Document:

ppl10k2007exhibit10q.htm

    
      Exhibit
10(q)-7

      

      SIXTH
AMENDMENT TO REIMBURSEMENT AGREEMENT

      

      THIS
SIXTH AMENDMENT TO REIMBURSEMENT AGREEMENT, dated as of March 29, 2007 (this
“Amendment”),
to the Existing Reimbursement Agreement (as defined below) is made by PPL ENERGY
SUPPLY, LLC, a Delaware limited liability company (the “Account Party”), and
certain of the Lenders (such capitalized term and other capitalized terms used
in this preamble and the recitals below to have the meanings set forth in, or
are defined by reference in, Article I
below).

       

      W I T N E S S E T
H:

       

      WHEREAS,
the Account Party, the Lenders and The Bank of Nova Scotia, as the Issuer and as
Administrative Agent, are all parties to the Reimbursement Agreement, dated as
of March 31, 2005 (as amended or otherwise modified prior to the date
hereof, the “Existing
Reimbursement Agreement”, and as amended by this Amendment and as the
same may be further amended, supplemented, amended and restated or otherwise
modified from time to time, the “Reimbursement
Agreement”); and

       

      WHEREAS,
the Account Party has requested that the Lenders amend certain provisions of the
Existing Reimbursement Agreement and the Lenders are willing to modify the
Existing Reimbursement Agreement on the terms and subject to the conditions
hereinafter set forth;

       

      NOW,
THEREFORE, the parties hereto hereby covenant and agree as follows:

       

      ARTICLE
I

      DEFINITIONS

       

      SECTION
1.1.  Certain
Definitions.  The following terms when used in this Amendment
shall have the following meanings (such meanings to be equally applicable to the
singular and plural forms thereof):

       

       
“Account Party”
is defined in the preamble.

       

       
“Amendment” is
defined in the preamble.

       

       
“Existing
Reimbursement Agreement” is defined in the first
recital.

       

       
“Reimbursement
Agreement” is defined in the first
recital.

       

       

      SECTION
1.2.  Other
Definitions.  Terms for which meanings are provided in the
Existing Reimbursement Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendment with such
meanings.

       

      ARTICLE
II

      AMENDMENTS
TO THE EXISTING REIMBURSEMENT AGREEMENT

       

      Effective
as of the date hereof, but subject to the occurrence of the satisfaction of the
conditions in Article
III, the provisions of the Existing Reimbursement Agreement referred to
below are hereby amended in accordance with this Article
II.

       

       

      SECTION
2.1.  Amendment to Article
I.  The definition of “Restricted Subsidiary” set forth in
Section 1.1 of the Existing Reimbursement Agreement is hereby amended by
deleting the words “Schedule 5.12” therein and inserting the words “Schedule
5.11” in lieu thereof.

       

       

      SECTION
2.2.  Amendment to Article
II.  Clause (b) of Section 2.5 of the Existing Reimbursement
Agreement is hereby amended in its entirety to read as follows:

       

      deliver
to the Administrative Agent a representation certificate duly executed by an
Authorized Officer of the Account Party, dated as of March 31, 2007, in form and
substance satisfactory to the Administrative Agent.

       

      SECTION
2.3.  Amendments to Article
VI.  Article VI of the Existing Reimbursement Agreement is
hereby amended in accordance with Sections 2.3.1
through 2.3.3.

       

       

      SECTION
2.3.1.  Section 6.4 of the Existing Reimbursement Agreement is hereby
amended by deleting each instance of the date “December 31, 2004” in clauses (a)
and (b) thereof and inserting the date “December 31, 2005” in lieu
thereof.

       

       

      SECTION
2.3.2.  Section 6.6 of the Existing Reimbursement Agreement is hereby
amended by deleting the date “December 31, 2004” therein and inserting the date
“December 31, 2005” in lieu thereof.

       

       

      SECTION
2.3.3.  Section 6.11 of the Existing Reimbursement Agreement is hereby
amended in its entirety to read as follows:

       

       

       SECTION
6.11.  [INTENTIONALLY OMITTED.]

       

       

      SECTION
2.4.  Amendments to Article
VIII.  Article VIII of the Existing Reimbursement Agreement is
hereby amended in accordance with Sections 2.4.1 and
2.4.2.

       

       

      SECTION
2.4.1.  Section 8.1.3 of the Existing Reimbursement Agreement is
hereby amended in its entirety to read as follows:

       

      SECTION
8.1.3.  The Account Party shall default in the due performance or
observance of any of its obligations under clause (ii) of Section 6.05, or
Sections 6.06, 6.08, 6.09, 6.11 or 6.12 of the Incorporated
Agreement.

       

       

      SECTION
2.4.2.  Clause (a) of Section 8.1.4 of the Existing Reimbursement
Agreement is hereby amended in its entirety to read as follows:

       

       

      (a) fail
to observe or perform any covenant or agreement contained in Section 6.01(d)(i)
of the Incorporated Agreement for 30 days after any such failure or in Section
6.01(d)(ii) of the Incorporated Agreement for 10 days after any such failure;
or

       

      ARTICLE
III

      CONDITIONS
TO EFFECTIVENESS

       

      This
Amendment and the amendments contained herein shall become effective as of the
date hereof when each of the conditions set forth in this Article III shall
have been fulfilled to the satisfaction of the Administrative
Agent.

       

       

      SECTION
3.1.  Counterparts.  The
Administrative Agent shall have received counterparts hereof executed on behalf
of the Account Party and the Required Lenders.

       

       

      SECTION
3.2.  Costs
and Expenses, etc.  The Administrative Agent shall have
received for the account of each Lender, all fees, costs and expenses due and
payable pursuant to Section 10.3 of the Reimbursement Agreement, if then
invoiced.

       

       

      SECTION
3.3.  Satisfactory Legal
Form.  The Administrative Agent and its counsel shall have
received all information, and such counterpart originals or such certified or
other copies of such materials, as the Administrative Agent or its counsel may
reasonably request, and all legal matters incident to the effectiveness of this
Amendment shall be satisfactory to the Administrative Agent and its
counsel.  All documents executed or submitted pursuant hereto or in
connection herewith shall be reasonably satisfactory in form and substance to
the Administrative Agent and its counsel.

       

      ARTICLE
IV

      MISCELLANEOUS

       

      SECTION
4.1.  Automatic Extension of
Stated Maturity Date.  After the occurrence of the Amendment
Effective Date and upon receipt of the items set forth in clauses (a) and (b) of
Section 2.5 of the Credit Agreement, the Stated Maturity Date shall be
automatically extended to March 31, 2008 in accordance with such
Section.

       

       

      SECTION
4.2.  Cross-References.  References
in this Amendment to any Article or Section are, unless otherwise specified, to
such Article or Section of this Amendment.

       

       

      SECTION
4.3.  Loan
Document Pursuant to Existing Reimbursement Agreement.  This
Amendment is a Loan Document executed pursuant to the Existing Reimbursement
Agreement and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with all of the terms and provisions of
the Existing Reimbursement Agreement, as amended hereby, including
Article X thereof.

       

       

      SECTION
4.4.  Successors and
Assigns.  This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns.

       

       

      SECTION
4.5.  Counterparts.  This
Amendment may be executed by the parties hereto in several counterparts, each of
which when executed and delivered shall be an original and all of which shall
constitute together but one and the same agreement.  Delivery of an
executed counterpart of a signature page to this Amendment by facsimile shall be
effective as delivery of a manually executed counterpart of this
Amendment.

       

       

      SECTION
4.6.  Governing
Law.  THIS AMENDMENT WILL BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH
PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE
OF NEW YORK).

       

       

      SECTION
4.7.  Full
Force and Effect; Limited Amendment.  Except as expressly
amended hereby, all of the representations, warranties, terms, covenants,
conditions and other provisions of the Existing Reimbursement Agreement and the
Loan Documents shall remain unchanged and shall continue to be, and shall
remain, in full force and effect in accordance with their respective
terms.  The amendments set forth herein shall be limited precisely as
provided for herein to the provisions expressly amended herein and shall not be
deemed to be an amendment to, waiver of, consent to or modification of any other
term or provision of the Existing Reimbursement Agreement or any other Loan
Document or of any transaction or further or future action on the part of any
Obligor which would require the consent of the Lenders under the Existing
Reimbursement Agreement or any of the Loan Documents.

       

       

      SECTION
4.8.  Representations and
Warranties.  In order to induce the Lenders to execute and
deliver this Amendment, the Account Party hereby represents and warrants to the
Lenders, on the date this Amendment becomes effective pursuant to Article III, that
both before and after giving effect to this Amendment, all statements set forth
in clauses (a) and (b) of Section 5.2.1 of the Reimbursement Agreement are true
and correct as of such date, except to the extent that any such statement
expressly relates to an earlier date (in which case such statement was true and
correct on and as of such earlier date).

      

       

      IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment
as of the date first above written.

      

        
          

        

      

       

       

      

       

      PPL
ENERGY SUPPLY, LLC

      

      

      By:  /s/ James E.
Abel                             

            Title:  Vice
President and Treasurer

      

      

      

      THE BANK
OF NOVA SCOTIA

      

      

      By:  /s/ Andrew
Johnson                      

            Title:
Directorppl10k2007exhibit10y.htm

    Exhibit
      10(y)

     

    

     

    

     

    

     

    

     

    

     

    EXEMPT
      FACILITIES LOAN AGREEMENT

     

    

     

    Between

     

    

     

    PENNSYLVANIA
      ECONOMIC DEVELOPMENT FINANCING AUTHORITY

     

    and

     

    

     

    PPL
      ENERGY SUPPLY, LLC

     

    

     

    Dated
      as
      of December 1, 2007

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Table
      of Contents

     

    Page

     

    
      	
              I.

            	
              Background,
                Definitions, Representations and Findings.

            	
              1

            
	 	
              Section
                1.1

            	
              Background

            	
              1

            
	 	
              Section
                1.2

            	
              Definitions

            	
              1

            
	 	
              Section
                1.3

            	
              Company
                Representations

            	
              4

            
	 	
              Section
                1.4

            	
              Authority
                Findings and Representations

            	
              6

            
	 	 	 
	
              II.

            	
              The
                Project Facilities.

            	
              7

            
	 	
              Section
                2.1

            	
              Acquisition
                of Project Facilities

            	
              7

            
	 	
              Section
                2.2

            	
              Additions
                and Changes to Project Facilities

            	
              7

            
	 	
              Section
                2.3

            	
              Issuance
                of Bonds; Application of Proceeds

            	
              8

            
	 	
              Section
                2.4

            	
              Disbursements
                from Project Fund

            	
              8

            
	 	
              Section
                2.5

            	
              Company
                Required to Pay Costs in Event Project Fund Insufficient

            	
              9

            
	 	
              Section
                2.6

            	
              Completion

            	
              9

            
	 	
              Section
                2.7

            	
              Investment
                and Use of Fund Moneys

            	
              9

            
	 	
              Section
                2.8

            	
              Rebate
                Fund

            	
              9

            
	 	 	 
	
              III.

            	
              Loan
                By Authority; Loan Payments; Other Payments

            	
              9

            
	 	
              Section
                3.1

            	
              Loan
                by Authority

            	
              9

            
	 	
              Section
                3.2

            	
              Loan
                Payments

            	
              10

            
	 	
              Section
                3.3

            	
              Purchase
                Payments

            	
              10

            
	 	
              Section
                3.4

            	
              Additional
                Payments

            	
              10

            
	 	
              Section
                3.5

            	
              Obligations
                Unconditional

            	
              11

            
	 	
              Section
                3.6

            	
              Assignment
                of Authority’s Rights

            	
              11

            
	 	 	 
	
              IV.

