LOAN AGREEMENT BETWEEN PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY (THE “ISSUER”) AND THE YORK WATER COMPANY (THE “COMPANY”) DATED AS OF SEPTEMBER 1, 2019
BETWEEN
PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY
(THE “ISSUER”)
AND
THE YORK WATER COMPANY
(THE “COMPANY”)
DATED AS OF SEPTEMBER 1, 2019
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND CERTAIN RULES OF INTERPRETATION
SECTION 1.1. Definitions.
SECTION 1.2. Certain Rules of
Interpretation.
ARTICLE II REPRESENTATIONS
SECTION 2.1. Representations and Findings
of Issuer.
SECTION 2.2. Representations by the
Company.
ARTICLE III THE REFUNDING PROJECT
SECTION 3.1. Acquisition and Construction.
ARTICLE IV LOAN AND REPAYMENT; OPERATION OF PROJECT
SECTION 4.1. Loan of Bond Proceeds.
SECTION 4.2. Repayment of Loan.
SECTION 4.3. Operation.
SECTION 4.4. Insurance.
SECTION 4.5. Maintenance and Repair.
SECTION 4.6. Right to Discontinue
Operation of Project.
SECTION 4.7. Insurance and Condemnation
Awards.
SECTION 4.8. Workers’ Compensation
Coverage.
SECTION 4.9. Taxes, Claims for Labor and
Materials, Compliance with Laws.
SECTION 4.10. Issuer’s Limited Liability.
SECTION 4.11. Right of Inspection.
ARTICLE V ISSUANCE OF BONDS; SECURITY; INVESTMENTS
SECTION 5.1. Issuance of Bonds.
SECTION 5.2. Security for the Bonds.
SECTION 5.3. Redemption of the Refunded
Bonds.
SECTION 5.4. Investment of Funds.
ARTICLE VI COMPANY OBLIGATIONS; PROVISIONS FOR PAYMENT; COVENANTS
SECTION 6.1. Company Approval of Issuance
of Bonds.
SECTION 6.2. Refunding of Bonds.
SECTION 6.3. Redemption of Bonds.
SECTION 6.4. Installment Loan Payments.
SECTION 6.5. Administrative Expenses.
SECTION 6.6. Payments to Issuer and Local
▇▇▇.
SECTION 6.7. Obligations of the Company
Absolute and Unconditional.
SECTION 6.8. Option to Prepay Amounts
Under Loan Agreement in Certain Events.
SECTION 6.9. Company’s Performance Under
Indenture.
SECTION 6.10. Covenants Regarding Tax
Exemption.
SECTION 6.11. Bonds Purchased in Lieu of
Redemption.
SECTION 6.12. Nondiscrimination - Sexual
Harassment.
SECTION 6.13. Right to Know.
ARTICLE VII PARTICULAR AGREEMENTS
SECTION 7.1. Indemnified Parties’ Release
and Indemnification Provisions.
SECTION 7.2. Maintenance of Corporate
Existence.
SECTION 7.3. Financial Information.
SECTION 7.4. Agreement of Issuer Not to
Assign or Pledge.
SECTION 7.5. Reference to Bonds
Ineffective after Bonds Paid.
SECTION 7.6. Assignment, Sale or Lease of
Project.
SECTION 7.7. Amendment of Loan Agreement
or Indenture.
SECTION 7.8. Waiver of Vendor’s Lien.
SECTION 7.9. Limitations on Certain
Indebtedness.
SECTION 7.10. Limitation on Liens.
SECTION 7.11. Dividends, Stock Purchases.
SECTION 7.12. [Reserved.]
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES
SECTION 8.1. Defaults and Remedies.
SECTION 8.2. Annulment of Acceleration.
SECTION 8.3. Agreement to Pay Attorneys’
Fees and Expenses.
SECTION 8.4. General Enforcement
Provisions.
SECTION 8.5. Notice of Default.
SECTION 8.6. Unassigned Issuer’s Rights.
SECTION 8.7. Determination of Taxability
Not an Event of Default.
ARTICLE IX MISCELLANEOUS
SECTION 9.1. Term of Loan Agreement.
SECTION 9.2. Notices.
SECTION 9.3. Benefit of Parties.
SECTION 9.4. Severability.
SECTION 9.5. Counterparts.
SECTION 9.6. Captions.
SECTION 9.7. Law Governing Construction of
Loan Agreement.
SECTION 9.8. Payments on Non-Business
Days.
SECTION 9.9. Payments to be Sufficient to
Meet DTC Requirements.
SECTION 9.10. Reserved.
SECTION 9.11. Limitation of Liability: No
Personal Liability.
