenue
Bonds, Series 2008B (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
2008 Capital Budget, including, but not limited to the design, acquisition,
construction, improvement, extension, renovation, equipping and installation of
(a) various structures, including distribution buildings, booster stations,
pumping stations, and various plant and ancillary buildings, (b) spillway
upgrades, standpipes, transmission and distribution mains, service lines,
meters, fire hydrants, water treatment, pumping and purification equipment, and
(c) various other capital improvements, replacements and equipment for the
Company’s water system located throughout York County and Adams County,
Pennsylvania, and (ii) the payment of all or a portion of the costs of issuance
of the 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, 2008 (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:

      

      "Bond Resolution" means the resolution
of the governing body of the Issuer adopted on September 10, 2008, authorizing
the issuance of the Bonds.

      

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

      

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

      

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

      

      "Department" means the Department of
Community and Economic Development of the Commonwealth.

      

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

      

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

      

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

      

      "Excepted Encumbrances" shall mean any
of the following:

      

      (a) liens for
taxes, assessments or governmental charges not delinquent and liens for workers'
compensation awards and similar obligations not delinquent and undetermined
liens or charges incidental to construction;

       

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

       

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

       

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

       

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

       

      (f) rights
reserved to or vested in any municipality or public authority to control or
regulate any Property of the Company or to use such Property in a manner which
does not materially impair the use of such Property for the purposes for which
it is held by the Company; 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 May 23,
2008 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.

      

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

      

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

      

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

      

      "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 and the Local IDA, the Issuer has
found that the Company is engaged in industrial, commercial and/or specialized
activities in the Commonwealth requiring substantial capital and creating or
maintaining substantial employment opportunities, that the Company’s operations
contribute to economic growth and the creation or maintenance of employment
opportunities in the Commonwealth, that the Company is financially responsible
to assume its obligations prescribed by this Loan Agreement and the Act and that
the Project 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, 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 Local IDA,
(2) the Governor or Lieutenant Governor of the Commonwealth 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, 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 Quarterly
Report on Form 10-Q for the quarter ended June 30, 2008, 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
Commonwealth and has a substantial connection with the
Commonwealth.  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.

       

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

      

      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:

      

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

       

      (ii) 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 and Local
IDA.

       

      The Company shall pay or cause to be
paid all of the Issuer's and Local IDA's reasonable, actual out-of-pocket
expenses and costs in connection with the issuance of the Bonds, including,
without limitation, all financing, legal, printing, and other expenses and all
Costs of Issuance incurred in issuing the Bonds (including the fees and expenses
of bond counsel and the Issuer's financial advisor) and the Issuer's fee of .20%
of the principal amount of the Bonds for issuing the Bonds, less an application
fee of $0.  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 5.6 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:

       

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

       

      (ii) consolidated
statements of income and shareholders' investment of the Company for such
quarterly period, setting forth in comparative form the consolidated figures for
the corresponding period of the preceding fiscal year, and

       

      (iii) consolidated
statements of cash flows of the Company for the portion of the fiscal year
ending with such quarter, setting forth in comparative form the consolidated
figures for the corresponding period of the preceding fiscal year,

       

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

      

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

       

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

       

      (ii) consolidated
statements of income and shareholders' investment and cash flows of the Company
for such fiscal year,

       

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

      

      (c) Audit
Reports.  Promptly upon receipt thereof, one copy of each
interim or special audit made by independent accountants of the books of the
Company;

       

      (d) SEC and Other
Reports.  Promptly upon their becoming available, one copy of
each financial statement, report, notice or proxy statement sent by the Company
to stockholders generally and of each regular or periodic report, and any
registration statement or prospectus filed by the Company with any securities
exchange or the Securities and Exchange Commission or any successor agency, and
copies of any orders in any proceedings substantially affecting the financial
condition of the Company to which the Company is a party, issued by any
governmental agency, Federal or state, having jurisdiction over the
Company;

       

      (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) The
assignee shall not be a Disqualified Contractor.

       

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

       

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

       

      (i) No such
lease shall relieve the Company from its obligations under this Loan
Agreement;

       

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

       

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

       

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

       

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

       

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

       

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

       

      SECTION
7.7. Amendment of Loan Agreement
or Indenture.

       

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

      

      SECTION
7.8. Waiver of Vendor’s
Lien.

       

      Notwithstanding anything in this Loan
Agreement to the contrary, it is the intention of the parties hereto that no
vendor’s lien and/or privilege, mortgage, 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:

       

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

       

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

       

      (iii) Funded
Debt (including the Bonds) in an amount not in excess of 60% of the Plant
Account on the books of the Company at any one time outstanding.

       

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

       

      (c) Subject
to compliance with this Section 7.9, nothing contained in this Agreement shall
prohibit the Company from 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:

       

      (i) the
pledging by the Company of its assets as security for the payment of any tax,
assessment or other similar charge demanded of the Company by any governmental
authority or public body as long as the Company in good faith contests its
liability to pay the same, or as security to be deposited with any governmental
authority or public body for any purpose at any time required by law or,
governmental regulation as a condition to the transaction of any business or the
exercise of any privilege, license or right; or

       

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

       

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

       

      (iv) the
pledging by the Company of 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 $475,118 as of June 30,
2008.

       

      (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 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

      P.O. Box 15089

      York, PA  17405

      Attention:  President

      Telecopy No. (717)
852-0058

      

      (b) to the
Issuer, to:

       

      Department of Community and Economic
Development

      Pennsylvania Economic Development
Finance Authority

      Center for Private Financing –
Commonwealth Keystone Building

      400 North Street, 4th
Floor

      Harrisburg, PA 17120

      Attention:  Secretary

      Telecopy No.  (717)
787-0879

      

      (c) to the
Trustee, to:

       

      Manufacturers and Traders Trust
Company

      213 Market Street

      Harrisburg,
PA  17101

      Attn:  Corporate Trust
Department

      Telecopy No. (717)
231-2615

      

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

      

      SECTION
9.3. Benefit of
Parties.

       

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

      

      SECTION
9.4. Severability.

       

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

      

      SECTION
9.5. Counterparts.

       

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

      

      SECTION
9.6. Captions.

       

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

      

      SECTION
9.7. Law Governing Construction
of Loan Agreement.

       

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

      

      SECTION
9.8. Payments on Non-Business
Days.

       

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

      

      SECTION
9.9. Payments to be Sufficient to
Meet DTC Requirements.

       

      The Company hereby acknowledges that
the Bonds are intended to be issued in book-entry form through DTC and that DTC
has certain timing requirements and notice requirements.  The Company
hereby agrees to make payments and give notices in a manner sufficient to comply
from time to time with the DTC requirements, for so long as the Bonds are in
book-entry form at DTC.

      

      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.

       

      
        
          
             

          

           

        

        
          
          

          
            

          

        

        
           

        

      

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

       

       

      
        
          	 	
                  
                    PENNSYLVANIA
      ECONOMIC DEVELOPMENT FINANCING
      AUTHORITY

                  

                	 
	Attest:	 	 	 
	
                  By:/s/Craig S.
    Petrasic

                	
                  By:
      

                	/s/Stephen M. Drizos	 
	Craig
      S. Petrasic	 	Stephen
      M. Drizos	 
	Assistant
      Secretary	 	Executive
      Director	 
	 	 	 	 

        

      
        
          	 	THE
      YORK WATER COMPANY	 
	
                  Attest: 

                	 	 	 
	
                  By:/s/Bonnie J.
    Rexroth

                	
                  By: 

                	/s/Jeffrey R. Hines	 
	Bonnie
      J. Rexroth 	 	Jeffrey
      R. Hines	 
	Assistant
      Secretary 	 	President
      and Chief Executive Officer	 
	 	 	 	 

        

      

       

      
        
          
             

          

           

        

        
          
          

          
            

          

        

        
           

        

      

      EXHIBIT
A

      

      PROJECT
DESCRIPTION

      

      

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

      

      
        
          
             

          

           

        

        
          
          

          
            

          

        

        
           

        

      

      EXHIBIT
B

      

      NONDISCRIMINATION/SEXUAL
HARASSMENT CLAUSE

      

      During the term of the Loan Agreement,
the Company agrees as to itself and each person controlling, controlled by or
under common control with the Company (each, a "Contractor") as
follows:

      

      1. In the
hiring of any employee(s) for the manufacture of supplies, performance of work,
or any other activity required under the contract or any subcontract, the
Contractor, subcontractor, or any person acting on behalf of the Contractor or
subcontractor shall not, by reason of gender, race, creed, or color,
discriminate against any citizen of this Commonwealth who is qualified and
available to perform the work to which the employment relates.

       

      2. Neither
the Contractor nor any subcontractor nor any person on their behalf shall in any
manner discriminate against or intimidate any employee involved in the
manufacture or supplies, the performance of work, or any other activity required
under the contract on account of gender, race, creed, or color.

       

      3. Contractors
and subcontractors shall establish and maintain a written sexual harassment
policy and shall inform their employees of this policy.  The policy
must contain a notice that sexual harassment will not be tolerated and employees
who practice it will be disciplined.

       

      4. Contractors
shall not discriminate by reason of gender, race, creed, or color against any
subcontractor or supplier who is qualified to perform the work to which the
contracts relate.

       

      5. The
Contractor of each subcontractor shall furnish all necessary employment
documents and records to and permit access to their books, records, and accounts
by the contracting agency and the Bureau of Contract Administration and Business
Development, for purposes of investigation, to ascertain compliance with
provisions of this Nondiscrimination/Sexual Harassment Clause.  If the
Contractor or any subcontractor does not possess documents or records reflecting
the necessary information requested, the Contractor or subcontractor shall
furnish such information on reports forms supplied by the contracting agency or
the Bureau of Contract Administration and Business Development.

       

      6. The
Contractor shall include the provisions of this Nondiscrimination/Sexual
Harassment Clause in every subcontract so that such provisions will be binding
upon each subcontractor.

       

      7. The
Commonwealth may cancel or terminate the contract, and all money due or to
become due under the contract may be forfeited for a violation of the terms and
conditions of this Nondiscrimination/Sexual Harassment Clause.  In
addition, the agency may proceed with debarment or suspension and may place the
Contractor in the Contractor Responsibility file.exhibit102-101508.htm

    
      

    

    EXHIBIT
10.2

    
      
        

      

    

     

    
       

       

      TRUST INDENTURE

       

       

      between

       

       

      PENNSYLVANIA
ECONOMIC DEVELOPMENT FINANCING AUTHORITY,

      as
Issuer

       

       

      and

       

       

      MANUFACTURERS
AND TRADERS TRUST COMPANY,

      as
Trustee

       

       

      Dated
as of October 1, 2008

       

       

       

      $15,000,000

      PENNSYLVANIA
ECONOMIC DEVELOPMENT FINANCING AUTHORITY

      Exempt
Facilities Revenue Bonds

      Series
2008B

      (The
York Water Company Project)

      

      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      

      TABLE OF
CONTENTS

       

       

      ARTICLE I
DEFINITIONS 

      SECTION
1.1. Definitions. 

      SECTION
1.2. Certain Rules of Interpretation. 

       

      ARTICLE
II THE BONDS 

      SECTION
2.1. Authorized Amount and Issuance of Bonds; Disposition of Bond
Proceeds. 

      SECTION
2.2. Terms of the Bonds.

      SECTION
2.3. Reserved. 

      SECTION
2.4. Reserved.

      SECTION
2.5. Form of Bonds; Execution; Bonds Equally and Ratably Secured; Limited
Obligation of the Issuer.

      SECTION
2.6. Authentication.

      SECTION
2.7. Registration, Transfer and Exchange.

      SECTION
2.8. Mutilated, Destroyed, Lost or Stolen Bonds.

      SECTION
2.9. Payments of Principal, Redemption Price and Interest; Persons Entitled
Thereto.

      SECTION
2.10. Temporary Bonds. 

      SECTION
2.11. Cancellation of Surrendered Bonds. 

      SECTION
2.12. Acts of Registered Owners; Evidence of Ownership. 

      SECTION
2.13. Book Entry System.

      SECTION
2.14. Payments to Cede & Co.; Payments to Beneficial
Owners. 

       

      ARTICLE
III DEBT SERVICE FUND AND CONSTRUCTION FUND 

      SECTION
3.1. Establishment of Funds and Accounts. 

      SECTION
3.2. Debt Service Fund. 

      SECTION
3.3. Return of Monies from Non-Presentment of Bonds. 

      SECTION
3.4. Construction Fund. 

      SECTION
3.5. Debt Service Fund Monies to be Held for All Registered Owners, With Certain
Exceptions.

      SECTION
3.6. Additional Accounts and Subaccounts.

       

      ARTICLE
IV INVESTMENTS, TAX COVENANTS

      SECTION
4.1. Investment of Funds.

      SECTION
4.2. Arbitrage Bond Covenant. 

      SECTION
4.3. Covenants Regarding Tax Exemption.

      

      ARTICLE V
REDEMPTION OF BONDS

      SECTION
5.1. Bonds Subject to Redemption. 

      SECTION
5.2. Selection of Bonds for Redemption. 

      SECTION
5.3. Notice of Redemption.

      SECTION
5.4. Effect of Redemption. 

      SECTION
5.5. Redemption by the Company in the Event of Death of a Beneficial
Owner.

      SECTION
5.6. Purchase in Lieu of Redemption.

      

      ARTICLE
VI REPRESENTATIONS AND COVENANTS OF THE ISSUER 

      SECTION
6.1. General Limitation; Issuer’s Representation.

      SECTION
6.2. Payment of Bonds and Performance of Covenants. 

      SECTION
6.3. Enforcement of the Loan Agreement.

      SECTION
6.4. No Personal Liability.

      SECTION
6.5. Exemption from Federal Income Taxation. 

      SECTION
6.6. Corporate Existence; Compliance with Laws.

      SECTION
6.7. Filings. 

      SECTION
6.8. Further Assurances.

      SECTION
6.9. Inspection of Books. 

      

      ARTICLE
VII EVENTS OF DEFAULT AND REMEDIES 

      SECTION
7.1. Events of Default Defined. 

      SECTION
7.2. Acceleration and Annulment Thereof.

      SECTION
7.3. Legal Proceedings by Trustee.

      SECTION
7.4. Discontinuance of Proceedings by Trustee. 

      SECTION
7.5. Registered Owners May Direct Proceedings. 

      SECTION
7.6. Limitations on Actions by Registered Owners.

      SECTION
7.7. Trustee May Enforce Rights Without Possession of Bonds. 

      SECTION
7.8. Remedies Not Exclusive. 

      SECTION
7.9. Delays and Omissions Not to Impair Rights.

      SECTION
7.10. Application of Monies. 

      SECTION
7.11. Trustee’s Right to Receiver. 

      SECTION
7.12. Trustee and Registered Owners Entitled to All Remedies. 

      SECTION
7.13. Waiver of Past Defaults. 

      

      ARTICLE
VIII THE TRUSTEE 

      SECTION
8.1. Certain Duties and Responsibilities of Trustee.

      SECTION
8.2. Notice if Event of Default Occurs or Notice if Taxability
Occurs.

      SECTION
8.3. Certain Rights of Trustee. 

      SECTION
8.4. Not Responsible for Recitals or Issuance of Bonds. 

      SECTION
8.5. May Hold Bonds. 

      SECTION
8.6. Money Held in Trust. 

      SECTION
8.7. Corporate Trustee Required; Eligibility. 

      SECTION
8.8. Resignation and Removal of Trustee; Appointment of
Successor. 

      SECTION
8.9. Acceptance of Appointment by Successor Trustee. 

      SECTION
8.10. Merger, Conversion, Consolidation or Succession to
Business. 

      SECTION
8.11. Fees, Charges and Expenses of Trustee. 

      

      ARTICLE
IX AMENDMENTS AND SUPPLEMENTS 

      SECTION
9.1. Amendments and Supplements Without Registered Owners’
Consent. 

      SECTION
9.2. Amendments With Company and Registered Owners’ Consent. 

      SECTION
9.3. Amendments to Loan Agreement. 

      SECTION
9.4. Right to Payment. 

      

      ARTICLE X
DEFEASANCE

      SECTION
10.1. Defeasance. 

      SECTION
10.2. Effect of Defeasance. 

      

      ARTICLE
XI MISCELLANEOUS PROVISIONS 

      SECTION
11.1. Limitations on Recourse; Immunity of Certain Persons.

      SECTION
11.2. No Rights Conferred on Others. 

      SECTION
11.3. Illegal, Etc. Provisions Disregarded. 

      SECTION
11.4. Substitute Publication of Notice. 

      SECTION
11.5. Mailed Notice. 

      SECTION
11.6. Governing Law.

      SECTION
11.7. Successors and Assigns. 

      SECTION
11.8. Action by Company. 

      SECTION
11.9. Headings and Subheadings for Convenience Only. 

      SECTION
11.10. Counterparts. 

      SECTION
11.11. Additional Notices to Rating Agencies. 

      

      Exhibit 
A—Form of Bond

      Exhibit 
B—Letter of Representations to DTC

      Exhibit 
C—Form of Requisition

      Exhibit 
D—Form of Redemption Request

      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

          
             

          

        

      

      This Trust Indenture, dated as of
October 1, 2008 (the "Indenture") between the PENNSYLVANIA ECONOMIC DEVELOPMENT
FINANCING AUTHORITY, (the "Issuer"), a public instrumentality of the
Commonwealth of Pennsylvania (the "Commonwealth") and a public body corporate
and politic organized and existing under the Pennsylvania Economic Development
Financing Law, as amended (as defined herein, the "Act") and MANUFACTURERS AND
TRADERS TRUST COMPANY, a New York state chartered bank with trust powers duly
organized and existing under the laws of the State of New York with a corporate
trust office in Harrisburg, Pennsylvania, as Trustee (the
"Trustee"),

      

      W
I T N E S S E T H :

       

      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 $15,000,000 aggregate principal amount of its Exempt Facilities Revenue
Bonds, Series 2008B (The York Water Company Project) (the "Bonds") to provide
funds to loan to The York Water Company (the "Company") for the financing of
(i) a portion of the Company’s 2008 Capital Budget, including, but not
limited to the design, acquisition, construction, improvement, extension,
renovation, equipping and installation of (a) various structures, including
distribution buildings, booster stations, pumping stations, and various plant
and ancillary buildings, (b) spillway upgrades, standpipes, transmission
and distribution mains, service lines, meters, fire hydrants, water treatment,
pumping and purification equipment, and (c) various other capital
improvements, replacements and equipment for the Company’s water system located
throughout York County and Adams County, Pennsylvania, and (ii) the
payment of all or a portion of the costs of issuance of the Bonds (the
"Project"); and

      

      WHEREAS, the Issuer has entered into a
Loan Agreement dated as of October 1, 2008 (including any supplements and
amendments thereto, the "Loan Agreement") with the Company providing for the
loan by the Issuer to the Company of the proceeds of the Bonds for such purpose
and the repayment of such loan by the Company; and

      

      WHEREAS, the Bonds and the interest
thereon are and shall be payable from and secured by a lien on and pledge of the
Installment Loan Payments (as hereinafter defined) to be made by the Company
pursuant to the Loan Agreement in amounts sufficient to pay at maturity or
redemption the principal of, premium, if any, and interest on the Bonds when
due; and

      

      WHEREAS, all things necessary to make
the Bonds, when issued, executed and delivered by the Issuer and authenticated
by the Trustee pursuant to this Indenture, the valid, legal and binding special
obligations of the Issuer, and to constitute this Indenture a valid pledge of
certain income and hereinafter defined Revenues of the Issuer for the payment of
the principal of, premium, if any, and interest on the Bonds authenticated and
delivered under this Indenture, have been performed and the creation, execution
and delivery of this Indenture, and the creation, execution and issuance of the
Bonds, subject to the terms hereof, have in all respects been duly
authorized;

      

      NOW, THEREFORE, THIS INDENTURE
WITNESSETH:

      

      That the Issuer in consideration of the
premises, of the acceptance by the Trustee of the trusts hereby created, of the
mutual covenants herein contained and of the purchase and acceptance of the
Bonds by the Owners thereof, and for other valuable consideration, the receipt
of which is hereby acknowledged, and in order to secure the payment of the
principal of, premium, if any, and interest on the Bonds according to their
tenor and effect, and the performance and observance by the Issuer of all the
covenants and conditions herein and therein contained (a) has executed and
delivered this Indenture and (b) has agreed to sell, assign, transfer, set
over and pledge, and by these presents does hereby sell, assign, transfer, set
over and pledge unto Manufacturers and Traders Trust Company, Harrisburg,
Pennsylvania, as Trustee, and to its successors in trust and its assigns
forever, to the extent provided in this Indenture, all of the right, title and
interest of the Issuer in and to the Loan Agreement (except for the Unassigned
Issuer’s Rights as defined in the Loan Agreement), and all the Revenues of the
Issuer, and amounts on deposit in the Construction Fund and Debt Service Fund as
hereinafter in this Indenture provided (collectively, the "Trust Estate");
provided, however, that nothing in the Bonds or in this Indenture shall be
construed as pledging the faith or credit or taxing power of the Commonwealth,
or any other political subdivision of the Commonwealth, nor shall this Indenture
or the Bonds constitute a general obligation of the Issuer, or a debt of the
Commonwealth, or any political subdivision thereof;

      

      TO HAVE AND TO HOLD the same unto the
Trustee and its successors in trust forever;

      

      IN TRUST NEVERTHELESS, upon the terms
and trusts herein set forth for the benefit and security of those who shall hold
or own the Bonds issued hereunder, or any of them, without preference of any of
said Bonds over any others thereof by reason of priority in the time of the
issue or negotiation thereof or by reason of the date or maturity thereof, or
for any other reason whatsoever, except as otherwise provided
herein;

      

      IT IS HEREBY COVENANTED, declared and
agreed by and between the parties hereto, that all such Bonds are to be issued,
authenticated as required by this Indenture, and delivered and that all property
subject or to become subject hereto, including the Revenues, is to be held and
applied upon and subject to the further covenants, conditions, uses and trusts
hereinafter set forth; and the Issuer, for itself and its successors, does
hereby covenant and agree to and with the Trustee and its successors in trust,
for the benefit of those who shall hold all of the Bonds, or any of them, as
follows:

      

      ARTICLE
I                                

       

      DEFINITIONS

       

      SECTION
1.1. Definitions.

