LOAN AGREEMENT BETWEEN YORK COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY (the "ISSUER") AND THE YORK WATER COMPANY (the "COMPANY") DATED AS OF OCTOBER 1, 2006
BETWEEN
YORK
COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
(the
"ISSUER")
AND
THE
YORK WATER COMPANY
(the
"COMPANY")
DATED
AS OF OCTOBER 1, 2006
950615.7
10/25/06
TABLE
OF CONTENTS
ARTICLE
I
Definitions And Certain Rules Of Interpretation
SECTION
1.1. Definitions.
SECTION
1.2. Certain Rules of Interpretation.
ARTICLE
II Representations
SECTION
2.1. Representations and Findings of Issuer.
SECTION
2.2. Representations by the Company.
ARTICLE
III The Project
SECTION
3.1. Acquisition and Construction.
SECTION
3.2. Construction Fund.
SECTION
3.3. Establishment of Completion Date.
ARTICLE
IV Loan And Repayment; Operation Of Project
SECTION
4.1. Loan of Bond Proceeds.
SECTION
4.2. Repayment of Loan.
SECTION
4.3. Operation.
SECTION
4.4. Insurance.
SECTION
4.5. Maintenance and Repair.
SECTION
4.6. Right to Discontinue Operation of Project.
SECTION
4.7. Insurance and Condemnation Awards.
SECTION
4.8. Workers' Compensation Coverage.
SECTION
4.9. Taxes, Claims for Labor and Materials, Compliance with Laws.
SECTION
4.10. Issuer's Limited Liability.
SECTION
4.11. Right of Inspection.
ARTICLE
V Issuance Of Bonds; Security; Investments
SECTION
5.1. Issuance of Bonds.
SECTION
5.2. Security for the Bonds.
SECTION
5.3. Reserved.
SECTION
5.4. Investment of Funds.
ARTICLE
VI Company Obligations; Provisions For Payment; Covenants
SECTION
6.1. Company Approval of Issuance of Bonds.
SECTION
6.2. Refunding of Bonds.
SECTION
6.3. Redemption of Bonds.
SECTION
6.4. Installment Loan Payments.
SECTION
6.5. Administrative Expenses.
SECTION
6.6. Payments to Issuer and Issuer.
SECTION
6.7. Obligations of the Company Absolute and Unconditional.
SECTION
6.8. Option to Prepay Amounts Under Loan Agreement in Certain
Events.
SECTION
6.9. Company's Performance Under Indenture.
SECTION
6.10. Covenants Regarding Tax Exemption.
SECTION
6.11. Bonds Purchased in Lieu of Redemption.
SECTION
6.12. Nondiscrimination - Sexual Harassment.
ARTICLE
VII Particular Agreements
SECTION
7.1. Indemnified Party's Release and Indemnification Provisions.
SECTION
7.2. Maintenance of Corporate Existence.
SECTION
7.3. Financial Information.
SECTION
7.4. Agreement of Issuer Not to Assign or Pledge.
SECTION
7.5. Reference to Bonds Ineffective after Bonds Paid.
SECTION
7.6. Assignment, Sale or Lease of Project.
SECTION
7.7. Amendment of Loan Agreement or Indenture.
SECTION
7.8. Waiver of Vendor’s Lien.
SECTION
7.9. Limitations on Indebtedness.
SECTION
7.10. Limitation on Liens.
SECTION
7.11. Dividends, Stock Purchases.
SECTION
7.12. Termination of Pension Plans.
ARTICLE
VIII Events Of Default And Remedies
SECTION
8.1. Defaults and Remedies.
SECTION
8.2. Annulment of Acceleration.
SECTION
8.3. Agreement to Pay Attorneys’ Fees and Expenses.
SECTION
8.4. General Enforcement Provisions.
SECTION
8.5. Notice of Default.
SECTION
8.6. Unassigned Issuer’s Rights.
ARTICLE
IX Miscellaneous
SECTION
9.1. Term of Loan Agreement.
SECTION
9.2. Notices.
SECTION
9.3. Benefit of Parties.
SECTION
9.4. Severability.
SECTION
9.5. Counterparts.
SECTION
9.6. Captions.
SECTION
9.7. Law Governing Construction of Loan Agreement.
SECTION
9.8. Payments on Non-Business Days.
SECTION
9.9. Payments to be Sufficient to Meet DTC Requirements.
SECTION
9.10. Reserved.
SECTION
9.11. Limitation of Liability; No Personal Liability.
ii
950615.7 10/25/06
This
Loan
Agreement dated as of October 1, 2006, between the York County Industrial
Development Authority (the "Issuer"), a public instrumentality of the
Commonwealth of Pennsylvania and a public body corporate and politic organized
and existing under the Pennsylvania Economic Development Financing Law, as
amended (the "Act") of the Commonwealth of Pennsylvania (the "Commonwealth"),
and The York Water Company, a Pennsylvania corporation (the
"Company"),
WITNESSETH:
WHEREAS,
the Act declares that there is a critical need for the production of water
suitable for public use and consumption, that in order to insure continuing
supplies of water resources at reasonable rates, it is necessary to provide
additional means of financing projects directed to such production, and that
to
protect the health, safety and general welfare of the people of the Commonwealth
and to further encourage economic development and efficiency within the
Commonwealth by providing basic services and facilities, it is necessary to
provide additional or alternative means of financing facilities for the
furnishing of water; and
WHEREAS,
the Issuer is authorized to enter into agreements providing for the loan
financing of “projects” within the meaning of the Act that promote any of the
public purposes set forth in the Act; and
WHEREAS,
the Issuer has determined to issue $10,500,000 aggregate principal amount of
its
Exempt Facilities Revenue Bonds, Series 2006 (The York Water Company Project)
(the “Bonds”) to provide funds to loan to the Company for the financing of (i) a
portion of the Company’s 2006 Capital Budget, including, but not limited to the
design, acquisition, construction, improvement, renovation, equipping and
installation of (a) various structures, including distribution buildings,
booster stations, pumping stations, and various plant and ancillary buildings,
(b) spillway upgrades, standpipes, transmission and distribution mains, service
lines, meters, fire hydrants, and pumping, water treatment and purification
equipment, and (c) various other capital improvements, replacements and
equipment for the Company’s water system located throughout York County,
Pennsylvania, and (ii) the payment of all or a portion of the costs of issuance
of the Bonds (the "Project"); and
WHEREAS,
the Issuer will enter into this Loan Agreement with the Company, under the
terms
of which the Company will agree to repay the loan of the proceeds of the Bonds
by paying to the Issuer moneys sufficient to pay the principal of, and premium
(if any) and interest on the Bonds as the same become due and payable and to
pay
certain administrative expenses in connection with the Bonds; and
WHEREAS,
as security for the payment of said Bonds, the Issuer will assign and pledge
to
Manufacturers and Traders Trust Company, as trustee (the "Trustee") under the
terms of the Trust Indenture dated as of October 1, 2006 (the "Indenture")
certain rights, title and interest of the Issuer in (i) this Loan Agreement
(except for the indemnification rights and expense reimbursement rights
contained herein), and (ii) all amounts on deposit from time to time in the
various funds created in, and subject to the conditions set forth in, the
Indenture; and
NOW
THEREFORE, in consideration of the covenants and agreements herein made, and
subject to the conditions herein set forth, the Issuer and the Company,
intending to be legally bound, covenant and agree as follows:
ARTICLE
I
Definitions
And Certain Rules Of Interpretation
SECTION
1.1. Definitions.
All
words
and terms as used in this Loan Agreement shall have the same meanings given
such
words and terms in the Indenture, unless the context or use clearly indicates
another or different meaning or intent. In addition, the terms defined in the
recitals to this Loan Agreement shall have the meanings set forth therein and
the following words and terms as used in this Loan Agreement shall have the
following meanings, unless the context or use clearly indicates another or
different meaning or intent:
"Capitalized
Lease" shall mean any lease, the obligation for Rentals with respect to which
is
required to be capitalized on a balance sheet of the lessee in accordance with
generally accepted accounting principles.
"Capitalized
Rentals" shall mean as of the date of any determination the amount at which
the
aggregate Rentals due and to become due under all Capitalized Leases under
which
the Company is a lessee would be reflected as a liability on a balance sheet
of
the Company.
"Consolidated
Current Assets" and "Consolidated Current Liabilities" shall mean such assets
and liabilities of the Company and its subsidiaries on a consolidated basis
as
shall be determined in accordance with generally accepted accounting principles
to constitute current assets and current liabilities, respectively.
"Costs
of
Issuance" means all costs and expenses incurred by the Issuer or the Company
in
connection with the issuance and sale of the Bonds, including without limitation
(i) fees and expenses of accountants, attorneys, engineers, credit
enhancers and financial advisors, (ii) materials, supplies, and printing
and engraving costs, (iii) recording and filing fees, (iv) rating
agency fees, (v) the initial and first year's annual fees and expenses
(including, without limitation, counsel fees and expenses) of the Trustee,
(vi) any underwriters' discount or fee and expenses and (vii) the
Issuer's issuance fee and administrative and overhead expenses as provided
in
Section 6.6 of this Loan Agreement.
"County"
means the County of York, a political subdivision of the
Commonwealth.
"Department"
means the Department of Community and Economic Development of the
Commonwealth.
"Default"
shall mean any event or condition, the occurrence of which would, with the
lapse
of time or the giving of notice, or both, constitute an Event of Default as
defined in Section 8.1 hereof.
"Environmental
Legal Requirement" shall mean any applicable law relating to public health,
safety or the environment, including, without limitation, relating to releases,
discharges or emissions to air, water, land or groundwater, to the withdrawal
or
use of groundwater, to the use and handling of polychlorinated biphenyls or
asbestos, to the disposal, treatment, storage or management of solid or
hazardous wastes or to exposure to toxic or hazardous materials, to the
handling, transportation, discharge or release of gaseous or liquid substances
and any regulation, order, notice or demand issued pursuant to such statute
or
ordinance, in each case applicable to the Property of the Company or the
operation, construction or modification of any thereof, including without
limitation the following: the Clean Air Act, the Federal Water Pollution Control
Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response Compensation and Liability Act as amended
by the Superfund Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act as amended by the Solid and Hazardous Waste
Amendments of 1984, the Occupational Safety and Health Act, the Emergency
Planning and Community Right-to-Know Act of 1986, the Solid Waste Disposal
Act,
the Pennsylvania Safe Drinking Water Act and any other state statutes addressing
similar matters, and any state statute providing for financial responsibility
for cleanup or other actions with respect to the release or threatened release
of hazardous substances and any state nuisance statute.
"Excepted
Encumbrances" shall mean any of the following:
(a) liens
for
taxes, assessments or governmental charges not delinquent and liens for workers'
compensation awards and similar obligations not delinquent and undetermined
liens or charges incidental to construction;
(b) any
liens
securing Indebtedness neither assumed nor guaranteed by the Company on which
it
customarily pays interest, existing in or relating to real estate acquired
by
the Company for transmission, distribution or right-of-way
purposes;
(c) easements
or reservations in any Property of the Company created for the purpose of roads,
railroads, railroad side tracks, water and gas transmission and distribution
mains, conduits, water power rights of the Commonwealth of Pennsylvania or
others, building and use restrictions and defects of title to, or leases of,
any
parts of the Property of the Company which do not in the opinion of the
Company's counsel materiality impair the use of the Property as an entirety
in
the operation of the business of the Company;
(d) undetermined
liens and charges incidental to current construction, including mechanics',
laborers', materialmen's and similar liens not delinquent;
(e) any
obligations or duties affecting the Property of the Company to any municipality
or public authority with respect to any franchise, grant, license, permit or
certificate;
(f) rights
reserved to or vested in any municipality or public authority to control or
regulate any Property of the Company or to use such Property in a manner which
does not materially impair the use of such Property for the purposes for which
it is held by the Company; or
(g) judgments
in course of appeal or otherwise in contest and secured by sufficient bond
or
security.