EXHIBIT A PROJECT DESCRIPTION
EXHIBIT B NONDISCRIMINATION/SEXUAL
HARASSMENT CLAUSE
EXHIBIT C RIGHT-TO-KNOW LAW
This Loan Agreement dated as of September 1, 2019, between the Pennsylvania Economic
Development Financing Authority (the “Issuer”), a public instrumentality of the Commonwealth of Pennsylvania (the “Commonwealth”) and a public body corporate and politic organized and existing under the Pennsylvania Economic Development Financing Law, as amended (the “Act”) of the Commonwealth, and The York Water Company, a Pennsylvania corporation (the “Company”).
WITNESSETH:
WHEREAS, the Act declares that there is a critical need for the production of water suitable
for public use and consumption, that in order to insure continuing supplies of water resources at reasonable rates, it is necessary to provide additional means of financing projects directed to such production, and that to protect the health,
safety and general welfare of the people of the Commonwealth and to further encourage economic development and efficiency within the Commonwealth by providing basic services and facilities, it is necessary to provide additional or alternative means
of financing facilities for the furnishing of water; and
WHEREAS, the Issuer is authorized to enter into agreements providing for the loan financing
of “projects” within the meaning of the Act that promote any of the public purposes set forth in the Act; and
WHEREAS, the York County Industrial Development Authority has issued its York County
Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2006 (The York Water Company Project) (the “2006 Bonds”) currently outstanding in
the aggregate principal amount of $10,500,000 to provide funds to loan to the Company for the financing of (i) a portion of the Company’s 2006 Capital Budget, including, but not limited to the design, acquisition, construction, improvement,
renovation, equipping and installation of (a) various structures, including distribution buildings, booster stations, pumping stations, and various plant and ancillary buildings, (b) spillway upgrades, standpipes, transmission and distribution
mains, service lines, meters, fire hydrants, and pumping, water treatment and purification equipment, and (c) various other capital improvements, replacements and equipment for the Company’s water system located throughout York County,
Pennsylvania, and (ii) the payment of all or a portion of the costs of issuance of the 2006 Bonds (the “2006 Bonds Project”); and
WHEREAS, the Issuer has issued its Exempt Facilities Revenue Bonds, Series 2008B (The York
Water Company Project) (the “2008B Bonds”) to provide funds to loan to the Company for the financing of (i) a portion of the Company's 2008 Capital Budget,
including, but not limited to the design, acquisition, construction, improvement, extension, renovation, equipping and installation of (a) various structures, including distribution buildings, booster stations, pumping stations, and various plant
and ancillary buildings, (b) spillway upgrades, standpipes, transmission and distribution mains, service lines, meters, fire hydrants, water treatment, pumping and purification equipment, and (c) various other capital improvements, replacements and
equipment for the Company’s water system located throughout York County and ▇▇▇▇▇ County, Pennsylvania, and (ii) the payment of all or a portion of the costs of issuance of the 2008B Bonds (the “2008B Bonds Project”); and
WHEREAS, the Issuer has issued its Exempt Facilities Revenue Refunding Bonds, Series 2014
(The York Water Company Project) (the “2014 Bonds,” and together with the 2006 Bonds, the “Refunded Bonds”) currently outstanding in the aggregate principal amount of $14,870,000 to provide funds to loan to the Company for the financing of the current refunding of the 2008B Bonds (the “2014 Bonds Project,” and together with the 2006 Bonds Project and 2008B Bonds Project, the “Project”); and
WHEREAS, at the request of the Company, the Issuer has determined to issue $10,500,000 aggregate principal amount
of its Exempt Facilities Revenue Refunding Bonds, Series A of 2019 (The York Water Company Project) (the “2019A Bonds”), in order to refund the outstanding
2006 Bonds for debt service savings (the “Series A Refunding Project”); and
WHEREAS, at the request of the Company, the Issuer has determined to issue $14,870,000 aggregate principal amount
of its Exempt Facilities Revenue Refunding Bonds, Series B of 2019 (The York Water Company Project) (the “2019B Bonds,” and together with the 2019A Bonds,
the “Bonds”) in order to refund the outstanding 2014 Bonds for debt service savings (the “Series B Refunding Project,” and together with the Series A Refunding Project, the “Refunding Project”); and
WHEREAS, the Issuer will enter into this Loan Agreement with the Company, under the terms of
which the Company will agree to repay the loan of the proceeds of the Bonds by paying to the Issuer moneys sufficient to pay the principal of, and premium (if any) and interest on the Bonds as the same become due and payable and to pay certain
administrative expenses in connection with the Bonds; and
WHEREAS, as security for the payment of said Bonds, the Issuer will assign and pledge to
Manufacturers and Traders Trust Company, as trustee (the “Trustee”) under the terms of the Trust Indenture dated as of September 1, 2019 (the “Indenture”) certain rights, title and interest of the Issuer in (i) this Loan Agreement (except for the indemnification rights and expense reimbursement rights
contained herein), and (ii) all amounts on deposit from time to time in the various funds created in, and subject to the conditions set forth in, the Indenture;
NOW THEREFORE, in consideration of the covenants and agreements herein made, and subject to
the conditions herein set forth, the Issuer and the Company, intending to be legally bound, covenant and agree as follows:
ARTICLE I
DEFINITIONS AND CERTAIN RULES OF INTERPRETATION
SECTION 1.1. Definitions.