            	
              Additional
                Covenants Of Company

            	
              11

            
	 	
              Section
                4.1

            	
              Maintenance
                of Existence

            	
              11

            
	 	
              Section
                4.2

            	
              Compliance
                with Laws; Commencement and Continuation of Operations at Project
                Facilities; No Sale, Removal or Demolition of Project
                Facilities

            	
              12

            
	 	
              Section
                4.3

            	
              Right
                of Inspection

            	
              13

            
	 	
              Section
                4.4

            	
              Lease
                by Company

            	
              13

            
	 	
              Section
                4.5

            	
              Financial
                Statements; Books and Records

            	
              13

            
	 	
              Section
                4.6

            	
              Taxes,
                Other Governmental Charges and Utility Charges

            	
              13

            
	 	
              Section
                4.7

            	
              Insurance

            	
              14

            
	 	
              Section
                4.8

            	
              Damage
                to or Condemnation of Project Facilities

            	
              14

            
	 	
              Section
                4.9

            	
              Misuse
                of Bond Proceeds; Litigation Notice

            	
              14

            
	 	
              Section
                4.10

            	
              Indemnification

            	
              14

            
	 	
              Section
                4.11

            	
              Tax
                Covenants of Company and Authority

            	
              16

            
	 	
              Section
                4.12

            	
              Further
                Tax Covenants of Company

            	
              16

            
	 	
              Section
                4.13

            	
              Nondiscrimination/Sexual
                Harassment Clause

            	
              18

            
	 	 	 
	
              V.

            	
              Redemption
                of Bonds

            	
              18

            
	 	
              Section
                5.1

            	
              Optional
                Redemption

            	
              18

            
	 	
              Section
                5.2

            	
              Mandatory
                Redemption

            	
              19

            
	 	
              Section
                5.3

            	
              Actions
                by Authority

            	
              19

            
	 	 	 
	
              VI.

            	
              Events
                Of Default And Remedies

            	
              19

            
	 	
              Section
                6.1

            	
              Events
                of Default

            	
              19

            
	 	
              Section
                6.2

            	
              Remedies
                on Default.

            	
              20

            
	 	
              Section
                6.3

            	
              Remedies
                Not Exclusive

            	
              21

            
	 	
              Section
                6.4

            	
              Payment
                of Legal Fees and Expenses

            	
              22

            
	 	
              Section
                6.5

            	
              No
                Waiver

            	
              22

            
	 	
              Section
                6.6

            	
              Notice
                of Default

            	
              22

            
	 	 	 	 
	
              VII.

            	
              Miscellaneous

            	 	
              22

            
	 	
              Section
                7.1

            	
              Term
                of Agreement

            	
              22

            
	 	
              Section
                7.2

            	
              Notices

            	
              22

            
	 	
              Section
                7.3

            	
              Limitation
                of Liability; No Personal Liability

            	
              23

            
	 	
              Section
                7.4

            	
              Binding
                Effect

            	
              24

            
	 	
              Section
                7.5

            	
              Amendments

            	
              24

            
	 	
              Section
                7.6

            	
              Counterparts

            	
              24

            
	 	
              Section
                7.7

            	
              Severability

            	
              24

            
	 	
              Section
                7.8

            	
              Governing
                Law

            	
              24

            
	 	
              Section
                7.9

            	
              Assignment

            	
              24

            
	 	
              Section
                7.10

            	
              Receipt
                of Indenture

            	
              25

            
	 	 	 	 

    

    

    
      	
              EXHIBIT
                A – Description of Project Facilities

            	
              A-1

            
	
              EXHIBIT
                B – Form of Disbursement Request

            	
              B-1

            
	
              EXHIBIT
                C – Form of Exempt Facilities Note

            	
              C-1

            
	
              EXHIBIT
                D – Nondiscrimination /Sexual Harassment Clause

            	
              D-1

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXEMPT
      FACILITIES LOAN AGREEMENT dated as of December 1, 2007 (the “Agreement”) between
      PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY (the “Authority”) and PPL
      ENERGY SUPPLY, LLC (together with permitted successors and assigns, the
“Company”).

     

     

    I.           
      Background, Definitions, Representations and Findings.

     

    Section
      1.1   
      Background.  Pursuant
      to the Pennsylvania Economic Development Financing Law (Act No. 102, approved
      August 23, 1967, P.L. 251, as amended) (the “Act”), the Montour County
      Industrial Development Authority has authorized and approved the Project
      Facilities (as defined herein) and the financing thereof by the Authority
      through the issuance of the Authority’s Exempt Facilities Revenue Bonds, Series
      2007 (PPL Energy Supply, LLC Project) in the original aggregate principal amount
      of $80,570,000 (the “Bonds”) and the loan of the proceeds thereof to the Company
      to finance a portion of the costs of the installation of certain “pollution
      control facilities” (as defined in the Act) consisting of four limestone
      forced-oxidation flue gas desulfurization systems (or sulfur dioxide scrubbers)
      at (i) the Montour County Generating Station, Washingtonville, Montour County,
      Pennsylvania, and (ii) the Brunner Island Generating System, York Haven, York
      County, Pennsylvania (collectively, the “Plants”), such facilities as more fully
      described in Exhibit A are herein called the “Project Facilities”.

     

    The
      Bonds
      will be issued under a Trust Indenture dated as of the date hereof (the
“Indenture”) between the Authority and The Bank of New York Trust Company, N.A.,
      as trustee (the “Trustee”).  The Company and the Authority are
      entering into this Agreement in order to provide for the issuance of the Bonds
      and the loan of the proceeds of the Bonds to the Company.

     

    The
      obligation of the Company to repay the loan of the proceeds of the Bonds made
      pursuant hereto will be evidenced by the Company’s Exempt Facilities Note
      (Pennsylvania Economic Development Financing Authority) Series 2007 in the
      principal amount of $80,570,000 (the “Note”) issued to the Trustee as the
      assignee of the Authority under the Indenture.  The Company has
      elected to cause and is causing to be delivered to the Trustee an irrevocable
      direct pay letter of credit (the “Letter of Credit”) issued by Wachovia Bank,
      National Association (the “Bank”).  Nothing herein shall require the
      Company to maintain the Letter of Credit or any other Credit Facility (as
      defined in the Indenture).

     

    The
      Authority and the Company intend that substantially all of the Project
      Facilities constitute or will constitute “pollution control facilities” for
      purposes of the Act and solid waste disposal facilities for the purposes of
      the
      Internal Revenue Code of 1986, as amended (the “Code”), so that interest on the
      Bonds will not be included in gross income of the holders thereof for federal
      income tax purposes under the Code (except for such holders who are “substantial
      users” of the Project Facilities or “related persons” as provided in Section
      147(a) of the Code).

     

    Section
      1.2   
      Definitions.  Terms
      used in this Agreement which are defined in the Indenture and are not otherwise
      defined in this Agreement shall have the meanings set forth in the Indenture
      unless the context or use clearly indicates another meaning or
      intent.  In addition to the terms defined in the recital clauses of
      this Agreement, as used herein:

     

    “Additional
      Payments” means the amounts required to be paid by the Company pursuant to
      Section 3.4.

     

    “Agreement”
      means this Exempt Facilities Loan Agreement, as amended or supplemented from
      time to time.

     

    “Authority’s
      Fee” means an amount equal to 0.2% of the amount of the Loan.

     

    “Authorized
      Representative” means, (i) with respect to the Authority, each person at the
      time designated to act on behalf of the Authority by written certificate
      furnished to the Trustee containing the specimen signature of such person and
      signed on behalf of the Authority by its Secretary or Assistant Secretary,
      (ii)
      with respect to the Company, each person at the time designated to act on behalf
      of the Company by written certificate furnished to the Trustee containing the
      specimen signature of such person and signed on behalf of the Company by its
      President, any Vice President, its Treasurer, its Secretary, any Assistant
      Treasurer or any Assistant Secretary and (iii) with respect to the Credit
      Facility Issuer, each person at the time designated to act on behalf of the
      Credit Facility Issuer by written certificate furnished to the Trustee
      containing the specimen signature of such person and signed on behalf of the
      Credit Facility Issuer by its President, Vice President, Manager, Treasurer,
      Secretary, Assistant Treasurer or Assistant Secretary.

     

    “Completion
      Date” means the date that the Company certifies to the Trustee and the Authority
      that the Project Facilities have been completed.

     

    “Debt
      Service” means, for any period or payable at any time, the principal of,
      premium, if any, on and interest on the Bonds for that period or payable at
      the
      time whether due on an Interest Payment Date, at maturity or upon acceleration
      or redemption.

     

    “Issue
      Date” means December 31, 2007.

     

    “Loan”
      means the loan by the Authority to the Company of the proceeds of the Bonds
      pursuant to Section 3.1 in the original principal amount of
      $80,570,000.

     

    “Loan
      Payments” means the amounts required to be paid by the Company in repayment of
      the Loan pursuant to Section 3.2.

     

    “Local
      Entity” means the Montour County Industrial Development Authority.

     

    “Misuse
      of Bond Proceeds” means the implementation or operation of the Project
      Facilities in a manner which would cause the Project Facilities to not be a
      “project” as defined in the Act or the use of the proceeds of the Bonds for any
      purpose materially different from the Project Facilities as described to and
      approved by the Authority.

     

    “Project
      Approval” means the initial official action of the Local Entity declaring its
      intent with respect to the financing of the Project Facilities.  The
      date of the Project Approval is December 19, 2007.

     

    “Project
      Costs” means costs of the Project Facilities permitted under the Act, including,
      but not limited to, the following:

     

    (a)           
      Costs incurred in connection with the acquisition, construction, installation,
      equipment or improvement of the Project Facilities, including costs incurred
      in
      respect of the Project Facilities for preliminary planning and studies;
      architectural, engineering, accounting, consulting, legal and other professional
      fees and expenses; labor, services and materials;

     

    (b)           
      Fees, charges and expenses incurred in connection with the authorization, sale,
      issuance and delivery of the Bonds, including without limitation underwriting
      discount, printing expense, title insurance, recording fees and the initial
      and
      first year annual fees and expenses of the Trustee, Authority, Local Entity
      and
      Remarketing Agent; provided that the amount of the proceeds of the Bonds used
      to
      finance such issuance costs (but excluding the Authority’s Fee) shall not exceed
      2% of the aggregate face amount of the Bonds within the meaning of Section
      147(g) of the Code;

     

    (c)           
      Payment of interest on the Bonds or other interim indebtedness of the Company
      incurred to pay Project Costs on an interim basis and fees and expenses of
      the
      Trustee and Remarketing Agent accruing prior to the Completion Date;
      and

     

    (d)           
      Any other costs, expenses, fees and charges properly chargeable to the cost
      of
      acquisition, construction, installation, equipment or improvement of the Project
      Facilities.

     

    “Purchase
      Payments” means the amounts required to be paid by the Company pursuant to
      Section 3.3.

     

    “Rehabilitation
      Expenditure” shall mean a “rehabilitation expenditure” as such term is defined
      in Section 147(d)(3) of the Code, including, without limiting the generality
      of
      the foregoing, a capital expenditure incurred in connection with the
      rehabilitation of a building or structure which is part of the Project
      Facilities, if such expenditure is incurred by the Company, the seller of such
      building to the Company (if incurred pursuant to the sales contract between
      such
      seller and the Company) or a successor to the Company; provided,
      that:

     

    (1)           
      if an integrated operation is contained in such building or structure before
      its
      acquisition by Company, expenditures incurred to rehabilitate existing equipment
      or to replace existing equipment with equipment having substantially the same
      function is treated as incurred in connection with the rehabilitation of such
      building or structure; and

     

    (2)           
      notwithstanding the foregoing, the term “Rehabilitation Expenditure” does not
      include any expenditure:

     

    (a)           
      with respect to which the method and period of depreciation is other than the
      straight line method over a period determined under Section 168(c) or (g) of
      the
      Code, unless the alternative depreciation system of Section 168(g) of the Code
      applies to such expenditure by reason of Section 168(g)(1)(B) or (C) of the
      Code;

     

    (b)           
      for the cost of acquiring any building or interest therein;

     

    (c)           
      attributable to enlargement of an existing building;

     

    (d)           
      attributable to the rehabilitation of a certified historic structure or a
      building in a registered historic district, unless either the rehabilitation
      is
      a certified rehabilitation or, with respect to a building other than a certified
      historic structure, the Secretary of the Interior has certified to the Secretary
      of the Treasury that the building is not of historic significance to the
      district (all terms used in this paragraph (d) have the meanings assigned in
      Section 47(c)(2)(B) of the Code);

     

    (e)           
      allocable to the portion of such building which is, or may reasonably be
      expected to be, tax-exempt use property within the meaning of Section 168(h)
      of
      the Code; or

     

    (f)           
      by a lessee of such building.