"Excepted
Property" shall mean (a) cash, bonds, stocks, obligations and other Securities;
(b) choses in action, accounts and bills receivable, judgments and other
evidences of Indebtedness and contracts, leases and operating agreements; (c)
stock in trade, merchandise, equipment, apparatus, materials or supplies
manufactured or acquired for the purpose of sale and/or resale in the usual
course of business or consumable in the operation of any of the Properties
of
the Company or held for the purpose of repairing or replacing (in whole or
in
part) any rolling stock, business, motor coaches, trucks, automobiles or other
vehicles or aircraft; (d) timber, gas, oil, minerals (including developed and
undeveloped natural gas reserves and natural gas in underground storage or
otherwise), mineral rights and royalties; (e) materials or products generated,
manufactured, produced or purchased by the Company for sale, distribution or
use
in the ordinary course of its business; (f) rolling stock, buses, motor coaches,
trucks, automobiles and other vehicles and all aircraft; and (g) the Company's
franchise to be a corporation.
"Funded
Debt" of any Person shall mean (a) all Indebtedness for borrowed money or which
has been incurred in connection with the acquisition of assets in each case
having a final maturity of one or more than one year from the date of origin
thereof (or which is renewable or extendible at the option of the obligor for
a
period or periods more than one year from the date of origin), including all
payments in respect thereof that are required to be made within one year from
the date of any determination of Funded Debt, whether or not included in
Consolidated Current Liabilities, (b) all Capitalized Rentals, and (c) all
Guaranties of Indebtedness of others.
"Guaranties"
by any Person shall mean all obligations (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
of such Person guaranteeing or in effect, guaranteeing any Indebtedness,
dividend or other obligation, of any other Person (the "primary obligor") in
any
manner, whether directly or indirectly, including, without limitation, all
obligations incurred through an agreement, contingent or otherwise, by such
Person: (a) to purchase such Indebtedness or obligation or any Property or
assets constituting security therefor, (b) to advance or supply funds (1) for
the purchase or payment of such Indebtedness or obligation, (2) to maintain
working capital or other balance sheet condition or, otherwise to advance or
make available funds for the purchase or payment of such Indebtedness or
obligation, or (c) to lease Property or to purchase Securities or other Property
or services primarily for the purpose of assuring the owner of such Indebtedness
or obligation of the ability of the primary obligor to make payment of the
Indebtedness or obligation, or (d) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed
to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness
equal
to the maximum aggregate amount of such obligation, liability or
dividend.
"Indebtedness"
of any Person shall mean and include all obligations of such Person which in
accordance with generally accepted accounting principles shall be classified
upon a balance sheet of such Person as liabilities of such Person, and in any
event shall include all (a) obligations of such Person for borrowed money or
which has been incurred in connection with the acquisition of Property or
assets, (b) obligations secured by any lien or other charge upon Property or
assets owned by such Person, even though such Person has not assumed or become
liable for the payment of such obligations, (c) obligations created or arising
under any conditional sale or other title retention agreement with respect
to
Property acquired by such Person, notwithstanding the fact that the rights
and
remedies of the seller, lender or lessor under such agreement in the event
of
default are limited to repossession or sale of Property, and (d) Capitalized
Rentals under any Capitalized Lease. For the purpose of computing the
"Indebtedness" of any Person, there shall be excluded any particular
Indebtedness to the extent that, upon or prior to the maturity thereof, there
shall have been deposited with the proper depositary in trust the necessary
funds (or evidences of such Indebtedness, if permitted by the instrument
creating such Indebtedness) for the payment, redemption or satisfaction of
such
Indebtedness; and thereafter such funds and evidences of Indebtedness so
deposited shall not be included in any computation of the assets of such
Person.
"Indemnified
Parties" means the Issuer, the Trustee, the Paying Agent and any of their
respective officers, directors, members, commissioners, employees, agents,
servants and any other person acting for or on behalf of the Issuer, the Trustee
or the Paying Agent.
“Inducement
Resolution” means the resolution of the governing body of the Issuer adopted on
February 7, 2006 granting initial approval of the financing of the
Project.
"Installment
Loan Payment(s)" means payments required to be made by the Company to pay the
Debt Service on the Bonds, as provided for in Section 6.4(b), (c), (d) and
(f) of this Loan Agreement, including the principal of, premium, if any (whether
at stated maturity, upon redemption prior to stated maturity, or upon
acceleration of stated maturity), and interest on the Bonds when
due.
"Loan
Agreement" means this Loan Agreement, and all amendments and supplements
hereto.
"Plant
Account" shall mean the plant account under the Pennsylvania Public Utilities
Commission Uniform System of Accounts for Water Utilities dated November 21,
1946, as the same may be amended from time to time.
"Project"
means the facilities described in the recitals hereto and "Exhibit A" to
this Loan Agreement, as amended from time to time as provided herein, and which
are being financed with the proceeds of the Bonds and an equity contribution
from the Company.
"Project
Costs" means all costs incurred by the Company, whether before or after issuance
of the Bonds, with respect to the acquisition, construction and installation
of
the Project, including but not limited to, the following items:
(i) Obligations
incurred or assumed for labor, materials and equipment (including obligations
payable to the Company for expenditures made or costs incurred by the
Company);
(ii) Costs
of
any performance, payment, or surety bonds and insurance deemed necessary or
appropriate by the Company;
(iii) Costs
of
engineering and other services, including the costs incurred or assumed for
preliminary design and development, surveys, estimates and plans and
specifications, and for supervising construction and performing all other duties
required by or consequent upon proper construction;
(iv) Costs
which the Company shall be required to pay under the terms of any contract
or
contracts in connection with the construction, acquisition and installation
of
the Project;
(v) Amounts
which are required to be paid for taxes, assessments and other similar charges
payable during the period of construction;
(vi) Expenses
incurred in seeking to enforce any remedy against any contractor, subcontractor
or other provider of labor, materials, equipment or services, in respect of
any
default, breach or dispute relating to the Project;
(vii) Sums
required to reimburse the Company for advances made for any of the above items,
and for any other costs incurred for work done or caused to be done by the
Company which are properly chargeable to the Project;
(viii) Capitalized
interest with respect to the Project;
(ix) To
the
extent authorized by the Act, costs of all other items related to the
acquisition, construction and installation of the Project; and
(x) All
Costs
of Issuance.
"Property"
shall mean any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible.
"Rentals"
shall mean and include all fixed rents (including as such all payments which
the
lessee is obligated to make to the lessor on termination of the lease or
surrender of the Property) payable by the Company, as lessee or sublessee under
a lease of real or personal property, but shall be exclusive of any amounts
required to be paid by the Company (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges. Fixed rents under any so-called "percentage leases" shall
be
computed solely on the basis of the minimum rents, if any, required to be paid
by the lessee regardless of sales volume or gross revenues.
"Seasonal
Indebtedness" as of the date of any determination thereof shall mean (a) all
Indebtedness for money borrowed other than Funded Debt and (b) Guaranties of
Seasonal Indebtedness of others.
"Security"
or "Securities" shall have the same meaning as in Section 2(1) of the Securities
Act of 1933, as amended.
"Unassigned
Issuer's Rights" means all of the rights of the Issuer to receive insurance
under Section 4.4 hereof, to inspect the Project under Section 4.11 hereof,
to
receive payments and to be reimbursed for attorney's and other fees and expenses
under Sections 6.6 and 8.3 hereof, to be held harmless and indemnified under
Section 7.1 hereof, to receive information under Section 7.3, and, to the extent
provided in this Agreement, to give or withhold consent to or approval of
amendments, modifications, and terminations of this Agreement.
"Voting
Stock" shall mean Securities of any class or classes, the holders of which
are
ordinarily, in the absence of contingencies, entitled to elect a majority of
the
corporate directors (or Persons performing similar functions).
SECTION
1.2. Certain
Rules of Interpretation.
(a) The
definitions set forth in Article I and in the Indenture shall be equally
applicable to both the singular and plural forms of the terms therein defined
and shall cover all genders.
(b) "Herein,"
"hereby," "hereunder," "hereof," "hereinbefore," "hereinafter" and other
equivalent words refer to this Loan Agreement and not solely to the particular
Article, Section or Subdivision hereof in which such word is used.
(c) Reference
herein to an article number (e.g.,
Article IV) or a section number (e.g.,
Section 6.2) shall be construed to be a reference to the designated article
number or section number hereof unless the context or use clearly indicates
another or different meaning or intent.
(d) Words
of
the masculine gender shall mean and include correlative words of the feminine
and neuter genders and words importing the singular number shall mean and
include the plural number and vice versa.
(e) Words
importing persons shall include firms, associations, partnerships (including
limited partnerships), trusts, corporations and other legal entities, including
public bodies, as well as natural persons.
(f) Any
headings preceding the text of the several Articles and Sections of this Loan
Agreement, and any table of contents appended to copies hereof, shall be solely
for convenience of reference and shall not constitute a part of this Loan
Agreement, nor shall they affect its meaning, construction or
effect.
(g) References
to statutes or regulations are to be construed as including all statutory or
regulatory provisions consolidating, amending or replacing the statute or
regulation referred to; and references to agreements and other contractual
instruments shall be deemed to include any exhibits and appendices attached
thereto and all amendments, supplements and other modifications to such
instruments, but only to the extent such amendments, supplements and other
modifications are not prohibited by the terms of this Loan
Agreement.
(h) Whenever
in this Loan Agreement, the Issuer, the Company or the Trustee is named or
referred to, it shall include, and shall be deemed to include, its respective
successors and assigns whether so expressed or not. All of the covenants,
stipulations, obligations and agreements by or on behalf of, and other
provisions for the benefit of, the Issuer, the Company and the Trustee contained
in this Loan Agreement shall inure to the benefit of such respective successors
and assigns, bind and shall, inure to the benefit of any officer, board,
commission, authority, agency or instrumentality to whom or to which there
shall
be transferred by or in accordance with law any right, power or duty of the
Issuer or of its successors or assigns, the possession of which is necessary
or
appropriate in order to comply with any such covenants, stipulations,
obligations, agreements or other provisions of this Loan Agreement.
(i) Every
"request," "order," "demand," "application," "appointment," "notice,"
"statement," "certificate," "consent," "direction" or similar action hereunder
by persons referred to herein shall, unless the form thereof is specifically
provided, be in writing and signed by an Authorized Representative of the person
giving it.
ARTICLE
II
Representations
SECTION
2.1. Representations
and Findings of Issuer.
The
Issuer hereby confirms its findings and represents that:
(a) Organization.
The
Issuer is a public body corporate and politic established in the Commonwealth
pursuant to the laws of the Commonwealth including the Act. Under the Act,
the
Issuer has the power to enter into the Indenture, this Loan Agreement and the
Underwriting Agreement and to carry out its obligations thereunder and hereunder
and to issue the Bonds to finance all or a portion of the Project
Costs.
(b) Pending
Litigation.