All words and terms as used in this Loan Agreement shall have the same meanings given such
words and terms in the Indenture, unless the context or use clearly indicates another or different meaning or intent. In addition, the terms defined in the recitals to this Loan Agreement shall have the meanings set forth therein and the following
words and terms as used in this Loan Agreement shall have the following meanings, unless the context or use clearly indicates another or different meaning or intent:
“Bond
Resolution” means the resolution of the governing body of the Issuer adopted on August 20, 2019 authorizing the issuance of the Bonds.
“Capitalized
Lease” shall mean any lease, the obligation for Rentals with respect to which is required to be capitalized on a balance sheet of the lessee in accordance with generally accepted accounting principles.
“Capitalized
Rentals” shall mean as of the date of any determination the amount at which the aggregate Rentals due and to become due under all Capitalized Leases under which the Company is a lessee would be reflected as a liability on a balance
sheet of the Company.
“Costs of
Issuance” means all costs and expenses incurred by the Issuer, the Local ▇▇▇ or the Company in connection with the issuance and sale of the Bonds, including without limitation (i) fees and expenses of accountants, attorneys,
engineers, credit enhancers and financial advisors, (ii) materials, supplies, and printing and engraving costs, (iii) recording and filing fees, (iv) rating agency fees, (v) the initial and first year’s annual fees and expenses (including, without
limitation, counsel fees and expenses) of the Trustee, (vi) any underwriters’ discount or fee and expenses and (vii) the Issuer’s issuance fee and administrative and overhead expenses as provided in Section 6.6 of this Loan Agreement.
“Department”
means the Department of Community and Economic Development of the Commonwealth.
“Default”
shall mean any event or condition, the occurrence of which would, with the lapse of time or the giving of notice, or both, constitute an Event of Default as defined in Section 8.1 hereof.
“Disqualified
Contractor” means a Person which has been suspended or debarred by the Commonwealth under its Contractor Responsibility Program, Management Directive 215.9, as amended or replaced by a successive directive rule, regulation or statute
from time to time or has been convicted by a court of competent jurisdiction of a crime for which a term of imprisonment of one year or more could have been imposed, and any Person controlled by a Person which has been so suspended, debarred or
convicted.
“Environmental
Legal Requirement” shall mean any applicable law relating to public health, safety or the environment, including, without limitation, relating to releases, discharges or emissions to air, water, land or groundwater, to the withdrawal
or use of groundwater, to the use and handling of polychlorinated biphenyls or asbestos, to the disposal, treatment, storage or management of solid or hazardous wastes or to exposure to toxic or hazardous materials, to the handling, transportation,
discharge or release of gaseous or liquid substances and any regulation, order, notice or demand issued pursuant to such statute or ordinance, in each case applicable to the Property of the Company or the operation, construction or modification of
any thereof, including without limitation the following: the Clean Air Act, the Federal Water Pollution Control Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the Comprehensive Environmental Response Compensation and Liability
Act as amended by the Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation and Recovery Act as amended by the Solid and Hazardous Waste Amendments of 1984, the Occupational Safety and Health Act, the Emergency Planning
and Community Right-to-Know Act of 1986, the Solid Waste Disposal Act, the Pennsylvania Safe Drinking Water Act and any other state statutes addressing similar matters, and any state statute providing for financial responsibility for cleanup or
other actions with respect to the release or threatened release of hazardous substances and any state nuisance statute.
“Excepted
Encumbrances” shall mean any of the following:
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(a)
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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;
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(b)
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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;
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(c)
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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;
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(d)
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undetermined liens and charges incidental to current construction, including mechanics’, laborers’,
materialmen’s and similar liens not delinquent;
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(e)
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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;
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(f)
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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;
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(g) judgments in course of appeal or otherwise in contest and secured by sufficient bond or security; or
(h) any right of set-off or banker’s lien in favor of any bank lender or any security interest in favor
of any bank lender in deposits, moneys, securities or other property in the possession of or on deposit with, or in transit to, such bank lender or any of its affiliates.