     

    “Related
      Person” shall have the meaning set forth in Section 144(a)(3) of the Code and
      shall include (to the extent there provided) any parent, subsidiary, affiliated
      corporation or unincorporated enterprise, majority shareholder and commonly
      owned entity.

     

    “Remarketing
      Agreement” means the Remarketing Agreement between the Company and the
      Remarketing Agent relating to the Bonds, as the same may be amended,
      supplemented or replaced from time to time.

     

    “Resolutions”
      means the resolutions of the Authority approving and authorizing the Bonds,
      the
      Indenture and this Agreement.

     

    “Unassigned
      Authority’s Rights” means all of the rights of the Authority to receive
      Additional Payments under Section 3.4, to be held harmless and indemnified
      under
      Section 4.10, to be reimbursed for attorney’s fees and expenses under Section
      6.4, to exercise remedies under Section 6.2 and to give or withhold consent
      to
      or approval of amendments, modifications, termination or assignment of this
      Agreement, or sale, transfer, assignment, lease (or assignment of lease) or
      other disposal of the Project Facilities, or other matters requiring consent
      or
      approval under Sections 2.2, 4.1, 4.2, 4.4, 7.5 and 7.9.

     

    Section
      1.3     Company
      Representations.  The Company represents as of the date hereof
      that:

     

    (a)           
      It
      is a
      limited liability company duly formed and validly existing under the laws of
      the
      State of Delaware, is duly qualified to do business in the Commonwealth of
      Pennsylvania, and has requisite power and legal right to enter into this
      Agreement and perform its obligations hereunder.  The making and
      performance of this Agreement on the part of the Company have been duly
      authorized by all necessary corporate action.

     

    (b)           
      The
      Project Facilities will abate, reduce, remediate or aid in the prevention,
      control, collection, treatment, disposal or monitoring of solid waste and other
      pollutants and will facilitate compliance with the environmental requirements
      of
      federal, state or local agencies exercising jurisdiction thereover.

     

    (c)           
      Neither
      the execution and delivery of this Agreement nor the consummation of the
      transactions contemplated hereby will conflict in any material respect with
      or
      constitute a material violation or breach of, or a material default under,
      the
      Company’s certificate of formation or Limited Liability Company Agreement, or
      any indenture or other material agreement or instrument to which the Company
      is
      a party or by which it or any of its property is bound.

     

    (d)           
      This Agreement
      and the Note have been duly authorized, executed and delivered by the Company
      and are valid instruments legally binding upon the Company (except as may be
      limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
      moratorium and other similar laws affecting the enforcement of creditors’ rights
      generally, by general equitable proceedings (whether considered in a proceeding
      in equity or at law) and by an implied covenant of good faith, fair dealing
      and
      reasonableness).

     

    (e)           
      The
      Company is not a Disqualified Contractor.

     

    (f)           
      The
      Project Facilities will promote the public purposes of the Act 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 of
      Pennsylvania to another.  The Project Facilities are located within
      the boundaries of the county, city, town, borough or township which organized
      the Local Entity (or within the boundaries of the county in which such city,
      town, borough or township is located or in which such Local Entity is certified
      by the Pennsylvania Industrial Development Authority to act as an industrial
      development agency as defined in the Act).

     

    (g)           
      The
      Company or the Affiliates have acquired or will acquire all permits and licenses
      including, without limitation, all required environmental permits or approvals,
      and has satisfied or will satisfy in all material respects other requirements
      necessary, for the acquisition, construction, installation and/or operation
      of
      the Project Facilities.  The Project Facilities are a project within
      the meaning of the Act and will be operated as such.

     

    (h)           
      The
      Company presently intends to use or operate or cause to be used
      or
      operated the Project Facilities in a manner consistent with the Act until the
      date on which the Bonds have been fully paid and knows of no reason why the
      Project Facilities will not be so used or operated.

     

    (i)           
      The
      information furnished by the Company and used by the Authority in preparing
      the
      arbitrage certificate pursuant to Section 148 of the Code and information
      statement pursuant to Section 149(e) of the Code is accurate and complete as
      of
      the Issue Date.

     

    (j)           
      The
      proceeds of the Bonds will not exceed the Project Costs.

     

    (k)           
      The
      costs
      of issuance financed with proceeds of the Bonds, including any underwriting
      discount on the sale of the Bonds, will not exceed 2% of the proceeds of the
      Bonds.

     

    (l) No
      costs
      of the Project Facilities to be financed with the proceeds of the Bonds, except
      for certain preliminary costs such as architectural, engineering, surveying,
      soil testing and similar costs incurred before the start of construction of
      the
      Project Facilities,  have been paid by or on behalf of the Company,
      the Affiliates or any Related Person more than 60 days prior to April 15,
      2005.

     

    Section
      1.4   
      Authority Findings
      and
      Representations.  The Authority hereby confirms its findings
      and represents that:

     

    (a)           
      The
      Authority is a public body corporate and politic established in the Commonwealth
      of Pennsylvania pursuant to the laws of the Commonwealth of Pennsylvania
      (including the Act).  Under the Act, the Authority has the power to
      enter into the Indenture, the Purchase Agreement and this Agreement and to carry
      out its obligations thereunder and to issue the Bonds to finance the Project
      Facilities.

     

    (b)           
      By
      adoption of the Resolutions at one or more duly convened meetings of the
      Authority at which a quorum was present and acting throughout, the Authority
      has
      duly authorized the execution and delivery of the Indenture, the Purchase
      Agreement and this Agreement and performance of its obligations thereunder
      and
      the issuance of the Bonds.  Simultaneously with the execution and
      delivery of this Agreement, the Authority has duly executed and delivered the
      Indenture and issued and sold the Bonds.

     

    (c)           
      Based
      on
      representations and information furnished to the Authority by or on behalf
      of
      the Company and the Local Entity, the Authority has found that the Company
      is
      qualified to be a beneficiary of financing provided by the Authority pursuant
      to
      the Act.

     

    (d)           
      Based
      on
      representations and information furnished to the Authority by or on behalf
      of
      the Company, the Authority has found that the Project Facilities (i) will
      promote the public purposes of the Act, (ii) are located within the boundaries
      of the Commonwealth of Pennsylvania and within the boundaries of the county,
      city, town, borough or township which organized the Local Entity (or within
      the
      boundaries of the county in which such city, town, borough or township is
      located or in which such Local Entity is certified by The Pennsylvania
      Industrial Development Authority to act as an industrial development agency
      as
      defined in the Act), and (iii) will constitute a project within the meaning
      of
      the Act.

     

    (e)           
      The
      Authority has filed a Preliminary Allocation Request (“PAR”) for purposes of
      receiving an allocation of the tax-exempt bond authority of the Commonwealth
      of
      Pennsylvania and has received approval of the PAR from the Pennsylvania
      Department of Community and Economic Development (the “Department”), certifying
      approval of such allocation for the Project Facilities as required by
      Section 146 of the Code.  The Authority will simultaneously with
      the issuance of the Bonds deliver a Final Allocation Request to the Department
      to obtain a final confirmation of such allocation.

     

    (f)           
      The
      Project Facilities have been approved (1) by the Local Entity, as required
      by
      the Act, (2) by the Pennsylvania Secretary of Community and Economic
      Development, as required by the Act, (3) by the Governor or Lieutenant Governor
      of the Commonwealth of Pennsylvania as the “applicable elected representative”,
      as that term is defined under the Code, after a public hearing held upon
      reasonable notice, as required by the Code, and (4) by the Authority by adoption
      of the Resolutions, as required by the Act.

     

    (g)           
      The
      Authority has not and will not pledge the income and revenues
      derived from this Agreement other than pursuant to and as set forth in the
      Indenture.

     

     

    II.           
      The Project Facilities.

     

    Section
      2.1   
      Acquisition of Project
      Facilities.  The Company (which for purposes of this provision
      and all other provisions of this Agreement pertaining to the Company’s ownership
      and operation of the Project Facilities shall include the Company’s direct or
      indirect subsidiaries that own and operate the Project Facilities) (a) has
      acquired, constructed, installed and equipped, or will acquire construct,
      install and equip, the Project Facilities substantially in all material respects
      in accordance with the description thereof in Exhibit A attached hereto and
      applicable law, (b) has procured or caused to be procured or will procure or
      cause to be procured all permits and licenses necessary for the prosecution
      of
      any and all work on the Project Facilities, and (c) has paid or will pay when
      due all costs and expenses incurred in connection with such acquisition,
      construction, installation, equipping and improvement from funds made available
      therefor in accordance with this Agreement or otherwise.  It is
      understood that the Company (or one or more of such subsidiaries) owns or leases
      the Project Facilities and that any contracts made by the Company (or any such
      subsidiary, as the case may be) with respect thereto and any work to be done
      by
      the Company (or any such subsidiary) on the Project Facilities are made or
      done
      by the Company (or any such subsidiary) on its own behalf and not as agent
      or
      contractor for the Authority.

     

    Section
      2.2   
      Additions and Changes
      to Project Facilities.  Subject to the provisions of Sections
      4.11 and 4.12, the Company may, at its option and at its own cost and expense,
      at any time and from time to time, revise the description of the Project
      Facilities in Exhibit A attached hereto and/or make such additions,
      deletions and changes to the Project Facilities as it, in its discretion, may
      deem to be desirable for its uses and purposes, provided that (i) any such
      additions and changes shall, when made, constitute part of the Project
      Facilities for purposes of this Agreement, (ii) the Company shall supplement
      the
      information contained in Exhibit A attached hereto by filing with the Authority
      and the Trustee such supplemental information as is necessary to reflect such
      additions, deletions and changes so that the Authority and the Trustee will
      be
      reasonably able to ascertain the nature and cost of the facilities included
      in
      the Project Facilities and covered by this Agreement, (iii) such additions,
      deletions and changes will not result in a Misuse of Bond Proceeds, and (iv)
      if
      an addition, deletion or change is substantial in relation to the Project
      Facilities, the Company shall have first obtained and filed with the Authority
      and the Trustee an opinion of Bond Counsel to the effect that such addition,
      deletion or change is authorized or permitted under the Act and will not
      adversely affect the exclusion from gross income of interest on the Bonds under
      the Code.  In any case, the Company shall obtain the Authority’s
      approval of any addition to the Project Facilities or any material changes
      to
      the proposed facilities or other material changes not generally described or
      contemplated in Exhibit A attached hereto on the date of delivery of this
      Agreement, which approval shall not be unreasonably withheld, and the Company
      shall delete any facilities from the Project Facilities if such deletion is
      necessary to avoid a Misuse of Bond Proceeds or to maintain the exclusion from
      gross income of interest on the Bonds under the Code.

     

    Section
      2.3   
      Issuance of Bonds;
      Application of Proceeds.  To provide funds to make the Loan for
      purposes of paying Project Costs, the Authority will issue the Bonds in the
      aggregate principal amount of $80,570,000. The Bonds will be issued pursuant
      to
      the Indenture and will bear interest, mature and be subject to redemption all
      as
      set forth therein.  The Company hereby approves the terms and
      conditions of the Indenture and the Bonds, and the terms and conditions under
      which the Bonds will be issued, sold and delivered.

     

    The
      proceeds from the sale of the Bonds (including any underwriting discount) shall
      be loaned to the Company pursuant to Section 3.1, and such proceeds (net of
      any
      underwriting discount) shall be paid over to the Trustee for deposit in the
      Project Fund (other than any accrued interest which shall be deposited in the
      Bond Fund) as provided in the Indenture.  Pending disbursement
      pursuant to Section 2.4, the proceeds of the Bonds so deposited in the Project
      Fund, together with any investment earnings thereon, shall constitute a part
      of
      the Trust Estate and shall be subject to the lien of the Indenture pursuant
      to
      the granting clauses therein as security for the obligations described in such
      granting clauses, and to such end the Company hereby grants to the Trustee
      as
      security for such obligations a security interest in all of the Company’s right,
      title and interest in and to the Project Fund.