       

      Terms used in this Indenture with the
initial letter capitalized shall have the meanings specified in this
Section 1.1 or if not defined in this Section 1.1, shall have the
meanings specified in the recitals or other provisions of the Indenture as
applicable.  All words and terms used in this Indenture and not
defined herein shall, if defined in the Loan Agreement, have the meaning set
forth therein.  The words "hereof," "herein," "hereto," "hereby," and
"hereunder" (except in the Form of Bond) refer to the entire
Indenture.  All words and terms importing the singular number shall,
where the context requires, import the plural number and vice
versa.

      

      "Act" means the Pennsylvania Economic
Development Financing Law (Act of August 23, 1967 P. L. 251, No. 102), as
amended.  The Act is codified at 73 P.S. § 371 et seq.

      

      "Act of Bankruptcy" means any of the
following events:

      

      (i) The
Company (or any Person obligated, as guarantor or otherwise, to make payments
under the Loan Agreement) shall (a) apply for or consent to the appointment
of, or the taking of possession by, a receiver, custodian, trustee, liquidator
or the like of the Company (or any such other Person obligated, as a guarantor
or otherwise, to make payments under the Loan Agreement) or of all or any
substantial part of its property, (b) commence a voluntary case under the
United States Bankruptcy Code, as now or hereafter in effect and including any
amendments thereto, or (c) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts; or

       

      (ii) A
proceeding or case shall be commenced in any court of competent jurisdiction,
seeking (a) the liquidation, reorganization, dissolution, winding-up, or
composition or adjustment of debts, of the Company (or any Person obligated, as
guarantor or otherwise, to make payments under the Loan Agreement), (b) the
appointment of a trustee, receiver, custodian, liquidator or the like of the
Company (or any Person obligated, as a guarantor or otherwise, to make payments
under the Loan Agreement) or of all or any substantial part of its property, or
(c) similar relief in respect of the Company (or any such other Person
obligated, as a guarantor or otherwise, to make payments under the Loan
Agreement) under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts.

       

      "Administrative Expenses" means fees
and expenses of the Trustee and the Issuer including, without limitation, the
reasonable fees and expenses of their counsel and other professional
advisors.

      

      "Authorized Representative" means (i)
in the case of the Issuer, each person at the time designated to act on behalf
of the Issuer by the most recent written certificate furnished to the Company
and the Trustee containing the specimen signature of such person and signed on
behalf of the Issuer by its Secretary or Assistant Secretary; and (ii) with
respect to each person at the time designated to act on behalf of any other
Person (e.g., the Company or the Trustee), by written certificate furnished to
the Trustee containing the specimen signature of such other person and signed on
behalf of such person, in case of a partnership by each of its general partners
(or any other person authorized to sign on behalf of such Partnership) and in
the case of a corporation by a person authorized by such corporation to deliver
such certificates.

      

      "Authorized Denominations" means,
$5,000 and any whole multiple thereof.

      

      "Beneficial Owners" means the owners of
beneficial interests in the Bonds while Bonds are held by a Securities
Depository.

      

      "Bond Counsel" means any firm of
nationally recognized bond counsel selected by the Issuer and not unsatisfactory
to the Trustee or the Company.

      

      "Bond Documents" means the Financing
Documents and all other agreements, certificates, documents and instruments
delivered in connection with any of the Financing Documents.

      

      "Bond Obligations" means the Debt
Service due and payable and to become due and payable, and any other amounts
which may be owed by the Company to, or on behalf of, the Issuer or the Trustee
under the Bond Documents.

      

      "Bond Resolution" means the resolution
of the governing body of the Issuer adopted on September 10, 2008, authorizing
the issuance of the Bonds.

      

      "Bonds" means the
Pennsylvania Economic Development Financing Authority Exempt Facilities
Revenue Bonds, Series 2008B (The York Water Company Project) authorized
hereunder.

      

      "Business Day" means any day which is
not (a) a Saturday, a Sunday or in the City of New York, New York, or
the city in which the corporate trust operations office of the Trustee or any
duly appointed Paying Agent or the office of the Trustee at which this Indenture
is being administered is located, a day on which banks are authorized or
required by law or executive order to be closed, or (b) a day on which the
New York Stock Exchange is closed.

      

      "Code" means the Internal Revenue Code
of 1986, as amended.

      

      "Construction Fund" means the fund of
that name created pursuant to Section 3.1 hereof.

      

      "Dated Date" means the date of delivery
of the Bonds.

      

      "Debt Service" means the principal of,
premium, if any, and interest on the Bonds.

      

      "Debt Service Fund" means the special
fund of that name created pursuant to Section 3.1 hereof.

      

      "Department" means the Department of
Community and Economic Development of the Commonwealth.

      

      "Determination of Taxability" means a
Final Determination by the Internal Revenue Service or by a court of competent
jurisdiction in the United States that, as a result of failure by the Company to
observe or perform any covenant, condition or agreement on its part to be
observed or performed under the Loan Agreement or as a result of the inaccuracy
of any representation or agreement made by the Company under the Loan Agreement,
the interest payable on any Bond is includable in the gross income of the
Registered Owner or Beneficial Owner of such Bond (other than a Registered Owner
or Beneficial Owner who is a "substantial user" of the Project or a "related
person" within the meaning of Section 147(a) of the Code).

      

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

      

      "DTC" means The Depository Trust
Company, acting as Securities Depository, as set forth in Section 2.13
hereof.

      

      "DTC Participant" shall have the
meaning assigned from time to time by DTC when used by DTC in reference to a
"DTC Participant."

      

      "Event of Default" means any of the
events described in Section 7.1 hereof.

      

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

      

      "Final Determination" means, with
respect to a private letter ruling or a technical advice memorandum of the
Internal Revenue Service, written notice thereof in a proceeding in which the
Company had an opportunity to participate and, otherwise, means written notice
of a determination from which no further right of appeal exists or from which no
appeal is timely filed with the next level of administrative or judicial review
in a proceeding to which the Company was a party or in which the Company had the
opportunity to participate.

      

      "Financing Documents" means this
Indenture, the Loan Agreement, the Tax Documents and the Bonds.

      

      "Government Obligations" means any one
or more of the following:

      

      (i) Securities
that are direct obligations of the United States of America or securities the
timely payment of whose principal and interest is unconditionally guaranteed by
the full faith and credit of the United States of America, trust receipts or
other evidence of a direct claim upon the instruments described above, including
but not limited to CATS (Certificates of Accrual on Treasury Securities), TIGRS
(Treasury Investment Growth Receipts) and Government Trust Certificates;
or

       

      (ii) To the
extent permitted by law for the particular investment contemplated, pre-refunded
municipal obligations meeting the conditions set forth in (a) through (e)
below:

       

      (a) the
municipal obligations are (i) not subject to redemption prior to maturity
or (ii) the trustee for such municipal obligations has been given
irrevocable instructions concerning their calling and redemption and the issuer
of such municipal obligations has covenanted not to redeem such bonds other than
as set forth in such instructions; and

       

      (b) the
municipal obligations are secured by cash or non-callable United States
Government Obligations that may be applied only to interest, principal and
premium payments of such municipal obligations; and

       

      (c) the
principal of and interest on such United States Government Obligations (plus any
cash in an escrow fund) are sufficient to meet all of the liabilities of the
municipal obligations; and

       

      (d) the cash
and/or United States Government Obligations serving as security for the
municipal obligations are held by an escrow agent or trustee; and

       

      (e) the
United States Government Obligations are not available to satisfy any other
claims, including those against the trustee or escrow agent.

       

      "Indenture" means this Trust Indenture
dated as of October 1, 2008, as hereafter amended and supplemented by any
Supplemental Indenture.

      

      "Interest Payment Date" means, with
respect to the Bonds, May 1 and November 1 of each year, commencing May 1,
2009.

      

      "Investment Securities" means and
includes any of the following securities on which neither the Company nor any of
its subsidiaries is the obligor:  (a) Government Obligations or
obligations of any United States Government Related Entity or obligations
guaranteed or insured as to principal and interest by the United States of
America or any United States Government Related Entity; "United States
Government-Related Entity" shall mean the Export-Import Bank of the United
States, Farmers Home Administration, Federal Housing Administration, General
Services Administration, Government National Mortgage Association, Federal
National Mortgage Association, each Federal Home Loan Bank, Federal Home Loan
Mortgage Corporation, each Federal Land Bank, each Federal Intermediate Credit
Bank, Banks for Cooperatives and the Farm Credit System and The Student Loan
Marketing Association; (b) obligations of a state, a territory, or a
possession of the United States, or any political subdivision of any of the
foregoing or of the District of Columbia as described in Section 103 of the
Code, and rated not less than "A2" by Moody’s or "A" by another Nationally
Recognized Statistical Rating Organization ("NRSRO"); split rated investments
where one of the ratings falls below the minimum rating set forth above are not
permitted; (c) domestic and eurodollar time deposits, overnight deposits,
certificates of deposit and banker’s acceptances (i) maintained at or
issued by any office or branch of any bank or trust company organized or
licensed under the laws of the United States of America or any state thereof
which bank or trust company has capital, surplus and undivided profits of at
least $500,000,000, or (ii) maintained at or issued by any bank organized
under the laws of a jurisdiction outside of the United States of America
provided that the long term securities of such bank or trust company are rated A
or higher (A2 in the case of Moody’s) by at least one NRSRO, in each case
maturing not more than 360 days from the date of acquisition thereof; split
rated investments where one of the ratings falls below the minimum rating set
forth above are not permitted; (d) commercial paper and other instruments that
are rated, or that are issued or guaranteed by an issuer that is rated, in the
highest, short term category by at least two NRSROs (A-1 shall be deemed to be
the highest short term rating for Standard and Poor’s) and maturing not more
than 270 days from the date of acquisition thereof; (e) corporate notes and
bonds rated "A" or higher (A2 in the case of Moody’s) by two or more NRSROs
maturing not more than 364 days from the date of acquisition thereof; split
ratings where one of the ratings falls below the minimum rating set forth above
are not permitted; (f) repurchase and reverse repurchase agreements with
any bank (or a broker-dealer subsidiary of affiliate of such bank), provided
such bank has combined capital, surplus and undivided profits of at least
$500,000,000, or any primary dealer of United States government securities
provided that the collateral is limited to the investments described in
(a) above; (g) shares of any money market mutual fund registered with
the Securities and Exchange Commission as an investment company under the
Investment Advisors Act of 1940, as amended, including any such fund which is
managed by the Trustee or one of its affiliates or subsidiaries, including,
without limitation, any mutual fund for which the Trustee or an affiliate of the
Trustee serves as investment manager, administrator, shareholder servicing
agent, and/or custodian or subcustodian, notwithstanding that (i) the
Trustee or an affiliate of the Trustee receives fees from such funds for
services rendered, (ii) the Trustee charges and collects fees for services
rendered pursuant to this Indenture, which fees are separate from the fees
received from such funds, and (iii) services performed for such funds and
pursuant to this Indenture may at times duplicate those provided to such funds
by the Trustee or its affiliates; and (h) as otherwise permitted by
Commonwealth law for such funds.

      

      "Issue Date" means the date on which
the Bonds are first authenticated and delivered to the initial purchasers
against payment therefor.

      

      "Loan Agreement" means the Loan
Agreement dated as of October 1, 2008 between the Issuer and the Company, as
hereafter amended and supplemented by any Supplemental Loan
Agreement.

      

      "Moody’s" means Moody’s Investors
Service, Inc., a corporation organized and existing under the laws of the State
of Delaware, its successors and their assigns, and, if such corporation shall be
dissolved or liquidated or shall no longer perform the functions of a securities
rating agency, "Moody’s" shall be deemed to refer to any other nationally
recognized securities rating agency designated by the Company by written notice
to the Trustee and the Issuer.

      

      "Outstanding" when used with reference
to Bonds means all Bonds authenticated and delivered under this Indenture as of
the time in question, except:

      

      (a) All Bonds
theretofore canceled or required to be canceled under Section 2.11
hereof;

       

      (b) Bonds for
the payment or redemption of which provision has been made in accordance with
Article X hereof; provided that, if such Bonds are being redeemed, the
required notice of redemption shall have been given or provision satisfactory to
the Trustee shall have been made therefor; and

       

      (c) Bonds in
substitution for which other Bonds have been authenticated and delivered
pursuant to Article II hereof.

       

      In determining whether the Registered
Owners of a requisite aggregate principal amount of Bonds Outstanding have
concurred in any request, demand, authorization, direction, notice, consent or
waiver under the provisions hereof, Bonds which are owned of record by the
Company or any affiliate thereof shall be disregarded and deemed not to be
Outstanding hereunder for the purpose of any such determination (except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Bonds
which the Trustee knows to be so owned or held shall be disregarded) unless all
Bonds are owned by the Company or any affiliate thereof, in which case such
Bonds shall be considered outstanding for the purpose of such
determination.  For the purpose of this definition, an "affiliate" of
any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified
Person and "control," when used with respect to any specified Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.

      

      "Paying Agent" means, initially, the
Trustee and any successor.

      

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

      

      "Rating Agency" means Moody’s or
S&P.

      

      "Rebate Fund" means the separate fund,
if any, created pursuant to the Tax Documents at the request of the Company and
held by the Trustee but not as part of the Trust Estate under this
Indenture.

      

      "Register" means the registration books
of the Issuer described in Section 2.7(a) hereof.

      

      "Registered Owner" or "Bondholder" or
"Owner" means the Person in whose name any Bond is registered pursuant to
Section 2.7(a) hereof.

      

      "Regular Record Date" means, with
respect to the Bonds, the close of business on the fifteenth day of the month
immediately preceding the Interest Payment Date.

      

      "Regulations" means the applicable
proposed, temporary or final Income Tax Regulations promulgated under the Code,
as such regulations may be amended or supplemented from time to
time.

      

      "Revenues of the Issuer" or
"Revenues"  means and includes all payments by or on behalf of the
Company, including specifically the Installment Loan Payments, under the Loan
Agreement to be paid into the Debt Service Fund and all receipts of the Trustee
credited against such payments, but not including payments with respect to the
indemnification or reimbursement of certain expenses of the Trustee under
Section 6.5 of the Loan Agreement and of the Issuer under
Sections 6.6, 7.1 and 8.3 of the Loan Agreement or under any other guaranty
or indemnification agreement.

      

      "S&P" means Standard & Poor’s
Ratings Services, a division of The McGraw-Hill Companies, Inc., a corporation
organized and existing under the laws of the State of New York, its successors
and their assigns, and, if such corporation shall be dissolved or liquidated or
shall no longer perform the functions of a securities rating agency, "S&P"
shall be deemed to refer to any other nationally recognized securities rating
agency designated by the Company, by notice to the Issuer and the
Trustee.

      

      "Securities Depository" means any
"clearing agency" registered under Section 17A of the Securities Exchange
Act of 1934, as amended.

      

      "Special Mandatory Redemption" means
any redemption of Bonds made pursuant to Section 5.1(b)
hereof.

      

      "Special Record Date" means the Special
Record Date established by the Trustee pursuant to Section 2.9(b)(iii)
hereof with respect to payment of overdue interest.

      

      "Supplemental Indenture" means any
supplement to this Indenture delivered pursuant to Article IX
hereof.

      

      "Supplemental Loan Agreement" means any
supplement to the Loan Agreement entered into pursuant to Section 9.3
hereof.

      

      "Tax Documents" means the Tax
Certificate as to Arbitrage and Instructions as to Compliance with Provisions of
Section 103(a) of the Internal Revenue Code of 1986, as amended, of the
Company and the Issuer, dated as of the issuance date of the Bonds, and such
other documents as Bond Counsel may require to be executed and delivered in
connection with the issuance of the Bonds relating to their tax status under the
Code.

      

      "Trust Estate" means the trust estate
as defined in the granting clauses in this Indenture.

      

      "Underwriting Agreement" means, with
respect to the Bonds, the Bond Purchase Agreement dated October __, 2008
among the Issuer, the Company and Edward D. Jones and Co., LP, as
underwriter, providing for the purchase and sale of the Bonds.

      

      "United States Government Obligations"
means direct obligations of, or obligations the full and timely payment of which
are unconditionally guaranteed by, the United States of
America.

      

      SECTION
1.2. Certain Rules of
Interpretation.

       

      (a) The
definitions set forth in Article I and in the Loan Agreement 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 Indenture 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
Indenture, and any table of contents appended to copies hereof, shall be solely
for convenience of reference and shall not constitute a part of this Indenture,
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 Indenture.

       

      (h) Whenever
in this Indenture, 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 Indenture 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 Indenture.

       

      (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                                

       

      THE
BONDS

       

      SECTION
2.1. Authorized Amount and
Issuance of Bonds; Disposition of Bond Proceeds.

       

      Upon the execution and delivery of this
Indenture, the Issuer shall execute the Bonds and deliver them to the Trustee
for authentication.  At the written direction of the Issuer, the
Trustee shall authenticate the Bonds, and deliver them to the purchasers thereof
upon receipt by the Trustee of the amount due the Issuer for the initial
delivery of the Bonds pursuant to the terms of the Underwriting Agreement by
wire transfer of immediately available funds.  The proceeds of the
Bonds shall be deposited by the Trustee in a settlement account and disbursed or
transferred as follows:  (a) transfer to the Debt Service Fund,
established pursuant to Section 3.1 hereof, a sum equal to the accrued
interest, if any, paid by the initial purchasers of the Bonds; (b) disburse
amounts set forth in a Closing Statement executed by the Issuer and the Company
to pay Costs of Issuance of the Bonds; and (c) transfer to the Construction
Fund, established pursuant to Section 3.1 hereof, the balance of the
proceeds received from the initial purchasers of the Bonds.  The total
principal amount of the Bonds that may be issued hereunder is hereby expressly
limited to $15,000,000, except as provided in Section 2.8
hereof.

      

      SECTION
2.2. Terms of the
Bonds.

       

      The Bonds shall be designated
"Pennsylvania Economic Development Financing Authority Exempt Facilities
Revenue Bonds, Series 2008B (The York Water Company Project)" and shall be
issuable only as fully registered Bonds without coupons in Authorized
Denominations.  Unless the Issuer shall otherwise direct, the Bonds
shall be numbered separately from 1 upward.  The Bonds shall be dated
as of the Dated Date and shall mature, subject to prior redemption upon the
terms and conditions hereinafter set forth, on November 1, 2038.  The
Bonds shall bear interest at the rate of 6.00% per annum, from and
including the date thereof until payment of the principal or redemption price
thereof shall have been made or provided for in accordance with the provisions
hereof, whether at maturity, upon redemption or otherwise.  Each Bond
shall bear interest on overdue principal and premium, if any, and, to the extent
permitted by law, on overdue interest at the rate of interest borne by the
Bonds.

      

      Optional Redemption.
The Bonds shall be subject to redemption by the Issuer, at the direction of the
Company, on or after November 1, 2013, in whole or in part at any time, in
Authorized Denominations, at a redemption price of 100% of the principal amount
redeemed plus accrued interest, if any, to the redemption date.

      

      Special Mandatory
Redemption.  The Bonds are also subject to Special Mandatory
Redemption as set forth in Section 5.1(b) hereof.

      

      Redemption by the Company in
the Event of Death of a Beneficial Owner.  The Bonds are
subject to Redemption by the Company in the Event of Death of a Beneficial Owner
as set forth in Section 5.5 hereof.

      

      SECTION
2.3. Reserved.

       

      SECTION
2.4. Reserved.

       

      SECTION
2.5. Form of
Bonds; Execution; Bonds Equally and Ratably Secured; Limited Obligation of the
Issuer.