“Favorable
Opinion of Bond Counsel” means an opinion of Bond Counsel, or opinions of Co-Bond Counsel, as appropriate, addressed to the Issuer, the Company and the Trustee to the effect that the action proposed to be taken is authorized or
permitted by the laws of the Commonwealth and this Indenture and will not, in and of itself, adversely affect any exclusion of interest on the Bonds from gross income of the owners thereof for federal income tax purposes.
“Funded Debt”
of any Person shall mean (a) all Indebtedness for borrowed money or which has been incurred in connection with the acquisition of assets in each case having a final maturity of one or more than one year from the date of origin thereof (or which is
renewable or extendible at the option of the obligor for a period or periods more than one year from the date of origin), including all payments in respect thereof that are required to be made within one year from the date of any determination of
Funded Debt, and (b) all Guaranties of such Indebtedness described in clause (a).
“Guaranties”
by any Person shall mean all obligations (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect, guaranteeing any Indebtedness, dividend or other
obligation, of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, all obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such
Indebtedness or obligation or any Property or assets constituting security therefor, (b) to advance or supply funds (1) for the purchase or payment of such Indebtedness or obligation, (2) to maintain working capital or other balance sheet condition
or, otherwise to advance or make available funds for the purchase or payment of such Indebtedness or obligation, or (c) to lease Property or to purchase Securities or other Property or services primarily for the purpose of assuring the owner of
such Indebtedness or obligation of the ability of the primary obligor to make payment of the Indebtedness or obligation, or (d) otherwise to assure the owner of the Indebtedness or obligation of the primary obligor against loss in respect thereof.
In any computation of the Indebtedness or other liabilities of the obligor under any Guaranty, the Indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor.
“Indebtedness”
of any Person shall mean and include, without duplication, all (a) obligations of such Person for borrowed money or which has been incurred in connection with the acquisition of Property or assets, (b) obligations secured by any lien or other
charge upon Property or assets owned by such Person, even though such Person has not assumed or become liable for the payment of such obligations, (c) obligations created or arising under any conditional sale or other title retention agreement with
respect to Property acquired by such Person, notwithstanding the fact that the rights and remedies of the seller, lender or lessor under such agreement in the event of default are limited to repossession or sale of Property, and (d) Capitalized
Rentals under any Capitalized Lease. For the purpose of computing the “Indebtedness” of any Person, there shall be excluded any particular Indebtedness to the extent that, upon or prior to the maturity thereof, there shall have been deposited with
the proper depositary in trust the necessary funds (or evidences of such Indebtedness, if permitted by the instrument creating such Indebtedness) for the payment, redemption or satisfaction of such Indebtedness; and thereafter such funds and
evidences of Indebtedness so deposited shall not be included in any computation of the assets of such Person.
“Indemnified
Parties” means the Issuer, the Local ▇▇▇, the Trustee, the Paying Agent and any of their respective officers, directors, members, commissioners, employees, agents, servants and any other person acting for or on behalf of the Issuer,
the Trustee or the Paying Agent.
“Installment
Loan Payment(s)” means payments required to be made by the Company to pay the Debt Service on the Bonds, as provided for in Section 6.4(b), (c), (d) and (f) of this Loan Agreement, including the principal of, premium, if any (whether
at stated maturity, upon redemption prior to stated maturity, or upon acceleration of stated maturity), and interest on the Bonds when due.
“Loan
Agreement” means this Loan Agreement, and all amendments and supplements hereto.
“Local ▇▇▇”
means the York County Industrial Development Authority, a governmental entity of the Commonwealth in its capacity as an applicant sponsor for the Refunding Project.
“Plant
Account” shall mean the plant account under the Pennsylvania Public Utilities Commission Uniform System of Accounts for Water Utilities dated November 21, 1946, as the same may be amended from time to time.
“Person”
means an individual, a corporation, a partnership, an association, a joint stock company, a trust, any unincorporated organization, a governmental body or a political subdivision, a municipal corporation, public corporation or any other group or
organization of individuals.
“Priority
Debt” means Indebtedness of the Company secured by assets not otherwise permitted by clauses (i) through (iii) of Section 7.10(a) or as an Excepted Encumbrance.
“Project”
means the facilities described in the recitals hereto and Exhibit A to this Loan Agreement, as amended from time to time as provided herein, and which are
being refinanced with the proceeds of the Bonds.
“Property”
or “Properties” shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.