     

    Section
      2.4   
      Disbursements from
      Project Fund.  Subject to the provisions below, disbursements
      from the Project Fund shall be made to reimburse or pay the Company, an
      Affiliate or any Person designated by the Company, for Project
      Costs.  The Company agrees that the sums so disbursed from the Project
      Fund will be used only for the payment of Project Costs, and will not be used
      for any other purpose.

     

    Subject
      to Section 6.03 of the Indenture, any disbursements from the Project Fund for
      the payment of the Project Costs shall be made by the Trustee only upon the
      written order of an Authorized Representative of the Company delivered to the
      Trustee with a copy to the Credit Facility Issuer.  Subject to Section
      6.03 of the Indenture, each such written order shall be substantially in the
      form of the disbursement request attached hereto as Exhibit B and shall be
      consecutively numbered and accompanied by a statement in reasonable detail
      listing the Project Costs to be paid to any contractors, materialmen or
      suppliers or incurred by the Company for which it is to be
      reimbursed.  Any disbursement for any item which is inconsistent with
      the information statement filed by the Authority in connection with the issuance
      of the Bonds as required by Section 149(e) of the Code, shall be accompanied
      by
      an opinion of a Bond Counsel to the effect that such disbursement will not
      result in the interest on the Bonds becoming included in the gross income of
      the
      holders thereof for federal income tax purposes. In case any contract
      provides for the retention by the Company of a portion of the contract price,
      there shall be paid from the Project Fund only the net amount remaining after
      deduction of any such portion, and only when that retained amount is due and
      payable, may it be paid from the Project Fund.

     

    Section
      2.5   
      Company Required
      to
      Pay Costs in Event Project Fund Insufficient.  If moneys in the
      Project Fund are not sufficient to reimburse the Company for all Project Costs,
      the Company will not be entitled to any reimbursement for excess expense from
      the Authority, the Trustee or any Bondholder; nor shall the Company be entitled
      to any abatement, diminution or postponement of the Loan Payments.

     

    Section
      2.6   
      Completion.  When
      the Company certifies to the Trustee and the Authority that the Project
      Facilities have been completed, any amount then remaining in the Project Fund
      shall be applied by the Trustee in accordance with the provisions of the
      Indenture.

     

    Section
      2.7   
      Investment and Use
      of
      Fund Moneys.  At the written request of an Authorized
      Representative of the Company, any moneys held as part of the Bond Fund (except
      moneys representing principal of, or premium, if any, or interest on, any Bonds
      which are deemed paid under Section 16.01 of the Indenture) or the Project
      Fund
      shall be invested or reinvested by the Trustee as provided in Section 8.02
      of
      the Indenture.  The Authority and the Company each hereby covenants
      that it will restrict that investment and reinvestment and the use of the
      proceeds of the Bonds in such manner and to such extent, if any, as may be
      necessary, after taking into account reasonable expectations at the time of
      delivery of and payment for the Bonds, so that the Bonds will not constitute
      arbitrage bonds under Section 148 of the Code.

     

    Any
      Authorized Representative of the Authority having responsibility for issuing
      the
      Bonds is authorized and directed, alone or in conjunction with an Authorized
      Representative of the Company and/or any other officer, partner, employee or
      agent of or consultant to the Authority or the Company, to give an appropriate
      certificate of the Authority pursuant to Section 148 of the Code, for inclusion
      in the transcript of proceedings for the issuance of the Bonds, setting forth
      the reasonable expectations of the Authority regarding the amount and use of
      the
      proceeds of the Bonds and the facts, estimates and circumstances on which those
      expectations are based, all as of the Issue Date.  The Company shall
      provide the Authority with, and the Authority’s certificate may be based on, a
      certificate of the Authorized Representative of the Company or other appropriate
      officer, partner, employee or agent of or consultant to the Company setting
      forth the reasonable expectations of the Company on the Issue Date regarding
      the
      amount and use of the proceeds of the Bonds and the facts, estimates and
      circumstances on which they are based.

     

    Section
      2.8   
      Rebate
      Fund.  The Company agrees to make such payments to the Trustee
      as are required of the Company under Section 6.05 of the
      Indenture.  The obligation of the Company to make such payments shall
      remain in effect and be binding upon the Company notwithstanding the release
      and
      discharge of the Indenture.

     

     

    III.           
      Loan By Authority; Loan Payments; Other Payments

     

    Section
      3.1   
      Loan by
      Authority.  Upon the terms and conditions of this Agreement,
      the Authority will make the Loan to the Company on the Issue Date in a principal
      amount equal to the aggregate principal amount of the Bonds.  The Loan
      shall be deemed fully advanced upon deposit of the proceeds of the Bonds (net
      of
      any underwriting discount) in the Bond Fund and the Project Fund pursuant to
      Section 2.3.

     

    Section
      3.2   
      Loan Payments.

     

    (a)           
      In consideration of the issuance, sale and delivery of the Bonds by the
      Authority, the Company hereby agrees to pay to the Trustee for the account
      of
      the Authority Loan Payments in such amounts and manner so as to enable the
      Trustee to make payment of the principal of, and premium, if any, and accrued
      interest on the Bonds as the same shall become due and payable whether at stated
      maturity or by acceleration, redemption or otherwise in accordance with the
      terms of the Indenture; provided, however, that the obligation of the Company
      to
      make any Loan Payment hereunder shall be reduced by the amount of any reduction
      under the Indenture of the amount of the corresponding payment required to
      be
      made by the Authority of the principal of or premium, if any, or interest on
      the
      Bonds. Pursuant to the Indenture, the Authority directs the Trustee to apply
      such Loan Payments in the manner provided in the Indenture. Whenever payment
      or
      provision for payment has been made in respect of the principal of, or premium,
      if any, and interest on all of the Bonds, the Loan Payments shall be deemed
      paid
      in full.

     

    (b)           
      The obligation of the Company to make the Loan Payments directly to the Trustee,
      as the assignee of the Authority under the Indenture, shall be evidenced by
      the
      Company’s Note substantially in the form of Exhibit C hereto, which shall be
      delivered concurrently with the delivery by the Authority of the
      Bonds.

     

    (c)           
      Notwithstanding the foregoing, while any Credit Facility is in effect with
      respect to the Bonds, the Company’s obligation to make Loan Payments hereunder
      in respect of the principal of, and premium, if any, and accrued interest on
      the
      Bonds shall be deemed to have been satisfied to the extent that moneys shall
      have been paid by a Credit Facility Issuer to the Trustee for such payment
      in
      respect of the Bonds, which amounts may be reimbursed by the Company directly
      to
      such Credit Facility Issuer, and no Event of Default shall occur hereunder
      by
      reason of any failure of the Company to make any such Loan Payment to the
      Trustee under subsection (a) above unless the Trustee is notified by the Credit
      Facility Issuer of the Company’s failure to have reimbursed the Credit Facility
      Issuer in accordance with the terms of the Credit Facility.

     

    Section
      3.3   
      Purchase
      Payments.  To the extent that moneys on deposit in the
      Remarketing Proceeds Account of the Purchase Fund established under the
      Indenture are insufficient to pay the full purchase price of Bonds payable
      pursuant to Section 5.03 of the Indenture on the applicable Purchase Date,
      the
      Company shall promptly pay to the Trustee as Purchase Payments for deposit
      in
      the Company Fund established under Section 5.07 of the Indenture amounts
      sufficient to cover such shortfalls in sufficient time to enable the Trustee
      to
      deliver to the Tender Agent the purchase price of Bonds payable pursuant to
      Section 5.03 of the Indenture; provided, however, that the obligation of the
      Company to make any Purchase Payment hereunder shall be deemed to have been
      satisfied to the extent that moneys shall have been paid by a Credit Facility
      Issuer to the Trustee for such payment in respect of the Bonds.

     

    Section
      3.4   
      Additional
      Payments.  The Company shall pay as Additional Payments
      hereunder:  (a) to the Authority, the Authority’s Fee on the Issue
      Date and any and all costs and expenses (including reasonable legal fees and
      expenses) incurred or to be paid by the Authority in connection with the
      issuance and delivery of the Bonds or otherwise related to actions taken by
      the
      Authority under this Agreement or the Indenture or any amendment thereof,
      supplement thereto or consent or waiver thereunder, including without limitation
      any annual charge made by a rating agency to maintain a rating on the Bonds;
      (b)
      to the Local Entity, the Local Entity’s fee on the Issue Date and any and all
      costs and expenses incurred or to be paid by the Local Entity in connection
      with
      the Project Facilities; and (c) to the Trustee, the Tender Agent, the Bond
      Registrar, the Paying Agent and their agents, their reasonable fees, charges
      and
      expenses for acting as such under the Indenture.  The obligations of
      the Company under clause (c) shall survive the termination of this Agreement
      and
      the Indenture, payment or defeasance of the Bonds and the removal or resignation
      of the Trustee, the Tender Agent, the Bond Registrar or the Paying Agent in
      accordance with the Indenture for any reason.

     

    Section
      3.5   
      Obligations
      Unconditional.  The obligations of the Company to make Loan
      Payments, Purchase Payments and Additional Payments
      shall be absolute and unconditional, and the Company shall make such payments
      without abatement, diminution or deduction regardless of any cause or
      circumstances whatsoever including without limitation any defense, set-off,
      recoupment or counterclaim which the Company may have or assert against the
      Authority, the Trustee, the Remarketing Agent or any other Person, whether
      express or implied, or any duty, liability or obligation arising out of or
      connected with this Agreement, it being the intention of the parties that the
      payments required of the Company hereunder will be paid in full when due without
      any delay or diminution whatsoever.  Loan Payments and Purchase
      Payments required
      to be paid by or on behalf of the Company hereunder shall be received by the
      Authority or the Trustee as net sums and the Company agrees to pay or cause
      to
      be paid all charges against or which might diminish such net sums.

     

    Section
      3.6   
      Assignment of
      Authority’s Rights.  To secure the payment of the Debt Service,
      the Authority shall pledge and assign to the Trustee all the Authority’s rights
      in, to and under this Agreement (except for the Unassigned Authority’s Rights),
      the Revenues and the other property comprising the Trust Estate.  The
      Company consents to such pledge and assignment and agrees to make or cause
      to be
      made Loan Payments and Purchase Payments directly to the Trustee without defense
      or set-off by reason of any dispute between the Company and the
      Trustee.  Whenever the Company is required to obtain the consent of
      the Authority hereunder, the Company shall also obtain the consent of the
      Trustee; provided that, except as otherwise expressly stipulated herein or
      in
      the Indenture, the Company shall not be required to obtain the Trustee’s consent
      with respect to the Unassigned Authority’s Rights.

     

     

    IV.           
      Additional Covenants Of Company

     

    Section
      4.1   
      Maintenance of
      Existence.  So long as the Bonds are Outstanding, the Company
      will maintain its existence and its qualification to do business in
      Pennsylvania, except that it may (with the consent of the Authority, which
      consent shall not be unreasonably withheld) dissolve or otherwise dispose of
      all
      or substantially all of its assets and may consolidate with or merge into any
      other entity or permit one or more entities to consolidate or merge into it
      so
      long as (i) the surviving, resulting or transferee entity, if other than the
      Company, assumes in writing all of the obligations of the Company hereunder
      and
      under the Note and is an entity organized under the laws of one of the states
      of
      the United States of America, is duly qualified to do business in Pennsylvania
      and is not a Disqualified Contractor, (ii) immediately thereafter neither the
      Company nor its successor will be in default under the Agreement or the Note
      and
      (iii) the provisions of Section 7.9 are satisfied.

     

    Section
      4.2   
      Compliance with Laws; Commencement and Continuation of Operations at Project
      Facilities; No Sale, Removal or Demolition of Project Facilities; Maintenance
      of
      Employment.