       

      (a) The Bonds
shall be substantially in the form of Exhibit A attached to this Indenture
and made a part hereof, with appropriate insertions, deletions and modifications
to reflect the terms of the Bonds. The Bonds shall be executed on behalf of the
Issuer with the manual or facsimile signature of its Chairman, Executive
Director, or the Deputy Secretary for Business Assistance, Pennsylvania
Department of Community and Economic Development (the "Deputy Secretary") and
attested by the manual or facsimile signature of its Assistant Secretary, and
shall have impressed or imprinted thereon the official seal of the Issuer or a
facsimile thereof.  All authorized facsimile signatures shall have the
same force and effect as if manually signed.  In case any official
whose signature or a facsimile of whose signature shall appear on the Bonds
shall cease to be such official before the delivery of such Bonds, such
signature or such facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if such official had remained in office until
delivery.

       

      (b) The Bonds
shall be equally and ratably secured under the Indenture, except as otherwise
expressly provided herein.  The Bonds, together with premium, if any,
and interest thereon, shall be special, limited obligations of the Issuer
secured by the Trust Estate and payable solely from the Revenues (except to the
extent paid out of monies attributable to the Bond proceeds or the income from
the temporary investment thereof) and shall be a valid claim of the respective
owners thereof only against the Debt Service Fund and the Construction Fund and
the Revenues, which Revenues shall be used for no other purpose than to pay the
principal of, and premium, if any, and interest on, the Bonds, except as may be
otherwise expressly authorized in this Indenture.  The Bonds are limited obligations of
the Issuer and are payable solely from amounts payable by the Company under the
Loan Agreement and any funds held under the Indenture and available for such
payment.  Neither the Commonwealth of Pennsylvania, nor any political
subdivision thereof is or shall be obligated to pay the principal of or premium,
if any, or interest on the Bonds, and the Bonds shall not be deemed an
obligation of the Commonwealth of Pennsylvania, or any political subdivision
thereof.  Neither the faith and credit nor the taxing power of the
Commonwealth of Pennsylvania, or any political subdivision thereof is pledged to
the payment of the principal of or premium, if any, or the interest on the
Bonds.  The Issuer has no taxing power.

       

      (c) All
covenants, promises, agreements, duties and obligations of the Issuer set forth
in the Financing Documents shall be solely the covenants, promises, agreements,
duties and obligations of the Issuer and shall not be deemed to be, or be, the
covenants, promises, agreements, duties or obligations of any member, officer,
employee or agent of the Issuer or the Commonwealth in his or her individual
capacity, and no recourse shall be had for the payment of the principal of, or
interest on the Bonds or any other amount payable hereunder or in connection
herewith, or for any claim based hereon or on the Bonds or the Loan Agreement,
against any such member, officer, employee or agent in his or her individual
capacity.

       

      SECTION
2.6. Authentication.

       

      No Bonds shall be valid for any purpose
hereunder until the  certificate of authentication printed thereon is
duly executed by the manual signature of an authorized signatory of the Trustee,
acting as authenticating agent.  Such authentication or registration
shall be proof that the Registered Owner is entitled to the benefit of the
trusts hereby created.  The certificate of the Trustee may be executed
by any person authorized by the Trustee, and it shall not be necessary that the
same authorized person sign the certificates of authentication of all
Bonds.

      

      SECTION
2.7. Registration,
Transfer and Exchange.

       

      (a) The
ownership of each Bond shall be recorded in the registration books of the
Issuer, which books shall be kept by the Trustee, acting as bond registrar, at
its designated corporate trust operations office and shall contain such
information as is necessary for the proper discharge of the duties of the
Trustee hereunder.

       

      (b) Bonds may
be transferred or exchanged as follows:  Any Bond may be transferred
if endorsed for such transfer by the Registered Owner thereof and surrendered by
such Registered Owner or his duly appointed attorney to the Trustee at its
designated corporate trust operations office, whereupon the Trustee shall
authenticate and deliver to the transferee a new Bond or Bonds in the same
denominations as the Bond surrendered for transfer or in different Authorized
Denominations equal in the aggregate to the principal amount of the surrendered
Bond.

       

      (i) Any Bond
or Bonds may be exchanged for one or more Bonds and in the same principal
amount, but in a different Authorized Denomination or Authorized
Denominations.  Each Bond so to be exchanged shall be surrendered by
the Registered Owner thereof or his duly appointed attorney to the Trustee at
its designated corporate trust operations office, whereupon a new Bond or Bonds
shall be authenticated and delivered to the Registered Owner.

       

      (ii) In the
case of any Bond properly surrendered for partial redemption, the Trustee shall
authenticate and deliver a new Bond in exchange therefor, such new Bond to be in
an Authorized Denomination equal to the unredeemed principal amount of the
surrendered Bond without cost to the Owner; provided that, at its option, the
Trustee may certify the amount and date of partial redemption  upon
the partial redemption certificate, if any, printed on the surrendered Bond and
return such surrendered Bond to the Registered Owner in lieu of an
exchange.

       

      (iii) No
additional resolutions need be adopted by the governing body of the Issuer or
any other body or person so as to accomplish the foregoing conversion and
exchange or replacement of any Bond or portion thereof, and the Trustee shall
provide for the completion, authentication, and delivery of the substitute Bonds
in the manner prescribed herein.

       

      Except as provided in
subparagraph (iii) above, the Trustee shall not be required to effect any
transfer or exchange during the fifteen (15) days immediately preceding the
date of mailing of any notice of redemption or at any time following the mailing
of any such notice in the case of Bonds selected for such
redemption.  No charge shall be imposed upon Registered Owners in
connection with any transfer or exchange, except for taxes or governmental
charges related thereto.  No transfers or exchanges shall be valid for
any purposes hereunder except as provided above.

      

      SECTION
2.8. Mutilated,
Destroyed, Lost or Stolen Bonds.

       

      (a) If any
Bond is mutilated, lost, stolen or destroyed, the Registered Owner thereof shall
be entitled to the issuance of a substitute Bond provided that:

       

      (i) in all
cases, the Registered Owner must provide indemnity to the Issuer, the Company
and the Trustee satisfactory to each such party to be indemnified against any
and all claims arising out of or otherwise related to the issuance of substitute
Bonds pursuant to this Section;

       

      (ii) in the
case of a mutilated Bond the Registered Owner shall surrender the Bond to the
Trustee for cancellation; and

       

      (iii) in the
case of a lost, stolen or destroyed Bond, the Registered Owner shall provide
evidence, satisfactory to the Trustee, of the ownership and the loss, theft or
destruction of the affected Bond.

       

      Upon compliance with the foregoing, a
new Bond of like tenor and denomination, executed by the Issuer, shall be
authenticated by the Trustee and delivered to the Registered Owner, all at the
expense of the Registered Owner to whom the substitute Bond is
delivered.  Notwithstanding the foregoing, the Trustee shall not be
required to authenticate and deliver any substitute for a Bond which has been
called for redemption or which has matured or is about to mature and, in any
such case, the principal or redemption price then due or becoming due shall be
paid by the Trustee in accordance with the terms of the mutilated, lost, stolen
or destroyed Bond without substitution therefor.

      

      (b) Every
Bond issued pursuant to this Section 2.8 shall constitute an additional
contractual obligation of the Issuer, whether or not the Bond alleged to have
been destroyed, lost or stolen shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Bonds duly issued hereunder.

       

      (c) All Bonds
shall be held and owned upon the express condition that the foregoing provisions
are exclusive with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Bonds, and shall preclude any and all other rights or
remedies, unless expressly inconsistent with any law or statute existing or
hereafter enacted with respect to the replacement or payment of negotiable
instruments, investments or other securities without their
surrender.

       

      SECTION
2.9. Payments
of Principal, Redemption Price and Interest; Persons Entitled
Thereto.

       

      (a) The
principal or redemption price of each Bond shall be payable in lawful money of
the United States of America upon surrender of such Bond to the designated
corporate trust operations office of the Trustee, initially in Harrisburg,
Pennsylvania.  Such payments shall be made to the Registered Owner of
the Bond so surrendered, as shown on the registration books maintained by the
Trustee on the date of payment.

       

      (b) Each Bond
shall bear interest and be payable in lawful money of the United States of
America as to interest as follows:

       

      (i) Each Bond
shall bear interest (A) from the date of authentication, if authenticated
on an Interest Payment Date to which interest has been paid or duly provided
for, or (B) from the last preceding Interest Payment Date to which interest
has been paid or duly provided for (or the Dated Date if no interest thereon has
been paid) in all other cases.

       

      (ii) Subject
to the provisions of subparagraph (iii) below, the interest due on any Bond
on any Interest Payment Date shall be paid to the Registered Owner of such Bond
as shown on the registration books kept by the Trustee as of the Regular Record
Date.  The amount of interest payable on any Interest Payment Date
shall be computed on the basis of a 360-day year of twelve (12) 30-day
months.

       

      (iii) If the
funds available under this Indenture are insufficient on any Interest Payment
Date to pay the interest then due, the Regular Record Date shall no longer be
applicable with respect to the Bonds.  If sufficient funds for the
payment of such overdue interest thereafter become available, the Trustee shall
immediately establish a special interest payment date for the payment of the
overdue interest and a Special Record Date (which shall be a Business Day) for
determining the Registered Owners entitled to payments.  Notice of
such date so established shall be mailed by the Trustee to each Owner at least
ten (10) days prior to the Special Record Date, but not more than thirty (30)
days prior to the special interest payment date.  The overdue interest
shall be paid on the special interest payment date to the Registered Owners, as
shown on the registration books kept by the Trustee as of the close of business
on the Special Record Date.

       

      (c) Interest
due at the maturity or redemption of the Bonds shall be paid only upon
presentation and surrender of Bonds at the corporate trust operations office of
the Trustee in Harrisburg, Pennsylvania or such other office as may be
designated by the Trustee in writing to the Issuer, the Company and the Owners
of the Bonds.

       

      (d) All Bonds
issued hereunder are and are to be, to the extent provided in this Indenture,
equally and ratably secured by this Indenture without preference, priority or
distinction on account of the actual time or times of the authentication,
delivery or maturity of the Bonds so that, subject as aforesaid, all Bonds at
any time Outstanding hereunder shall have the same right, lien and preference
under and by virtue of this Indenture and shall all be equally and ratably
secured hereby with like effect as if they had all been executed, authenticated
and delivered simultaneously on the date hereof, whether the same, or any of
them, shall actually be disposed of at such date, or whether they, or any of
them, shall be disposed of at some future date.

       

      SECTION
2.10. Temporary
Bonds.

       

      Pending preparation of definitive
Bonds, the Issuer may issue, in lieu of definitive Bonds, one or more temporary
printed or typewritten Bonds in Authorized Denominations, of substantially the
tenor recited above.  At the written request of the Issuer, the
Trustee shall authenticate definitive Bonds in exchange for and upon surrender
of an equal principal amount of temporary  Bonds.  Until so
exchanged, temporary  Bonds shall have the same rights, remedies and
security hereunder as definitive Bonds.  Temporary Bonds shall be
numbered consecutively upward from TR-1.

      

      SECTION
2.11. Cancellation
of Surrendered Bonds.

       

      The Trustee shall cancel (a) all
Bonds surrendered for transfer or exchange, for payment at maturity or for
redemption (unless the surrendered Bond is to be partially redeemed and the
Trustee elects to return the Bond, certified as to the partial redemption, to
the Registered Owner thereof pursuant to Section 2.7(b)(ii)), and
(b) all Bonds purchased at the direction of the Company and surrendered to
the Trustee for cancellation.  The Trustee shall deliver to the Issuer
a certificate of cancellation in respect of all Bonds canceled in accordance
with this Section.

      

      SECTION
2.12. Acts of
Registered Owners; Evidence of Ownership.

       

      Any action to be taken by Registered
Owners may be evidenced by one or more concurrent written instruments of similar
tenor signed or executed by such Registered Owners in person or by an agent
appointed in writing.  The fact and date of the execution by any
Person of any such instrument may be proved by acknowledgment before a notary
public or other officer empowered to take acknowledgments or by an affidavit of
a witness to such execution.  Any action by the Registered Owner of
any Bond shall bind all future Registered Owners of the same Bond in respect of
anything done or suffered by the Issuer or the Trustee in pursuance
thereof.

      

      SECTION
2.13. Book Entry
System.

       

      (a) DTC will
act as Securities Depository for the Bonds.  The Bonds shall be
initially issued in the form of a single fully registered Bond registered in the
name of Cede & Co. (DTC’s partnership nominee).  So long as Cede
& Co. is the Registered Owner of the Bonds, as nominee of DTC, references
herein to Registered Owners, Bondholders or holders or Owners of the Bonds shall
mean Cede & Co. and shall not mean the beneficial owners of the
Bonds.

       

      (b) The
ownership interest of each of the Beneficial Owners of the Bonds will be
recorded through the records of a DTC Participant.  Transfers of
beneficial ownership interests in the Bonds which are registered in the name of
Cede & Co. will be accompanied by book entries made by DTC and, in turn, by
the DTC Participants who act on behalf of the Beneficial Owners of the
Bonds.

       

      (c) With
respect to Bonds registered in the name of Cede & Co., as DTC’s nominee, the
Issuer and the Trustee shall have no responsibility or obligation to any DTC
Participant or to any person on behalf of whom such a DTC Participant holds an
interest in the Bonds, except as provided in this Indenture.  Without
limiting the immediately preceding sentence, the Issuer and the Trustee shall
have no responsibility or obligation with respect to (i) the accuracy of
the records of DTC, Cede & Co. or any DTC Participant with respect to any
ownership interest in the Bonds, (ii) the delivery to any DTC Participant
or any other person, other than a Bondholder, as shown on the registration
books, of any notice with respect to the Bonds, including any notice of
redemption, or (iii) the payment to any DTC Participant or any other
person, other than a Registered Owner, as shown in the registration books of any
amount with respect to principal of, premium, if any, or interest on, the
Bonds.

       

      (d) Notwithstanding
any other provisions of this Indenture to the contrary, the Issuer and the
Trustee shall be entitled to treat and consider the person in whose name each
Bond is registered in the registration books as the absolute owner of such Bond
for the purpose of payment of principal, premium, if any, and interest with
respect to such Bond, for the purpose of giving notices of redemption and other
matters with respect to such Bond, for the purpose of registering transfers with
respect to such Bond, and for all other purposes whatsoever.  The
Trustee shall pay all principal of, premium, if any, and interest on the Bonds
only to or upon the order of the respective owners, as shown in the registration
books as provided in this Indenture, or their respective attorneys duly
authorized in writing, and all such payments shall be valid and effective to
fully satisfy and discharge the Issuer’s obligations with respect to payment of
principal of, premium, if any, and interest on, the Bonds to the extent of the
sum or sums so paid.

       

      (e) No person
other than a Registered Owner, as shown in the registration books, shall receive
a Bond certificate evidencing the obligation of the Issuer to make payments of
principal, premium, if any, and interest, pursuant to this
Indenture.

       

      (f) Any
provision of this Indenture permitting or requiring the delivery of Bonds shall,
while the book-entry system is in effect, be satisfied by the notation on the
books of DTC or a DTC Participant, if applicable, of the transfer of the
Beneficial Owner’s interest in such Bond.

       

      (g) So long
as the book-entry system is in effect, the Trustee and the Issuer shall comply
with the terms of the Letter of Representations, a copy of which is attached
hereto as Exhibit B and made a part hereof, or an alternate Letter of
Representations as required by DTC.

       

      (h) DTC may
determine to discontinue providing its service with respect to the Bonds at any
time by giving reasonable written notice and all relevant information on the
Beneficial Owners of the Bonds to the Issuer or the Trustee and discharging its
responsibilities with respect thereto under applicable law.  If there
is no successor Securities Depository appointed by the Issuer, the Trustee shall
authenticate and deliver Bonds to the Beneficial Owners thereof in accordance
with the information respecting the Beneficial Owners provided to the Trustee by
DTC, but without any liability on the part of the Issuer or the Trustee for the
accuracy of such information.  The Issuer, at the direction of the
Company, may determine not to continue participation in the system of book entry
transfers through DTC (or a successor Securities Depository) at any time by
giving reasonable written notice to DTC (or a successor Securities Depository)
and the Trustee.  In such event, the Issuer shall execute and deliver
to the Trustee, and the Trustee shall authenticate and deliver the Bonds to the
Beneficial Owners thereof in accordance with the information respecting the
Beneficial Owners provided to the Trustee by DTC, but without any liability on
the part of the Issuer or the Trustee for the accuracy of such
information.

       

      The Chairman, Executive Director or
Deputy Secretary of the Issuer is hereby authorized to execute any additional
Letter of Representations or similar document necessary from time to time to
continue or provide for the DTC book-entry system.

      

      SECTION
2.14. Payments
to Cede & Co.; Payments to Beneficial Owners.

       

      (a) Notwithstanding
any other provision of this Indenture to the contrary, so long as any Bond is
registered in the name of Cede & Co., as nominee of DTC, all payments with
respect to principal of, premium, if any, and interest on, such Bond and all
notices with respect to such Bond shall be made and given, respectively,
pursuant to DTC’s rules and procedures.

       

      (b) Payments
by the DTC Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is now the case with municipal
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such DTC Participant and not of
DTC, the Trustee or the Issuer, subject to any statutory and regulatory
requirements as may be in effect from time to time.

       

      ARTICLE
III                                

       

      DEBT
SERVICE FUND AND CONSTRUCTION FUND

       

      SECTION
3.1. Establishment of Funds and
Accounts.

       

      The Issuer hereby establishes with the
Trustee trust funds designated the Debt Service Fund and the Construction
Fund.

      

      SECTION
3.2. Debt
Service Fund.

       

      Monies in the Debt Service Fund shall
be held in trust for the Bondholders and, except as otherwise expressly provided
herein, shall be used solely for the payment of the interest on the Bonds and
for the payment of principal of or premium, if any, on the Bonds upon maturity,
whether stated or accelerated, or upon redemption thereof pursuant to
Article V hereof.  The Issuer hereby authorizes and directs the
Trustee, and the Trustee hereby agrees, to withdraw and make available at its
designated office sufficient funds (to the extent available) from the Debt
Service Fund to pay the principal of, premium, if any, and interest on the Bonds
as the same become due and payable, which authorization and direction the
Trustee hereby accepts.

      

      SECTION
3.3. Return of
Monies from Non-Presentment of Bonds.

       

      In the event any Bond shall not be
presented for payment when the principal thereof becomes due, either at
maturity, at the date fixed for redemption thereof, or otherwise, and is not
thereafter presented for payment, any funds which shall be held for the payment
of such principal or redemption price and which remain unclaimed by the Owner of
the Bond not presented for payment for a period of two (2) years after such due
date thereof, shall, upon request in writing by the Company to the Trustee, and
subject to applicable unclaimed property or similar law of the Commonwealth, be
paid by the Trustee to the Company.  The owners of the Bonds for which
the related deposit was made shall thereafter be limited to a claim against the
Company for such monies without interest thereon and only to the extent the
related deposit was repaid to the Company.

      

      SECTION
3.4. Construction
Fund.

       

      The net proceeds of the sale of the
Bonds, after deposit of any accrued interest thereon in the Debt Service Fund
and payment of Costs of Issuance pursuant to Section 2.1 hereof, shall be
deposited by the Trustee in the Construction Fund and shall be used to pay
Project Costs as provided in Section 3.2 of the Loan
Agreement.  The Trustee shall disburse monies from the Construction
Fund upon receipt of requisitions signed by the Company substantially in the
form attached to this Indenture as Exhibit C.  Any amounts
remaining after delivery of the certificate of completion pursuant to
Section 3.3 of the Loan Agreement shall be used by the Trustee as provided
in Section 3.3 of the Loan Agreement.

      

      SECTION
3.5. Debt
Service Fund Monies to be Held for All Registered Owners, With Certain
Exceptions.

       

      Until applied as herein provided,
monies and investments held in the Debt Service Fund shall be held in trust for
the benefit of the Registered Owners of all Outstanding Bonds, except that on
and after the date on which the interest on or principal or redemption price of
any particular Bond or Bonds is due and payable from the Debt Service Fund, the
unexpended balance of the amount deposited or reserved in such fund for the
making of such payments shall, to the extent necessary therefor, be held for the
benefit of the Registered Owner or Registered Owners entitled
thereto.

      

      SECTION
3.6. Additional Accounts and
Subaccounts.

       

      At the written request of the Company,
the Trustee shall establish and maintain additional accounts or subaccounts
within the Debt Service Fund or Construction Fund as the Company may reasonably
request; provided that (a) in each  case, the written request of the
Company shall set forth in reasonable detail the sources of deposits into and
disbursements from the account or subaccount to be established, and (b) in
each case, the sources of deposits into and disbursements from the account or
subaccount to be established shall be limited to the sources of deposits
permitted or required to be made into and the disbursements permitted or
required to be made from the fund or account within which it is to be
established.