“PUC”
shall mean the Pennsylvania Public Utility Commission.
“Rentals”
shall mean and include all fixed rents (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the Property) payable by the Company, as lessee or sublessee under a lease of
real or personal property, but shall be exclusive of any amounts required to be paid by the Company (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges. Fixed rents under
any so-called “percentage leases” shall be computed solely on the basis of the minimum rents, if any, required to be paid by the lessee regardless of sales volume or gross revenues.
“Seasonal
Indebtedness” as of the date of any determination thereof shall mean (a) all Indebtedness for money borrowed other than Funded Debt and (b) Guaranties of Seasonal Indebtedness of others.
“Security”
or “Securities” shall have the same meaning as in Section 2(1) of the Securities Act of 1933, as amended.
“Unassigned
Issuer’s Rights” means all of the rights of the Issuer to receive insurance under Section 4.4 hereof, to inspect the Project under Section 4.11 hereof, to receive payments and to be reimbursed for attorney’s and other fees and
expenses under Sections 6.6 and 8.3 hereof, to be held harmless and indemnified under Section 7.1 hereof, to receive information under Section 7.3, and, to the extent provided in this Agreement, to give or withhold consent to or approval of
amendments, modifications, and terminations of this Agreement.
“Voting
Stock” shall mean Securities of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate directors (or Persons performing similar functions).
SECTION 1.2. Certain Rules of Interpretation.
(a) The definitions set forth in Article I and in the Indenture shall be equally applicable to both the singular and plural forms of the terms therein defined and shall cover all
genders.
(b) “Herein,” “hereby,” “hereunder,” “hereof,” “hereinbefore,” “hereinafter” and other equivalent words refer to
this Loan Agreement and not solely to the particular Article, Section or Subdivision hereof in which such word is used.
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(c)
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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.
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(d)
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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.
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(e)
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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.
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(f)
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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.
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(g)
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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.
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(h)
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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.
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(i)
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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.
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ARTICLE II
REPRESENTATIONS
SECTION 2.1. Representations and Findings of Issuer.
The Issuer hereby confirms its findings and represents that:
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(a)
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Organization.
The Issuer is a public body corporate and politic established in the Commonwealth pursuant to the laws of the Commonwealth including the Act. Under the Act, the Issuer has the power to enter into the Indenture, this Loan Agreement and
the Bond Purchase Agreement and to carry out its obligations thereunder and hereunder and to issue the Bonds to finance all or a portion of the Project Costs.
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(b)
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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.
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(c)
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Economic Findings.
Based on representations and information furnished to the Issuer by or on behalf of the Company and the Local ▇▇▇, the Issuer has found that the Company is engaged in industrial, commercial and/or specialized activities in the
Commonwealth requiring substantial capital and creating or maintaining substantial employment opportunities, that the Company’s operations contribute to economic growth and the creation or maintenance of employment opportunities in the
Commonwealth, that the Company is financially responsible to assume its obligations prescribed by this Loan Agreement and the Act and that the Project and the facilities refinanced by the Refunding Project constitute “facilities for the
furnishing of water” within the meaning of Section 142(a)(4) of the Code.
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(d)
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Public Purpose Findings.
Based on representations and information furnished to the Issuer by or on behalf of the Company, the Issuer has found that (i) the Project promoted the health, safety and general welfare of the people of the Commonwealth and the public
purposes of the Act by alleviating unemployment and maintaining employment at a high level and creating and developing business opportunities in the Commonwealth and aiding in the provision of water; (ii) the interests in land and other
property which is part of the Project and the Refunding Project is located within the boundaries of the Commonwealth, which organized the Issuer; and (iii) the Project and Refunding Project constitute a “project” within the meaning of the
Act.
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(e)
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Private Activity Bond
Allocations. The Issuer received an allocation of the tax-exempt private activity bond volume cap of the Commonwealth in an aggregate amount at least equal to the aggregate principal amount of the Refunded Bonds from the
Department as required by Section 146 of the Code.
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(f)
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Project Approvals.
The Refunding Project has been approved by (1) the Local ▇▇▇, and (2) the Issuer by adoption of the Bond Resolution as required by the Act.
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(g)
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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.
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(h)
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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.
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(i)
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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.
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(j)
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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.
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(k) No Defaults. No event
has occurred and no condition exists with respect to the Issuer which would constitute an “Event of Default” as defined in the Indenture or which, with the lapse of time or with the giving of notice or both, would become an “Event of Default”
under the Indenture.
(l) Limited Obligations.