To the
knowledge of the Issuer, there are no actions, suits, proceedings, inquiries
or
investigations pending or threatened against or affecting the Issuer in any
court or before any governmental authority or arbitration board or tribunal,
which involve the possibility of materially and adversely affecting the
transactions contemplated by the Financing Documents or which, in any way,
would
adversely affect the validity or enforceability of the Financing Documents
or
the ability of the Issuer to perform its obligations under the Financing
Documents.
(c) Economic
Findings.
Based
on representations and information furnished to the Issuer by or on behalf
of
the Company, the Issuer has found that the Company is engaged in industrial,
commercial and/or specialized activities in the Commonwealth requiring
substantial capital and creating or maintaining substantial employment
opportunities, that the Company’s operations contribute to economic growth and
the creation or maintenance of employment opportunities in the Commonwealth,
that the Company is financially responsible to assume its obligations prescribed
by this Loan Agreement and the Act and that the Project will constitute
facilities for the furnishing of water within the meaning of Section 142(a)(4)
of the Code.
(d) Public
Purpose Findings.
Based
on representations and information furnished to the Issuer by or on behalf
of
the Company, the Issuer has found that (i) the Project will promote the health,
safety and general welfare of the people of the Commonwealth and the public
purposes of the Act by alleviating unemployment and maintaining employment
at a
high level and creating and developing business opportunities in the
Commonwealth and aiding in the provision of water; (ii) the interests in land
and other property which is part of the Project is located within the boundaries
of the Commonwealth and within the boundaries of the County, which organized
the
Issuer; and (iii) the Project will constitute a “project” within the meaning of
the Act.
(e) Private
Activity Bond Allocations.
The
Issuer has received a Preliminary Allocation of the tax-exempt private activity
bond authority of the Commonwealth in an aggregate amount at least equal to
the
aggregate principal amount of the Bonds from the Department which certifies
the
preliminary approval of such allocation for the Project as required by Section
146 of the Code. Simultaneously with the issuance of the Bonds, the Issuer
shall
request a Final Allocation from the Department which request will automatically
convert the Preliminary Allocation to a Final Allocation of the Commonwealth's
private activity bond authority to the Project.
(f) Project
Approvals.
The
Project has been approved by (1) the Company, (2) the Commissioners of the
County, as the "applicable elected representative," as that term is defined
under the Code, of the Issuer after a public hearing held upon reasonable public
notice, as required by the Code, and (3) the Issuer by adoption of resolutions
including the Bond Resolution as required by the Act.
(g) No
Other Pledges.
The
Issuer has not and will not pledge the income and Revenues derived from this
Loan Agreement or its other interests in this Loan Agreement or the Indenture
other than pursuant to and as set forth in the Indenture.
(h) No
Conflicts.
The
execution, delivery and performance by the Issuer of this Loan Agreement and
the
Indenture and the issuance of the Bonds will not conflict with or create a
breach of or default under the Act or other applicable law or any agreement
or
instrument to which the Issuer is a party or by which it is bound.
(i) Agreements
Are Legal and Authorized.
The
adoption of the Bond Resolution, the issuance and sale of the Bonds and the
execution and delivery by the Issuer of the Financing Documents, and the
compliance by the Issuer with all of the provisions of each thereof and of
the
Bonds, (i) are within the powers and authority of the Issuer,
(ii) have been done in full compliance with the provisions of the Act, are
legal and will not conflict with or constitute on the part of the Issuer a
violation of or a breach of or default under, or result in the creation of
any
lien, charge or encumbrance upon any property of the Issuer (other than as
contemplated by this Loan Agreement and the Indenture) under the provisions
of,
any by-law or other agreement or instrument to which the Issuer is a party
or by
which the Issuer is bound, or any license, judgment, decree, law, statute,
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Issuer or any of its activities or properties and
(iii) have been duly authorized by all necessary action on the part of the
Issuer.
(j) Governmental
Consents.
Neither
the nature of the Issuer nor any of its activities or properties, nor any
relationship between the Issuer and any other Person, nor any circumstance
in
connection with the offer, issue, sale or delivery of any of the Bonds is such
as to require the consent, approval or authorization of, or the filing,
registration or qualification with, any governmental authority on the part
of
the Issuer in connection with the execution, delivery and performance of the
Financing Documents or the offer, issue, sale or delivery of the Bonds, other
than those already obtained as of the Issue Date; provided, however, no
representation is made herein as to compliance with the securities or "blue
sky"
laws of any jurisdiction.
(k) No
Defaults.
No
event has occurred and no condition exists with respect to the Issuer which
would constitute an "Event of Default" as defined in the Indenture or which,
with the lapse of time or with the giving of notice or both, would become an
"Event of Default" under the Indenture.
(l) Limited
Obligations.
The
Bonds shall be limited obligations of the Issuer and shall be payable by the
Issuer solely out of the Revenues. The Bonds shall never be payable out of
any
other funds of the Issuer except the Revenues. Neither the faith and credit
nor
the taxing power of the Commonwealth, the Issuer, the County or any other
political corporation, subdivision or agency thereof is pledged to the payment
of the principal of and premium, if any, or interest on such Bonds.
(m) Requirements
Satisfied.
All
requirements and conditions specified in the Act and all other laws and
regulations applicable to the adoption of the Bond Resolution, the execution
and
delivery of this Loan Agreement and the Indenture, and the issuance and delivery
of the Bonds will be fulfilled prior to the initial delivery of the Bonds to
the
purchasers thereof.
SECTION
2.2. Representations
by the Company.
The
Company makes the following representations as the basis for the undertakings
on
its part herein contained:
(a) Corporate
Organization and Power.
The
Company (i) is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth, and (ii) has all requisite
power and authority and all necessary licenses and permits to own and operate
its properties and to carry on its business as now being conducted and as
presently proposed to be conducted.
(b) Pending
Litigation.
Except
as set forth in the Company's Annual Report on Form 10-K for the year ended
December 31, 2005, there are no actions, suits, proceedings, inquiries or
investigations pending, or to the knowledge of the Company threatened, against
or affecting the Company in any court or before any governmental authority
or
arbitration board or tribunal which involve the possibility of materially and
adversely affecting the transactions contemplated by the Financing Documents
or
which, in any way, would adversely affect the validity or enforceability of
the
Bonds or the Financing Documents or the legal ability of the Company to perform
its obligations under this Loan Agreement.
(c) Agreements
Are Valid and Authorized.
The
execution and delivery by the Company of this Loan Agreement and the compliance
by the Company with all of the provisions hereof (i) are within the
corporate power of the Company, (ii) will not conflict with or result in
any breach of any of the provisions of, or constitute a default under, any
material agreement, charter document, by-law or other material instrument to
which the Company is a party or by which it may be bound, or any license,
judgment, decree, law, statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of
its
activities or properties, and (iii) have been duly authorized by all
necessary action on the part of the Company. This Agreement, upon the due
execution and delivery thereof by the Company and the Issuer, will be a valid
and binding obligation of the Company enforceable in accordance with its terms,
except as limited by bankruptcy, insolvency, reorganization, moratorium or
other
laws or equitable principles of general application relating to or affecting
the
enforcement of creditors' rights generally.
(d) Governmental
Consents.
No
actions by the Company in connection with the execution, delivery and
performance by the Company of this Loan Agreement is such as to require the
consent, approval or authorization of, or the filing, registration or
qualification with, any governmental authority on the part of the Company,
other
than those already obtained as of the Issue Date; provided, however, no
representation is made herein as to compliance with the securities or "blue
sky"
laws of any jurisdiction.
(e) No
Defaults.
No
event has occurred and no condition exists with respect to the Company that
would constitute an "Event of Default" under the Indenture or which, with the
lapse of time or with the giving of notice or both, would become an "Event
of
Default" under the Indenture.
(f) Tax
Documents.
The
representations and statements made by the Company in the Tax Documents are
true
and correct.
(g) Project
Benefits.
The
acquisition, construction, development, design, equipping, testing and
installing of the Project, as provided under this Loan Agreement, will promote
the employment and the health, safety and general welfare of the residents
of
the Commonwealth by promoting the continuation and expansion of gainful
employment opportunities for such residents, will aid in the provision of water,
and will not cause, directly or indirectly, the removal, either in whole or
in
part, of a plant, facility or establishment from one area of the Commonwealth
to
another. The Plant and other fixed property which is part of the Project is
located within the boundaries of the County and has a substantial connection
with the County. The Project is a "project" within the meaning of the Act and
will be operated as such. The Project consists of land or property of a
character subject to allowance for depreciation under Section 167 of the Code
and constitutes "facilities for the furnishing of water" within the meaning
of
Section 142(a)(4) of the Code.
(h) Operation
of Project.
The
Company presently intends to use or operate the Project (or cause the Project
to
be operated) in a manner consistent with the Act for the provision and supply
of
water until the date on which the Bonds have been fully paid and knows of no
reason why the Project will not be so used or operated.
(i) Tax
Information.
The
information furnished by the Company and used by the Issuer in preparing the
tax
certificate and information return pursuant to the Code is accurate and complete
in all material respects as of the date of original issuance and delivery of
the
Bonds. The proceeds of the Bonds will not exceed the Project Costs. The Costs
of
Issuance financed with proceeds of the Bonds, including any bond discount on
the
sale of the Bonds, will not exceed 2% of the proceeds of the Bonds.
(j) Commencement
of Project.
Prior
to the adoption of the Inducement Resolution, no properties included in the
Project, that are to be financed with the proceeds of the Bonds, had been
acquired by the Company or any Related Person (as defined in the Code), and
no
physical work on the Project had been commenced by the Company or any Related
Person, except to the extent permitted in such Inducement
Resolution.
ARTICLE
III
The
Project
SECTION
3.1. Acquisition
and Construction.
The
Company (a) has acquired, or has the requisite legal power to acquire, all
interests in land required for construction of the Project, and shall construct,
install, equip and improve the Project with all reasonable dispatch and in
accordance with the description thereof in Exhibit A attached hereto and
applicable law, (b) shall procure or cause to be procured all permits and
licenses necessary for the prosecution of the work, and (c) shall pay when
due
all costs and expenses incurred in connection with that acquisition,
construction, installation, equipment and improvement from funds made available
therefor in accordance with this Loan Agreement or otherwise. The Company will
revise Exhibit A and such supplemental information from time to time as
necessary to reflect material additions to, deletions from and changes in the
Project and will notify the Issuer and the Trustee in writing of such
modifications so that the Issuer and the Trustee will be able to ascertain
the
nature, location and estimated cost of the Project. It is understood that the
Project is the property of the Company and that any contracts made by the
Company with respect thereto and any work to be done on the Project is to be
done by the Company in its own behalf and not as agent or contractor for the
Issuer or the Trustee.
In
the
event that Exhibit A
hereto
is to be amended or supplemented in accordance with the provisions of
Section 9.3 of the Indenture, the Issuer will enter into, and will instruct
the Trustee to consent to, an amendment of or supplement to Exhibit A
hereto
upon receipt by the Issuer and Trustee of:
(i) a
certificate of an Authorized Company Representative describing in detail the
proposed changes; and
(ii) a
copy of
the proposed form of amendment or supplement to Exhibit A
hereto
and such other documents, certificates and showings as may be required by
counsel rendering the opinion in clause (iii) of this paragraph;
and
(iii) an
opinion of Bond Counsel to the effect that such amendment complies with the
requirements of this Section 3.1, is in proper form for execution and
delivery by the Issuer and will not adversely affect the validity of the Bonds
or the exemption from federal income taxes of the interest thereon.