     

    (a)           
      The
      Company (or a subsidiary of the Company) will acquire, construct and install
      the
      Project Facilities and will operate and maintain or cause to be operated and
      maintained the Project Facilities in such manner as to comply with the Act
      and
      to comply in all material respects with 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
      Facilities 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 contesting in good faith any such requirement by
      appropriate legal proceedings.

     

    (b)           
      The
      Company shall not cause, permit or suffer to exist a Misuse of Bond
      Proceeds.

     

    (c)           
      The
      Company (or a subsidiary of the Company or a lessee permitted by Section 4.4
      or
      successor permitted by Section 4.1) shall complete the Project Facilities
      (except for immaterial items) and commence operation of the Project Facilities
      within three (3) years from the Issue Date and operate or cause to be operated
      the Plants throughout the term of this Agreement.

     

    (d) The
      Company shall not permit the Project Facilities or any material portion thereof
      to be sold, transferred or otherwise disposed of (other than as permitted by
      Section 4.1 and Section 4.4), or undertake or permit the demolition or
      removal of the Project Facilities or any material portion thereof, without
      the
      prior written consent of the Authority; provided that the Company (or a
      subsidiary of the Company) shall be permitted (i) to sell, transfer, assign
      or
      otherwise dispose of or remove all or any portion of the Project Facilities
      which are obsolete, retired or replaced in the ordinary course of business;
      and
      (ii) to demolish or remove a portion of the Project Facilities, in each case
      if
      the Company shall have first obtained an opinion of Bond Counsel to the effect
      that such demolition or removal is authorized or permitted under the Act and
      will not adversely affect the exclusion from gross income of interest on the
      Bonds for federal income tax purposes.

     

    (e)           
      The
      Company shall not assign its interest under this Agreement in violation of
      Section 7.9.

     

    (f)           
      The
      Company shall maintain at least 50% of the employment at the Project stated
      in
      the Local Entity’s application to the Authority on behalf of the Company
      pursuant to which the Bonds were issued.

     

    Section
      4.3   
      Right of
      Inspection.  Subject to reasonable security and safety
      regulations and upon reasonable advance, written notice, the Authority and
      the
      Trustee, and their respective agents, shall have the right during normal
      business hours to inspect the Project Facilities.

     

    Section
      4.4   
      Lease by
      Company.  The Company (or a subsidiary of the Company) may,
      subject to the provisions of Sections 4.11 and 4.12, lease the Project
      Facilities, in whole or in part, to one or more Persons, provided
      that:

     

    (a)           
      No
      such
      lease shall relieve the Company from its obligations under this Agreement,
      the
      Indenture, or the Remarketing Agreement;

     

    (b)           
      In
      connection with any such lease the Company (or a subsidiary of the Company)
      shall retain such rights and interests as will permit it to comply with its
      obligations under this Agreement, the Indenture, and the Remarketing
      Agreement;

     

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

     

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

     

    (e)           
      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 Facilities, (i) such new lessee
      shall not be a Disqualified Contractor and (ii) unless the new lessee is an
      affiliate of the Company, such new lessee shall have been approved by the
      Authority (such approval not to be unreasonably withheld); and

     

    (f)           
      Any
      lessees under any such leases, including any leases in force on the date of
      issuance of the Bonds, shall be subject to the applicable terms and conditions
      of Section 4.12.

     

    Section
      4.5   
      Financial Statements;
      Books and Records.  The Company shall prepare or have prepared
      financial statements in accordance with generally accepted accounting principles
      and shall keep true and proper books of records and accounts in which full
      and
      correct entries are made of all its business transactions.  Copies of
      such financial statements shall be provided to the Authority and the Trustee
      promptly upon request.

     

    Section
      4.6   
      Taxes, Other
      Governmental Charges and Utility Charges.  The Company shall
      pay, or cause to be paid before the same become delinquent, all taxes,
      assessments, whether general or special, and governmental charges of any kind
      whatsoever that may at any time be lawfully assessed or levied against or with
      respect to the Project Facilities, including any equipment or related property
      installed or brought by the Company therein or thereon, and all utility and
      other charges incurred in the operation, maintenance, use, occupancy and upkeep
      of the Project Facilities; provided that with respect to special assessments
      or
      other governmental charges that lawfully may be paid in installments over a
      period of years, the Company shall be obligated to pay only such installments
      as
      are required to be paid during the term hereof.  The Company may, at
      its expense, in good faith contest any such taxes, assessments and other charges
      and, in the event of any such contest, may permit the taxes, assessments or
      other charges so contested to remain unpaid during the period of such contest
      and any appeal therefrom.  The Company shall also comply in all
      material respects at its own cost and expense with all notices received from
      public authorities with respect to the Project Facilities, subject to the
      Company’s right to contest such notices in good faith.

     

    Section
      4.7   
      Insurance.  The
      Company shall at its own cost and expense obtain or cause to be obtained
      insurance policies against such risks, and in such amounts, as are customarily
      insured against by entities owning facilities of like size and type to the
      Project Facilities, paying, as the same become due and payable, all premiums
      in
      respect thereof; provided that the Company may self-insure in such amounts
      and
      against such risks as the Company shall deem reasonable and
      prudent.  All proceeds of such insurance shall be for the account of
      the Company.

     

    Section
      4.8   
      Damage to or
      Condemnation of Project Facilities.  In the event of damage,
      destruction or condemnation of part or all of the Project Facilities or the
      Plant such that the Company has the right to call the Bonds for extraordinary
      optional redemption pursuant to Section 9.01(a)(iv) of the Indenture, the
      Company shall be obligated to either:  (i) restore the Project
      Facilities or the Plants, as the case may be, to the extent necessary to ensure
      the continued character of the Project Facilities as solid waste disposal
      facilities, or (ii) if permitted by the terms of the Bonds, direct the Authority
      to call the Bonds for redemption as set forth in Section 9.01(a)(iv) of the
      Indenture.  Damage to, destruction of or condemnation of all or a
      portion of the Project Facilities shall not terminate this Agreement or cause
      any abatement of or reduction in the payments to be made by the Company under
      this Agreement.

     

    Section
      4.9   
      Misuse of Bond
      Proceeds; Litigation Notice.  The Company shall give the
      Authority, the Trustee and the Remarketing Agent prompt written notice of any
      Misuse of Bond Proceeds or action, suit or proceeding pending or threatened
      against it at law or in equity, or before any governmental instrumentality
      or
      agency, which, if adversely determined, would materially impair the right of
      the
      Company to carry on the business which is contemplated in connection with the
      Project Facilities or would materially and adversely affect its business,
      operations, properties, assets or condition.

     

    Section
      4.10   
      Indemnification.  The
      Company will indemnify and hold harmless the Authority and each member,
      director, officer, employee, attorney and agent of the Authority for and against
      any and all claims, losses, damages or liabilities (including the costs and
      expenses of defending against any such claims) to which the Authority or any
      member, director, officer, employee or agent of the Authority may become
      subject, insofar as such losses, claims, damages or liabilities (or actions
      in
      respect thereof) arise directly or indirectly out of (a) any loss or damage
      to
      property or injury to or death of or loss by any person that may be occasioned
      by any cause whatsoever pertaining to the construction, maintenance, operation
      and use of the Project Facilities; (b) any breach or default on the part of
      the
      Company in the performance of any covenant or agreement of the Company under
      this Agreement or the Note or any related document, or arising from any act
      or
      failure to act by the Company or any of its agents, contractors, servants,
      employees or licensees; (c) the authorization, issuance and sale of the Bonds,
      or the provision of any information or certification furnished in connection
      therewith concerning the Bonds, the Project Facilities or the Company
      (including, without limitation, any information furnished by the Company for
      inclusion in any certification made by the Authority or for inclusion in, or
      as
      a basis for preparation of, the information statements furnished by the
      Authority and any information or certification obtained from the Company) to
      assure the exclusion of the interest on the Bonds from the gross income of
      the
      holders thereof for federal income tax purposes; (d) the Company’s failure to
      comply with any requirements of this Agreement pertaining to compliance with
      the
      Code to assure such exclusion of the interest or the provisions set forth in
      Sections 4.11 and 4.12; (e) any failure by the Company to comply with the
      provisions of the Act; and (f) any claim, action or proceeding brought with
      respect to any matter set forth in clause (a), (b), (c), (d) or (e)
      above.

     

    The
      Company will indemnify and hold the Trustee and its directors, officers, agents
      and employees (collectively, the “Indemnitees”) harmless from and against any
      and all claims, liabilities, losses, damages, fines, penalties and expenses,
      including out-of-pocket expenses, incidental expenses, reasonable legal fees
      and
      expenses, and the reasonable costs and expenses of defending against any such
      claim (“Losses”) that may be imposed on, incurred by or asserted against, the
      Indemnitees or any of them for following any instruction or other direction
      upon
      which the Trustee is authorized to rely pursuant to the terms of this Agreement,
      the Bonds, the Note or the Indenture.  In addition to and not in
      limitation of the immediately preceding sentence, the Company also agrees to
      indemnify and hold the Indemnitees and each of them harmless from and against
      any and all Losses that may be imposed on, incurred by or asserted against
      the
      Indemnitees or any of them in connection with or arising out of the Trustee’s
      performance under this Agreement, the Bonds or the Indenture or the
      administration thereof, or in collecting under the Note, except in any case
      as a
      result of the gross negligence, willful misconduct or bad faith of the
      Trustee.

     

    In
      case
      any action or proceeding is brought against the Authority or the Trustee in
      respect of which indemnity may be sought hereunder, the party seeking indemnity
      promptly shall give notice of that action or proceeding brought against it
      to
      the Company, and the Company upon receipt of that notice shall have the
      obligation and the right to assume the defense of the action or proceeding;
      provided that failure of a party to give that notice shall not relieve the
      Company from any of its obligations under this Section unless (and then only
      to
      the extent) that failure prejudices the defense of the action or proceeding
      by
      the Company.  At its own expense, an indemnified party may employ
      separate counsel and participate in the defense.  The Authority or the
      Trustee, as the case may be, will cooperate with the Company, at the Company’s
      expense, with respect to its assumption of the defense of any such action or
      proceeding, and will take such reasonable actions as are requested of it by
      the
      Company, at the Company’s expense, in connection therewith.  The
      Company shall not be liable for any settlement made without its consent, which
      shall not be unreasonably withheld.  The Company shall not approve any
      settlement involving the Trustee without the Trustee’s prior written consent,
      which shall not be unreasonably withheld.

     

    The
      indemnification set forth above is intended to and shall (i) include the
      indemnification of all affected directors, officers, agents and employees of
      the
      Authority and the
      Trustee, respectively, and (ii) be enforceable by the Authority and the Trustee,
      respectively, to the full extent permitted by law.

     

    The
      provisions of this Section 4.10 shall survive the termination of this Agreement
      and the Indenture, payment or defeasance of the Bonds and the removal or
      resignation of the Trustee in accordance with the Indenture for any
      reason.

     

    Section
      4.11   
      Tax Covenants of
      Company and Authority.  The Company covenants and represents
      that it will at all times do and perform all acts and things necessary or
      desirable and within its reasonable control in order to assure that interest
      paid on the Bonds shall not be includable in the gross income of any holder
      thereof for federal income tax purposes, unless such holder is a “substantial
      user” of the Project Facilities or a “related person” of such a user within the
      meaning of Section 147(a) of the Code.  The Company also covenants and
      represents that it shall not take or omit to take, or permit to be taken on
      its
      behalf, any actions which, if taken or omitted, would adversely affect the
      excludability from the gross income of the holder of interest paid on the Bonds
      for federal income tax purposes.  The Authority and the Company
      mutually covenant for the benefit of the Bondholders that they will not use
      the
      proceeds of the Bonds, any moneys derived, directly or indirectly, from the
      use
      or investment thereof or any other moneys on deposit in any fund or account
      maintained in respect of the Bonds (whether such moneys were derived from the
      proceeds of the sale of the Bonds or from other sources) in a manner which
      would
      cause the Bonds to be treated as “arbitrage bonds” within the meaning of Section
      148 of the Code.