The Bonds shall be limited obligations of the Issuer and shall be payable by the Issuer solely out of the Revenues. The Bonds shall never be payable out of any other funds of the Issuer except the Revenues. Neither the faith and credit nor the
taxing power of the Commonwealth, the Issuer, or any other political corporation, subdivision or agency thereof is pledged to the payment of the principal of and premium, if any, or interest on such Bonds.
(m) Requirements Satisfied.
All requirements and conditions specified in the Act and all other laws and regulations applicable to the adoption of the Bond Resolution, the execution and delivery of this Loan Agreement and the Indenture, and the issuance and delivery of the
Bonds will be fulfilled prior to the initial delivery of the Bonds to the purchasers thereof.
SECTION 2.2. Representations by the Company.
The Company makes the following representations as the basis for the undertakings on its
part herein contained:
(a) Corporate Organization and Power. The Company (i) is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth, and (ii) has all requisite power and authority and all necessary licenses and permits to own and operate its properties and to carry on its business as now being conducted
and as presently proposed to be conducted.
(b) Pending Litigation. Except as set forth in Official Statement dated September 5,
2019, there are no actions, suits, proceedings, inquiries or investigations pending, or to the knowledge of the Company threatened, against or affecting the Company in any court or before any governmental authority or arbitration board or
tribunal which could reasonably be expected to involve the possibility of materially and adversely affecting the transactions contemplated by the Financing Documents or which, in any way, would adversely affect the validity or enforceability of
the Bonds or the Financing Documents or the legal ability of the Company to perform its obligations under this Loan Agreement.
(c) Agreements Are Valid and Authorized. The execution and delivery by the Company of
this Loan Agreement and the compliance by the Company with all of the provisions hereof (i) are within the corporate power of the Company, (ii) will not conflict with or result in any breach of any of the provisions of, or constitute a default
under, any material agreement, charter document, by-law or other material instrument to which the Company is a party or by which it may be bound, or any license, judgment, decree, law, statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its activities or properties, and (iii) have been duly authorized by all necessary action on the part of the Company. This Loan Agreement, upon the due execution and
delivery thereof by the Company and the Issuer, will be a valid and binding obligation of the Company enforceable in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or other laws or equitable
principles of general application relating to or affecting the enforcement of creditors’ rights generally.
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(d)
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Governmental Consents.
No actions by the Company in connection with the execution, delivery and performance by the Company of this Loan Agreement are such as to require the consent, approval or authorization of, or the filing, registration or qualification
with, any governmental authority on the part of the Company, other than those already obtained as of the Issue Date; provided, however, no representation is made herein as to compliance with the securities or “blue sky” laws of any
jurisdiction.
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(e)
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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.
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(f)
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Tax Documents.
The representations and statements made by the Company in the Tax Documents are true and correct.
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(g)
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Project Benefits.
The acquisition, construction, development, design, equipping, testing and installing of the Project helped to promote the employment and the health, safety and general welfare of the residents of the Commonwealth by promoting the
continuation and expansion of gainful employment opportunities for such residents, will aid in the provision of water, and did not cause, directly or indirectly, the removal, either in whole or in part, of a plant, facility or
establishment from one area of the Commonwealth to another. The facilities and other fixed property which were part of the Project is located within the boundaries of the Commonwealth and has a substantial connection with the
Commonwealth. The Project consists of land or property of a character subject to allowance for depreciation under Section 167 of the Code and constitutes “facilities for the furnishing of water” within the meaning of Section 142(a)(4) of
the Code.
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(h)
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Operation of Project.
The Company has used and will continue to operate the Project in a manner consistent with the Act for the provision and supply of water until the date on which the Bonds have been fully paid and knows of no reason why the Project will not
continue to be so used or operated.
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(i)
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Tax Information.
The information furnished by the Company and used by the Issuer in preparing the tax certificate and information return pursuant to the Code is accurate and complete in all material respects as of the date of original issuance and
delivery of the Bonds. The aggregate issue price of the Bonds will not exceed the outstanding principal amount of the Refunded Bonds. The Costs of Issuance will not be financed with proceeds of the Bonds.
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(j)
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Disqualified
Contractors. The Company is not a Disqualified Contractor.
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(k)
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PUC Approval.
The Company filed a securities certificate with respect to the Bonds with the PUC, and the PUC voted to register the securities certificate on August 8, 2019, all in accordance with Chapter 19 of the Pennsylvania Public Utility Code.
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ARTICLE III
THE REFUNDING PROJECT
THE REFUNDING PROJECT
SECTION 3.1. Acquisition and Construction.
Prior to construction of the
Project the Company acquired all interests in land required for construction. The Project has been completed and placed in service.