The
Company recognizes that since the Project has been or will be acquired,
constructed and equipped by the Company and by contractors and suppliers
selected by the Company in accordance with the plans and specifications, the
Issuer makes no representation or warranty, express or implied, with respect
to
the merchantability, condition or workmanship of any part of the Project or
its
suitability for the Company's purposes or the extent to which proceeds derived
from the sale of the Bonds will pay the costs to be incurred in connection
therewith.
SECTION
3.2. Construction
Fund.
The
Construction Fund shall be drawn on and used by the Company to pay the Costs
of
Issuance of the Bonds to the extent not paid from the settlement account
pursuant to Section 2.1 of the Indenture and to pay other Project Costs
when due and payable.
Moneys
in
the Construction Fund shall be disbursed to the Company, or such other Person
as
may be designated, on requisitions substantially in the form of Exhibit C
to the Indenture signed by the Authorized Company Representative and delivered
to the Trustee, stating with respect to each payment to be made:
(1) The
amount and general purpose of such disbursement; and
(2) That
each
obligation mentioned therein (i) has been properly incurred, (ii) is a proper
charge against the Construction Fund in accordance with the provisions of this
Loan Agreement, the Tax Documents and the Indenture, and (iii) has not been
the
basis of any previous requisition.
The
Trustee shall rely fully on any such requisition delivered pursuant to this
Section and shall not be required to make any investigation in connection
therewith.
All
moneys remaining in the Construction Fund after all Project Costs have been
paid
or provided for shall at the written direction of the Company be used in
accordance with Section 3.3 hereof.
If
moneys
in the Construction Fund are not sufficient to pay all Project Costs, the
Company nonetheless shall complete the Project in accordance with Exhibit A
attached hereto (as revised and amended in accordance with this Loan Agreement)
and shall pay all such additional Project Costs. The Company shall not be
entitled to any reimbursement for any such additional Project Costs from the
Issuer, the Trustee, or any Registered Owner; nor shall it be entitled to any
abatement, diminution or postponement of the Installment Loan Payments or other
amounts payable hereunder.
SECTION
3.3. Establishment
of Completion Date.
As
soon
as practicable after the completion of construction of the Project, the Company
shall furnish to the Trustee a certificate signed by an Authorized Company
Representative stating (i) that construction of the Project described in
Exhibit A hereto (as revised and amended in accord with this Loan
Agreement) has been completed, and (ii) any portion of the Project Costs which
has not yet then been paid. Such certificate may state that it is given without
prejudice to any rights against third parties which exist at the date of such
certificate or which may subsequently come into being.
Moneys
(including investment proceeds) remaining in the Construction Fund on the date
of such certificate may be used, at the written direction of an Authorized
Company Representative for the payment, in accordance with the provisions of
this Loan Agreement, of any Project Costs not then paid as specified in such
certificate. The Company agrees that any moneys (including investment proceeds)
remaining in the Construction Fund on the date of the aforesaid certificate
and
not so set aside for the payment of such Project Costs shall be transferred
or
disbursed in accordance with Section 1.142-2 of the Regulations, or any
successor thereto and that the Company shall give specific instructions to
the
Trustee as to the transfer or disbursement of such funds and certify that such
transfer or disbursement complies with the provisions of Section 1.142-2 of
the
Regulations or any successor thereto at such time. The Company acknowledges
that
these provisions generally require that a portion of the Bonds be redeemed,
or
defeased to the first call date (with appropriate notice to the Internal Revenue
Service), within 90 days of the earlier of (i) the date on which the Company
determines that the Project will not be completed or (ii) the date on which
the
Project is Placed-in-Service (as defined in the Tax Agreement).
ARTICLE
IV
Loan
And
Repayment; Operation Of Project
SECTION
4.1. Loan
of Bond Proceeds.
To
provide funds for the financing of Costs of Issuance and Project Costs, the
Issuer will issue the Bonds upon the terms and conditions contained in this
Loan
Agreement and the Indenture and will loan the proceeds thereof to the Company
by
causing the Bond proceeds to be applied as provided in Article V hereof.
The Company shall pay all Costs of completing the Project to the extent that
such Costs exceed the loan proceeds, including interest earnings, available
therefor.
SECTION
4.2. Repayment
of Loan.
The
Company will repay the loan of the Bond proceeds by making the payments required
by Article VI hereof.
SECTION
4.3. Operation.
The
Company shall acquire, construct, install, operate and maintain the Project
in
such manner as to comply in all material respects with the Act and all
applicable requirements of federal, state and local laws and the regulations,
rules and orders of any federal, state or local agency, board, commission or
court having jurisdiction over the Project or the operation thereof, including
without limitation applicable zoning, planning, building and environmental
laws,
regulations, rules and orders; provided that the Company shall be deemed in
compliance with this Section so long as it is acting with due diligence to
correct any violations of any of the foregoing or contesting in good faith
any
such requirement by appropriate legal proceedings. The Company shall pay all
costs and expenses of operation and maintenance of the Project, including all
applicable taxes. During such period as the Project is operated in accordance
with the provisions of this Loan Agreement, the Company will, within the design
capabilities thereof, cause the Project to be operated and maintained in
accordance with all applicable, valid and enforceable rules and regulations;
provided, that the Company reserves the right to contest in good faith any
such
rules or regulations or the application thereof to the Project. It is understood
and agreed that the Issuer shall have no duties or responsibilities whatsoever
with respect to the operation or maintenance of the Project, or the performance
of the Project for its designed purposes.
SECTION
4.4. Insurance.
Subject
to the provisions of Section 4.6 hereof, the Company agrees to maintain, or
cause to be maintained, all necessary insurance with respect to the Project
in
accordance with its customary insurance practices and the practices of Persons
operating similar facilities, which may include self-insurance. All costs of
maintaining insurance with respect to the Project shall be paid by the Company,
and the Issuer and the Trustee shall have no obligation or liability in this
regard. All general liability insurance policies relating to the Project site
or
facilities shall name the Authority and the Trustee as additional insureds
as
their interests may appear.
SECTION
4.5. Maintenance
and Repair.
Subject
to the provisions of Section 4.6 hereof, the Company agrees that it will
(i) maintain, or cause to be maintained, the Project and all of its other
properties in as reasonably safe condition as its operations shall permit and
(ii) maintain, or cause to be maintained, the Project and all of its other
properties in good repair and in good operating condition, ordinary wear and
tear excepted, making from time to time all necessary repairs thereto and
renewals and replacements thereof material to the integrity of the water system
or to the provision of adequate service to the Company's customers. All costs
of
operating and maintaining the Project and all of its other properties shall
be
paid by the Company, and the Issuer shall have no obligation or liability in
this regard.
SECTION
4.6. Right
to Discontinue Operation of Project.
Although
the Company intends to operate, or cause to be operated, the Project for its
designed purposes until the date on which no Bonds are Outstanding, subject
to
the provisions of Section 6.10 hereof, the Company is not required by this
Loan
Agreement to operate, or cause to be operated, any portion of the Project after
the Company shall deem in its sole discretion that such continued operation
is
not advisable and in such event it is not prohibited by this Loan Agreement
from
selling, leasing or retiring all or any such portion of the Project. Subject
to
the provisions of Section 6.10 hereof, the net proceeds from such sale,
lease or other disposition, if any, shall belong to, and may be used for any
lawful purpose by, the Company. Upon discontinuance of operation of the Project
in accordance with this Section 4.6, the Company shall be discharged from
its obligations to insure, maintain and repair the Project or to cause the
Project to be insured, maintained and repaired as set forth in Sections 4.4
and 4.5 hereof.
SECTION
4.7. Insurance
and Condemnation Awards.
Subject
to the provisions of Sections 4.4 and 6.10 hereof, the net proceeds of any
insurance or condemnation award as a result of the destruction or condemnation
of the Project or any portion thereof shall belong to, and may be used for
any
lawful purpose by, the Company.
SECTION
4.8. Workers'
Compensation Coverage.
Throughout
the term of this Loan Agreement, the Company shall comply, or cause compliance,
with applicable workers' compensation laws of the Commonwealth.
SECTION
4.9. Taxes,
Claims for Labor and Materials, Compliance with Laws.
(a) The
Company will promptly pay and discharge all lawful taxes, assessments and
governmental charges or levies imposed upon the Company or upon or in respect
of
all or any part of the Property or business of the Company, all trade accounts
payable in accordance with usual and customary business terms, and all claims
for work, labor or materials, which if unpaid might become a lien or charge
upon
any Property of the Company including the Installment Loan Payments; provided
the Company shall not be required to pay any such tax, assessment, charge,
levy,
account payable or claim if (1) the validity, applicability or amount thereof
is
being contested in good faith by appropriate actions or proceedings which will
prevent the forfeiture or sale of any Property of the Company or any material
interference with the use thereof by the Company, and (2) the Company shall
set
aside on its books, reserves deemed by it to be adequate with respect
thereto.
(b) The
Company will promptly comply with all laws, ordinances or governmental rules
and
regulations to which it is subject, including without limitation, the
Occupational Safety and Health Act of 1970, the Employees Retirement Income
Security Act of 1974, as amended, and all Environmental Legal Requirements,
the
violation of which would materially and adversely affect the Properties,
business, prospects, profits or condition (financial or otherwise) of the
Company or would result in any lien or charge upon any Property of the Company,
subject, however, to the Company's right to contest in good faith the
application of any such laws, rules or regulations to the Company or its
operations so long as such contest does not result in a material threat to
the
operation of the Company's water system or its ability to make the payments
due
hereunder.
SECTION
4.10. Issuer's
Limited Liability.
It
is
recognized that the Issuer's only source of funds with which to carry out its
commitments under the Bonds or this Loan Agreement will be from the proceeds
from the sale of the Bonds, the Installment Loan Payments, or from any available
income or earnings derived therefrom, or from any funds which otherwise might
be
made available by the Company; and it is expressly agreed that the Issuer shall
have no liability, obligation, or responsibility with respect to this Loan
Agreement or the Project except to the extent of funds available from such
sources. If, for any reason, the proceeds from the sale of the Bonds are not
sufficient to pay all the costs of completing the acquisition, construction
and
installation of the Project, the Company shall complete the acquisition,
construction and installation of the Project, and the Company shall pay such
costs from its own funds, but it shall not be entitled to reimbursement
therefor, or to any diminution in or postponement of any payments required
to be
made by the Company hereunder.
SECTION
4.11. Right
of Inspection.
Subject
to reasonable security and safety regulations and upon reasonable notice, the
Issuer and the Trustee, and their respective agents and representatives, shall
have the right during normal business hours to inspect the Project and the
books
and records of the Company pertaining to the Project; provided, however, that
this right is subject to federal, state and local laws and regulations
applicable to the site of the Project. The right of access hereby reserved
to
the Issuer and the Trustee may be exercised only after such agent or
representative shall have executed release of liability and secrecy agreements
(to the extent permitted by law, in the case of an Issuer representative) if
requested by the Company in the form then currently used by the Company, and
nothing contained in this Section or in any other provision of this Loan
Agreement shall be construed to entitle the Issuer or the Trustee to any
information or inspection involving the confidential expertise of the
Company.
ARTICLE
V
Issuance
Of Bonds; Security; Investments
SECTION
5.1. Issuance
of Bonds.
In
order
to provide funds to finance the acquisition, construction and installation
of
the Project, the Issuer, concurrently with the execution of this Loan Agreement,
will sell, issue and deliver to the initial purchasers thereof the Bonds, all
in
accordance with the Indenture. The Issuer will thereupon cause the accrued
interest, if any, received upon the delivery of the Bonds to be deposited in
the
Debt Service Fund and the balance of the proceeds received from the sale of
the
Bonds to be deposited in the Construction Fund.