     

    Section
      4.12   
      Further Tax Covenants
      of Company.  The Company further represents and covenants as
      follows:

     

    (a)           
      Action
      to Maintain
      Tax-Exempt Status.  The Company will take such actions as shall
      be necessary or desirable, from time to time and within its reasonable control,
      to cause all of the representations and warranties in this Section to remain
      true and correct during such periods as shall be necessary to maintain the
      exclusion of interest paid on the Bonds from the gross income of the holders
      thereof for federal income tax purposes (other than a holder who is a
“substantial user” of the Project Facilities or a “related person” as those
      terms are used in Section 147(a) of the Code), pursuant to the requirements
      of
      the Code.

     

    (b)           
      Operation
      as Solid Waste
      Disposal Facilities.  As long as the Company (or its lessee or
      transferee) is required to operate or cause to be operated the Project
      Facilities under Section 4.2, the Company (or its lessee or transferee) shall
      operate or cause to be operated the Project Facilities as “solid waste disposal
      facilities” within the meaning of Section 142(a)(6) of the Code.

     

    (c)           
      Ninety-five
      Percent Capital
      Costs Test.  The Company will spend not less than 95% of the
      net proceeds of the Bonds for capital costs of land or property of a character
      subject to allowance for depreciation under Section 167 of the Code and
      constituting “solid waste disposal facilities” for purposes of Section 142(a)(6)
      of the Code.

     

    (d)           
      Land
      Acquisition
      Limitation.  The Company will not use, directly or indirectly,
      25% or more of the net proceeds of the Bonds for the acquisition of land or
      an
      interest therein.

     

    (e)           
      Existing
      Facility and
      Rehabilitation Limitations.  The Company will not use any
      proceeds of the Bonds to acquire any property of which the Company would not
      be
      the first user, except as permitted by the next sentence.  If any
      proceeds of the Bonds are used to acquire (i) an existing building, (ii) an
      existing building and equipment thereof, (iii) an existing structure (other
      than
      a building), or (iv) an existing structure and equipment thereof, then the
      Company will, within two years of the later of the Issue Date or the date the
      Company acquires such building or structure, incur Rehabilitation Expenditures
      in an amount at least equal to (x) 15% of the portion of the cost of acquiring
      all existing buildings and equipment thereof which is financed with net proceeds
      of the Bonds, plus (y) 100% of the portion of the cost of acquiring all existing
      structures (other than a building) and equipment thereof which is financed
      with
      net proceeds of the Bonds.

     

    (f)           
      Limitation
      on Financing
      Certain Facilities.  The Company will not use more than 25% of
      the net proceeds of the Bonds to provide any portion of the Project Facilities
      the primary purpose of which is to provide retail food or beverage services
      (exclusive of grocery stores), automobile sales or services, or the provision
      of
      recreation or entertainment.

     

    (g)           
      Prohibition
      on Financing
      Certain Facilities.  The Company will not use any portion of
      the proceeds of the Bonds to provide any portion of the Project Facilities
      to be
      used for a private or commercial golf course, country club, massage parlor,
      tennis club, skating facility (including roller skating, skateboard and ice
      skating), racquet sports facility (including any handball or racquetball court),
      hot tub facility, suntan facility or racetrack.  The Company will not
      use any proceeds of the Bonds to provide any airplane, any sky box or other
      private luxury box, any health club facility, any facility primarily used for
      gambling, or any store the principal business of which is the sale of alcoholic
      beverages for consumption off premises.

     

    (h)           
      Lease
      or Transfer of Project
      Facilities.  In connection with any lease or transfer by the
      Company of the Project Facilities financed with Bond proceeds, the Company
      will
      require that the lessee or transferee and all Related Persons with respect
      to
      such lessee or transferee will not violate the covenants set forth in this
      Section 4.12.

     

    (i)           
      Bond
      Maturity
      Limitation.  The average maturity of the Bonds, as determined
      pursuant to Section 147(b) of the Code, will not exceed 120% of the average
      reasonably expected economic life of the property financed with the proceeds
      of
      the Bonds, disregarding land.

     

    (j)           
      Nonpurpose
      Investments.  After the expiration of any applicable temporary
      period under Section 148(c) of the Code, not more than the lesser of 5% of
      the
      proceeds of the Bonds or $100,000 (in addition to the amounts allowed under
      Sections 148(c) and (d) of the Code and subject to the yield adjustment
      provisions of Treasury Regulations §1.148-5(c)) of the proceeds of the
      Bonds will be invested in higher yielding investments.

     

    At
      no
      time will any funds constituting gross proceeds of the Bonds be used to acquire
      investments at other than fair market value within the meaning of the applicable
      Treasury Regulations pertaining to, or in any other fashion as would constitute
      failure of compliance with, Section 148 of the Code.  Investments or
      deposits in certificates of deposit or pursuant to guaranteed investment
      contracts shall not be made without compliance, at or prior to such investment
      or deposit, with the requirements of Treasury Regulations Section
      1.148-5(d)(6)(ii) and (iii), respectively, or with any successor provisions
      thereto.

     

    The
      terms
“proceeds”, “gross proceeds”, and “higher yielding investments” have the
      meanings assigned to them for purposes of Section 148 of the Code.

     

    (k)           
      Notice.  The
      Company shall provide a written statement signed by its Authorized
      Representative to the Authority and the Trustee reasonably promptly upon the
      Company’s becoming aware of a violation of any of the covenants set forth in
      this Section 4.12, setting forth in detail the facts, nature and scope of such
      violation.

     

    (l)           
      Arbitrage
      Rebate.  As required by Section 2.8, the Company will pay to or
      for the account of the Authority all amounts needed to comply with the
      requirements of Section 148 of the Code, concerning arbitrage bonds, including
      Section 148(f), which requires generally a rebate payment to the United States
      of America of arbitrage profit from investment of the proceeds of the Bonds
      in
      obligations other than tax-exempt obligations.  The obligation of the
      Company to make such payments is unconditional and is not limited to funds
      representing the proceeds of the Bonds or income from the investment thereof
      or
      any other particular source.

     

    Section
      4.13   
      Nondiscrimination/Sexual
      Harassment
      Clause.  The Company hereby accepts and agrees to be bound by
      the standard Nondiscrimination/Sexual Harassment Clause set forth in Exhibit
      D
      attached hereto.  For purposes of such Nondiscrimination/Sexual
      Harassment Clause, the parties hereto understand that (i) this Agreement is
      the
“contract” and (ii) there is no subcontractor for the performance of the
      Company’s obligations under this Agreement.

     

     

    V.           
      Redemption of Bonds

     

    Section
      5.1   
      Optional
      Redemption.  At any time and from time to time, the Company may
      deliver or cause to be delivered Loan Payments to the Trustee in addition to
      the
      scheduled Loan Payments required to be made under Section 3.2 and direct the
      Trustee to use the Loan Payments so delivered for the purpose of calling Bonds
      for optional or extraordinary optional redemption in accordance with the
      applicable provisions of the Indenture and redeeming such Bonds at the
      redemption price stated in the Indenture. Such Loan Payments shall be held
      and
      applied as provided in Section 6.02 of the Indenture and delivery thereof shall
      not operate to abate or postpone Loan Payments otherwise becoming due or to
      alter or suspend any other obligations of the Company under this
      Agreement.  Whenever the Bonds are subject to optional redemption
      pursuant to the Indenture, the Authority will, but only upon direction of the
      Company, direct the Trustee to call the same for redemption as provided in
      the
      Indenture.

     

    Section
      5.2   
      Mandatory
      Redemption.  The Company shall deliver or cause to be delivered
      to the Trustee the moneys needed to redeem the Bonds in accordance with the
      mandatory redemption provisions set forth in the Bonds and the
      Indenture.  Whenever the Bonds are subject to mandatory redemption
      pursuant to the Indenture, the Company will cooperate with the Authority and
      the
      Trustee in effecting such redemption.

     

    Section
      5.3   
      Actions by
      Authority.  At the request of the Company or the Trustee, the
      Authority shall take all steps required of it under the applicable provisions
      of
      the Indenture or the Bonds to effect the redemption of all or a portion of
      the
      Bonds pursuant to this Article.

     

     

    VI.           
      Events Of Default And Remedies

     

    Section
      6.1   
      Events of
      Default.  Each of the following shall be an Event of
      Default:

     

    (a)           
      Failure
      by the Company to make or cause to be made any Loan Payment or Purchase
      Payment which shall
      have resulted in an Event of Default described in clause (a), (b) or (d) of
      Section 11.01 of the Indenture;

     

    (b)           
      Failure
      by the Company to observe and perform any covenant, condition or agreement
      on
      its part to be observed or performed under this Agreement or the Note (other
      than payment obligations on the Note) for a period of sixty (60) days after
      written notice, specifying such failure and requesting that it be remedied,
      given to the Company by the Trustee; provided, that if such failure is of such
      nature that it can be corrected (as agreed to by the Trustee) but not within
      such period, the same shall not constitute an Event of Default so long as the
      Company institutes prompt corrective action and is diligently pursuing the
      same
      and provided further, that if the Company is unable to institute corrective
      action or to pursue the same because of circumstances beyond its control, the
      same shall not constitute an Event of Default until such circumstances no longer
      exist and then only after the Company has had an opportunity to remedy the
      same
      as provided above;

     

    (c)           
      The
      Company shall (i) apply for or consent to the appointment of a receiver,
      trustee, liquidator or custodian or the like of itself or of its property,
      or
      (ii) admit in writing its inability to pay its debts generally as they become
      due, or (iii) make a general assignment for the benefit of creditors, or (iv)
      be
      adjudicated a bankrupt or insolvent, or (v) commence a voluntary case under
      the
      United States Bankruptcy Code, or file a voluntary petition or answer seeking
      reorganization, an arrangement with creditors or an order for relief, or seeking
      to take advantage of any insolvency law or file an answer admitting the material
      allegations of a petition filed against it in any bankruptcy, reorganization,
      or
      insolvency proceeding, or corporate action shall be taken by it for the purpose
      of effecting any of the foregoing, or (vi) have instituted against it,
      without the application, approval or consent of the Company, a proceeding in
      any
      court of competent jurisdiction, under any law relating to bankruptcy,
      insolvency, reorganization or relief of debtors, seeking in respect of the
      Company an order for relief or an adjudication in bankruptcy, reorganization,
      dissolution, winding up, liquidation, a composition or arrangement with
      creditors, a readjustment of debts, the appointment of a trustee, receiver,
      liquidator or custodian or the like of the Company or of all or any substantial
      part of their assets, or other like relief in respect thereof under any
      bankruptcy or insolvency law, and the same shall (A) result in the entry of
      an order for relief or any such adjudication or appointment or (B) remain
      unvacated, undismissed and undischarged for a period of 90 days;

     

    (d)           
      Any
      representation or warranty made by the Company herein or any statement in any
      report, certificate, financial statement or other instrument furnished in
      connection with this Agreement or with the purchase of the Bonds shall at any
      time prove to have been false or misleading in any material respect when made
      or
      given; and

     

    (e)           
      For
      any
      reason the Bonds are declared due and payable by acceleration in accordance
      with
      Section 11.02 of the Indenture and such acceleration shall not have been
      annulled.

     

    The
      declaration of an Event of Default under paragraph (e) above, and the exercise
      of remedies upon any such declaration, shall be subject to any applicable
      limitations of federal bankruptcy law affecting or precluding that declaration
      or exercise during the pendency of or immediately following any bankruptcy,
      liquidation or reorganization proceedings.

     

    Section
      6.2   
      Remedies on
      Default.

     

    (a)           
      Whenever
      an Event of Default shall have happened and be subsisting uncured, any one
      or
      more of the following remedial steps may be taken:

     

    (1)           
      If acceleration of the principal amount of the Bonds has been declared pursuant
      to Section 11.02 of the Indenture, the Trustee, by notice in writing to the
      Company, shall declare all Loan Payments and amounts due on the Note to be
      immediately due and payable, whereupon the same shall become immediately due
      and
      payable; and

    

    (2)           
      The Authority or the Trustee may pursue any and all remedies now or hereafter
      existing at law or in equity to collect all amounts then due and thereafter
      to
      become due under this Agreement or to enforce the performance and observance
      of
      any other obligation or agreement of the Company under this Agreement and the
      Note.