      

      ARTICLE
IV                                

       

      INVESTMENTS,
TAX COVENANTS

       

      SECTION
4.1. Investment of
Funds.

       

      Pending disbursement of the amounts on
deposit in the Debt Service Fund (other than any monies held by the Trustee to
pay the principal of, premium, if any, or interest which has previously become
payable with respect to the Bonds which shall only be invested as provided below
in the next succeeding paragraph) and the Construction Fund as provided herein,
the Trustee is hereby directed to invest and reinvest such amounts in Investment
Securities promptly upon receipt of, and, subject to the limitations set forth
in this Article, in accordance with the written instructions of the
Company.  In the event no such instructions are received by the
Trustee, such amounts shall be invested in Investment Securities described in
clause (g) of the definition thereof, pending receipt of such investment
instructions.  All such investments, as well as the investments
described in the next succeeding paragraph, shall be credited to the fund (and
account and subaccount therein) from which the money used to acquire such
investments shall have come, and all income and profits on such investments
shall be credited to, and all losses thereon shall be charged against, such fund
(and account and subaccount therein).  As amounts invested are needed
for disbursement from the Debt Service Fund or the Construction Fund, the
Trustee shall cause a sufficient amount of the investments credited to that fund
to be redeemed or sold and converted into cash to the credit of that fund (and
account and subaccount therein).  The Trustee shall not be liable or
responsible for any loss resulting from any such investment or reinvestment or
redemption or sale as herein authorized; except that the Trustee shall be liable
for any loss resulting from its willful or grossly negligent failure, within a
reasonable time after  receiving the direction from the Company to
make any investment or reinvestment in the manner provided for herein at the
Company’s direction.  If the Trustee is unable, after reasonable
effort and within a reasonable time, to make any such investment or
reinvestment, it shall so notify the Company in writing and thereafter the
Trustee shall be relieved of all responsibility with respect
thereto.  The Trustee may make any and all such investments through
its own investment department or that of its affiliates or
subsidiaries.

      

      Notwithstanding anything to the
contrary contained herein, any monies held by the Trustee to pay the principal
of, premium, if any, or interest which has previously become payable with
respect to the Bonds shall only be invested by the Trustee overnight in United
States Government Obligations or other Investment Securities rated AAA or Aaa by
each Rating Agency then rating the Bonds as directed in writing by the
Company.

      

      The Company by its execution of the
Loan Agreement covenants to restrict the investment of money in the funds
created under this Indenture in such manner and to such extent, if any, as may
be necessary, after taking into account reasonable expectations at the time the
Bonds are delivered to their original purchaser, so that the Bonds will not
constitute arbitrage bonds under Section 148 of the Code and the
Regulations, and the Trustee hereby agrees to comply with the Company’s written
instructions with respect to the investment of money in the funds created under
this Indenture so long as such instructions conform to the requirements of the
Indenture.

      

      Notwithstanding the foregoing, the
Company will not direct the Trustee to make investments under this Indenture
that conflict with or exceed the limitations set forth in the Tax
Documents.  The Trustee shall have no responsibility with respect to
the compliance by the Company or the Issuer with respect to any covenant herein
regarding investments made in accordance with this Article, other than to use
its best reasonable efforts to comply with instructions from the Company
regarding such investments.  Since the investments permitted by this
Section have been included at the request of the Company and the making of such
investments will be subject to the Company’s written direction, the Issuer and
the Trustee specifically disclaim and shall not have any obligation to the
Company for any loss arising from, or tax consequences of, investments pursuant
to the provisions of this Section.  Confirmations are not required
from the Trustee for permitted investments included in a monthly statement
rendered by the Trustee, and no statement need be rendered by the Trustee for
any fund or account if no investment or income accrual activity occurred in such
fund or account during such month.

      

      SECTION
4.2. Arbitrage Bond Covenant.

       

      With respect to the authority to invest
funds granted in this Indenture, the Issuer hereby covenants with the
Bondholders that, subject to the Company’s direction of the investment of funds,
it will make no use of the proceeds of the Bonds, or any other funds which may
be deemed to be proceeds of the Bonds pursuant to Section 148 of the Code,
which would cause the Bonds to be "arbitrage bonds" within the meaning of such
Section.

      

      The Trustee shall provide such
information as the Company may reasonably request in writing to enable the
Company to calculate the amount of earnings on the monies held under this
Indenture.

      

      SECTION
4.3. Covenants Regarding Tax
Exemption.

       

      The Issuer covenants to refrain from
any action which would adversely affect, or to take such action as is reasonable
and available and within its control to assure, the treatment of the Bonds as
obligations described in Section 103(a) of the Code, the interest on which
is not included in the "gross income" of the holder (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.

      

      ARTICLE
V                                

       

      REDEMPTION
OF BONDS

       

      SECTION
5.1.   Bonds Subject to
Redemption.

       

      (a) Optional
Redemption.  The Bonds are subject to optional redemption as
set forth in Section 2.2 hereof.

       

      (b) Special Mandatory Redemption
of the Bonds.  The Bonds are subject to Special Mandatory
Redemption prior to maturity not later than 180 days after the Company has
notice or actual knowledge of the occurrence of a Determination of Taxability at
a redemption price equal to 100% of the principal amount thereof, plus accrued
interest, if any, to the redemption date.  Any such Special Mandatory
Redemption shall be in whole unless the Company delivers to the Trustee an
opinion of Bond Counsel that redemption of a portion of the Bonds Outstanding
would have the result that interest payable on the Bonds remaining Outstanding
after such redemption would not be includable for federal income tax purposes in
the gross income of any Owner or Beneficial Owner of a Bond (other than an Owner
or Beneficial Owner who is a "substantial user" of the Project or a "related
person" within the meaning of Section 147(a) of the Code and the applicable
regulations thereunder), and in such event the Bonds or portions thereof (in
Authorized Denominations) shall be redeemed at such times and in such amounts as
Bond Counsel shall so direct in such opinion.

       

      If the Trustee receives written notice
from any Owner stating that (i) the Owner has been notified in writing by
the Internal Revenue Service that it proposes to include the interest on any
Bond in the gross income of such Owner for the reasons stated in the definition
of "Determination of Taxability" set forth herein or any other proceeding has
been instituted against such Owner which may lead to a Final Determination, and
(ii) such Owner will afford the Company the opportunity to contest the
same, either directly or in the name of the Owner, and until a conclusion of any
appellate review, if sought, then the Trustee shall promptly give notice thereof
to the Company and the Issuer and to the Owners of Bonds then
Outstanding.  If the Trustee thereafter receives written notice of a
Final Determination, the Trustee shall make demand for prepayment of the unpaid
Installment Loan Payments under the Loan Agreement or necessary portions thereof
from the Company and give notice of the Special Mandatory Redemption of the
appropriate amount of Bonds on the earliest practicable date within the required
period of 180 days.  In taking any action or making any
determination under this Section 5.1(b), the Trustee may rely on an opinion
of counsel.

      

      SECTION
5.2. Selection of Bonds for
Redemption.

       

      In the event that fewer than all Bonds
subject to redemption are to be redeemed, Bonds shall be selected by the Trustee
for redemption by lot.  In the case of Bonds of varying Authorized
Denominations, each Bond shall be treated as representing that number of Bonds
which is obtained by dividing the face amount thereof by the minimum Authorized
Denomination applicable to such Bond.  In no event shall there remain
outstanding in the name of any Owner, a Bond in an amount less than the minimum
Authorized Denomination.

      

      SECTION
5.3. Notice of
Redemption.

       

      The Company must deliver written notice
by facsimile or first class mail to the Issuer and the Trustee of its intention
to prepay the amounts due under the Loan Agreement and its request that the
Bonds be called for redemption at least forty-five (45) days prior to the
proposed redemption date (or such lesser period as is acceptable to the
Trustee).  Unless previously delivered to the Trustee and the Issuer,
any such notice from the Company relating to Special Mandatory Redemption shall
be accompanied by a certificate as to the occurrence of the event or events on
which any Special Mandatory Redemption is based.  The Trustee shall
cause notice of any redemption of Bonds hereunder to be given to the Registered
Owners of all Bonds to be redeemed at the registered addresses appearing in the
registration books kept for such purpose pursuant to Article II
hereof.  Each such notice shall (i) be given by facsimile or by
first class mail at least thirty (30) days prior to the redemption date,
(ii) identify the Bonds to be redeemed (specifying the CUSIP numbers, if
any, assigned to the Bonds), (iii) specify the redemption date and the
redemption price, and (iv) state that on the redemption date the Bonds
called for redemption will be payable at the designated corporate trust
operations office of the Trustee, that from that date interest will cease to
accrue, and that no representation is made as to the accuracy or correctness of
the CUSIP numbers printed therein or on the Bonds.  No defect
affecting any Bond, whether in the notice of redemption or mailing thereof
(including any failure to mail such notice), shall affect the validity of the
redemption proceedings for any other Bonds.  The Trustee shall also
send a notice of prepayment or redemption by first class mail to the Registered
Owner of any Bond who has not sent such Bond in for redemption sixty
(60) days after the redemption date.

      

      In addition, the Trustee shall give
notice of redemption of Bonds by facsimile or by mail, first class postage
prepaid, at least thirty (30) days prior to a redemption date to each registered
Securities Depository and to any national information service that disseminates
redemption notices.  Any notice sent to registered securities
depositories or such national information services shall be sent so that they
are received at least two (2) days prior to the general mailing or publication
date of such notice.  The Trustee may give such other notice or
notices as may be recommended in releases, letters, pronouncements or other
writings of the Securities and Exchange Commission and the Municipal Securities
Rulemaking Board.  No defect in or delay or failure in giving any
recommended notice described in this paragraph shall in any manner affect the
notice of redemption described in the preceding paragraph of this
Section 5.3 and any notice mailed as provided in the preceding paragraph of
this Section 5.3 shall be conclusively presumed to have been duly given,
whether or not the Registered Owner receives the notice.

      

      With respect to any notice of optional
redemption of Bonds, unless upon the giving of such notice such Bonds shall be
deemed to have been paid within the meaning of Article X hereof, such
notice shall state that such redemption shall be conditional upon the receipt by
the Trustee on or prior to the date fixed for such redemption of monies
sufficient to pay the principal of, and premium, if any, and interest on, such
Bonds to be redeemed, and that if such monies shall not have been so received
said notice shall be of no force and effect and the Issuer shall not be required
to redeem such Bonds.  In the event that such notice of redemption
contains such a condition and such monies are not so received, the redemption
shall not be made and the Trustee shall within a reasonable time thereafter give
notice to all Owners of Outstanding Bonds, in the manner in which the notice of
redemption was given, that such monies were not so received.

      

      SECTION
5.4. Effect of
Redemption.

       

      If the redemption price of the Bonds
has been paid to the Trustee in immediately available funds on or before the
redemption date, then interest thereon will cease to accrue, and the Registered
Owners will have no rights with respect to such Bonds nor will they be entitled
to the benefits of the Indenture except to receive payment of the redemption
price thereof and unpaid interest accrued to the date fixed for
redemption.

      

      SECTION
5.5. Redemption
by the Company in the Event of Death of a Beneficial Owner.

       

      Unless the Bonds have been declared due
and payable prior to their maturity by reason of an Event of Default, the
Representative (as hereinafter defined) of a deceased Beneficial Owner (as
hereinafter defined) who has owned (or whose estate has owned) the Bonds at
least six months prior to any request for redemption, has the right after
November 1, 2010 to request redemption prior to stated maturity of all or part
of his interest in the Bonds, and the Company will redeem (or will cause the
Issuer to redeem) the same subject to the limitations that the Company will not
be obligated to redeem (or cause to be redeemed), during the period from
November 1, 2010 through and including November 1, 2011 (the "Initial Period"),
and during any twelve-month period which ends on and includes each November 1
thereafter (each such twelve-month period being hereinafter referred to as a
"Subsequent Period"), (i) on behalf of a deceased Beneficial Owner any interest
in the Bonds which exceeds $25,000 principal amount (the "Individual
Limitation") or (ii) interests in the Bonds exceeding $300,000 in aggregate
principal amount (the "Annual Limitation").  A request for redemption
may be initiated by the Representative of a deceased Beneficial Owner at any
time and in any principal amount.

      

      The Company may, at its option, redeem
(or cause to be redeemed) interests of any deceased Beneficial Owner in the
Bonds in the Initial Period or any Subsequent Period in excess of the Individual
Limitation.  Any such redemption, to the extent that it exceeds the
Individual Limitation for any deceased Beneficial Owner, shall not be included
in the computation of the Annual Limitation for such Initial Period or such
Subsequent Period, as the case may be, or for any succeeding Subsequent
Period.  The Company may, at its option, redeem (or cause to be
redeemed) interests of deceased Beneficial Owners in the Bonds, in the Initial
Period or any Subsequent Period in an aggregate principal amount exceeding the
Annual Limitation.  Any such redemption, to the extent it exceeds the
Annual Limitation shall not reduce the Annual Limitation for any Subsequent
Period.  On any determination by the Company to redeem (or cause to be
redeemed) Bonds in excess of the Individual Limitation or the Annual Limitation,
Bonds so redeemed shall be redeemed in the order of the receipt of Redemption
Requests (as hereinafter defined) by the Trustee.

      

      A request for redemption of an interest
in the Bonds may be initiated by the personal representative or other person
authorized to represent the estate of the deceased Beneficial Owner or by a
surviving joint tenant(s) or tenant(s) by the entirety or the trustee of a trust
(each, a "Representative").  The Representative shall deliver a
request to the DTC Participant through whom the deceased Beneficial Owner owned
such interest, in form satisfactory to the DTC Participant, together with
evidence of the death of the Beneficial Owner, evidence of the authority of the
Representative satisfactory to the DTC Participant, such waivers, notices or
certificates as may be required under applicable state or federal law and such
other evidence of the right to such redemption as the DTC Participant shall
require.  The request shall specify the principal amount of the
interest in the Bonds to be redeemed.  The DTC Participant shall
thereupon deliver to DTC a request for redemption substantially in the form
attached as Exhibit D
hereto (a "Redemption Request").  DTC will, on receipt thereof,
forward the same to the Trustee.  The Trustee shall maintain records
with respect to Redemption Requests received by it including date of receipt,
the name of the DTC Participant filing the Redemption Request and the status of
each such Redemption Request with respect to the Individual Limitation or the
Annual Limitation.  The Trustee will immediately file each Redemption
Request it receives, together with the information regarding the eligibility
thereof with respect to the Individual Limitation or the Annual Limitation with
the Company.  DTC, the Issuer and the Trustee may conclusively assume,
without independent investigation, that the statements contained in each
Redemption Request are true and correct and shall have no responsibility for
reviewing any documents submitted to the DTC Participant by the Representative
or for determining whether the applicable decedent is in fact the Beneficial
Owner of the interest in the Bonds to be redeemed or is in fact deceased and
whether the Representative is duly authorized to request redemption on behalf of
the applicable Beneficial Owner.

      

      Subject to the Individual Limitation
and the Annual Limitation, the Company will, after the death of any Beneficial
Owner, redeem (or cause to be redeemed) the interest of such Beneficial Owner in
the Bonds on the next Interest Payment Date occurring not less than 30 days
following receipt by the Company of the Redemption Request from the
Trustee.  If Redemption Requests exceed the aggregate principal amount
of interests in Bonds required to be redeemed during the Initial Period or
during any Subsequent Period, then such excess Redemption Requests will be
applied in the order received by the Trustee to successive Subsequent Periods,
regardless of the number of Subsequent Periods required to redeem such
interests.  The Company may, at any time notify the Trustee that it
will redeem (or cause to be redeemed), on the next Interest Payment Date
occurring not less than 30 days thereafter, all or any such lesser amount of
Bonds for which Redemption Requests have been received but which are not then
eligible for redemption by reason of the Individual Limitation and the Annual
Limitation.  Any Bonds so redeemed shall be redeemed in the order of
receipt of Redemption Requests by the Trustee.

      

      The price to be paid by the Company for
the Bonds to be redeemed pursuant to a Redemption Request is 100% of the
principal amount thereof plus accrued but unpaid interest to the date of
payment.  Subject to arrangements with DTC, payment for interests in
the Bonds which are to be redeemed shall be made to DTC upon presentation of
Bonds to the Trustee for redemption in the aggregate principal amount specified
in the Redemption Requests submitted to the Trustee by DTC which are to be
fulfilled in connection with such payment.  The principal amount of
any Bonds acquired or redeemed by or at the direction of the Company other than
by redemption at the option of any Representative of a deceased Beneficial Owner
pursuant to this section shall not be included in the computation of either the
Individual Limitation or the Annual Limitation for the Initial Period or for any
Subsequent Period.

      

      For purposes of this section, a
"Beneficial Owner" means the Person who has the right to sell, transfer or
otherwise dispose of an interest in a Bond and the right to receive the proceeds
therefrom, as well as the interest and principal payable to the holder
thereof.  In general, a determination of beneficial ownership in the
Bonds will be subject to the rules, regulations and procedures
governing  DTC and DTC Participants.

      

      For purposes of this section, an
interest in a Bond held in tenancy by the entirety, joint tenancy or by tenants
in common will be deemed to be held by a single Beneficial Owner and the death
of a tenant by the entirety, joint tenant or tenant in common will be deemed the
death of a Beneficial Owner.  The death of a person who, during his
lifetime, was entitled to substantially all of the rights of a Beneficial Owner
of an interest in the Bonds will be deemed the death of the Beneficial Owner,
regardless of the recordation of such interest on the records of the DTC
Participant, if such rights can be established to the satisfaction of the DTC
Participant.  Such interests shall be deemed to exist in typical cases
of nominee ownership, ownership under the Uniform Gifts to Minors Act or the
Uniform Transfers to Minors Act, community property or other similar joint
ownership arrangements, including individual retirement accounts or Keogh H.R.
10 plans maintained solely by or for the decedent or by or for the decedent and
any spouse, and trust and certain other arrangements where the decedent has the
right to receive all or a portion of the income and such person has
substantially all of the rights of a Beneficial Owner during such person's
lifetime.

      

      In the case of a Redemption Request
which is presented on behalf of a deceased Beneficial Owner and which has not
been fulfilled at the time the Company gives notice of its election to redeem
the Bonds, the Bonds which are the subject of such pending Redemption Request
shall be redeemed prior to any other Bonds.

      

      Any Redemption Request may be withdrawn
by the person(s) presenting the same upon delivery of a written request for such
withdrawal given by the DTC Participant on behalf of such person to the DTC and
by the DTC to the Trustee not less than 60 days prior to the Interest Payment
Date on which such Bonds are eligible for redemption.

      

      The Company may, at its option,
purchase any Bonds for which Redemption Requests have been received in lieu of
redeeming (or causing the redemption of) such Bonds.  Any Bonds so
purchased by the Company shall either be reoffered for sale and sold within 180
days after the date of purchase or presented to the Trustee for redemption and
cancellation.

      

      During such time or times as the Bonds
are not represented by a Global Security and are issued in definitive form, all
references in this Section to DTC Participants and the DTC, including the DTC's
governing rules, regulations and procedures shall be deemed deleted, all
determinations which under this section the DTC Participants are required to
make shall be made by the Company (including, without limitation, determining
whether the applicable decedent is in fact the Beneficial Owner of the interest
in the Bonds to be redeemed or is in fact deceased and whether the
Representative is duly authorized to request redemption on behalf of the
applicable Beneficial Owner), all Redemption Requests, to be effective, shall be
delivered by the Representative to the Trustee, with a copy to the Company, and
shall be in the form of a Redemption Request (with appropriate changes to
reflect the fact that such Redemption Request is being executed by a
Representative) and, in addition to all documents that are otherwise required to
accompany a Redemption Request, shall be accompanied by the Bond that is the
subject of such request.

      

      SECTION
5.6. Purchase in Lieu of
Redemption.

       

      Notwithstanding anything to the
contrary contained herein, the Company may elect to purchase from the Owners any
Bonds that have been called for redemption under Section 5.1 hereof on the
redemption date by giving the Trustee and the Issuer written notice at least two
(2) Business Days prior to the date the Bonds are to be redeemed, and such Bonds
so purchased shall be retired.  The principal amount of Bonds to be
redeemed on the applicable redemption date shall be reduced by the amount of
Bonds so purchased.

      

      ARTICLE
VI                                

       

      REPRESENTATIONS
AND COVENANTS OF THE ISSUER

       

      SECTION
6.1. General Limitation; Issuer’s
Representation.

       

      The representations and covenants of
the Issuer herein and in any proceeding, document or certification incidental to
issuance of the Bonds shall not create a pecuniary liability of the Issuer,
except to the extent of the Trust Estate.  The Issuer represents and
covenants that it has made no pledge, assignment or other conveyance of its
rights, title and interest in the Trust Estate except to the Trustee as provided
herein.

      

      SECTION
6.2. Payment of Bonds and
Performance of Covenants.