SECTION
5.2. Security
for the Bonds.
The
obligations of the Company under this Loan Agreement, including specifically
the
obligation to pay Installment Loan Payments and Administrative Expenses and
its
obligations under Article VI hereof shall be direct general obligations of
the Company. Prior to or simultaneously with the issuance of the Bonds, the
Issuer will assign to the Trustee under the terms of the Indenture all of the
Issuer's right, title, and interest in and to this Loan Agreement including
specifically the Installment Loan Payments but excepting all Unassigned Issuer's
Rights.
SECTION
5.3. Reserved.
SECTION
5.4. Investment
of Funds.
The
Issuer hereby gives its express written authority to the Company as provided
in
the Indenture to direct the investment of the Construction Fund, Debt Service
Fund or any other Fund held by the Trustee pursuant to the
Indenture.
ARTICLE
VI
Company
Obligations; Provisions For Payment; Covenants
SECTION
6.1. Company
Approval of Issuance of Bonds.
The
governing body of the Issuer has adopted the Bond Resolution authorizing the
execution of this Loan Agreement and the Indenture and the issuance of the
Bonds. The Company hereby approves the Bond Resolution and the Indenture. It
is
hereby agreed that the foregoing approval of the Bond Resolution and the
Indenture constitutes the acknowledgment and agreement of the Company that
the
Bonds, when issued, sold and delivered as provided in the Bond Resolution and
the Indenture, will be issued in accordance with and in compliance with this
Loan Agreement, notwithstanding any other provisions of this Loan Agreement
or
any other contract or agreement to the contrary. Any Registered Owner is
entitled to rely fully and unconditionally on the foregoing approval.
Notwithstanding any provisions of this Loan Agreement or any other contract
or
agreement to the contrary, the Company's approval of the Bond Resolution and
the
Indenture shall be the Company's agreement that all covenants and provisions
in
this Loan Agreement and the Indenture affecting the Company shall, upon the
delivery of the Bonds and the Indenture, become valid and binding covenants
and
obligations of the Company so long as the Bonds, premium, if any, and the
interest thereon are outstanding and unpaid. Particularly, the obligation of
the
Company to pay, promptly when due, all Installment Loan Payments specified
in
this Loan Agreement and the Indenture shall be absolute and unconditional,
and
said obligation may be enforced as provided in this Loan Agreement and the
Indenture.
SECTION
6.2. Refunding
of Bonds.
After
the
issuance of any Bonds, the Issuer shall not refund any of the Bonds or change
or
modify the Bonds in any way, except as provided for in the Indenture, without
the prior written approval of an Authorized Company Representative; nor shall
the Issuer redeem any Bonds prior to the maturity date except upon the written
request of an Authorized Company Representative, unless such redemption is
required or permitted by the Indenture without such request.
SECTION
6.3. Redemption
of Bonds.
The
Issuer, upon the written request of the Company (and provided that the affected
Bonds are subject to redemption prior to maturity at the option of the Issuer
or
the Company, and provided that such request is received in sufficient time
prior
to the date upon which such redemption is proposed), shall promptly take or
cause to be taken all action that may be necessary under the applicable
redemption provisions to effect such redemption prior to maturity, to the full
extent of funds either made available for such purpose by the Company or already
on deposit in the Debt Service Fund and available for such purpose. The
redemption of any Outstanding Bonds prior to maturity at any time shall not
relieve the Company of its absolute and unconditional obligation to pay each
remaining Installment Loan Payment with respect to any Outstanding Bonds, as
specified in the Indenture. If a redemption of Bonds is required pursuant to
the
provisions of the Indenture, the Company agrees as provided herein to promptly
make Installment Loan Payments sufficient to pay the principal of, premium,
if
any, and interest on the Bonds due on such redemption date.
SECTION
6.4. Installment
Loan Payments.
(a) The
Company hereby covenants and agrees to make the Installment Loan Payments,
as
hereinafter provided in subsections (b), (c), (d) and (f) of this Section,
to the Trustee, on behalf of the Issuer, in accordance with this Loan
Agreement.
(b) The
Company shall make Installment Loan Payments, subject to the limitations of
subsection (e) below of this Loan Agreement, in immediately available funds
directly to the Trustee for deposit in the Debt Service Fund at least three
Business Days before each day on which any payment of Debt Service shall become
due (whether at maturity or upon redemption or acceleration or otherwise) in
an
amount which, together with other money held by the Trustee under the Indenture
and available therefor, will enable the Trustee to make such payment in full
when due.
(c) In
the
event the Company should fail to make any of the payments required in this
Section, the item or installment so in default shall continue as an obligation
of the Company until the amount in default shall have been fully paid, and
the
Company agrees to pay the same with interest thereon, to the extent permitted
by
law, from the date when such payment was due as provided in the
Indenture.
(d) If,
subsequent to a date on which the Company is obligated to pay the Installment
Loan Payments (subject to the provisions of Article X of the Indenture),
losses (net of gains) shall be incurred in respect of any investments, or any
other event has occurred causing the money in the Debt Service Fund, together
with any other money then held by the Trustee and available for the purpose,
to
be less than the amount sufficient at the time of such occurrence or other
event
to pay, in accordance with the provisions of the Indenture, all Debt Service
due
and payable or to become due and payable, the Trustee shall notify the Company
of such fact and thereafter the Company, as and when required for purposes
of
such Debt Service Fund, shall pay in immediately available funds to the Trustee
for deposit in the Debt Service Fund the amount of any such
deficiency.
(e) Notwithstanding
the foregoing, it is the intention of the parties hereto to conform strictly
to
the usury laws now in force in the Commonwealth, and any provision for any
payment contained herein and in the Bonds shall be held to be subject to
reduction to the amount allowed under said usury laws as now or hereafter
construed by the courts having jurisdiction.
(f) The
Company further agrees that in the event payment of the principal of and the
interest on the Bonds is accelerated upon the occurrence of an Event of Default
under the Indenture, all amounts payable under Section 6.4(b) for the
remainder of the term hereof (other than interest not yet due) shall be
immediately due and payable.
(g) Any
amount held in the Debt Service Fund on any payment date specified in
subsection (b) above and not previously credited against Installment Loan
Payments or designated for payments due on particular Bonds, shall be credited
against the Installment Loan Payments required to be made by the Company on
such
date.
SECTION
6.5. Administrative
Expenses.
The
Company shall pay, or cause to be paid, an amount equal to the reasonable fees
and charges of the Trustee for services rendered as Trustee under the Indenture
and its reasonable expenses incurred as Trustee under the Indenture, including
reasonable fees and expenses of its counsel. The Trustee's right to receive
its
reasonable fees, charges and expenses hereunder shall be secured by a lien
on
moneys held by it in the Debt Service Fund and, upon an Event of Default
hereunder, the Trustee shall have a right of payment prior to the payment of
the
owners of the Bonds as provided in Section 8.11 of the Indenture.
SECTION
6.6. Payments
to Issuer.
The
Company shall pay or cause to be paid all of the Issuer's reasonable, actual
out-of-pocket expenses and costs in connection with the issuance of the Bonds,
including, without limitation, all financing, legal, printing, and other
expenses and all Costs of Issuance incurred in issuing the Bonds (including
the
fees and expenses of bond counsel and the Issuer's financial advisor) and the
Issuer's fee of .75% of the principal amount of the Bonds for issuing the Bonds,
less an application fee of $1,500. Also, in the future the Company shall pay
to
the Issuer upon receipt of statements therefor from time to time, such amounts
as are necessary to pay or reimburse the Issuer for its reasonable and necessary
expenses and costs attributable to the Bonds and the Project, including an
annual audit/service fee.
SECTION
6.7. Obligations
of the Company Absolute and Unconditional.
The
obligations of the Company to make the payments required and to perform the
covenants contained in Sections 6.4, 6.5, 6.6, 6.10, 7.1 and 8.3 and to
perform and observe the other agreements on its part contained herein shall
be
absolute and unconditional and shall not be subject to diminution by set-off,
counterclaim, abatement or otherwise. Until payment of all Debt Service relating
to the Bonds has been made, the Company (a) will not suspend or discontinue
any payments provided for in this Loan Agreement, except to the extent the
same
have been prepaid, (b) will perform and observe all its other agreements
contained herein, and (c) except as provided in Section 9.1, will not
terminate this Loan Agreement for any cause, including, without limiting the
generality of the foregoing, any acts or circumstances that may constitute
failure of consideration, sale, loss, eviction or constructive eviction,
destruction of or damage to the Project, commercial frustration of purpose,
any
change in the tax or other laws of the United States of America or of the
Commonwealth or any political subdivision of either, or any failure of the
Issuer to perform and observe any agreement, whether express or implied, or
any
duty, liability or obligation arising out of or in connection herewith or with
the Indenture. Nothing contained in this Section shall be construed to release
the Issuer from the performance of any of the agreements on its part herein
contained and in the event the Issuer shall fail to perform any such agreement
on its part, the Company may take such action as the Company may deem necessary
to perform or compel performance, provided that no such action shall violate
the
agreements on the part of the Company contained in this Loan Agreement or
postpone or diminish the amounts required to be paid by the Company pursuant
to
this Loan Agreement. Upon the issuance and delivery of the Bonds to the initial
purchasers thereof, the Company shall have received, and the Issuer shall have
given, full and complete consideration for the Company's obligation hereunder
to
make Installment Loan Payments.
SECTION
6.8. Option
to Prepay Amounts Under Loan Agreement in Certain Events.
The
Company shall have, and is hereby granted, the option to prepay the amounts
required to be paid by the Company under Section 6.4(b) in whole or in part
and to direct the Trustee to redeem the Bonds in whole or in part, as the case
may be, if the Company determines to exercise any optional redemption rights
under the terms of the Bonds or if any of the events described in Article V
of
the Indenture requiring the redemption of Bonds shall have occurred. The Company
may at any time deliver money, and/or Government Obligations, to the Trustee
with instructions to the Trustee to hold such money, and/or Government
Obligations, pursuant to Article X of the Indenture in connection with a
discharge of the Indenture. The Issuer agrees that, at the request at any time
of the Company, it will cooperate with the Company to cause the Bonds or any
portion thereof to be redeemed, or to cause the Indenture to be discharged,
to
the extent permitted by the Indenture.
SECTION
6.9. Company's
Performance Under Indenture.
The
Company agrees to do and perform all acts and things contemplated in the
Indenture to be done or performed by it and to not interfere with the exercise
of the power and authority granted to the Trustee in the Indenture. The Company
further agrees to aid in furnishing any documents, certificates or opinions
that
may be required under the Indenture.
SECTION
6.10. Covenants
Regarding Tax Exemption.
It
is the
intention of the Company and the Issuer that the interest on the Bonds be
excludable from the gross income of the holders thereof for federal income
tax
purposes by reason of Section 103(a) of the Code, except for any Bond for
any period that such Bond is owned by a person who is a "substantial user"
of
the Project or a "related person" within the meaning of Section 147(a) of
the Code, and that substantially all of the proceeds of the Bonds will be used
to provide facilities for the furnishing of water within the meaning of
Section 142(a)(4) of the Code and any Regulations promulgated with respect
thereto. To that end, the Company and the Issuer (to the extent reasonably
within the control of the Issuer) covenant with each other to refrain from
any
action which would adversely affect, or to take such action to assure, the
treatment of the Bonds as obligations described in Section 103(a) of the
Code, the interest on which is not includable in the gross income of the holders
thereof (other than the income of a "substantial user" of the Project or a
"related person" within the meaning of Section 147(a) of the Code) for
purposes of federal income taxation. None of the covenants and agreements herein
contained shall require either the Company or the Issuer to enter an appearance
or intervene in any administrative, legislative or judicial proceeding in
connection with any changes in applicable laws, rules or regulations or in
connection with any decisions of any court or administrative agency or other
governmental body affecting the taxation of interest on the Bonds.