    

    (b)           
      The
      Company covenants that, in case it shall fail to pay or cause to be paid any
      Loan Payments or Purchase Payments as and when the same shall become due and
      payable whether at maturity or by acceleration or otherwise, then, upon demand
      of the Trustee, the Company will pay to the Trustee the whole amount that then
      shall have become due and payable hereunder; and, in addition thereto, such
      further amounts as shall be sufficient to cover the reasonable costs and
      expenses of collection, including a reasonable compensation to the Trustee,
      its
      agents and counsel, and any expenses or liabilities incurred by the Authority
      or
      the Trustee, including counsel fees and expenses.  In case the Company
      shall fail forthwith to pay such amounts upon such demand, the Trustee shall
      be
      entitled and empowered to institute any actions or proceedings at law or in
      equity for the collection of the sums so due and unpaid.

     

    (c)           
      In
      case
      there shall be pending proceedings for the bankruptcy or reorganization of
      the
      Company under the federal bankruptcy laws or any other applicable law, or in
      case a receiver or trustee shall have been appointed for the benefit of the
      creditors or the property of the Company, the Trustee shall be entitled and
      empowered, by intervention in such proceedings or otherwise, to file and prove
      a
      claim or claims for the whole amount due hereunder, including interest owing
      and
      unpaid in respect thereof, and, in case of any judicial proceedings, to file
      such proofs of claim and other papers or documents as may be necessary or
      advisable in order to have the claims of the Trustee allowed in such judicial
      proceedings relative to the Company, its creditors or its property, and to
      collect and receive any moneys or other property payable or deliverable on
      any
      such claims, and to distribute the same after the deduction of its charges
      and
      expenses.  Any receiver, assignee or trustee in bankruptcy or
      reorganization is hereby authorized to make such payments to the Authority
      or
      the Trustee, and to pay to the Authority or the Trustee any amount due it for
      compensation and expenses, including counsel fees and expenses incurred by
      it up
      to the date of such distribution.

     

    (d) Notwithstanding
      the foregoing, the Trustee shall not be obligated to take any step which in
      its
      opinion will or might cause it to expend money or otherwise incur liability
      unless and until a satisfactory indemnity bond has been furnished to the Trustee
      at no cost or expense to the Trustee.  Any amounts collected as Loan
      Payments or applicable to Loan Payments and any other amounts which would be
      applicable to payment of Debt Service collected pursuant to action taken under
      this Section shall, after the deduction of the Trustee’s charges and expenses,
      be paid into the Bond Fund and applied in accordance with the provisions of
      the
      Indenture or, if the Outstanding Bonds have been paid and discharged in
      accordance with the provisions of the Indenture, shall be paid as provided
      in
      Section 6.02(e) of the Indenture for transfers of remaining amounts in the
      Bond
      Fund.

     

    (e)           
      The
      provisions of this Section are subject to the further limitation that the
      annulment by the Trustee of its declaration pursuant to Section 11.02 of the
      Indenture that all of the Bonds are immediately due and payable also shall
      constitute an annulment of any corresponding declaration made pursuant to
      Subsection 6.2(a)(1); provided that no such waiver or rescission shall extend
      to
      or affect any subsequent or other default or impair any right consequent
      thereon.

     

    Section
      6.3   
      Remedies Not
      Exclusive.  No remedy conferred upon or reserved to the
      Authority or the Trustee by this Agreement is intended to be exclusive of any
      other available remedy or remedies, including without limitation the remedies
      provided in the Act, but each and every such remedy shall be cumulative and
      shall be in addition to every other remedy given under this Agreement, or now
      or
      hereafter existing at law or in equity.  No delay or omission to
      exercise any right or power accruing upon any default shall impair that 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 order to entitle the Authority or the Trustee to
      exercise any remedy reserved to it in this Article, it shall not be necessary
      to
      give any notice, other than any notice required by law or for which express
      provision is made herein.

     

    Section
      6.4   
      Payment of Legal
      Fees
      and Expenses.  If an Event of Default should occur and the
      Authority, the Credit Facility Issuer or the Trustee should incur expenses,
      including reasonable attorneys’ fees and expenses, in connection with the
      enforcement of this Agreement, the Indenture, the Note or the collection of
      sums
      due hereunder or thereunder, the Company shall reimburse the Authority, the
      Credit Facility Issuer and the Trustee, as applicable, for the expenses so
      incurred, upon demand.

     

    Section
      6.5   
      No
      Waiver.  No failure by the Authority or the Trustee to insist
      upon the strict performance by the Company of any provision hereof or of the
      Note shall constitute a waiver of their right to strict performance and no
      express waiver shall be deemed to apply to any other existing or subsequent
      right to remedy the failure by the Company to observe or comply with any
      provision hereof.  No failure by the Company to observe and perform
      any of the covenants set forth in Section 4.2 hereof shall be waived by the
      Trustee without the written consent of the Authority.

     

    Section
      6.6   
      Notice of
      Default.  The Company shall immediately notify the Trustee and
      the Authority in writing 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.

     

     

    VII.           
      Miscellaneous

     

    Section
      7.1   
      Term of
      Agreement.  This Agreement shall be and remain in full force
      and effect from the Issue Date until such time as all of the Bonds shall have
      been fully paid (or provision made for such payment) pursuant to the Indenture,
      the Indenture shall have been released pursuant to Section 16.01 thereof,
      and all other sums payable by the Company under this Agreement shall have been
      paid, except for obligations of the Company under Section 3.4(c) and
      Section 4.10, which shall survive any termination of this
      Agreement.

     

    Section
      7.2   
      Notices.  All
      notices, certificates, requests or other communications hereunder shall be
      in
      writing and shall be deemed to be sufficiently given when mailed by registered
      or certified mail, postage prepaid, sent by telecopier or nationally recognized
      overnight courier or delivered in person and addressed or sent as
      follows:

     

    
      	
              If
                to the Company:

            	
              PPL
                Energy Supply, LLC

              Two
                North Ninth Street

              Allentown,
                PA 18101

              Telecopier
                No. 610-774-5235

              Attention:  Timothy
                D. Stephens

            
	 	 
	
              with
                a copy to

            	 
	 	 
	 	
              Telecopier
                No.

              Attention:

            
	 	 
	
              If
                to the Authority:

            	
              Pennsylvania
                Economic Development Financing Authority

              Pa.
                Department of Community and Economic Development

              Commonwealth
                Keystone Building

              400
                North Street, 4th Floor

              Harrisburg,
                PA  17120

              Telecopier
                No. 717-787-0879

            
	 	 
	
              If
                to the Trustee:

            	
              The
                Bank of New York Trust Company, N.A.

              1600
                Market Street, 15th Floor

              Philadelphia,
                PA 19103

              Telecopier
                No.

              Attention:  Global
                Corporate Trust

            

    

    

    
      	
              If
                to the Remarketing Agent:

            	
              Goldman,
                Sachs & Co.

              85
                Broad Street

              New
                York, NY  10004

              Telecopier
                No.

              Attention:

            

    

    

    The
      Company, the Authority, the Trustee and the Remarketing Agent, by notice given
      hereunder to the Persons listed above, may designate any further or different
      addresses or telecopier numbers to which subsequent notices, certificates,
      requests or other communications shall be sent.

     

    Section
      7.3   
      Limitation of
      Liability; No Personal Liability.  In the exercise of the
      powers of the Authority or the Trustee hereunder or under the Indenture,
      including without limitation the application of moneys and the investment of
      funds, neither the Authority or the Trustee nor their members, directors,
      officers, employees or agents shall be accountable to the Company for any action
      taken or omitted by any of them in good faith and with the belief that it is
      authorized or within the discretion or rights or powers
      conferred.  The Authority, the Trustee and their members, directors,
      officers, employees 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
      Authority hereunder, the liability of the Authority to the Company shall be
      enforceable only out of the Authority’s interest under this Agreement and there
      shall be no other recourse for damages by the Company against the Authority,
      its
      members, directors, officers, attorneys, agents and employees, or any of the
      property now or hereafter owned by it or them.  All covenants,
      obligations and agreements of the Authority contained in this 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, agent or employee of the Authority, 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 Authority contained
      in
      this Agreement or the Indenture.

     

    Section
      7.4   
      Binding
      Effect.  This Agreement shall inure to the benefit of and shall
      be binding in accordance with its terms upon the Authority, the Company and
      their respective successors and assigns; provided that this Agreement may not
      be
      assigned by the Company (except in connection with a sale or transfer of assets
      pursuant to Section 4.1 or in compliance with Section 7.9) and may not be
      assigned by the Authority except to the Trustee pursuant to the Indenture or
      by
      the Trustee to a successor Trustee, or as otherwise may be necessary to enforce
      or secure payment of Debt Service.  This Agreement may be enforced
      only by the parties, their assignees and others who may, by law, stand in their
      respective places.

     

    Section
      7.5   
      Amendments.  Except
      as otherwise expressly provided in this Agreement or the Indenture, subsequent
      to the issuance of the Bonds and unless and until all conditions provided for
      in
      the Indenture for release of the Indenture are met, this Agreement may not
      be
      effectively amended, modified or terminated except by an instrument in writing
      signed by the Company and the Authority, consented to by the Trustee, and in
      accordance with the provisions of Article XV of the Indenture as
      applicable.

     

    Section
      7.6   
      Counterparts.  This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      regarded as an original and all of which shall constitute one and the same
      instrument.

     

    Section
      7.7   
      Severability.  If
      any provision of this Agreement is determined by a court to be invalid or
      unenforceable, such determination shall not affect any other provision hereof,
      each of which shall be construed and enforced as if the invalid or unenforceable
      portion were not contained herein.  Such invalidity or
      unenforceability shall not affect any valid and enforceable application thereof,
      and each such provision shall be deemed to be effective, operative and entered
      into in the manner and to the full extent permitted by applicable
      law.

     

    Section
      7.8   
      Governing
      Law.  This Agreement shall be deemed to be a contract made
      under the laws of the Commonwealth of Pennsylvania and for all purposes shall
      be
      governed by and construed in accordance with the laws of the Commonwealth of
      Pennsylvania.

     

    Section
      7.9   
      Assignment. Except
      as otherwise
      provided in this Section 7.9, the Company shall not assign this 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 Agreement shall be adversely
      affected by such assignment; (iii) the Project Facilities 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; (v) the assignee shall not be
      a
      Disqualified Contractor and shall provide a written certification to such effect
      to the Trustee and the Authority; and (vi) if the assignee is other than an
      Affiliate of the Company, consent by the Authority, which consent shall not
      be
      unreasonably withheld.  Subject to the foregoing, the terms
“Authority,” “Company,” “Trustee” and “Remarketing Agent” shall, where the
      context requires, include the respective successors and assigns of such
      persons.

     

    Section
      7.10   
      Receipt of
      Indenture.  The Company hereby acknowledges that it has
      received an executed copy of the Indenture and is familiar with its provisions,
      and agrees that it is subject to and bound by the terms thereof (including
      the
      terms thereof relating to obligations of the Company) and it will take all
      such
      actions as are required or contemplated of it under the Indenture to preserve
      and protect the rights of the Trustee and of the Bondholders thereunder and
      that
      it will not take any action which would cause a default or Event of Default
      thereunder.

     

    

     

    [Signatures
      appear on following page]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Authority and the Company, intending to be legally bound,
      have caused this Agreement to be duly executed in their respective names, all
      as
      of the date first above written.