       

      The Issuer shall, but only out of the
Revenues, promptly pay the principal of, premium, if any, and interest on the
Bonds at the place, on the dates and in the manner provided in the
Bonds.  The Issuer shall promptly perform and observe all of its other
covenants, undertakings and obligations set forth in the Financing
Documents.

      

      SECTION
6.3. Enforcement of the Loan
Agreement.

       

      The Loan Agreement, a duly executed
counterpart of which has been filed with the Trustee, sets forth the covenants
and obligations of the Company, including provisions that the Loan Agreement may
only be amended with the written consent of the Trustee, and reference is hereby
made to the Loan Agreement for a statement of such covenants and obligations of
the Company.  Subject to Section 6.4 hereof and the enforcement
of Unassigned Issuer’s Rights by the Issuer, the Trustee may enforce against the
Company or any Person any rights of the Issuer or obligations of the Company
under or arising from the Bonds or the Loan Agreement, whether or not the Issuer
is in default hereunder or under the Bonds, but the Trustee shall not be deemed
to have thereby assumed the obligations of the Issuer under the Loan
Agreement.  The Issuer shall fully cooperate with the Trustee in the
enforcement by the Trustee of any such rights.

      

      SECTION
6.4. No Personal
Liability.

       

      No member, officer or employee of the
Issuer, including any person executing this Indenture or the Bonds and no
individual employee or agent of the Company shall be liable personally on the
Bonds or be subject to any personal liability for any reason relating to the
issuance of the Bonds.

      

      SECTION
6.5. Exemption from Federal
Income Taxation.

       

      The Issuer will not knowingly take any
action, or omit to take any action, which action or omission will adversely
affect the exclusion from gross income for federal income tax purposes of
interest on the Bonds, and in the event of such action or omission will
promptly, upon receiving knowledge thereof, take all lawful actions, based on
advice of counsel and at the expense of the Company, as may rescind or otherwise
negate such action or omission.

      

      SECTION
6.6. Corporate Existence;
Compliance with Laws.

       

                 The
Issuer shall maintain its corporate existence; shall use its best efforts to
maintain and renew all its rights, powers, privileges and franchises; and shall
comply with all valid and applicable laws, rules, regulations, orders,
requirements and directions of any legislative, executive, administrative or
judicial body relating to the Issuer’s participation in the financing of the
Project, the issuance of the Bonds or its execution, delivery and performance of
this Indenture and the Loan Agreement.

      

      SECTION
6.7. Filings.

       

                 The
Issuer shall cause this Indenture or financing statements relating hereto to be
filed, in such manner and at such places as may be required by law fully to
protect the security of the Registered Owners and the right, title and interest
of the Trustee in and to the Trust Estate or any part thereof.  From
time to time, the Trustee may, but shall not be required to, obtain an opinion
of counsel setting forth what, if any, actions by the Issuer or Trustee should
be taken to preserve such security.  The Issuer shall execute or cause
to be executed any and all further instruments as shall reasonably be requested
by the Trustee for such protection of the interests of the Registered Owners and
shall furnish satisfactory evidence to the Trustee of filing and refiling of
such instruments and of every additional instrument which shall be necessary to
preserve the lien of the Indenture upon the Trust Estate or any part thereof
until the principal or redemption price of, and interest on the Bonds issued
hereunder shall have been paid in full.  The Issuer shall cause to be
prepared, and the Trustee shall execute or join in the execution of, any such
further or additional instrument and file or join in the filing thereof at such
time or times and in such place or places as it may be advised by an opinion of
counsel to preserve the lien of this Indenture upon the Trust Estate or any part
thereof until the aforesaid principal or redemption price and interest shall
have been paid.

      

      SECTION
6.8. Further
Assurances.

       

                 Except
to the extent otherwise provided in this Indenture, the Issuer shall not enter
into any contract or take any action by which the rights of the Trustee or the
Registered Owners may be impaired and shall, from time to time, execute and
deliver such further instruments and take such further action as may be required
to carry out the purposes of this Indenture.

      

      SECTION
6.9. Inspection of
Books.

       

                 All
books and records, if any, in the Issuer’s possession relating to the Project
and the amounts derived from the Project shall, upon written request and at all
reasonable times, be open to inspection by such accountants or other agents as
the Trustee may from time to time designate.

      

      ARTICLE
VII                                           

       

      EVENTS
OF DEFAULT AND REMEDIES

       

      SECTION
7.1. Events of Default
Defined.

       

      (a) Each of
the following shall be an Event of Default hereunder:

       

      (i) Payment
of any installment of interest, principal, or premium, if any, on the Bonds is
not made when due and payable; or

       

      (ii) An Act of
Bankruptcy shall occur; or

       

      (iii) Failure
by the Issuer to observe or perform any covenant, condition or agreement on its
part to be observed or performed under this Indenture, other than as referred to
in (i) above, for a period of 30 days after written notice is given to the
Issuer, specifying such failure and requesting that it be remedied, by the
Trustee; provided, however, that if the failure stated in the notice is such
that it can be remedied but not within such 30-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 Issuer within
such period and is diligently pursued until the default is remedied;
or

       

      (iv) The
occurrence of an Event of Default under the Loan Agreement; or

       

      (v) Failure
by the Issuer to comply with the Act;

       

      (b) The
Trustee shall promptly notify the Issuer and the Company in writing of the
occurrence of any Event of Default after it receives written notice or has
actual knowledge of such occurrence.

       

      (c) Force Majeure.  The
provisions of Section 7.1(a)(iii) hereof and Section 8.1(b)(vi) of the
Loan Agreement are subject to the following limitations:  if by reason
of acts of God; strikes, lockouts or other industrial disturbances; acts of
public enemies; orders of any kind of the Government of the United States or of
the Commonwealth or any department, agency, political subdivision, court or
official of any of them, or any civil or military authority; insurrections;
riots; epidemics; landslides; lightning; earthquakes; volcanoes; fires;
hurricanes; tornadoes; storms; blue northers; floods; washouts; droughts;
restraint of government and people; civil disturbances; explosions; breakage or
accident to machinery; partial or entire failure of utilities; or any cause or
event not reasonably within the control of either the Company or the Issuer, the
Company is unable in whole or in part to carry out any one or more of its
agreements or obligations contained in the Loan Agreement (other than its
obligations under Sections 6.4 through 6.6, 6.10, 7.1, 7.2 and 8.3 thereof)
or the Issuer is unable in whole or in part to carry out any one or more of its
agreements or obligations contained in this Indenture (other than its
obligations to pay the principal of, and premium, if any, and interest on the
Bonds as herein provided), neither the Company nor the Issuer shall be deemed in
default by reason of not carrying out said agreement or agreements or performing
said obligation or obligations during the continuance of such
inability.  Both the Company and the Issuer shall make reasonable
efforts to remedy with all reasonable dispatch the cause or causes preventing
them from carrying out their respective agreements; provided, that the
settlement of strikes, lockouts and other industrial disturbances shall be
entirely within the discretion of the Company, and the Company shall not be
required to make settlement of strikes, lockouts and other disturbances by
acceding to the demands of the opposing party or parties when such course is in
the judgment of the Company unfavorable to the Company.

       

      SECTION
7.2. Acceleration and Annulment
Thereof.

       

      (a) Upon the
occurrence of an Event of Default described in Section 7.1(a)(ii) hereof,
the principal of all Bonds then Outstanding, together with accrued interest
thereon, shall automatically become due and payable immediately without any
declaration of acceleration by the Trustee, anything in this Indenture to the
contrary notwithstanding.   Upon the occurrence of any other
Event of Default hereunder the Trustee may, and upon the written direction of
the Registered Owners of 25% or more in principal amount of the Bonds then
Outstanding and (subject to the provisions of Section 8.1(b) hereof)
receipt of indemnity to its sole satisfaction shall, by notice in writing to the
Issuer and the Company declare the principal of all Bonds then Outstanding to be
immediately due and payable, and upon such declaration, the said principal,
together with interest accrued thereon, shall become due and payable
immediately, anything in this Indenture or in the Bonds to the contrary
notwithstanding; provided, however, that no such declaration shall be made if
the Company cures such Event of Default prior to the date of the
declaration.  Upon any acceleration hereunder (whether automatic or by
declaration), all payments due under the Loan Agreement shall automatically
become immediately due and payable and the Trustee shall promptly exercise such
rights as it may have under the Loan Agreement.

       

      Promptly following any declaration of
acceleration (or promptly after the Trustee has knowledge of an automatic
acceleration), the Trustee shall cause to be mailed notice of such acceleration
by first class mail to each Owner of a Bond at his last address appearing on the
registration books of the Trustee.  Any defect in or failure to give
such notice of such acceleration shall not affect the validity of such
acceleration.

       

      (b) If after
the principal then due on the Bonds has been declared to be due and payable, and
the redemption price then due and all arrears of interest upon the Bonds are
caused to be paid by the Issuer, and the Issuer also causes to be performed all
other things in respect to which it may have been in default hereunder and
causes to be paid by the Company or otherwise the reasonable charges of the
Trustee and the Registered Owners, plus reasonable attorney’s fees, or any such
default is waived as provided in Section 7.13 hereof, then, and in every
such case, the Trustee may or, upon the direction in writing of the Registered
Owners of a majority in principal amount of the Bonds then Outstanding, shall
annul such declaration and its consequences and such annulment shall be binding
upon the Trustee, the Issuer and upon all Registered Owners of Bonds issued
hereunder.  No such annulment shall extend to or affect any subsequent
default or impair any right or remedy consequent thereon.

       

      SECTION
7.3. Legal Proceedings by
Trustee.

       

      If any Event of Default has occurred
and is continuing, the Trustee in its discretion may, and upon the written
request of the Registered Owners of 25% or more in principal amount of the Bonds
then Outstanding and receipt of indemnity to its sole satisfaction shall, in its
own name;

      

      (a) By
mandamus, or other suit, action or proceeding at law or in equity, enforce all
rights of the Registered Owners, including the right to require the Issuer or
the Company to carry out any other agreements with, or for the benefit of, the
Registered Owners;

       

      (b) Bring
suit upon the Bonds;

       

      (c) By action
or suit in equity require the Issuer to account as if it were the trustee of an
express trust for the Registered Owners; and

       

      (d) By action
or suit in equity enjoin any acts or things which may be unlawful or in
violation of the rights of the Registered Owners.

       

      SECTION
7.4. Discontinuance of
Proceedings by Trustee.

       

      If any proceeding taken by the Trustee
on account of any default is discontinued or is determined adversely to the
Trustee, then the Issuer, the Trustee, the Company and the Registered Owners
shall be restored to their former positions and rights hereunder as though no
such proceeding had been taken.

      

      SECTION
7.5. Registered Owners May Direct
Proceedings.

       

      The Registered Owners of a majority in
principal amount of the Bonds then Outstanding hereunder shall have the right to
direct the method and place of conducting all remedial proceedings by the
Trustee hereunder; provided that the Trustee shall have the right to decline to
follow any such direction if the Trustee, upon advice of counsel, determines
that the action so directed may not be lawfully taken or if the Trustee in good
faith determines that the action so directed might involve the Trustee in
personal liability or might unduly prejudice the interests of the Registered
Owners not parties to such direction, it being understood that the Trustee has
no duty to ascertain whether or not such actions so directed are unduly
prejudicial to such Registered Owners.

      

      SECTION
7.6. Limitations on Actions by
Registered Owners.

       

      No Registered Owner shall have any
right to pursue any remedy hereunder unless (a) the Trustee shall have been
given written notice of an Event of Default or the Trustee is deemed to have
notice as provided in Section 8.3(h), (b) the Registered Owners of at
least 25% in principal amount of the Bonds then Outstanding shall have requested
the Trustee, in writing, to exercise the powers hereinabove granted or to pursue
such remedy in its or their name or names, (c) the Trustee shall have been
offered indemnity satisfactory to it against costs, expenses and liabilities,
and (d) the Trustee shall have failed to comply with such request within a
reasonable time; it being understood and intended that no one or more Registered
Owners shall have any right in any manner whatsoever to affect, disturb or
prejudice the lien of this Indenture by its, his or their action or to enforce
any right hereunder except in the manner herein provided, and that all
proceedings at law or in equity shall be instituted, had and maintained in the
manner herein provided and for the equal and ratable benefit of the owners of
all Bonds then Outstanding.  Nothing contained in this Indenture,
however, shall affect or impair the right of any Registered Owner to enforce the
payment of the principal of, premium, if any, and interest on any Bond at and
after the maturity thereof, or the obligation of the Issuer to cause the payment
of the principal of, premium, if any, and interest on each of the Bonds issued
hereunder to the respective owners thereof on the date, at the place, from the
source and in the manner in the Bonds expressed.

      

      SECTION
7.7. Trustee May Enforce Rights
Without Possession of Bonds.

       

      All rights under this Indenture and the
Bonds may be enforced by the Trustee without the possession of any Bonds or the
production thereof at the trial or other proceedings relative thereto, and any
proceeding instituted by the Trustee shall be brought in its name for the
ratable benefit of the Registered Owners of the Bonds.

      

      SECTION
7.8. Remedies Not
Exclusive.

       

      Except as limited under
Section 11.1 of this Indenture, no remedy herein conferred is intended to
be exclusive of any other remedy or remedies, and each remedy is in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute.

      

      SECTION
7.9. Delays and Omissions Not to
Impair Rights.

       

      No delay or omission in respect of
exercising any right or power accruing upon any default shall impair such right
or power or be a waiver of such default, and every remedy given by this Article
may be exercised from time to time and as often as may be deemed
expedient.

      

      SECTION
7.10. Application of
Monies.

       

      All monies received by the Trustee
pursuant to any right given or action taken under the provisions of this Article
shall, after payment of costs, expenses, liabilities and advances paid, incurred
or made or anticipated by the Trustee in the collection of such monies and of
the expenses, liabilities and advances incurred or made by the Trustee, be
deposited in the Debt Service Fund; and all monies in the Debt Service Fund
(other than monies held for the payment of a particular Bond) shall be applied,
as follows:

      

      (a) Unless
the principal of all of the Bonds shall have become or shall have been declared
due and payable, all such monies shall be applied:

       

      First -
to the payment to the persons entitled thereto of all interest then due on the
Bonds or if the amount available shall not be sufficient for such purpose, then
to the payment ratably, to the persons entitled thereto without any
discrimination or privilege; and

       

      Second -
to the payment to the persons entitled thereto of the unpaid principal of any of
the Bonds which shall have become due (other than Bonds matured, or called for
redemption for the payment of which monies and/or Government Obligations are
held pursuant to this Indenture), in the order of their due dates, with interest
on such Bonds from the respective dates upon which they become due and, if the
amount available shall not be sufficient to pay in full Bonds due on any
particular date, together with such interest, then to the payment ratably,
according to the amount of principal due on such date, to the persons entitled
thereto without any discrimination or privilege.

       

      (b) If the
principal of all the Bonds shall have become due or shall have been declared due
and payable, all such monies shall be applied to the payment of the principal
and the interest then due and unpaid upon the Bonds (other than installments of
interest, and amounts of principal of Bonds matured or called for redemption,
for the payment of which monies and/or Government Obligations are held pursuant
to this Indenture) without preference or priority of principal over interest or
of interest over principal, or of any installment of interest over any other
installment of interest, or of any Bond over any other Bond, ratably, according
to the amounts due respectively for principal and interest, to the persons
entitled thereto without any discrimination or privilege.

       

      (c) If the
principal of all the Bonds shall have been declared due and payable, and if such
declaration shall thereafter have been rescinded and annulled under the
provisions of this Article, then, subject to the provisions of
paragraph (b) of this Section in the event that the principal of all the
Bonds shall later become due or be declared due and payable, the monies shall be
applied in accordance with the provisions of paragraph (a) of this
Section.

       

      Whenever monies are to be applied
pursuant to the provisions of this Section, such monies shall be applied as soon
as practicable as the Trustee shall in good faith determine having due regard to
the amount of such monies available for application and the likelihood of
additional monies becoming available for such application in the
future.  Whenever the Trustee shall apply such funds, it shall fix the
date (which shall be the date of acceleration of the Bonds or if there shall not
have been an acceleration, such date as shall be determined by the Trustee) upon
which such application is to be made and upon such date interest on the amounts
of principal to be paid on such dates shall cease to accrue.  The
Trustee shall give such notice as it may deem appropriate of the deposit with it
of any such monies and of the fixing of any such date, and shall not be required
to make payment to the holder of any Bond until such Bond shall be presented to
the Trustee.

      

      SECTION
7.11. Trustee’s Right to
Receiver.

       

      The Trustee shall be entitled as of
right to the appointment of a receiver; and the Trustee, the Registered Owners
and any receiver so appointed shall have such rights and powers and be subject
to such limitations and restrictions as are permitted by law.

      

      SECTION
7.12. Trustee and Registered
Owners Entitled to All Remedies.

       

      It is the purpose of this Article to
make available to the Trustee and the Registered Owners all lawful remedies; but
should any remedy herein granted be held unlawful, the Trustee and the
Registered Owners shall nevertheless be entitled to every other remedy provided
by law.  It is further intended that, insofar as lawfully possible,
the provisions of this Article shall apply to and be binding upon any trustee or
receiver who may be appointed hereunder.

      

      SECTION
7.13. Waiver of Past
Defaults.

       

      The Registered Owners of not less than
a majority in principal amount of the Outstanding Bonds may on behalf of the
Registered Owners of all the Bonds (by written notice thereof to the Issuer and
the Trustee) waive any past default hereunder and its consequences, except a
default (1) in the payment of the principal of, redemption premium, if any,
or interest on, any Bond unless prior to such waiver or rescission, all arrears
of principal or interest, or both, as the case may be, and all expenses of the
Trustee, in connection with such default shall have been paid or provided for;
or (2) in respect of a covenant or provision hereof which under
Article IX cannot be modified or amended without the consent of the
Registered Owner of each Outstanding Bond.  Upon any such waiver, such
default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.

      

      ARTICLE
VIII                                           

       

      THE
TRUSTEE

       

      SECTION
8.1. Certain Duties and
Responsibilities of Trustee.

       

      (a) The
Trustee accepts the trusts hereby created and agrees to perform the duties
herein required of it upon the terms and conditions hereof.  The
Trustee shall have the right, power and authority, at all times, to do all
things not inconsistent with the express provisions of this Indenture which it
may deem necessary or advisable in order to:  (i) enforce the
provisions of this Indenture, (ii) take any action with respect to any
Event of Default, (iii) institute, appear in or defend any suit or other
proceeding with respect to an Event of Default, or (iv) protect the
interests of the Owners of any Outstanding Bonds.  The Trustee shall
be responsible only for performing those duties of the Trustee specifically
provided for herein and no implied duties or liabilities shall be read into this
Indenture against the Trustee.

       

      (b) The
permissive rights of the Trustee to do things enumerated in this Indenture shall
not be construed as a duty and, except as provided in the next succeeding
sentence in respect of the period during the continuance of an Event of Default,
the Trustee shall not be liable for any action reasonably taken or omitted to be
taken by it in good faith and reasonably believed by it to be within the
discretion or power conferred upon it hereby, or be responsible other than for
its own gross negligence or willful misconduct.  In case an Event of
Default has occurred and is continuing of which the Trustee has been notified as
provided in Section 8.3(h) or of which it is deemed to have notice pursuant
to such Section, the Trustee shall exercise such of the rights and powers vested
in it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise under the circumstances in the conduct
of his own affairs.

       

      (c) The
Trustee shall not be required to give any bond or surety in respect of the
execution of its rights and duties under this Indenture.

       

      (d) No
provision of this Indenture shall be construed to relieve the Trustee from
liability for its own grossly negligent action, its own grossly negligent
failure to act or its own willful misconduct, except that

       

      (i) this
subsection shall not be construed to limit the effect of subsection (a) of this
Section;

       

      (ii) the
Trustee shall not be liable for any error of judgment made in good faith by its
officers, unless it shall be proved that the Trustee was grossly negligent in
ascertaining the pertinent facts;

       

      (iii) the
Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with any direction of the Registered
Owners of at least 25% or not less than a majority in aggregate principal amount
of the Outstanding Bonds permitted to be given by them under this Indenture
except as otherwise provided herein; and

       

      (iv) no
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity, satisfactory to the Trustee in its sole discretion, against
such risk or liability is not assured to it.

       

      (e) Whether
or not therein expressly so provided, every provision of this Indenture relating
to the conduct or affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section.

       

      (f) Except as
otherwise expressly provided by the provisions of this Indenture, the Trustee
shall not be obligated and may not be required to give or furnish any notice,
demand, report, request, reply, statement, advice or opinion to any Holder or
any other Person, and the Trustee shall not incur any liability for its failure
or refusal to give or furnish the same unless obligated or required to do so by
the express provisions hereof.

       

      (g) In acting
or omitting to act pursuant to the provisions of the Loan Agreement, the Trustee
shall be entitled to all of the rights and immunities accorded to it under this
Indenture, including but not limited to those set out in this Article
VIII.