SECTION
6.11. Bonds
Purchased in Lieu of Redemption.
Pursuant
to Section 5.5 of the Indenture, the Company is given the right to purchase
Bonds in lieu of redemption, provided that Bonds so purchased shall be retired
and not remarketed.
SECTION
6.12. Nondiscrimination
-
Sexual Harassment.
The
Company hereby accepts and agrees to be bound by the Nondiscrimination - Sexual
Harassment clause set forth in Exhibit B attached hereto.
ARTICLE
VII
Particular
Agreements
SECTION
7.1. Indemnified
Party's Release and Indemnification Provisions.
The
Company agrees, whether or not the transactions contemplated by this Loan
Agreement and the Indenture shall be consummated:
(a) to
pay,
and save the Indemnified Parties harmless against liability for the payment
of,
all reasonable out-of-pocket expenses arising in connection with said
contemplated transactions, including the reasonable fees and expenses of counsel
to the Indemnified Parties; and
(b) to
defend, protect, indemnify and save the Indemnified Parties harmless from and
against all liability, losses, damages, costs, reasonable expenses (including
reasonable counsel fees), taxes, causes of action, suits, claims, demands and
judgments of any nature or form, by or on behalf of any Person arising in any
manner from the transactions of which this Loan Agreement or the Indenture
is a
part or arising in any manner in connection with the Project or the financing
or
refinancing of the Project, and, without limiting the generality of the
foregoing, arising from (i) the issuance, offering, sale, or delivery of
the Bonds, the Indenture, the Underwriting Agreement and this Loan Agreement
and
the obligations imposed on the Issuer hereby and thereby and the Trustee's
performance of its obligations under the Indenture; or the design, construction,
installation, operation, use, occupancy, maintenance, or ownership of the
Project; (ii) any written statements or representations made or given by
the Company or any of its officers or employees to the Indemnified Parties
or
any underwriters or purchasers of any of the Bonds, with respect to the Issuer,
the Company, the Project, the Bonds or the Underwriting Agreement, including,
but not limited to, statements or representations of facts, financial
information, or corporate affairs; (iii) damage to property or any injury
to or death of any person that may be occasioned by any cause whatsoever
pertaining to the Project; (iv) any breach or default on the part of the
Company in the performance of any of its obligations under this Loan Agreement;
(v) any violation of contract, agreement or restriction by the Company
relating to the Project; or (vi) any violation of law, ordinance or
regulation by or permitted by the Company affecting the Project or any part
thereof or the ownership or occupancy or use thereof.
In
the
event that any action or proceeding is brought against any Indemnified Party
by
reason of any such claim, such action or proceeding shall be defended against
by
counsel to the Company, unless the Indemnified Party shall determine, upon
advice of counsel to the Indemnified Party, that the Indemnified Party's
interests conflict with the interests of Company, in which event the Indemnified
Party may select its own counsel. In the event such defense is by counsel to
the
Indemnified Party on behalf of the Indemnified Party, the Company shall
indemnify the Indemnified Party for reasonable costs of counsel to the
Indemnified Party allocated to such defense and charged to the Indemnified
Party. The Company, upon notice from the Indemnified Party, shall resist and
defend such an action or proceeding on behalf of the Indemnified Party. The
Indemnified Party shall provide the Company prompt written notice of any claim
or suit with respect to which it has a right of indemnity hereunder, but the
failure to provide such notice shall not limit or impair the rights of any
Indemnified Party hereunder except to the extent that such failure causes actual
damage or loss to the Company. The Indemnified Party shall, at the Company's
expense, provide all reasonable assistance requested by the Company in its
defense and/or settlement of any such claim or suit. Neither party shall settle
or pay any such claim or suit without the prior written consent of the other
party, which shall not be unreasonably withheld.
The
provisions of this Section shall not apply to any claim or liability to the
extent resulting from the Indemnified Party's acts of gross negligence, bad
faith, fraud or deceit or for any claim or liability which the Company was
not
given the opportunity to contest (except as set forth in the preceding
paragraph), due to the gross negligence of the Indemnified Party.
The
Company also agrees to pay the expenses (including reasonable attorneys' fees)
of any Indemnified Party in enforcing this Section 7.1. The provisions of this
Section shall survive the payment of the Bonds, the termination of this Loan
Agreement, the termination of the Indenture, and, as to the Trustee, the removal
or resignation of the Trustee.
SECTION
7.2. Maintenance
of Corporate Existence.
The
Company agrees that during the term of this Loan Agreement it will maintain
its
corporate existence, will not dissolve or otherwise dispose of all or
substantially all of its assets and will not consolidate with or merge into
another corporation; provided, however, that the Company may, without violating
the agreement contained in this Section, consolidate with or merge into another
corporation, or sell or otherwise transfer to another corporation all or
substantially all of its assets as an entirety and thereafter dissolve, if
(a) the Issuer consents in writing, (b) the surviving, resulting or
transferee corporation, as the case may be, assumes in a writing delivered
to
the Trustee all of the obligations of the Company herein and under the Tax
Documents, is duly qualified to do business in the Commonwealth, (c) at the
time of such consolidation or merger and after giving effect thereto, no Default
or Event of Default shall have occurred and be continuing, (d) after giving
effect to such consolidation or merger the surviving corporation would be
permitted to incur at least $1.00 of additional Funded Debt under the provisions
of Section 7.9 hereof, and (e) the provisions of Section 7.6 are
satisfied.
SECTION
7.3. Financial
Information.
The
Company will keep proper books of record and account in which full and correct
entries will be made of all dealings or transactions of or in relation to the
business and affairs of the Company, in accordance with generally accepted
accounting principles consistently maintained (except for changes disclosed
in
the financial statements furnished pursuant to this Section 7.3 and
concurred in by the independent public accountants referred to herein), and
will
furnish to the Trustee and upon request, to the Issuer:
(a) Quarterly
Statements.
As soon
as available and in any event within 45 days after the end of each quarterly
fiscal period (except the last) of each fiscal year, duplicate copies
of:
(1) a
consolidated balance sheet of the Company as of the close of such quarter
setting forth in comparative form the consolidated figures for the corresponding
period of the preceding fiscal year,
(2) consolidated
statements of income and shareholders' investment of the Company for such
quarterly period, setting forth in comparative form the consolidated figures
for
the corresponding period of the preceding fiscal year, and
(3) consolidated
statements of cash flows of the Company for the portion of the fiscal year
ending with such quarter, setting forth in comparative form the consolidated
figures for the corresponding period of the preceding fiscal year,
all
in
reasonable detail and certified as complete and correct, by an authorized
financial officer of the Company;
(b) Annual
Statements.
As soon
as available and in any event within 120 days after the close of each fiscal
year of the Company, duplicate copies of:
(1) a
consolidated balance sheet of the Company as of the close of such fiscal
year,
(2) consolidated
statements of income and shareholders' investment and cash flows of the Company
for such fiscal year,
in
each
case setting forth in comparative form the consolidated figures for the
preceding fiscal year, all in reasonable detail and accompanied by an opinion
thereon of a firm of independent public accountants of recognized national
standing selected by the Company to the effect that the consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles consistently applied (except for changes in application in which
such
accountants concur) and present fairly, in all material respects, the financial
condition of the Company and that the examination of such accountants in
connection with such financial statements has been made in accordance with
generally accepted auditing standards and accordingly, includes such tests
of
the accounting records and such other auditing procedures as were considered
necessary in the circumstances;
(c) Audit
Reports.
Promptly upon receipt thereof, one copy of each interim or special audit made
by
independent accountants of the books of the Company;
(d) SEC
and Other Reports.
Promptly upon their becoming available, one copy of each financial statement,
report, notice or proxy statement sent by the Company to stockholders generally
and of each regular or periodic report, and any registration statement or
prospectus filed by the Company with any securities exchange or the Securities
and Exchange Commission or any successor agency, and copies of any orders in
any
proceedings substantially affecting the financial condition of the Company
to
which the Company is a party, issued by any governmental agency, Federal or
state, having jurisdiction over the Company;
(e) Officers'
Certificates.
Within
the periods provided in paragraphs (a) and (b) above, a certificate of an
authorized financial officer of the Company stating that he has reviewed the
provisions of this Agreement and setting forth: (1) the information and
computations (in sufficient detail) required in order to establish whether
the
Company was in compliance with the requirements of Sections 7.9 through 7.12,
inclusive, at the end of the period covered by the financial statements then
being furnished, and (2) whether there existed as of the date of such financial
statements and whether, to the best of his knowledge, there exists on the date
of the certificate or existed at any time during the period covered by such
financial statements any Default or Event of Default and, if any such condition
or event exists on the date of the certificate, specifying the nature and period
of existence thereof and the action the Company is taking and proposes to take
with respect thereto.
To
the
extent not furnished pursuant to the foregoing provisions of this
Section 7.3, the Company agrees to furnish to the Issuer and Trustee,
copies of the annual financial statements and other information filed with
Nationally Recognized Municipal Securities Information Repositories pursuant
to
the Company's continuing disclosure undertaking referred to in the Underwriting
Agreement. Such statements and other information shall be filed with the
Authority and the Trustee within ten (10) days of the filings made pursuant
to
such continuing disclosure undertaking.
SECTION
7.4. Agreement
of Issuer Not to Assign or Pledge.
Except
for the assignment and pledge described in the Indenture, the Issuer agrees
that
it will not attempt to further assign, pledge, transfer or convey its interest
in or create any assignment, pledge, lien, charge or encumbrance of any form
or
nature with respect to the rights and interests herein described.
SECTION
7.5. Reference
to Bonds Ineffective after Bonds Paid.
Upon
payment of all Debt Service due relating to the Bonds, and payment of all fees
and charges of the Issuer and the Trustee, all as provided in Article X of
the
Indenture, all references herein to the Bonds and the Trustee shall be
ineffective and neither the Issuer, the Trustee nor the holders of any of the
Bonds shall thereafter have any rights hereunder and the Company shall have
no
further obligation hereunder, saving and excepting those that shall have
theretofore vested and remain unsatisfied and any right of the Issuer or the
Trustee to indemnification under Section 7.1 and payment of fees under
Section 8.3, which rights shall survive the payment of all Debt Service due
relating to the Bonds and the termination of this Loan Agreement and the
Indenture.
SECTION
7.6. Assignment,
Sale or Lease of Project.
(a) The
Company shall not assign this Loan Agreement or any interest of the Company
herein, either in whole or in part, without the prior written consent of the
Trustee, which consent shall be given if the following conditions are
fulfilled;
(i) The
assignee assumes in writing all of the obligations of the Company
hereunder;
(ii) The
assignee provides the Trustee with an opinion of counsel satisfactory to the
Trustee to the effect that neither the validity nor the enforceability of this
Loan Agreement shall be adversely affected by such assignment;
(iii) The
Project shall continue in the opinion of Bond Counsel to be a “project” as such
term is defined in the Act after such assignment;
(iv) Such
assignment shall not, in the opinion of Bond Counsel, have an adverse effect
on
the exclusion from gross income for federal income tax purposes of interest
on
the Bonds; and
(v) Consent
by the Issuer, which consent shall not be unreasonably withheld.