ARTICLE IV
LOAN AND REPAYMENT; OPERATION OF PROJECT
SECTION 4.1. Loan of Bond Proceeds.
To provide funds for the financing of the Refunding Project, the Issuer will issue the Bonds upon the terms and
conditions contained in this Loan Agreement and the Indenture and will loan the proceeds thereof to the Company by causing the Bond proceeds to be applied as provided in Article V hereof. The Company shall pay all Costs of completing the Refunding
Project to the extent that such Costs exceed the loan proceeds, including interest earnings, available therefor.
SECTION 4.2. Repayment of Loan.
The Company will repay the loan of the Bond proceeds by making the payments required by Article VI hereof.
SECTION 4.3. Operation.
The Company shall continue to operate the Project in such manner as to comply in all material respects with the
Act and all applicable requirements of federal, state and local laws and the regulations, rules and orders of any federal, state or local agency, board commission or court having jurisdiction over the Project or the operation thereof, including
without limitation applicable zoning, planning, building and environmental laws, regulations, rules and orders; provided that the Company shall be deemed in compliance with this Section so long as it is acting with due diligence to correct any
violations of any of the foregoing or contesting in good faith any such requirement by appropriate legal proceedings. The Company shall pay all costs and expenses of operation and maintenance of the Project, including all applicable taxes. During
such period as the Project is operated in accordance with the provisions of this Loan Agreement, the Company will, within the design capabilities thereof, cause the Project to be operated and maintained in accordance with all applicable, valid and
enforceable rules and regulations; provided, that the Company reserves the right to contest in good faith any such rules or regulations or the application thereof to the Project. It is understood and agreed that the Issuer shall have no duties or
responsibilities whatsoever with respect to the operation or maintenance of the Project, or the performance of the Project for its designed purposes.
SECTION 4.4. Insurance.
Subject to the provisions of Section 4.6 hereof, the Company agrees to maintain, or cause to be maintained, all
necessary insurance with respect to the Project in accordance with its customary insurance practices and the practices of Persons operating similar facilities, which may include self-insurance. All costs of maintaining insurance with respect to
the Project shall be paid by the Company, and the Issuer and the Trustee shall have no obligation or liability in this regard. All general liability insurance policies relating to the Project site or facilities shall name the Issuer and the
Trustee as additional insureds as their interests may appear.
SECTION 4.5. Maintenance and Repair.
Subject to the provisions of Section 4.6 hereof, the Company agrees that it will (i) maintain, or cause to be
maintained, the Project and all of its other properties in as reasonably safe condition as its operations shall permit and (ii) maintain, or cause to be maintained, the Project and all of its other properties in good repair and in good operating
condition, ordinary wear and tear excepted, making from time to time all necessary repairs thereto and renewals and replacements thereof material to the integrity of the water system or to the provision of adequate service to the Company’s
customers. All costs of operating and maintaining the Project and all of its other properties shall be paid by the Company, and the Issuer shall have no obligation or liability in this regard.
SECTION 4.6. Right to Discontinue Operation of Project.
Although the Company intends to operate, or cause to be operated, the Project for its designed purposes until the
date on which no Bonds are Outstanding, subject to the provisions of Section 6.10 hereof, the Company is not required by this Loan Agreement to operate, or cause to be operated, any portion of the Project after the Company shall deem in its sole
discretion that such continued operation is not advisable and in such event it is not prohibited by this Loan Agreement from selling, leasing or retiring all or any such portion of the Project. Subject to the provisions of Section 6.10 hereof, the
net proceeds from such sale, lease or other disposition, if any, shall belong to, and may be used for any lawful purpose by, the Company. Upon discontinuance of operation of the Project in accordance with this Section 4.6, the Company shall be
discharged from its obligations to insure, maintain and repair the Project or to cause the Project to be insured, maintained and repaired as set forth in Sections 4.4 and 4.5 hereof.
SECTION 4.7. Insurance and Condemnation Awards.
Subject to the provisions of Sections 4.4 and 6.10 hereof, the net proceeds of any insurance
or condemnation award as a result of the destruction or condemnation of the Project or any portion thereof shall belong to, and may be used for any lawful purpose by, the Company.
SECTION 4.8. Workers’ Compensation Coverage.
Throughout the term of this Loan Agreement, the Company shall comply, or cause compliance,
with applicable workers’ compensation laws of the Commonwealth.
SECTION 4.9. Taxes, Claims for Labor and Materials, Compliance with Laws.