       

      (h) Notwithstanding
any provisions of this Indenture to the contrary, the Trustee shall not be
liable or responsible for the accuracy of any calculation or determination which
may be required in connection with or for the purpose of complying with
Section 148 of the Code, including, without limitation, the calculation of
amounts required to be paid to the United States under the provisions of
Section 148 of the Code, the maximum amount which may be invested in
"nonpurpose obligations" as defined in the Code and the fair market value of any
investments made hereunder, and the sole obligation of the Trustee with respect
to the investments of funds hereunder shall be to invest the monies received by
the Trustee as provided herein pursuant to the written instructions of the
Company.

       

      (i) The
Trustee will report to the Bondholders and to the Internal Revenue Service for
each calendar year the amount of any "reportable payments" during such year with
respect to payments on the Bonds.

       

      SECTION
8.2. Notice if Event of Default
Occurs or Notice if Taxability Occurs.

       

      The Trustee shall give written notice
as soon as possible (and in any event within three (3) Business Days) to
the Registered Owners (with copies to the parties to the Financing Documents) of
the occurrence of any Event of Default hereunder after the Trustee acquires
actual knowledge thereof, unless such default shall have been cured or waived;
provided, however, that, in the case of an Event of Default of the character
described in Section 7.1(a)(iii), the Trustee shall be protected in
withholding such notice if and so long as the Trustee in good faith determines
that the withholding of such notice is in the interest of the Registered
Owners.  The Trustee shall also give to the parties to the Financing
Documents and the Registered Owners written notice within five (5) Business Days
of receipt by it of any notification from the Internal Revenue Service that
the interest on the Bonds is, or may be, subject to federal income
taxation.

      

      SECTION
8.3. Certain Rights of
Trustee.

       

      Except as otherwise provided in
Section 8.1:

      

      (a) the
Trustee may conclusively rely upon, and shall be protected in acting or
refraining from acting upon, any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties and any action taken by the Trustee
pursuant to this Indenture upon the request, authority or consent of any
Registered Owner (determined at the time of such request, authority or consent)
shall be conclusive and binding upon all future owners of the same Bond and any
Bonds issued in exchange therefor;

       

      (b) any
request or direction of the Issuer or the Company mentioned herein shall be
sufficiently evidenced by a writing signed by an Authorized Representative and
any resolution of the Issuer may be sufficiently evidenced by a copy of such
resolution certified by an Authorized Representative;

       

      (c) whenever
in the administration of this Indenture the Trustee shall deem it desirable that
a matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, rely upon a
certificate of an Authorized Representative;

       

      (d) before
the Trustee acts or refrains from acting, it may consult with counsel, engineers
or other experts as may be appropriate, and the written advice of such counsel,
engineers or other experts as may be appropriate shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;

       

      (e) the
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the
Registered Owners pursuant to this Indenture, unless such Registered Owners
shall have offered to the Trustee security or indemnity acceptable to the
Trustee in its sole discretion against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction and such
action may be lawfully taken;

       

      (f) the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture or other paper or
document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled, upon reasonable notice and during regular business hours, and subject,
further to the Company’s safety and confidentiality requirements to examine the
books, records and premises of the Company and the books and records of the
Issuer concerning the Bonds personally or by agent or attorney;

       

      (g) the
Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or indirectly or by or through agents or attorneys
provided that the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney reasonably appointed by it
hereunder in good faith; and

       

      (h) the
Trustee shall not be required to take notice or be deemed to have notice of any
default hereunder unless the Trustee shall be specifically notified of such
default in writing by the Issuer, the Company or the Owners of a majority in
principal amount of the Outstanding Bonds, and in the absence of such notice the
Trustee may conclusively assume there is no default; provided, however, that the
Trustee shall be required to take and be deemed to have notice of its failure to
receive the monies necessary to make payments when due of the Bond
Obligations.

       

      SECTION
8.4. Not Responsible for Recitals
or Issuance of Bonds.

       

      Except for the Trustee's certificate of
authentication signed on the Bonds, the Trustee assumes no responsibility for
correctness of the terms set forth herein or in the Bonds.  The
Trustee makes no representations as to the validity or sufficiency of this
Indenture, except that the Trustee represents that said Indenture has been duly
authorized, executed and delivered by the Trustee and constitutes a legal, valid
and binding obligation of the Trustee in accordance with the terms hereof,
except as its enforceability may be subject to (i) the exercise of judicial
discretion in accordance with general equitable principles; and
(ii) applicable bankruptcy, insolvency, reorganization, moratorium and
other laws for the relief of debtors heretofore or hereafter enacted to the
extent that the same may be constitutionally applied.  Further, the
Trustee makes no representations as to the validity or sufficiency of the
Bonds.  The Trustee shall not be accountable for the use or
application by the Issuer or the Company of Bonds or the proceeds
thereof.  The Trustee shall not be bound to ascertain or inquire as to
the performance or observance of any covenant, condition or agreement on the
part of the Issuer or the Company under the Loan Agreement (except as provided
in Section 8.3(h) hereof), but the Trustee may require of the Issuer or the
Company full information and advice as to the performance on such covenants,
conditions and agreements.

      

      SECTION
8.5. May Hold
Bonds.

       

      The Trustee or any other agent of the
Issuer or the Company, in its individual or any other capacity, may become the
owner of Bonds and may otherwise deal with the Issuer or the Company with the
same rights it would have if it were not Trustee or such other
agent.  The Trustee may in good faith buy, sell, own, hold and deal in
any of the Bonds and may join in any action which any Registered Owners may be
entitled to take with like effect. The Trustee may also engage in or be
interested in financial or other transactions with the Company and the Issuer;
provided that such transactions are not in conflict with its duties under this
Indenture.

      

      SECTION
8.6. Money Held in
Trust.

       

      All money deposited from time to time
in the Debt Service Fund and the Construction Fund shall be held in trust for
the benefit of the Owners but, except as provided in Article X of this
Indenture, need not be segregated from other funds held in trust under this
Indenture by the Trustee, but shall be segregated at all times from all funds of
the Issuer or the Trustee not held by the Trustee under this
Indenture.  The Trustee shall be under no liability for interest on
any money received by it hereunder except as otherwise provided in this
Indenture.

      

      SECTION
8.7. Corporate Trustee Required;
Eligibility.

       

      There shall at all times be a Trustee
hereunder which shall be a corporation or association organized and doing
business under the laws of the United States of America or of any state that is
either a trust company or a bank in good standing in the Commonwealth,
authorized under such laws to exercise trust powers and authorized under the Act
to act as Trustee hereunder, having a combined capital, surplus and undivided
profits of at least $100,000,000, subject to supervision or examination by
federal or state authority and shall not be a Disqualified
Contractor.  If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published.  If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this
Article.

      

      SECTION
8.8. Resignation and Removal of
Trustee; Appointment of Successor.

       

      (a) No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 8.9 of this
Indenture.

       

      (b) The
Trustee may resign at any time by giving written notice thereof to the other
parties to the Financing Documents.  If an instrument of acceptance by
a successor Trustee shall not have been delivered to the resigning Trustee
within thirty (30) days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.

       

      (c) The
Trustee may be removed at any time by the Owners of a majority in aggregate
principal amount of the Outstanding Bonds, or so long as no Event of Default or
no event which with the passage of time or the giving of notice or both would
constitute an Event of Default is then in existence, by the Company, in either
case by an instrument in writing delivered to the parties to the Financing
Documents not less than fifteen (15) days prior to the intended effective
date of the removal.

       

      (d) If at any
time:  (i) the Trustee shall cease to be eligible under
Section 8.7 of this Indenture or under applicable law and shall fail to
resign after written request therefor as a result thereof by any party to a
Financing Document or by a Registered Owner who has been a bona fide Owner for
at least six (6) months, or (ii) the Trustee shall become incapable of
acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee
or of its property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then, in any such case,
(x) the Company or the Issuer may remove the Trustee, or (y) any
Registered Owner who has been a bona fide Owner for at least six (6)
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.

       

      (e) If the
Trustee shall resign, be removed or become incapable of acting, or if a vacancy
shall occur in the office of Trustee for any cause, the Issuer, with the prior
consent of the Company, if any, shall promptly appoint a successor
Trustee.  If, within sixty (60) days after such resignation, removal
or incapability, or the occurrence of such resignation, removal or incapability,
or the occurrence of such vacancy, a successor Trustee shall be appointed by the
Owners of a majority in aggregate principal amount of the Outstanding Bonds and
notice of acceptance of such appointment is delivered to the parties to the
Financing Documents, the successor Trustee so appointed shall, forthwith upon
its acceptance of such appointment, become the successor Trustee and supersede
the successor Trustee appointed by the Issuer.  The Trustee shall
assign all its interests hereunder to the successor Trustee.  If no
successor Trustee shall have been so appointed by the Issuer or the Registered
Owners and accepted appointment in the manner hereinafter provided, any
Registered Owner who has been a bona fide Registered Owner for at least six (6)
months may, on behalf of himself and all other Owners similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

       

      (f) The
Issuer, at the expense of the Company, shall give prompt notice of each
resignation and each removal of the Trustee and each appointment of a successor
Trustee by mailing written notice of such event to the Registered Owners and to
the parties to the Financing Documents.  Each notice shall include the
name of the successor Trustee and the address of its corporate trust operations
office.

       

      SECTION
8.9. Acceptance of Appointment by
Successor Trustee.

       

      Every successor Trustee appointed
hereunder shall execute, acknowledge and deliver to the parties to the Financing
Documents, including the retiring Trustee, an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on request of the Issuer or the successor
Trustee, such retiring Trustee shall, upon payment of its charges and expenses
by the Company, execute and deliver an instrument prepared by the successor
Trustee transferring to such successor Trustee all the rights, powers and trusts
of the retiring Trustee, and shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee
hereunder.  Upon request of any such successor Trustee, the Issuer
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and
trusts.  No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.

      

      SECTION
8.10. Merger, Conversion,
Consolidation or Succession to Business.

       

      Any corporation or association into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation or association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation or association succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be otherwise qualified and eligible
under this Article, to the extent operative, without the execution or filing of
any paper or any further act on the part of any of the parties
hereto.

      

      SECTION
8.11. Fees, Charges and Expenses
of Trustee.

       

      Pursuant to the provisions of
Section 6.5 and 8.3 of the Loan Agreement, the Trustee shall be entitled to
be paid by the Company reasonable compensation for its services rendered
hereunder and to reimbursement for its actual out-of-pocket expenses (including
reasonable counsel fees) necessarily incurred in connection
therewith.  The Company may, without creating a default hereunder,
contest in good faith the necessity for and the reasonableness of any such
services and expenses after making payment therefor.  The Company, the
Issuer and the Bondholders agree that the Trustee shall have a lien for the
foregoing compensation, expenses and fees upon the Trust Estate (other than
monies held for the payment of particular Bonds whether or not such payment is
then due and owing) and, upon an Event of Default hereunder, the Trustee shall
have a right of payment prior to payment to the Bondholders on account of
principal of, premium, if any, and interest on any Bond as provided in
Section 7.10 hereof.

      

      The Issuer shall require the Company,
pursuant to the Loan Agreement, to indemnify and hold harmless the Trustee
against any liabilities which the Trustee may incur in the exercise and
performance of its powers and duties hereunder, under the Loan Agreement and any
other agreement referred to herein which are not due to the Trustee’s gross
negligence or willful misconduct, and for any fees and expenses of the Trustee
to the extent funds are not available under this Indenture as provided in the
preceding paragraph for the payment thereof.  The rights of the
Trustee under this Section shall survive the payment in full of the Bonds and
the discharge of this Indenture.  The Trustee acknowledges that the
requirement set forth in this paragraph has been satisfied by the Issuer and
agrees that in the event the Company fails to perform its obligations under the
Loan Agreement relating to such undertaking, the Trustee will make no claim
against the Issuer with respect thereto.

      

      When the Trustee incurs expenses or
renders services after an Event of Default as a result of an Act of Bankruptcy
of the Company, the expenses and the compensation for services (including the
fees and expenses of its agents and counsel) are intended to constitute expenses
of administration of the bankruptcy estate under applicable bankruptcy
law.

      

      ARTICLE
IX                                

       

      AMENDMENTS
AND SUPPLEMENTS

       

      SECTION
9.1. Amendments and Supplements
Without Registered Owners’ Consent.

       

      This Indenture may be amended or
supplemented from time to time, without the consent of the Registered Owners by
a Supplemental Indenture authorized by a certified resolution of the Issuer
filed with the Trustee, for one or more of the following purposes:

      

      (a) to add
additional covenants of the Issuer or to surrender any right or power herein
conferred upon the Issuer; or

       

      (b) to cure
any ambiguity or to cure, correct or supplement any defective (whether because
of any inconsistency with any other provision hereof or otherwise) provision of
this Indenture in such manner as shall not be inconsistent with this Indenture
and shall not impair the security hereof or adversely affect the Registered
Owners; or

       

      (c) to
provide procedures permitting Registered Owners to utilize an uncertificated
system of registration for Bonds or for the issuance of Bonds pursuant to a book
entry system with a Securities Depository or other entity; or

       

      (d) to
modify, alter, amend, supplement or restate this Indenture in any and all
respects necessary, desirable or appropriate in order to satisfy the
requirements of any Rating Agency which may from time to time provide a rating
on the Bonds, or in order to obtain or retain such rating on the Bonds as is
deemed necessary by the Company; or

       

      (e) to make
any change which, in the judgment of the Trustee, does not adversely affect the
rights or security of the Registered Owners.

       

      In determining compliance with this
Section, the Trustee may request such certificates and opinions of counsel as it
deems necessary and may rely conclusively on such certificates and opinions in
the absence of negligence or willful misconduct.

      

      SECTION
9.2. Amendments With Company and
Registered Owners’ Consent.

       

      (a) Consent of
Majority.  With the written consent of the Company, the parties
to this Indenture may enter into Indentures supplemental to this Indenture or
amendments to this Indenture modifying, adding to or eliminating any of the
provisions hereof but, if such supplement or amendment is not of the character
described in Section 9.1, only with the consent of the Registered Owners of
not less than a majority of the aggregate principal amount of the Outstanding
Bonds, but subject to the limitations of Section 9.2(b).

       

      

      (b) Consent of All
Bondholders.  Notwithstanding the foregoing, no supplement or
amendment to this Indenture shall, without the consent of the Registered Owner
of each Outstanding Bond so affected, (i) extend the maturity date of any
Bond, or reduce the rate or extend the time of payment of interest thereon, or
reduce the principal amount thereof, or reduce any premium payable upon the
redemption thereof, or extend or reduce the amount of any mandatory redemption
requirement, (ii) deprive such Registered Owner of the lien hereof on the
Revenues pledged hereunder and on the Trust Estate, (iii) decrease the
amounts payable by the Company under Section 6.4 of the Loan Agreement,
(iv) reduce the aggregate principal amount of Bonds the Registered Owners
of which are required to approve any such supplement or amendment to this
Indenture, (v) increase the percentage of the aggregate principal amount of
Bonds the Registered Owners of which are required to direct the Trustee to
accelerate the maturity of the Bonds, or (vi) provide a privilege or
priority of any Bond over any other Bond.

       

      

      (c) Effective Date of
Amendment.  The Trustee shall establish a record date for
purposes of approval of any such amendment or supplement described in
subsections (a) and (b) of this Section 9.2, and shall cause notice of
such record date and such proposed amendment to be given to the Owners in the
same manner as notices of redemption are given by the Trustee.  Such
notice shall briefly set forth the nature of the proposed amendment and shall
state that copies thereof are on file at the designated office of the Trustee
for inspection by all Registered Owners.  If, within sixty (60)
days (or such longer period as shall be prescribed by the Company in a written
notice to the Trustee and the Issuer) following the mailing of such notice, the
Registered Owners of the requisite aggregate principal amount of the Bonds
Outstanding at the time of the record date established for such purpose shall
have consented to and approved such amendment, no Registered Owner of any Bond
shall have any right to object to any of the terms and provisions contained
therein, or the operation thereof, or in any manner to question the propriety of
the execution thereof, or to enjoin or restrain the parties to such amendment
from adopting the same or from taking any action pursuant to the provisions
thereof.  Upon receipt of the consent of the Registered Owners of the
requisite aggregate principal amount of the Bonds Outstanding, the Issuer and
the Trustee may execute such amendment.

       

      The consent of a Registered Owner shall
be evidenced by an instrument executed by such Registered Owner, delivered to
the Trustee, which instrument shall refer to the proposed amendment described in
said notice and shall specifically consent to and approve such
amendment.  Any consent given by a Registered Owner as of such record
date shall be irrevocable for a period of six (6) months from the date such
consent is given, and shall be conclusive and binding upon all future Registered
Owners of the same Bond during such period.  Such consent may be
revoked at any time after six (6) months from the date such consent was
given by such Registered Owner or by a successor in title, by filing written
notice thereof with the Issuer, the Company and the Trustee, but such revocation
shall not be effective if the Registered Owners of the requisite aggregate
principal amount of the Bonds Outstanding have, prior to the attempted
revocation, consented to and approved such amendment.

      

      Notwithstanding any provision herein to
the contrary, no amendment to this Indenture which affects the rights or
obligations of the Trustee shall be effective against the Trustee without its
written consent.

      

      SECTION
9.3. Amendments to Loan
Agreement.

       

      The Loan Agreement may be amended by
written agreement of the Issuer and the Company and with the written consent of
the Trustee, provided that no amendment may be made which would adversely affect
the rights of some but less than all Outstanding Bonds without the consent of
(a) the Registered Owners of not less than a majority in aggregate
principal amount of the Bonds then Outstanding and (b) the Registered
Owners of not less than a majority in aggregate principal amount of the Bonds so
affected; and no amendment may be made which would (i) decrease the amounts
payable under the Loan Agreement as Installment Loan Payments; (ii) change
any date of payment or prepayment provisions under the Loan Agreement; or
(iii) change the amendment provisions of the Loan Agreement without the
consent of all of the Registered Owners of the Bonds adversely affected thereby,
and provided further that the Loan Agreement may be amended by written agreement
of the Issuer and the Company and with the written consent of the Trustee, but
not the Owners, in order to make conforming changes with respect to amendments
made to this Indenture pursuant to Section 9.1(d) or (e).

      

      SECTION
9.4. Right to
Payment.

       

      Notwithstanding any other provisions in
this Indenture to the contrary, the right of the Owner of any Bond to receive
payment of the principal of, and the premium, if any, and interest on, such
Bond, on or after the respective due dates expressed herein, or to institute
suit for the enforcement of any such payment on or after such respective dates,
will not be impaired or affected without the consent of such Owner.

      

      ARTICLE
X                                

       

      DEFEASANCE

       

      SECTION
10.1. Defeasance.

       

      If the Issuer or Company shall pay or
cause to be paid, or there shall be otherwise paid or provision for payment made
to or for the Owners from time to time of the Bonds, the principal of, premium,
if any, and interest due or to become due thereon on the dates and in the manner
stipulated therein, and shall pay or cause to be paid to the Trustee all sums of
money due or to become due according to the provisions hereof and if all other
liabilities of the Company under the Loan Agreement shall have been satisfied,
then these presents and the estate and rights hereby granted shall cease,
determine and be void, whereupon the lien of this Indenture shall be canceled
and discharged (except with respect to monies held by the Trustee hereunder for
the payment of Bonds as aforesaid, and the rights and immunities of the Issuer
and the Trustee hereunder), and upon written request of the Issuer or the
Company, the Trustee shall execute and deliver to the Issuer such instruments in
writing as shall be required by the Issuer or the Company to cancel and
discharge the lien hereof and thereof, and reconvey, release, assign and deliver
unto the Issuer and the Company, respectively, the estate, right, title and
interest in and to any and all property conveyed, assigned or pledged to the
Trustee or otherwise subject to the lien of this Indenture.

      

      Any Bond shall be deemed to be paid
within the meaning of this Section 10.1 when payment of the principal of
and premium, if any, on such Bond, plus interest thereon to the due date thereof
(whether such due date be by reason of maturity or upon redemption prior to
maturity as provided in this Indenture or otherwise), either (i) shall have been
made or caused to be made in accordance with the terms thereof, or
(ii) shall have been provided by irrevocably depositing with the Trustee,
in trust for the benefit of and subject to a security interest in favor of the
owner of such Bond, and irrevocably setting aside exclusively for such payment
on such due date, (1) monies sufficient to make such payment, or
(2) Government Obligations (provided that in the opinion of Bond Counsel
delivered to the Trustee and the Issuer such deposit of Government Obligations
will not adversely affect the exclusion from gross income for federal income tax
purposes of interest on the Bonds or cause any of the Bonds to be classified as
"arbitrage bonds" within the meaning of Section 148 of the Code) maturing
as to principal and interest in such amounts and on such dates as will (together
with any monies held under clause (1)), in the written opinion to the Trustee
from a firm of certified public accountants not unsatisfactory to the Trustee,
provide sufficient monies without reinvestment to make such payment, and if all
necessary and proper fees, compensation and expenses of the Trustee pertaining
to the Bonds with respect to which such deposit is made and all other
liabilities of the Company under the Loan Agreement shall have been paid or the
payment thereof provided for to the satisfaction of the Trustee.  At
such time as a Bond shall be deemed to be paid hereunder, as aforesaid, it shall
no longer be secured by or entitled to the benefits of this Indenture, except
for the purposes set forth in Sections 2.7 and 2.8 hereof and any such
payment from such monies or Government Obligations on the date or dates
specified at the time of such deposit.