(b) The
Company may, subject to the provisions of Section 6.10, lease the Project,
in
whole or in part, to one or more other Persons, provided that:
(i) No
such
lease shall relieve the Company from its obligations under this Loan
Agreement;
(ii) In
connection with any such lease the Company shall retain such rights of interests
as will permit it to comply with its obligations under this Loan
Agreement;
(iii) No
such
lease shall impair materially the accomplishment of the purposes of the Act
to
be accomplished by operation of the Project as herein provided;
(iv) Any
such
lease shall require the lessee to operate the Project as a “project” under the
Act as long as the Bonds are outstanding;
(v) In
the
case of a lease to a new lessee or an assignment of an existing lease to a
new
lessee of substantially all of the Project, such new lessee shall have been
approved by the Issuer (such approval not to be unreasonably withheld); and
(vi) The
lessees under any such leases, shall be subject to the applicable terms and
conditions of Section 6.10.
(c) The
Company shall not sell, assign or otherwise dispose of (whether in one
transaction or in a series of transactions) its interest in the Project or
any
material portion thereof, other than is permitted by Section 7.6(a) and other
than leases permitted under Section 7.6(b) or undertake or permit the
demolition or removal of the Project or any material portion thereof without
the
prior written consent of the Issuer; provided that the Company shall be
permitted to sell, transfer, assign or otherwise dispose of or remove any
portion of the Project which is retired or replaced in the ordinary course
of
business.
SECTION
7.7. Amendment
of Loan Agreement or Indenture.
No
amendment, change, addition to, or waiver of any of the provisions of this
Loan
Agreement or the Indenture shall be made except pursuant to Article IX and
Article XI of the Indenture.
SECTION
7.8. Waiver
of Vendor’s Lien.
Notwithstanding
anything in this Loan Agreement to the contrary, it is the intention of the
parties hereto that no vendor’s lien and/or privilege, mortgage, resolutory
condition, right of rescission or stipulation for the benefit of a third party
shall be created by execution of this Loan Agreement, and if any such lien,
privilege, condition, or benefit should be deemed to have been created by
execution of this Loan Agreement, they are expressly released, renounced, waived
and abandoned by the parties hereto.
SECTION
7.9. Limitations
on Indebtedness.
(a) The
Company will not have outstanding, or in any manner be liable in respect of,
any
Indebtedness, except the following:
(1) current
operating liabilities and current or other obligations (other than for borrowed
money) incurred in the ordinary course of business;
(2) Seasonal
Indebtedness, provided that such Seasonal Indebtedness has not existed for
a
period of at least 30 consecutive days in the twelve preceding months;
and
(3) Funded
Debt (including the Bonds) in an amount not in excess of 60% of the Plant
Account on the books of the Company at any one time outstanding.
(b) The
renewal, extension or refunding of any Funded Debt issued or incurred in
accordance with the limitations of this Section 7.9 shall constitute the
issuance of additional Funded Debt, which is, in turn, subject to the
limitations of the applicable provisions of this Section 7.9, but any
Indebtedness paid or defeased from the proceeds of additional Funded Debt may
be
excluded from outstanding Indebtedness for purposes of this
Section 7.9.
(c) Subject
to compliance with this Section 7.9, nothing contained in this Agreement shall
prohibit the Company from having the Issuer issue in the future additional
series of bonds or incurring other types of Funded Debt.
SECTION
7.10. Limitation
on Liens.
(a) The
Company will not create or incur, or suffer to be incurred or to exist, any
mortgage, pledge, security interest, encumbrance, lien or charge of any kind
on
its Property or assets, whether now owned or hereafter acquired, or upon any
income or profits therefrom, or transfer any Property for the purpose of
subjecting the same to the payment of obligations in priority to the payment
of
its or their general creditors, or acquire or agree to acquire any Property
or
assets upon conditional sales agreements or other title retention devices,
except Excepted Encumbrances; provided, however, that this requirement shall
not
be applicable to, nor prevent:
(1) the
pledging by the Company of its assets as security for the payment of any tax,
assessment or other similar charge demanded of the Company by any governmental
authority or public body as long as the Company in good faith contests its
liability to pay the same, or as security to be deposited with any governmental
authority or public body for any purpose at any time required by law or,
governmental regulation as a condition to the transaction of any business or
the
exercise of any privilege, license or right; or
(2) the
pledging by the Company of any assets for the purpose of securing a stay or
discharge or for any other purpose in the course of any legal proceeding in
which the Company is a party; or
(3) making
good faith deposits in connection with tenders, contracts or leases to which
the
Company is a party; or
(4) the
pledging by the Company of its revenues to the Pennsylvania Infrastructure
Investment Authority pursuant to that certain Loan Agreement dated as of
August 24, 1999 in order to secure a loan in the original aggregate
principal amount of $800,000 made by such Authority to the Company, such loan
having an outstanding principal balance of approximately $554,754 as of June
30,
2006.
(b) In
the
event any Property or assets of the Company are subject to a lien or charge
not
otherwise permitted by Section 7.10(a) above, the Company will make effective
provision whereby the Bonds shall (so long as any other Indebtedness shall
be so
secured) be secured (along with any other Indebtedness similarly entitled to
be
equally and ratably secured) by a direct lien (on all the Property, other than
Excepted Property, owned by the Company just prior to the time such other lien
shall have become a lien on any of the Property of the Company) prior to the
lien or liens securing any and all such other Indebtedness. Compliance with
the
provisions of this paragraph shall not be deemed to constitute a waiver of,
or
consent to, any violation of Section 7.10(a).
(c) The
Company covenants that, so long as any Bonds shall be outstanding under the
Indenture, if, upon any consolidation or merger of the Company with or into
any
other corporation, or upon any sale or conveyance of all or substantially all
of
the Property of the Company as an entirety, or upon any acquisition by the
Company of the Property of another corporation substantially as an entirety
or
upon any merger of any other corporation into the Company, any of the Property
(other than Excepted Property) owned by the Company just prior thereto, would
thereupon become subject to any lien (other than Excepted Encumbrances), the
Company, prior to such consolidation, merger, sale, conveyance or acquisition,
will take appropriate action whereby the Bonds shall (so long as such Property
shall be subject to such lien) be secured (along with any other Indebtedness
similarly entitled to be equally and ratably secured) by a direct lien on such
portion of the Property of the Company prior to all other liens, other than
Excepted Encumbrances and other than any liens existing thereon just prior
to
such consolidation, merger, sale, conveyance or acquisition.
(d) Any
mortgage created pursuant to the requirements of paragraphs (b) or (c) above
shall contain reasonable and customary provisions for the enforcement of the
lien thereby created and for the release of, or substitution for, the Property
so mortgaged. Such direct lien shall be evidenced by an appropriate instrument
or instruments executed and delivered to the Trustee.
SECTION
7.11. Dividends,
Stock Purchases.
The
Company will not, except as hereinafter provided:
(a) Declare
or pay any dividends, either in cash or Property, on any shares of its capital
stock of any class (except dividends or other distributions payable solely
in
shares of capital stock of the Company, including the portion of dividends
reinvested in shares of the Company’s common capital stock under the Company’s
Optional Dividend Reinvestment Plan); or
(b) Directly
or indirectly, purchase, redeem or retire any shares of its capital stock of
any
class or any warrants, rights or options to purchase or acquire any shares
of
its capital stock (other than in exchange for or out of the net proceeds to
the
Company from the substantially concurrent issue or sale of other shares of
capital stock of the Company or warrants, rights or options to purchase or
acquire any shares of its capital stock); or
(c) Make
any
other payment or distribution, either directly or indirectly, in respect of
its
capital stock; or
(d) Make
any
payment, distribution, conveyance or transfer of any Property to any subsidiary
or affiliate;
(such
declarations or payments of dividends, purchases, redemptions or retirements
of
capital stock and warrants, rights or options, and all such other distributions,
conveyances and transfers being herein collectively called “Restricted
Payments”), if after giving effect thereto the aggregate amount of Restricted
Payments made during the period from and after December 31, 1982 to and
including the date of the making of the Restricted Payment in question, would
exceed the sum of (1) $1,500,000 plus (2) earned surplus of the Company, on
a
non-consolidated basis, accumulated after December 31, 1982, determined without
any deduction on account of such Restricted Payments, provided, however, that
notwithstanding the foregoing, in no event shall the Company make any
distribution, conveyance or transfer to any subsidiary or affiliate of any
Property constituting the Plant Account.
The
Company will not declare any dividend which constitutes a Restricted Payment
payable more than 60 days after the date of declaration thereof.
For
the
purposes of this Section 7.11, the amount of any Restricted Payment declared,
paid or distributed in Property of the Company shall be deemed to be the greater
of the book value or fair market value (as determined in good faith by the
Board
of Directors of the Company) of such Property at the time of the making of
the
Restricted Payment in question.
SECTION
7.12. Termination
of Pension Plans.
The
Company will not permit any employee benefit plan maintained by it to be
terminated in a manner which could result in the imposition of a lien on any
Property of the Company pursuant to Section 4068 of the Employee Retirement
Income Security Act of 1974, as amended.
ARTICLE
VIII
Events
Of
Default And Remedies
SECTION
8.1. Defaults
and Remedies.
(a) The
Company is advised and recognizes that the Issuer will assign all of its right,
title, and interest in and to all of the Installment Loan Payments required
to
be made pursuant to this Loan Agreement, and the right to receive and collect
same, to the Trustee under the Indenture. All rights of the Issuer (other than
Unassigned Issuer’s Rights) against the Company arising under this Loan
Agreement or the Indenture may be enforced by the Trustee, or the Registered
Owners of the Bonds, to the extent provided in the Indenture, without making
the
Issuer a party.
(b) The
following shall constitute an “Event of Default” hereunder:
(i) Payment
of any Installment Loan Payment is not made when due and payable and such
failure shall continue for one Business Day; or
(ii) Payment
of any amount due under this Loan Agreement other than Installment Loan Payments
is not made when due and payable and such failure shall continue for fifteen
(15) Business Days after the Trustee shall have given written notice to the
Company specifying such default; or
(iii) Failure
to pay the principal of or interest on any Indebtedness of the Company for
borrowed money, as and when the same shall become due and payable by the lapse
of time, by declaration, by call for redemption or otherwise, and such default
shall continue beyond the period of grace, if any, allowed with respect thereto;
or
(iv) Default
or the happening of any event shall occur under any indenture, agreement, or
other instrument under which any Indebtedness of the Company for borrowed money
may be issued and such default or event shall continue for a period of time
sufficient to permit the acceleration of the maturity of any Indebtedness of
the
Company outstanding thereunder; or
(v) Default
shall occur in the observance or performance of any covenant or agreement
contained in Sections 7.9 through 7.12 hereof;
(vi) Subject
to Section 7.1(c) of the Indenture relating to force majeure, failure by the
Company to observe or perform any other covenant, condition or agreement on
its
part to be observed or performed under the Indenture or the Loan Agreement,
other than as referred to in subsections (i) through (v) inclusive above, for
a
period of 60 days after written notice, specifying such failure and requesting
that it be remedied, is given to the Company by the Issuer or the Trustee;
provided, however, that if the failure stated in the notice is such that is
can
be remedied but not within such 60-day period, it shall not constitute an Event
of Default if the default, in the judgment of the Trustee in reliance upon
advice of counsel, is correctable without material adverse effect on the
Bondholders and if corrective action is instituted by the Company, within such
period and is diligently pursued until the default is remedied; or
(vii) Final
judgment or judgments for the payment of money aggregating in excess of $250,000
is or are outstanding against the Company or against any Property or assets
of
the Company and any one of such judgments has remained unpaid, unvacated,
unbonded or unstayed by appeal or otherwise for a period of 60 days from the
date of its entry; or
(viii) The
occurrence of an Event of Default under the Indenture.