     

    

    

    

    
      	
              [SEAL]

            	
              PENNSYLVANIA
                ECONOMIC 

              DEVELOPMENT
                FINANCING 

              AUTHORITY

            
	 	 
	
              Attest  /s/
                Craig
                Petrasic                   

                                (Assistant)
                Secretary

            	
              By  /s/
                Stephen M.
                Drizos                  

              Stephen
                M. Drizos

              Executive
                Director

            
	 	 
	 	 
	 	
              PPL
                ENERGY SUPPLY, LLC

            
	 	 
	 	 
	 	
              By  /s/
                James E.
                Abel                         

              Name:  James
                E. Abel

              Title:  Vice
                President and Treasure

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    DESCRIPTION
      OF PROJECT
      FACILITIES

     

    The
      Project Facilities consist
      generally of those portions of the Company’s wet limestone flue gas
      desulfurization (or “FGD”) systems currently being installed at the Montour
      Plant and the Brunner Island Plant.  The Montour Plant consists of two
      coal-fired electric generating units each rated at 745 megawatt electric
      (“MW(e)”) gross and 755 MW(e) gross maximum continuous load.  The
      Brunner Island Plant consists of three coal-fired electric generating units;
      Unit 1 is rated at 363.3MW(e); Unit 2 is rated at 405 MW(e); and Unit 3 is
      rated
      at 790.4 MW(e).  Specifically, the Company will install (i) one FGD
      unit at each of Units 1 and 2 at the Montour Plant, and (ii) one FGD unit at
      Unit 3 and one FGD unit for Units 1 and 2 at the Brunner Island
      Plant.  The FGD systems are designed to remove over 97% of the sulfur
      dioxide (SO2)
in
      the exhaust, or flue gas, created by the burning of coal at the Plants
      through a series of processes that will involve, among other things, the
      injection of a limestone and water mixture into the flue gas to ultimately
      form
      calcium sulfate, or gypsum, as a byproduct.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

     

    FORM
      OF
      DISBURSEMENT REQUEST

    

    STATEMENT
      NO. _________ REQUESTING DISBURSEMENT OF FUNDS FROM PROJECT FUND PURSUANT TO
      SECTION 2.4 OF THE EXEMPT FACILITIES LOAN AGREEMENT DATED AS OF DECEMBER 1,
      2007
      (“LOAN AGREEMENT”) BETWEEN PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY
      (“AUTHORITY”) AND PPL ENERGY SUPPLY, LLC (“COMPANY”).

    

    The
      terms
      used herein shall have the meanings specified for such terms in or pursuant
      to
      the Loan Agreement.  Pursuant to Section 2.4 of the Loan Agreement,
      the undersigned Authorized Representative of the Company hereby requests and
      authorizes the Trustee to pay to the Company or to the Person(s) listed on
      the
      Disbursement Schedule attached hereto out of the moneys deposited in the Project
      Fund the aggregate
      sum of $___________ to reimburse the Company or to pay such Person(s), as
      indicated in the Disbursement Schedule, for the items of Project Cost listed
      in
      the Disbursement Schedule.  Such Payee(s) may be (i) the Company in
      the case of work done by Company personnel and in the case of reimbursement
      for
      payments previously made by the Company for Project Costs (other than payments
      made by way of set-off of mutual claims between the Company and the payee),
      (ii)
      the Trustee in the case of a requisition for payment of interest on the Bonds
      during acquisition, construction, installation, equipment and improvement of
      the
      Project Facilities and (iii) any other Person designated by the Company for
      Project Costs incurred by such Person associated with the issuance of the
      Bonds.  All such payments shall be made by check or wire transfer in
      accordance with payment instructions contained in the Disbursement Schedule
      and
      the Trustee shall have no duty or obligation to authenticate such payment
      instructions or the authorization thereof.

     

    In
      connection with the foregoing request and authorization, the undersigned hereby
      certifies that:

     

    (a)           
      Each
      item
      for which disbursement is requested hereunder is due, is an item of incurred
      Project Cost properly reimbursable or payable out of the Project Fund in accordance with
      the
      terms and conditions of the Loan Agreement, and none of those items has formed
      the basis for any disbursement heretofore made from the Project
      Fund.

     

    (b)           
      Each
      such
      item is or was necessary or appropriate in connection with the acquisition,
      construction, installation, equipment and/or improvement of the Project
      Facilities.

     

    (c)           
      Each
      such
      item is as described in the information statement filed by the Authority in
      connection with the issuance of the Bonds (as defined in the Loan Agreement),
      as
      required by Section 149(e) of the Code; provided that if any such item is not
      as
      described in that information statement, attached hereto is an opinion of Bond
      Counsel that such disbursement will not result in the interest on the Bonds
      becoming included in the gross income of the holders thereof for federal income
      tax purposes.

     

    (d)           
      The
      reimbursement or payment of the Project Costs requisitioned hereby will comply
      with the restrictions contained in Sections 2.4, 4.11 and 4.12 of the Loan
      Agreement.

     

    (e)           
      This
      statement and all exhibits hereto, including the Disbursement Schedule, shall
      constitute full warrant, protection and authority to the Trustee for its actions
      taken pursuant hereto.

     

    

    Dated:
      ________________

     

    

    PPL
      ENERGY SUPPLY, LLC

    

    

    By
      _________________________________

    Authorized
      Representative

    

    

    

    

    

     

    
      
        

      

    DISBURSEMENT
      SCHEDULE

    

    TO
      STATEMENT NO. ___________ REQUESTING AND AUTHORIZING DISBURSEMENT OF FUNDS
      FROM
      PROJECT FUND PURSUANT TO SECTION 2.4 OF THE EXEMPT FACILITIES LOAN AGREEMENT
      DATED AS OF DECEMBER 1, 2007 BETWEEN PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING
      AUTHORITY AND PPL ENERGY SUPPLY, LLC.

    

    
      	
              PAYEE

            	
              PURPOSE

            	
              AMOUNT

            
	 	 	 
	 	 	 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      C

    

    PPL
      ENERGY SUPPLY, LLC

     

    EXEMPT
      FACILITIES NOTE

     

    (PENNSYLVANIA
      ECONOMIC DEVELOPMENT FINANCING AUTHORITY)

     

    SERIES
      2007

     

    

     

    This
      Note
      is issued pursuant to an Exempt Facilities Loan Agreement dated as of December
      1, 2007 (the “Agreement”) by and between the Pennsylvania Economic Development
      Financing Authority (the “Authority”) and the Company (as hereinafter defined)
      relating to the financing of certain facilities (the “Project Facilities) at the
      (i) Montour Generating Station, Washingtonville, Montour County, Pennsylvania;
      and (ii) Brunner Island Generating Station, York Haven, York County,
      Pennsylvania (collectively, the “Plants”). Each capitalized term not otherwise
      defined herein shall have the meaning given to such term in the
      Agreement.

     

    PPL
      Energy Supply, LLC (the “Company”), a Delaware limited liability company, for
      value received, unconditionally promises to pay to The Bank of New York Trust
      Company, N.A., as Trustee (including its successors in such capacity, the
“Trustee”) under the Trust Indenture dated as of December 1, 2007 (as the same
      may be amended and supplemented from time to time, the “Indenture”) between the
      Trustee and the Authority, the principal sum of EIGHTY MILLION FIVE HUNDRED
      SEVENTY THOUSAND DOLLARS ($80,570,000) on December 1, 2037, and to pay (i)
      interest thereon from the date hereof until the payment of such principal sum
      has been made or provided for at a rate or rates at all times equal to the
      interest rate or rates from time to time borne by the Authority’s Exempt
      Facilities Revenue Bonds, Series 2007 (PPL Energy Supply, LLC Project) (the
      “Bonds”) and payable on each date that interest is payable on the Bonds, and
      (ii) to the extent provided by law, on overdue interest at the rate or rates
      borne by the Bonds; provided, however, that the obligation of the Company to
      make any payment hereunder (a) shall be reduced by the amount of any reduction
      under the Indenture of the amount of the corresponding payment required to
      be
      made by the Authority of the principal of or premium or interest on the Bonds
      and (b) shall be deemed to have been satisfied to the extent that moneys shall
      have been paid by a Credit Facility Issuer to the Trustee for such payment
      in
      respect of the Bonds.

     

    If
      the
      Bonds become subject to redemption as provided therein and in the Indenture,
      the
      Company shall, as provided in the Agreement, on or before the proposed
      redemption date for the Bonds, pay to the Trustee the whole or appropriate
      portion of the unpaid principal amount of this Note with interest accrued to
      the
      proposed redemption date, together with such premium as is necessary to pay
      the
      corresponding premium, if any, on the Bonds.  Such amount shall be
      paid by the Company to the Trustee on the date specified in a notice from the
      Trustee.

     

    If,
      for
      any reason, the amounts specified above are not sufficient to make corresponding
      payments of principal of, premium, if any, and interest on, all of the Bonds,
      when such payments are due, the Company shall pay as additional amounts due
      hereunder, the amounts required from time to time to make up any such
      deficiency.  Whenever payment or provision for payment has been made
      in respect of the principal or redemption price of, and interest on, all of
      the
      Bonds in accordance with the Indenture, this Note shall be deemed paid in full
      and shall be canceled and returned to the Company.

     

    All
      payments of principal, redemption price and interest shall be made to the
      Trustee at its corporate trust office designated pursuant to the Indenture,
      in
      such coin or currency of the United States of America as at the time of payment
      shall be legal tender for the payment of public and private
      debts.  All payments shall be made in funds which will be available no
      later than 10:00 a.m. on the applicable due date, and shall be in the full
      amount required hereunder unless the Trustee notifies the Company that it is
      entitled to a credit under the Agreement or the Indenture.

     

    The
      obligations of the Company to make the payments required hereunder shall be
      absolute and unconditional without defense or setoff by reason of any cause
      or
      circumstance whatsoever, including without limitation, any acts or circumstances
      that may constitute failure of consideration, destruction of or damage to the
      Project Facilities or the Plants, commercial frustration of purpose, or failure
      of the Authority to perform and observe any agreement, whether express or
      implied, or any duty, liability or obligation arising out of or connected with
      the Agreement, it being the intention of the Company and the Authority that
      the
      payments hereunder will be paid in full when and as due without any delay or
      diminution whatsoever.

     

    In
      case
      one or more of the Events of Default specified in Section 6.1 of the Agreement
      shall have occurred and be continuing, then and in each and every such case,
      the
      Trustee, by notice in writing to the Company, may declare the unpaid balance
      of
      this Note to be due and payable immediately, if concurrently with or prior
      to
      such notice the unpaid principal amount of the Bonds has been declared to be
      due
      and payable, and upon any such declaration the same shall become and shall
      be
      immediately due and payable, anything in this Note or in the Agreement to the
      contrary notwithstanding.  Notwithstanding the foregoing, if after any
      declaration of acceleration hereunder there is an annulment of any declaration
      of acceleration with respect to the Bonds, such annulment shall also
      automatically constitute an annulment of any corresponding declaration under
      this Note and a waiver and rescission of the consequences of such
      declaration.

     

    In
      case
      the Trustee shall have proceeded to enforce its rights under this Note or the
      Agreement and such proceedings shall have been discontinued or abandoned for
      any
      reason or shall have been determined adversely to the Trustee, then and in
      every
      such case the Company and the Trustee shall be restored to their respective
      positions and rights hereunder, and all rights, remedies and powers of the
      Company and the Trustee shall continue as though no such proceeding had been
      taken, subject to any such adverse determination.

     

    In
      case
      the Company shall fail forthwith to pay all amounts due hereunder and under
      the
      Agreement upon such demand, the Trustee shall be entitled and empowered to
      institute any action or proceeding at law or in equity for the collection of
      the
      sums so due and unpaid, and may prosecute any such action or proceeding to
      judgment or final decree, and may enforce any such judgment or final decree
      against the Company and collect, in the manner provided by law out of the
      property of the Company, the moneys adjudged or decreed to be
      payable.

     

    This
      Note
      shall be governed by and interpreted under the laws of the Commonwealth of
      Pennsylvania.

     

    IN
      WITNESS WHEREOF, the Company has caused this Note to be duly executed and
      delivered.

     

    
      	
              Dated:  as
                of December 1, 2007

            	
              PPL
                ENERGY SUPPLY, LLC

            
	 	 
	 	
              By:
                ________________________________

              Name:

              Title:

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      D

     

    NONDISCRIMINATION/SEXUAL
      HARASSMENT CLAUSE

    

    

    During
      the term of this contract, the Company agrees as to itself and each tenant
      of
      the Project Facilities controlling, controlled by or under common control with
      the Company (each of the Company and each such tenant, 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 of 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 the 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 relates.

     

    5.           
      The Contractor and 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 reporting 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.

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