      

      Notwithstanding the foregoing, in the
case of Bonds which are to be redeemed prior to the maturity date, no deposit
under clause (ii) of the immediately preceding paragraph shall be deemed a
payment of such Bonds as aforesaid until proper notice of redemption of such
Bonds shall have been previously given in accordance with Article V hereof,
or until the Company, on behalf of the Issuer, shall have given the Trustee, in
form satisfactory to the Trustee, irrevocable written instructions:

      

      (a) stating
the redemption date when the principal (and premium, if any) of each such Bond
is to be paid (which may be any redemption date permitted by this Indenture);
and

       

      (b) to call
for redemption pursuant to this Indenture any Bonds to be redeemed prior to the
maturity date pursuant to (a) hereof.

       

      In the case of Bonds which are not to
be redeemed within the next succeeding sixty (60) days, the Trustee shall
mail, as soon as practicable, in the manner prescribed by Article V hereof,
a notice to the Owners of such Bonds that the deposit required by (ii) above has
been made with the Trustee and that said Bonds are deemed to have been paid in
accordance with this Section 10.1 and stating the redemption or maturity
date upon which monies are to be available for the payment of the redemption
price on or principal of said Bonds.

      

      Any monies so deposited with the
Trustee as provided in this Section 10.1 may at the written direction of
the Company also be invested and reinvested in Government Obligations, maturing
in the written opinion of a firm of certified public accountants delivered and
not unsatisfactory to the Trustee in the amounts and on the dates as
hereinbefore set forth, and all income from all Government Obligations in the
hands of the Trustee pursuant to this Section 10.1 which, in the written
opinion to the Trustee from a firm of certified public accountants not
unsatisfactory to the Trustee, is not required for the payment of the Bonds and
interest and premium, if any, thereon with respect to which such monies are
deposited, shall be deposited in the Debt Service Fund as and when collected for
use and application as are other monies deposited in that fund.

      

      Anything in Article IX hereof to
the contrary notwithstanding, if monies or Government Obligations have been
deposited or set aside with the Trustee pursuant to this Section 10.1 for
the payment of the principal of, premium, if any, and interest on the Bonds and
the principal of, premium, if any, and interest on such Bonds shall not have in
fact been actually paid in full, no amendment to the provisions of this
Section 10.1 shall be made without the consent of the Owner of each of the
Bonds affected thereby.

      

      If an agreement with a Securities
Depository as described in Section 2.13 hereof is then in effect and such
agreement provides for the Company to obtain a CUSIP number in the event of a
partial refunding or redemption of the Bonds and the authentication of a new
Bond for the refunded or redeemed Bonds, then the Company shall comply with the
provisions of such agreement.

      

      SECTION
10.2. Effect of
Defeasance.

       

      Notwithstanding anything stated to the
contrary in this Article, no defeasance hereunder shall relieve the Trustee of
any duty with respect to, or discharge or terminate the provisions hereof with
respect to, the payment, transfer, purchase, exchange, registration or
redemption of Bonds.

      

      ARTICLE
XI                                

       

      MISCELLANEOUS
PROVISIONS

       

      SECTION
11.1. Limitations on Recourse;
Immunity of Certain Persons.

       

      No recourse shall be had for any claim
based on this Indenture or the Bonds against any past, present or future member,
officer, official or employee of the Issuer, either directly or through the
Issuer or any such successor body, under any constitutional provision, statute
or rule of law or by the enforcement of any assessment or penalty or otherwise,
all such liability and all such claims being hereby expressly waived and
released as a condition of, and as consideration for, the execution of this
Indenture and the issuance of the Bonds.  The Bonds are payable solely
from the Revenues pledged hereunder and other monies held by the Trustee
hereunder for such purpose.  The Issuer shall be conclusively deemed
to have complied with all of its covenants and other obligations hereunder,
including but not limited to those set forth in Articles III and VI hereof,
upon requiring the Company in the Loan Agreement to agree to perform such Issuer
covenants and other obligations (excepting only any approvals or consents
permitted or required to be given by the Issuer hereunder, and any exceptions to
the performance by the Company of the Issuer’s covenants and other obligations
hereunder, as may be contained in the Loan Agreement).  However,
nothing contained in any such agreement in the Loan Agreement shall prevent the
Issuer from time to time, in its discretion, from performing any such covenants
or other obligations.  The Issuer shall have no liability for any
failure to fulfill, or breach by the Company of, the Company’s obligations under
the Bonds, this Indenture, the Loan Agreement, or otherwise, including without
limitation the Company’s obligation to fulfill the Issuer’s covenants and other
obligations under this Indenture.

      

      SECTION
11.2. No Rights Conferred on
Others.

       

      Nothing herein contained shall confer
any right upon any Person other than the parties hereto, the Company and the
Registered Owners of the Bonds.

      

      SECTION
11.3. Illegal, Etc. Provisions
Disregarded.

       

      If any term or provision of this
Indenture or the Bonds or the application thereof for any reason or
circumstances shall to any extent be held invalid or unenforceable, the
remaining provisions or the application of such term or provision to persons and
situations other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term and provision hereof and thereof
shall be valid and enforced to the fullest extent permitted by law.

      

      SECTION
11.4. Substitute Publication of
Notice.

       

      If for any reason it shall be
impossible to make publication of any notice required hereby in a newspaper or
newspapers, then such publication in lieu thereof as shall be made with the
approval of the Trustee shall constitute a sufficient publication of such
notice.

      

      SECTION
11.5. Mailed
Notice.

       

      All notices required or authorized to
be given to the Company, the Issuer and the Trustee pursuant to this Indenture
shall be in writing and shall be given as provided herein or 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 with
evidence of receipt confirmed to the sender, to the following
address:

      

      (a) to the
Company, to:

       

      The York Water Company

      130 East Market Street

      Box 15089

      York,
PA   17405-7089

      Attention:  President and
CEO

      Telecopy No.:  (717)
852-0058

      

      (b) to the
Issuer, to:

       

      Department of Community and Economic
Development

      Pennsylvania Economic Development
Financing Authority

      Center for Private
Financing

      Commonwealth Keystone
Building

      400 North Street – 4th
Floor

      Harrisburg,
PA   17120-0225

      Telecopy No.:  (717)
772-3103

      

      (c) to the
Trustee, to:

       

      Manufacturers and Traders Trust
Company

      213 Market Street

      Harrisburg,
PA   17101

      Attention:  Corporate Trust
Department

      Telecopy No.:  (717)
231-2615

      

      or to such other addresses as may from
time to time be furnished to the parties, effective upon the receipt of notice
thereof given as set forth above.

      

      SECTION
11.6. Governing
Law.

       

      This Indenture shall be governed, in
all respects including validity, interpretation and effect by, and shall be
enforceable in accordance with, the laws of the United States of America and of
the Commonwealth.

      

      SECTION
11.7. Successors and
Assigns.

       

      All the covenants, promises and
agreements in this Indenture contained by or on behalf of the Issuer or by or on
behalf of the Trustee shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed or not.

      

      SECTION
11.8. Action by
Company.

       

      Any requirement imposed by this
Indenture or the Loan Agreement on the Issuer may, if not performed by the
Issuer, be performed by the Company and such performance by the Company shall
constitute compliance with the requirements of this Indenture or the Loan
Agreement as if performed by the Issuer.

      

      SECTION
11.9. Headings and Subheadings for
Convenience Only.

       

      The table of contents and descriptive
headings and subheadings in this Indenture are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.

      

      SECTION
11.10. Counterparts.

       

      This Indenture may be executed in any
number of counterparts, each of which when so executed and delivered shall be an
original; but such counterparts shall together constitute but one and the same
instrument.

      

      SECTION
11.11. Additional Notices to Rating
Agencies.

       

      The Trustee hereby agrees that if at
any time (a) there is a change in the Trustee (b) there are any
amendments to the Indenture or the Loan Agreement or (c) all or any part of
the principal of the Bonds is paid, the Trustee shall use its best efforts to
promptly give notice as provided in Section 11.5 hereof of any such event
to each Rating Agency then maintaining a rating on the Bonds, which notice in
the case of an event described in clause (b) above shall include a copy of
any such amendment.  The agreement contained in this paragraph is made
as a matter of courtesy and accommodation only and the Trustee shall have no
liability to any person for any failure to comply therewith.

       

      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

          
             

          

        

      

      IN WITNESS WHEREOF, the Issuer and
Trustee have caused this Indenture of Trust to be executed in their respective
corporate names and caused their respective corporate seals to be hereunto
affixed and attested by their respective duly authorized officers or
representatives, as of the day first above written.

       

       

      
        	 	
                
                  PENNSYLVANIA
      ECONOMIC DEVELOPMENT FINANCING
      AUTHORITY

                

              	 
	Attest:	 	 	 
	
                By:/s/Craig S.
    Petrasic

              	
                By:
      

              	/s/Stephen M. Drizos	 
	Craig
      S. Petrasic	 	Stephen
      M. Drizos	 
	Assistant
      Secretary	 	Executive
      Director	 
	 	 	 	 

      

       

       

      
        
          	 	
                  MANUFACTURERS AND TRADERS
      TRUST

                  COMPANY, as
      Trustee

                	 
	Attest:	 	 	 
	
                  By:/s/Alphonse C.
      Miller

                	
                  By:
      

                	/s/Adnan
      Ahmad 	 
	Alphonse
      C. Miller 	 	Adnan
      Ahmad 	 
	Assistant
      Vice President  	 	Assistant
      Vice President 	 
	 	 	 	 

        

      

      

       

      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      

      Exhibit A

       

      (FORM
OF BOND)

       

      [The following legend shall appear so
long as the Book Entry System described in Section 2.13 of the Indenture
has not been discontinued.]

       

      This Bond is subject to a Book Entry
System of Registration under which, except as specifically provided otherwise in
the Indenture (hereinafter defined), Cede & Co., as nominee of The
Depository Trust Company, a New York corporation ("DTC"), will be the
Registered Owner and will hold this Bond on behalf of the Beneficial Owner
hereof.  By acceptance of a confirmation of purchase, delivery or
transfer, the Beneficial Owner of this Bond shall be deemed to have agreed to
such arrangement.  Cede & Co., as Registered Owner of this Bond,
shall be treated as the Owner of this Bond for all purposes.

       

      Unless this Bond is presented by an
Authorized Representative of DTC to the Trustee for registration of transfer,
exchange, or payment, and any Bond issued is registered in the name of Cede
& Co. or in such other name as is requested by an Authorized Representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an Authorized Representative of DTC), any transfer, pledge, or
other use hereof for value or otherwise by or to any person is wrongful inasmuch
as the Registered Owner hereof, Cede & Co., has an interest
herein.

       

      UNITED
STATES OF AMERICA

       

      PENNSYLVANIA ECONOMIC
DEVELOPMENT FINANCING AUTHORITY

       

      Exempt
Facilities Revenue Bond

      Series
2008B

      (The
York Water Company Project)

      

       

      No.
R-1                                                                                                                     $15,000,000

       

      

      

      Interest
Rate                                  Dated
Date                                      Maturity
Date                                             CUSIP

      6.00%                            October
15,
2008                                       November
1,
2038                                           708686
CG3

      

      

      Registered
Owner:  CEDE & CO.

      

      Principal
Amount:  FIFTEEN MILLION DOLLARS

      

      PENNSYLVANIA ECONOMIC DEVELOPMENT
FINANCING AUTHORITY (the "Issuer"), a public instrumentality of the Commonwealth
of Pennsylvania and a body corporate and politic organized and existing under
the Pennsylvania Economic Development Financing Law, as amended (the "Act"), for
value received, hereby  promises to pay, but solely from the sources
hereinafter set forth, to the Registered Owner named above or registered
assigns, on the Maturity Date specified above (unless this Bond shall have been
previously called for redemption in whole or in part and payment of the
redemption price shall have been duly made or provided for) the Principal Amount
shown above upon surrender of this Bond at the designated corporate trust office
of the Trustee (hereinafter defined) and to pay interest thereon, but solely
from such sources, at the Interest Rate per annum shown above on May 1 and
November 1 of each year, commencing May 1, 2009 (each an "Interest
Payment Date").  This Bond shall bear interest from the date of
authentication if authenticated on an Interest Payment Date to which interest
has been paid or duly provided for, otherwise from the last preceding Interest
Payment Date to which interest has been paid or duly provided for or from the
Dated Date if no interest hereon has been paid.  The principal or
redemption price of this Bond (or of a portion of this Bond in the case of a
partial redemption) is payable to the Registered Owner hereof at the corporate
trust office of Manufacturers and Traders Trust Company, Harrisburg,
Pennsylvania, or the designated office of its successor as trustee (the
"Trustee").  Interest shall be paid to the Registered Owner hereof
whose name appears on the registration books kept by the Trustee as of the
Regular Record Date by check drawn on the Trustee and mailed on the applicable
interest payment date to such Registered Owner, or at the option of any
Registered Owner, by wire transfer of immediately available funds to such wire
transfer address of a bank in the United States as such Registered Owner shall
specify in writing to the Trustee no later than the Record Date for such
payment.  The Regular Record Date for any Interest Payment Date shall
be the close of business on the fifteenth day of the month immediately preceding
the Interest Payment Date.  Any interest which is not timely paid or
duly provided for shall cease to be payable to the Holder as of the Regular
Record Date, and shall be payable to the Holder in whose name this Bond is
registered at the close of business on a Special Record Date to be fixed by the
Trustee for the payment of such overdue interest.  Notice of the
Special Record Date shall be mailed to Holders not less than ten (10) days prior
thereto.

      

      This Bond is one of the Issuer's duly
authorized Exempt Facilities Revenue Bonds, Series 2008B (The York Water Company
Project) aggregating $15,000,000 original principal amount (the "Bonds"), issued
under and pursuant to the Act and laws of the Commonwealth, and the Trust
Indenture dated as of October 1, 2008 (together with any supplements or
amendments thereto, the "Indenture"), between the Issuer and the
Trustee.  The Bonds are issued for the purpose of loaning the proceeds
thereof to The York Water Company (the "Company") for the financing of
(i) a portion of the Company’s 2008 Capital Budget, including, but not
limited to the design, acquisition, construction, improvement, extension,
renovation, equipping and installation of (a) various structures, including
distribution buildings, booster stations, pumping stations, and various plant
and ancillary buildings, (b) spillway upgrades, standpipes, transmission
and distribution mains, service lines, meters, fire hydrants, water treatment,
pumping and purification equipment, and (c) various other capital
improvements, replacements and equipment for the Company’s water system located
throughout York County and Adams County, Pennsylvania, and (ii) the payment
of all or a portion of the costs of issuance of the Bonds.  Pursuant
to a Loan Agreement dated as of October 1, 2008 (together with any supplements
or amendments thereto, the "Loan Agreement") between the Issuer and the Company,
the Company has agreed to make payments to the Trustee, on behalf of the Issuer,
in amounts and at the time sufficient to pay the principal of, redemption
premium, if any, and interest on the Bonds as and when due.

       

      Capitalized terms used in this Bond
which are not defined herein but which are defined in the Indenture or the Loan
Agreement shall have the respective meanings set forth in the Indenture or the
Loan Agreement.

       

      Reference is made to the Indenture for
provisions concerning the rights of the Registered Owners and the rights and
obligations of the Issuer, the Company and the Trustee.  The
acceptance of the terms and conditions of the foregoing documents, including
amplifications and qualifications of the provisions hereof and thereof, each of
which is on file at the corporate trust office of the Trustee in Harrisburg,
Pennsylvania, is an explicit and material part of the consideration of the
Issuer's issuance hereof and each Registered Owner hereof by acceptance of this
Bond accepts and assents to all such terms and conditions as if fully set forth
herein.

       

      REDEMPTION

       

      Optional
Redemption.  The Bonds shall be subject to redemption by the
Issuer, at the direction of the Company, on or after November 1, 2013, in whole
or in part at any time, in Authorized Denominations, at a redemption price of
100% of the principal amount redeemed plus accrued interest, if any, to the
redemption date.

       

      Special Mandatory
Redemption.  The Bonds are subject to Special Mandatory
Redemption prior to maturity not later than one hundred eighty (180) days after
the Company has notice or actual knowledge of the occurrence of a Determination
of Taxability, as defined in the Indenture, at a redemption price equal to 100%
of the principal amount thereof, plus accrued interest, if any, to the
redemption date.  Any such Special Mandatory Redemption shall be in
whole unless the Company delivers to the Trustee an opinion of Bond Counsel that
redemption of a portion of the Bonds Outstanding would have the result that
interest payable on the Bonds remaining Outstanding after such redemption would
not be includable for federal income tax purposes in the gross income of any
Owner or Beneficial Owner of a Bond (other than an owner or Beneficial Owner who
is a "substantial user" of the Project or a "related person" within the meaning
of Section 147(a) of the Code and the applicable regulations thereunder),
and in such event the Bonds or portions thereof (in Authorized Denominations)
shall be redeemed at such times and in such amounts as Bond Counsel shall so
direct in such opinion.

      

      If the Trustee receives written notice
from any Owner stating that (i) the Owner has been notified in writing by
the Internal Revenue Service that it proposes to include the interest on any
Bond in the gross income of such Owner for the reasons stated in the definition
of "Determination of Taxability" set forth in the Indenture or any other
proceeding has been instituted against such Owner which may lead to a Final
Determination, and (ii) such Owner will afford the Company the opportunity
to contest the same, either directly or in the name of the Owner, and until a
conclusion of any appellate review, if sought, then the Trustee shall promptly
give notice thereof to the Company and the Issuer and to the Owners of Bonds
then Outstanding.  If the Trustee thereafter receives written notice
of a Final Determination, the Trustee shall make demand for prepayment of the
unpaid Installment Loan Payments under the Loan Agreement or necessary portions
thereof from the Company and give notice of the Special Mandatory Redemption of
the appropriate amount of Bonds on the earliest practicable date within the
required period of 180 days.  In taking any such action or making
any such determination, the Trustee may rely on an opinion of
counsel.

      

      Notice of
Redemption.  The Trustee shall cause notice of any redemption
of Bonds hereunder to be given to the Registered Owners of all Bonds to be
redeemed at the registered addresses appearing in the registration books kept
for such purpose pursuant to the Indenture.  Each such notice shall
(i) be given by facsimile or by first class mail at least thirty (30) days
prior to the redemption date, (ii) identify the Bonds to be redeemed
(specifying the CUSIP numbers, if any, assigned to the Bonds),
(iii) specify the redemption date and the redemption price, and
(iv) state that on the redemption date the Bonds called for redemption will
be payable at the designated corporate trust operations office of the Trustee,
that from that date interest will cease to accrue, and that no representation is
made as to the accuracy or correctness of the CUSIP numbers printed therein or
on the Bonds.  No defect affecting any Bond, whether in the notice of
redemption or mailing thereof (including any failure to mail such notice), shall
affect the validity of the redemption proceedings for any other
Bonds.  The Trustee shall also send a notice of prepayment or
redemption by first class mail to the Registered Owner of any Bond who has not
sent such Bond in for redemption sixty (60) days after the redemption
date.

      

      With respect to any notice of optional
redemption of Bonds, unless upon the giving of such notice such Bonds shall be
deemed to have been paid within the meaning of Article X of the Indenture,
such notice shall state that such redemption shall be conditional upon the
receipt by the Trustee on or prior to the date fixed for such redemption of
monies sufficient to pay the principal of, and premium, if any, and interest on,
such Bonds to be redeemed, and that if such monies shall not have been so
received said notice shall be of no force and effect and the Issuer shall not be
required to redeem such Bonds.  In the event that such notice of
redemption contains such a condition and such monies are not so received, the
redemption shall not be made and the Trustee shall within a reasonable time
thereafter give notice to all Owners of Outstanding Bonds, in the manner in
which the notice of redemption was given, that such monies were not so
received.