(c) Upon
the
occurrence of an Event of Default, the Trustee (or in the case of an Event
of
Default arising out of Unassigned Issuer’s Rights, the Issuer) shall have the
power to proceed with any right or remedy granted by the Constitution and laws
of the Commonwealth, as it may deem best, including without limitation any
suit,
action or special proceeding in equity or at law, including mandamus
proceedings, for the specific performance of any agreement, obligation or
covenant contained herein or for the enforcement of any proper legal or
equitable remedy as the Trustee shall deem most effectual to protect the rights
of the Registered Owners, including without limitation, acceleration of all
amounts payable hereunder; provided, however, any such proceedings shall be
subject to the provisions of Section 7.1(c) of the Indenture relating to
force majeure. Upon the occurrence of an Event of Default under
Section 7.1(a)(ii) of the Indenture and upon the occurrence of any other
Event of Default under the Indenture pursuant to the terms of which the Trustee
shall have declared the Bonds immediately due and payable, then all payments
required to be made by the Company under Section 6.4(b) (other than
interest not yet accrued) shall become immediately due and payable.
(d) Any
amounts collected for non-payment of amounts described in Section 6.4
hereof pursuant to actions taken under this Section shall be paid into the
Debt
Service Fund and applied in accordance with the provisions of the
Indenture.
SECTION
8.2. Annulment
of Acceleration.
If,
in
compliance with the requirements of Section 7.2 of the Indenture, the
Trustee shall annul an acceleration declared due to any Event of Default under
the Indenture, such annulment shall be deemed to also rescind any acceleration
of all payments required under Section 6.4. In case of any such annulment,
or in case any proceeding taken by the Trustee on account of any such Event
of
Default shall have been discontinued or abandoned or determined adversely,
then
and in every such case the Issuer, the Company, the Trustee and the Registered
Owners shall be restored to their former positions and rights hereunder, but
no
such annulment shall extend to any subsequent or other Event of Default or
impair any right consequent thereon.
SECTION
8.3. Agreement
to Pay Attorneys’ Fees and Expenses.
In
the
event the Company should default under any of the provisions of this Loan
Agreement and the Issuer or the Trustee should employ attorneys or incur other
expenses for the collection of payments required hereunder or the enforcement
of
performance or observance of any obligation or agreement on the part of the
Company herein contained, the Company agrees that it will upon demand therefore
pay to the Issuer or the Trustee the reasonable fees and expenses of such
attorneys and such other expenses so incurred by the Issuer or the
Trustee.
SECTION
8.4. General
Enforcement Provisions.
(a) The
terms
of this Loan Agreement may be enforced as to one or more breaches either
separately or cumulatively.
(b) No
remedy
conferred upon or reserved to the Issuer, the Trustee, or the Registered Owners
of the Bonds in this Loan Agreement is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy now or hereafter existing at
law
or in equity or by statute. No delay or omission to exercise any right or power
accruing upon any default, omission, or failure of performance hereunder shall
impair any such right or power or shall be construed to be a waiver thereof,
but
any such right and power may be exercised from time to time and as often as
may
be deemed expedient. In the event any provision contained in this Loan Agreement
should be breached by the Company and thereafter duly waived, such waiver shall
be limited to the particular breach so waived and shall not be deemed to waive
any other breach of this Loan Agreement. No waiver by any party of any breach
by
any other party of any of the provisions of this Loan Agreement shall be
construed as a waiver of any subsequent breach, whether of the same or of a
different provision of this Loan Agreement.
SECTION
8.5. Notice
of Default.
The
Company shall notify the Trustee and the Issuer in writing immediately if it
becomes aware of the occurrence of any Event of Default hereunder or of any
fact, condition or event which, with the giving of notice or passage of time
or
both, would become an Event of Default.
SECTION
8.6. Unassigned
Issuer’s Rights.
Notwithstanding
any other provision hereof, upon the occurrence of an Event of Default arising
out of Unassigned Issuer’s Rights, the Issuer reserves the right to exercise or
refrain from exercising remedies under the Loan Agreement with respect to such
Event of Default and such Event of Default may not be waived or annulled without
the prior written consent of the Issuer.
ARTICLE
IX
Miscellaneous
SECTION
9.1. Term
of Loan Agreement.
Subject
to all provisions hereof which expressly state that the same shall survive
termination hereof, this Loan Agreement shall terminate when payment of all
Debt
Service relating to the Bonds shall have been made and all fees, indemnities,
expenses and charges of the Issuer and the Trustee have been fully paid or
provision satisfactory to such parties made for such payment.
SECTION
9.2. Notices.
All
notices, approvals, consents, requests and other communications hereunder shall
be in writing and shall be deemed to have been given when delivered by hand
or
overnight courier service or mailed by first class registered or certified
mail,
return receipt requested, postage prepaid, or sent by telecopy and addressed
as
follows:
(a) to
the
Company, to:
The
York
Water Company
▇▇▇
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇,
▇▇
▇▇▇▇▇
Attention:
President
Telecopy
No. (▇▇▇) ▇▇▇-▇▇▇▇
(b) to
the
Issuer, to:
York
County Industrial Development Authority
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇,
▇▇
▇▇▇▇▇
Attention:
Secretary
Telecopy
No. (▇▇▇) ▇▇▇-▇▇▇▇
(c) to
the
Trustee, to:
Manufacturers
and Traders Trust Company
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
Corporate
Trust Department
Telecopy
No. (▇▇▇) ▇▇▇-▇▇▇▇
(d) to
the
Bond Insurer, to:
Financial
Guaranty Insurance Company
▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
Risk Management
A
duplicate copy of each notice, approval, consent, request or other communication
given hereunder by the Issuer, the Company or the Trustee to any one of the
others shall also be given to all of the others at the address furnished from
time to time. The Issuer, the Company and the Trustee may, by notice given
hereunder, designate any further or different addresses to which subsequent
notices, approvals, consents, requests or other communications shall be sent
or
persons to whose attention the same shall be directed.
SECTION
9.3. Benefit
of Parties.
This
Loan
Agreement is made for the exclusive benefit of the Issuer, the Trustee, the
Registered Owners, the Beneficial Owners, the Company, the Bond Insurer and
their respective successors and assigns herein permitted, and not for any other
third party or parties other than the Bond Insurer, as described below; and
nothing in this Loan Agreement, expressed or implied, is intended to confer
upon
any party or parties other than the Issuer, the Trustee, the Registered Owners,
the Beneficial Owners, the Company, the Bond Insurer and their respective
successors and assigns herein permitted, any rights or remedies under or by
reason of this Loan Agreement. The Bond Insurer is hereby explicitly recognized
as a third-party beneficiary hereunder with the power to enforce any right,
remedy or claim conferred, given or granted hereunder.
SECTION
9.4. Severability.
If
any
provision hereof shall be held invalid or unenforceable by any court of
competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof.
SECTION
9.5. Counterparts.
This
Loan
Agreement may be executed in any number of counterparts, each of which shall
be
deemed to be an original, but all of which together shall constitute one and
the
same instrument.
SECTION
9.6. Captions.
The
captions and headings herein are for convenience only and in no way define,
limit or describe the scope or intent of any provisions hereof.
SECTION
9.7. Law
Governing Construction of Loan Agreement.
This
Loan
Agreement shall be governed by, and construed in accordance with, the laws
of
the Commonwealth.
SECTION
9.8. Payments
on Non-Business Days.
If
any
payment required hereunder is due on a date that is not a Business Day, payment
shall be made on the next succeeding Business Day with the same force and effect
as if made on the date fixed for such payment, and no interest shall accrue
on
such amount for the period after such date.
SECTION
9.9. Payments
to be Sufficient to Meet DTC Requirements.
The
Company hereby acknowledges that the Bonds are intended to be issued in
book-entry form through DTC and that DTC has certain timing requirements and
notice requirements. The Company hereby agrees to make payments and give notices
in a manner sufficient to comply from time to time with the DTC requirements,
for so long as the Bonds are in book-entry form at DTC.
SECTION
9.10. Reserved.
SECTION
9.11. Limitation
of Liability; No Personal Liability.
(a) In
the
exercise of the powers of the Issuer or the Trustee hereunder or under the
Indenture, including without limitation the application of moneys and the
investment of funds, neither the Issuer or the Trustee nor their members,
directors, officers, employees, attorneys or agents shall be accountable to
the
Company for any action taken or omitted by any of them in good faith and without
gross negligence and with the belief that it is authorized or within the
discretion or rights or powers conferred. The Issuer and the Trustee and their
members, directors, officers, employees, attorneys and agents shall be protected
in acting upon any paper or document believed to be genuine, and any of them
may
conclusively rely upon the advice of counsel and may (but need not) require
further evidence of any fact or matter before taking any action. In the event
of
any default by the Issuer hereunder, the liability of the Issuer to the Company
shall be enforceable only out of the Issuer’s interest under this Loan Agreement
and there shall be no other recourse for damages by the Company against the
Issuer, its members, directors, officers, employees, attorneys and agents,
or
any of the property now or hereafter owned by it or them. All covenants,
obligations and agreements of the Issuer contained in this Loan Agreement or
the
Indenture shall be effective to the extent authorized and permitted by
applicable law. No such covenant, obligation or agreement shall be deemed to
be
a covenant, obligation or agreement of any present or future member, director,
officer, employee, attorney or agent of the Issuer, and no official executing
the Bonds shall be liable personally on the Bonds or be subject to any personal
liability or accountability by reason of the issuance thereof or by reason
of
the covenants, obligations or agreements of the Issuer contained in this Loan
Agreement or the Indenture.
(b) No
claim
shall be made by the Company or any of the Company’s affiliates against the
Issuer or the Trustee or any of their affiliates, directors, employees,
attorneys or agents for any special, indirect, consequential or punitive damages
in respect of any breach or wrongful conduct (whether or not the claim therefore
is based on contract, tort or duty imposed by law), in connection with, arising
out of or in any way related to the transactions contemplated by this Loan
Agreement, the Indenture or the other financing arrangements entered into in
connection with the Project, or any act or omission or event occurring in
connection therewith; and the Company hereby waives, releases and agrees not
to
▇▇▇ upon any such claim for any such damages, whether or not accrued and whether
or not known or suspected to exist in its favor.
38
950615.7 10/25/06
IN
WITNESS WHEREOF, the Issuer and the Company have caused this Loan Agreement
to
be executed in their respective names by their authorized officers or
representatives and their respective seals to be affixed hereto and have caused
its execution hereof to be attested by its authorized officer, all as of the
date first above written.
|
YORK
COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY
|
||
| Attest: |
|
|
|
By:
/s/J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
By: | /s/▇▇▇▇ ▇. ▇▇▇▇▇ |
| J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | ▇▇▇▇ ▇. ▇▇▇▇▇ | |
| Assistant Secretary | Chairman | |
| THE YORK WATER COMPANY | ||
| Attest: |
|
|
|
By:
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
|
By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ |
| ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |
| Assistant Secretary | President and CEO | |
Date: October 27, 2006
38
950615.7 10/25/06