      

      Redemption By The Company In
The Event Of Death Of A Beneficial Owner.  Unless the Bonds
have been declared due and payable prior to their maturity by reason of an Event
of Default, the Representative (as hereinafter defined) of a deceased Beneficial
Owner (as hereinafter defined) who has owned (or whose estate has owned) the
Bonds at least six months prior to any request for redemption, has the right
after November 1, 2010, to request redemption prior to stated maturity of all or
part of his interest in the Bonds, and the Company will redeem (or will cause
the Issuer to redeem) the same subject to the limitations that the Company will
not be obligated to redeem (or cause to be redeemed), during the period from
November 1, 2010 through and including November 1, 2011 (the "Initial Period"),
and during any twelve-month period which ends on and includes each November 1
thereafter (each such twelve-month period being hereinafter referred to as a
"Subsequent Period"), (i) on behalf of a deceased Beneficial Owner any interest
in the Bonds which exceeds $25,000 principal amount (the "Individual
Limitation") or (ii) interests in the Bonds exceeding $300,000 in aggregate
principal amount (the "Annual Limitation").  A request for redemption
may be initiated by the Representative of a deceased Beneficial Owner at any
time and in any principal amount.

      

      The Company may, at its option, redeem
(or cause to be redeemed) interests of any deceased Beneficial Owner in the
Bonds in the Initial Period or any Subsequent Period in excess of the Individual
Limitation.  Any such redemption, to the extent that it exceeds the
Individual Limitation for any deceased Beneficial Owner, shall not be included
in the computation of the Annual Limitation for such Initial Period or such
Subsequent Period, as the case may be, or for any succeeding Subsequent
Period.  The Company may, at its option, redeem (or cause to be
redeemed) interests of deceased Beneficial Owners in the Bonds, in the Initial
Period or any Subsequent Period in an aggregate principal amount exceeding the
Annual Limitation.  Any such redemption, to the extent it exceeds the
Annual Limitation shall not reduce the Annual Limitation for any Subsequent
Period.  On any determination by the Company to redeem (or cause to be
redeemed) Bonds in excess of the Individual Limitation or the Annual Limitation,
Bonds so redeemed shall be redeemed in the order of the receipt of Redemption
Requests (as hereinafter defined) by the Trustee.

      

      A request for redemption of an interest
in the Bonds may be initiated by the personal representative or other person
authorized to represent the estate of the deceased Beneficial Owner or by a
surviving joint tenant(s) or tenant(s) by the entirety or the trustee of a trust
(each, a "Representative").  The Representative shall deliver a
request to the DTC Participant through whom the deceased Beneficial Owner owned
such interest, in form satisfactory to the DTC Participant, together with
evidence of the death of the Beneficial Owner, evidence of the authority of the
Representative satisfactory to the DTC Participant, such waivers, notices or
certificates as may be required under applicable state or federal law and such
other evidence of the right to such redemption as the DTC Participant shall
require.  The request shall specify the principal amount of the
interest in the Bonds to be redeemed.  The DTC Participant shall
thereupon deliver to DTC a request for redemption substantially in the form
attached as Exhibit D
to the Indenture (a "Redemption Request").  DTC will, on
receipt thereof, forward the same to the Trustee.  The Trustee shall
maintain records with respect to Redemption Requests received by it including
date of receipt, the name of the DTC Participant filing the Redemption Request
and the status of each such Redemption Request with respect to the Individual
Limitation or the Annual Limitation.  The Trustee will immediately
file each Redemption Request it receives, together with the information
regarding the eligibility thereof with respect to the Individual Limitation or
the Annual Limitation with the Company.  DTC, the Issuer and the
Trustee may conclusively assume, without independent investigation, that the
statements contained in each Redemption Request are true and correct and shall
have no responsibility for reviewing any documents submitted to the DTC
Participant by the Representative or for determining whether the applicable
decedent is in fact the Beneficial Owner of the interest in the Bonds to be
redeemed or is in fact deceased and whether the Representative is duly
authorized to request redemption on behalf of the applicable Beneficial
Owner.

      

      Subject to the Individual Limitation
and the Annual Limitation, the Company will, after the death of any Beneficial
Owner, redeem (or cause to be redeemed) the interest of such Beneficial Owner in
the Bonds on the next Interest Payment Date occurring not less than 30 days
following receipt by the Company of the Redemption Request from the
Trustee.  If Redemption Requests exceed the aggregate principal amount
of interests in Bonds required to be redeemed during the Initial Period or
during any Subsequent Period, then such excess Redemption Requests will be
applied in the order received by the Trustee to successive Subsequent Periods,
regardless of the number of Subsequent Periods required to redeem such
interests.  The Company may, at any time notify the Trustee that it
will redeem (or cause to be redeemed), on the next Interest Payment Date
occurring not less than 30 days thereafter, all or any such lesser amount of
Bonds for which Redemption Requests have been received but which are not then
eligible for redemption by reason of the Individual Limitation and the Annual
Limitation.  Any Bonds so redeemed shall be redeemed in the order of
receipt of Redemption Requests by the Trustee.

      

      The price to be paid by the Company for
the Bonds to be redeemed pursuant to a Redemption Request is 100% of the
principal amount thereof plus accrued but unpaid interest to the date of
payment.  Subject to arrangements with DTC, payment for interests in
the Bonds which are to be redeemed shall be made to DTC upon presentation of
Bonds to the Trustee for redemption in the aggregate principal amount specified
in the Redemption Requests submitted to the Trustee by DTC which are to be
fulfilled in connection with such payment.  The principal amount of
any Bonds acquired or redeemed by or at the direction of the Company other than
by redemption at the option of any Representative of a deceased Beneficial Owner
pursuant to this section shall not be included in the computation of either the
Individual Limitation or the Annual Limitation for the Initial Period or for any
Subsequent Period.

      

      For purposes of this section, a
"Beneficial Owner" means the Person who has the right to sell, transfer or
otherwise dispose of an interest in a Bond and the right to receive the proceeds
therefrom, as well as the interest and principal payable to the holder
thereof.  In general, a determination of beneficial ownership in the
Bonds will be subject to the rules, regulations and procedures
governing  DTC and DTC Participants.

      

      For purposes of this section, an
interest in a Bond held in tenancy by the entirety, joint tenancy or by tenants
in common will be deemed to be held by a single Beneficial Owner and the death
of a tenant by the entirety, joint tenant or tenant in common will be deemed the
death of a Beneficial Owner.  The death of a person who, during his
lifetime, was entitled to substantially all of the rights of a Beneficial Owner
of an interest in the Bonds will be deemed the death of the Beneficial Owner,
regardless of the recordation of such interest on the records of the DTC
Participant, if such rights can be established to the satisfaction of the DTC
Participant.  Such interests shall be deemed to exist in typical cases
of nominee ownership, ownership under the Uniform Gifts to Minors Act or the
Uniform Transfers to Minors Act, community property or other similar joint
ownership arrangements, including individual retirement accounts or Keogh [H.R.
10] plans maintained solely by or for the decedent or by or for the decedent and
any spouse, and trust and certain other arrangements where the decedent has the
right to receive all or a portion of the income and such person has
substantially all of the rights of a Beneficial Owner during such person's
lifetime.

      

      In the case of a Redemption Request
which is presented on behalf of a deceased Beneficial Owner and which has not
been fulfilled at the time the Company gives notice of its election to redeem
the Bonds, the Bonds which are the subject of such pending Redemption Request
shall be redeemed prior to any other Bonds.

      

      Any Redemption Request may be withdrawn
by the person(s) presenting the same upon delivery of a written request for such
withdrawal given by the DTC Participant on behalf of such person to the DTC and
by the DTC to the Trustee not less than 60 days prior to the Interest Payment
Date on which such Bonds are eligible for redemption.

      

      The Company may, at its option,
purchase any Bonds for which Redemption Requests have been received in lieu of
redeeming (or causing the redemption of) such Bonds.  Any Bonds so
purchased by the Company shall either be reoffered for sale and sold within 180
days after the date of purchase or presented to the Trustee for redemption and
cancellation.

      

      During such time or times as the Bonds
are not represented by a Global Security and are issued in definitive form, all
references in this Section to DTC Participants and the DTC, including the DTC's
governing rules, regulations and procedures shall be deemed deleted, all
determinations which under this section the DTC Participants are required to
make shall be made by the Company (including, without limitation, determining
whether the applicable decedent is in fact the Beneficial Owner of the interest
in the Bonds to be redeemed or is in fact deceased and whether the
Representative is duly authorized to request redemption on behalf of the
applicable Beneficial Owner), all Redemption Requests, to be effective, shall be
delivered by the Representative to the Trustee, with a copy to the Company, and
shall be in the form of a Redemption Request (with appropriate changes to
reflect the fact that such Redemption Request is being executed by a
Representative) and, in addition to all documents that are otherwise required to
accompany a Redemption Request, shall be accompanied by the Bond that is the
subject of such request.

      

      Purchase in Lieu of
Redemption.  In the manner and subject to the conditions
provided in the Indenture, the Company may elect to purchase any Bonds that have
been called for redemption hereof on the redemption date by giving the Trustee
and the Issuer written notice at least two (2) Business Days prior to the
date the Bonds are to be redeemed, provided that Bonds so purchased shall be
retired.  The principal amount of Bonds to be redeemed on the
applicable redemption date shall be reduced by the amount of Bonds so
purchased.

      

      DEFAULT

       

      In case an Event of Default as defined
in the Indenture shall have occurred, the principal of all Bonds then
Outstanding under the Indenture may become due and payable prior to their
scheduled maturity date.

       

      GENERAL
PROVISIONS

       

      The Bonds are and will be equally and
ratably secured, to the extent provided in the Indenture, by the Installment
Loan Payments to be received by the Trustee from the Company under the Loan
Agreement and other amounts payable by the Company under the Loan
Agreement.  The Issuer has pledged and assigned to the Trustee as
security for the payment of the Bonds all other rights, title and interest of
the Issuer in (a) the Loan Agreement (except for the indemnification rights
and expense reimbursement rights contained therein), and (b) all amounts on
deposit from time to time in the various funds created in, and subject to the
conditions set forth, in the Indenture.

       

      No Registered Owner shall have any
right to pursue any remedy under the Indenture unless (a) the Trustee shall
have been given written notice of an Event of Default; (b) the Registered
Owners of at least 25% in principal amount of the Bonds then Outstanding shall
have requested the Trustee, in writing, to exercise the powers granted in the
Indenture or to pursue such remedy in its or their name or names; (c) the
Trustee shall have been offered indemnity satisfactory to it against costs,
expenses and liabilities; and (d) the Trustee shall have failed to comply
with such request within a reasonable time.

       

      The Bonds are being issued by means of
a book entry system, with actual bond certificates evidencing ownership of the
Bonds immobilized at The Depository Trust Company, New York, New York (the
"Securities Depository"), or its successor as Securities
Depository.  Transfers of beneficial ownership of the Bonds shall be
effected on the records of the Securities Depository and its participants
pursuant to the rules and procedures established by the Securities
Depository.  So long as the Bonds are issued in book-entry form,
actual bond certificates are not available for distribution to the beneficial
owners and the principal, redemption premium (if any), purchase price and
interest on the Bonds are payable to Cede & Co., as nominee of the
Securities Depository.  Transfer of principal, redemption premium (if
any) and interest payments to participants of the Securities Depository is the
responsibility of the Securities Depository; transfers of principal, redemption
premium (if any) and interest to beneficial owners of the Bonds by participants
of the Securities Depository will be the responsibility of such participants and
other nominees of beneficial owners.  The Issuer and the Trustee are
not responsible or liable for maintaining, supervising or reviewing the records
maintained by the Securities Depository, its participants or persons acting
through such participants.  If the Bonds are no longer registered to a
Securities Depository or its nominee:  (a) this Bond may be
registered as transferred only upon the registration books kept for that purpose
at the designated corporate trust office of the Trustee by the registered owner
hereof in person, or by his or her attorney duly authorized in writing, upon
presentation and surrender to the Trustee of this Bond duly endorsed for
registration of transfer or accompanied by an assignment duly executed by the
registered owner or his or her attorney duly authorized in writing, and
thereupon a new registered certificate, in the same aggregate principal amount
and of the same maturity shall be issued to the transferee in exchange therefor;
and (b) this Bond may be exchanged by the registered owner hereof or his or
her duly authorized attorney upon presentation at the designated corporate trust
office of the Trustee for an equal aggregate principal amount of Bonds of the
same maturity and in any Authorized Denomination in the manner, subject to the
conditions and upon payment of charges, if any, provided in the
Indenture.

       

      Except in the case of a partial
redemption and in connection with the remarketing of Bonds purchased by the
Company, the Trustee shall not be obligated to effect any such exchange or
transfer of Bonds during the fifteen (15) days immediately preceding the date of
mailing of any notice of redemption or at any time following the mailing of any
such notice in the case of Bonds selected for such redemption.

       

      The Indenture and the Loan Agreement
may be modified or amended only with the consent, with certain exceptions as
described in the Indenture, of the Registered Owners of not less than a
majority, or in certain instances 100%, in aggregate principal amount of all
Bonds Outstanding under the Indenture.

       

      Reference is hereby made to the
Indenture and the Loan Agreement, copies of which are on file with the Trustee,
for the provisions, among others, with respect to the nature and extent of the
rights, duties and obligations of the Issuer, the Company, the Trustee and the
Registered Owners of the Bonds.  The Registered Owner of this Bond, by
the acceptance hereof, is deemed to have agreed and consented to the terms and
provisions of the Indenture and the Loan Agreement.

       

      The Issuer and the Trustee shall be
entitled to treat and consider the Person in whose name this Bond is registered
in the registration books the absolute owner of this Bond for the purpose of
payment of principal, premium, if any, and interest with respect to this Bond,
for the purpose of giving notices of redemption and other matters with respect
to this Bond, for the purpose of registering transfers with respect to this
Bond, and for all other purposes whatsoever.

       

      No recourse shall be had for the
payment of the principal of or interest on this Bond, or for any claim based
hereon, against any member, officer or employee, past, present or future, of the
Issuer or of any successor body, as such, either directly or through the Issuer
or through any such successor body, under any constitutional provision, statute
or rule of law, or by the enforcement of any assessment or by any legal or
equitable proceeding or otherwise, and all such liability of such members,
officers or employees is released as a condition of and as consideration for the
execution and issuance of this Bond.

      

      Whenever the due date for payment of
interest on or principal of this Bond shall be a Saturday, Sunday or a day on
which banking institutions in the Commonwealth of Pennsylvania are authorized by
law to close (a "Holiday"), then the payment of such interest or principal need
not be made on such date, but may be made on the succeeding day which is not a
Holiday, with the same force and effect as if made on the due date for payment
of principal or interest.

      

      This Bond shall not be entitled to any
right or benefit under the Indenture, or be valid or become obligatory for any
purpose, until this Bond shall have been authenticated by execution by the
Trustee, acting as authenticating agent, of the certificate of authentication
inscribed hereon.

       

      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      

      IN WITNESS WHEREOF, the
Pennsylvania Economic Development Financing Authority has caused this Bond
to be executed in its name by the manual or facsimile signature of its
Executive Director as of the Dated Date set forth above.

       

      

      PENNSYLVANIA ECONOMIC
DEVELOPMENT FINANCING AUTHORITY

      

      

      

      By:                                                                           

      Executive Director

      

      [Seal]

      

      Attest:

      

      

      

      (Assistant)
Secretary

      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      

      CERTIFICATE
OF AUTHENTICATION

       

      This Bond is one of the Bonds described
in the within-mentioned Indenture.

      

      

      Date of
Authentication:                                                                           MANUFACTURERS
AND TRADERS TRUST

      COMPANY, as Trustee

      

      

      By:                                                                           

      Authorized Signatory

      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      

      ASSIGNMENT

       

      FOR VALUE RECEIVED, the undersigned
hereby sells, assigns and transfers unto

       

      Please
insert Social Security or

       

      Taxpayer
Identification Number of Transferee

       

      

       

      /                                                      \

       

      

       

      (Please
print or typewrite name and address, including zip code of
Transferee)

       

      

       

      the
within Bond and all rights thereunder, and hereby irrevocably constitutes
and

       

      ,

       

      appoints
attorney to register the transfer of the within Bond on the books kept
for

       

      registration
thereof, with full power of substitution in the premises.

       

      

       

      Dated:                                                                

       

      Signature
Guaranteed:

       

      

       

      
        	
                _______________________________

              	 
      	
                _________________________________

              
	
                 

                Notice:  Signature
      (s) must be guaranteed by an eligible guarantor institution participating
      in a securities transfer association recognized signature guarantee
      program.

                 

              	 
      	
                 

                Notice:  The
      Signature above must correspond with the name of the Registered Owner as
      it appears upon the front of this Bond in every particular, without
      alteration or enlargement or any change
  whatsoever

              

      

      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      

      EXHIBIT B

       

      DTC
LETTER OF REPRESENTATION

       

      See
Tab 25

       

      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      

      EXHIBIT C

      

      FORM
OF REQUISITION

      

      

      PENNSYLVANIA
ECONOMIC DEVELOPMENT FINANCING AUTHORITY

      EXEMPT
FACILITIES REVENUE BONDS, SERIES 2008B

      (THE
YORK WATER COMPANY PROJECT)

      

      FORM OF
REQUISITION

      

      

      Requisition No.
_____________________

      Date:  _____________________________

      

      

      Manufacturers
and Traders Trust Company,

      as Trustee

      213
Market Street

      Harrisburg,
PA   17101

      

      

      Ladies
and Gentlemen:

      

      All capitalized terms used herein shall
have the meanings set forth in the Trust Indenture dated as of October 1, 2008
(the "Indenture") between the Pennsylvania Economic Development Financing
Authority and Manufacturers and Traders Trust Company, as trustee.

      

      You are hereby directed, pursuant to
Section 3.4 of the Indenture, to make the following advances from the
Construction Fund under the Indenture:

      

      
        	
                Name and Address of Payee

              	
                Amount to be Paid

              	
                Purpose of Payment

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

      

      

      The undersigned Authorized Company
Representative(s) hereby certifies that each of these obligations has been
properly incurred, is for Project Costs, is a proper charge against the
Construction Fund in accordance with the provisions of the Loan Agreement, the
Tax Documents and the Indenture and each amount requisitioned is due and unpaid
and has not been the basis of any previous requisition.  To the extent
the ultimate payee is not The York Water Company (the "Company"), the amount
requisitioned will be transferred to such third party immediately upon
receipt.  The undersigned further certifies that there is no Event of
Default now existing and he/she has no knowledge of any vendors’, mechanics’ or
other liens, conditional sales contracts, chattel mortgages, leases of
personalty, title retention agreements or security interests which should be
satisfied or discharged before the payments as requisitioned herein are made or
which will not be discharged by such payment.

      

      

      THE YORK WATER COMPANY

      

      

      By:                                                                           

      Authorized Company
Representative

      

      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      

      EXHIBIT
D

      

      FORM
OF REDEMPTION REQUEST

      PENNSYLVANIA
ECONOMIC DEVELOPMENT FINANCING AUTHORITY

      EXEMPT
FACILITIES REVENUE BONDS

      SERIES
2008B

      (The
York Water Company Project)

      

      due
November 1, 2038

      (the
"Bonds")

      

      CUSIP
NO. __________

      

      The undersigned, ____________________
(the "Participant"), does hereby certify, pursuant to the provisions of that
certain Trust Indenture dated as of October 1, 2008 (the "Indenture") between
the Pennsylvania Economic Development Financing Authority (the "Issuer") and
Manufacturers and Traders Trust Company as Trustee (the "Trustee"), to the
Depository Trust Company (the "DTC"), York Water Company (the "Company"), the
Issuer and the Trustee that:

      

      1.           [Name
of deceased Beneficial Owner] is deceased.

      

      2.           [Name
of deceased Beneficial Owner] had a $__________ interest in the above referenced
Bonds.

      

      3.           [Name
of Representative] is [Beneficial Owner's personal representative/other person
authorized to represent the estate of the Beneficial Owner/surviving joint
tenant/surviving tenant by the entirety/trustee of a trust] of [Name of deceased
Beneficial Owner] and has delivered to the undersigned a request for redemption
in form satisfactory to the undersigned, requesting that $__________ principal
amount of said Bonds be redeemed pursuant to said Indenture.  The
documents accompanying such request, all of which are in proper form, are in all
respects satisfactory to the undersigned and the [Name of Representative] is
entitled to have the Bonds to which this Request relates redeemed.

      

      4.           The
Participant holds the interest in the Bonds with respect to which this Request
for Redemption is being made on behalf of [Name of deceased Beneficial
Owner].

      

      5.           The
Participant hereby certifies that it will indemnify and hold harmless DTC, the
Trustee, the Issuer and the Company (including their respective officers,
directors, agents, attorneys and employees), against all damages, loss, cost,
expense (including reasonable attorneys' and accountants' fees), obligations,
claims or liability (collectively, the "Damages") incurred by the indemnified
party or parties as a result of or in connection with the redemption of Bonds to
which this Request relates.  The Participant will, at the request of
the Company, forward to the Company, a copy of the documents submitted by [Name
of Representative] in support of the request for redemption.

      

      IN WITNESS WHEREOF, the
undersigned has executed this Redemption Request as of
_________________.

      

      [PARTICIPANT NAME]

      

      By:                                                                

      Name:

      Title:

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