(a) The Company will promptly pay and discharge all lawful taxes, assessments and governmental charges or levies
imposed upon the Company or upon or in respect of all or any part of the Property or business of the Company, all trade accounts payable in accordance with usual and customary business terms, and all claims for work, labor or materials, which if
unpaid might become a lien or charge upon any Property of the Company including the Installment Loan Payments; provided the Company shall not be required to pay any such tax, assessment, charge, levy, account payable or claim if (1) the validity,
applicability or amount thereof is being contested in good faith by appropriate actions or proceedings which will prevent the forfeiture or sale of any Property of the Company or any material interference with the use thereof by the Company, and
(2) the Company shall set aside on its books, reserves deemed by it to be adequate with respect thereto.
(b) The Company will promptly comply with all laws, ordinances or governmental rules and regulations to which it is subject, including without
limitation, the Occupational Safety and Health Act of 1970, the Employees Retirement Income Security Act of 1974, as amended, and all Environmental Legal Requirements, the violation of which would materially and adversely affect the Properties,
business, prospects, profits or condition (financial or otherwise) of the Company or would result in any lien or charge upon any material portion of the Property of the Company, subject, however, to the Company’s right to contest in good faith
the application of any such laws, rules or regulations to the Company or its operations so long as such contest does not result in a material threat to the operation of the Company’s water system or its ability to make the payments due hereunder.
SECTION 4.10. Issuer’s Limited Liability.
It is recognized that the Issuer’s only source of funds with which to carry out its commitments under the Bonds,
the Indenture or this Loan Agreement will be from the proceeds from the sale of the Bonds, the Installment Loan Payments, or from any available income or earnings derived therefrom, or from any funds which otherwise might be made available by the
Company; and it is expressly agreed that the Issuer shall have no liability, obligation, or responsibility with respect to this Loan Agreement or the Refunding Project except to the extent of funds available from such sources. If, for any reason,
the proceeds from the sale of the Bonds are not sufficient to pay all the costs of completing the Refunding Project, the Company shall complete the Refunding Project, and the Company shall pay such costs from its own funds, but it shall not be
entitled to reimbursement therefor, or to any diminution in or postponement of any payments required to be made by the Company hereunder.
SECTION 4.11. Right of Inspection.
Subject to reasonable security and safety regulations and upon reasonable notice, the Issuer
and the Trustee, and their respective agents and representatives, shall have the right during normal business hours to inspect the Project and the books and records of the Company pertaining to the Project; provided, however, that this right is
subject to federal, state and local laws and regulations applicable to the site of the Project. The right of access hereby reserved to the Issuer and the Trustee may be exercised only after such agent or representative shall have executed release
of liability and secrecy agreements (to the extent permitted by law, in the case of an Issuer representative) if requested by the Company in the form then currently used by the Company, and nothing contained in this Section or in any other
provision of this Loan Agreement shall be construed to entitle the Issuer or the Trustee to any information or inspection involving the confidential expertise of the Company.
ARTICLE V
ISSUANCE OF BONDS; SECURITY; INVESTMENTS
SECTION 5.1. Issuance of Bonds.
In order to provide funds for the Refunding Project, the Issuer, concurrently with the
execution of this Loan Agreement, will sell, issue and deliver to the initial purchasers thereof the Bonds, all in accordance with the Indenture.
SECTION 5.2. Security for the Bonds.
The obligations of the Company under this Loan Agreement, including specifically the
obligation to pay Installment Loan Payments and Administrative Expenses and its obligations under Article VI hereof shall be direct general obligations of the Company. Prior to or simultaneously with the issuance of the Bonds, the Issuer will
assign to the Trustee under the terms of the Indenture all of the Issuer’s right, title, and interest in and to this Loan Agreement including specifically the Installment Loan Payments but excepting all Unassigned Issuer’s Rights.
SECTION 5.3. Redemption of the Refunded Bonds.
The Issuer hereby approves the current refunding of the 2006 Bonds with the proceeds of the 2019A Bonds, together
with other available funds of the Company, to pay interest accrued on the 2006 Bonds to their date of redemption. The 2006 Bonds will be redeemed on October 8, 2019.
The Issuer hereby approves the current refunding of the 2014 Bonds with the proceeds of the 2019B Bonds, together
with other available funds of the Company, to pay interest accrued on the 2014 Bonds to their date of redemption. The 2014 Bonds will be redeemed on October 8, 2019.
SECTION 5.4. Investment of Funds.
The Issuer hereby gives its express written authority to the Company as provided in the
Indenture to provide written direction regarding the investment of any Fund held by the Trustee pursuant to the Indenture.
ARTICLE VI
COMPANY OBLIGATIONS; PROVISIONS FOR PAYMENT; COVENANTS
SECTION 6.1. Company Approval of Issuance of Bonds.
The governing body of the Issuer has adopted the Bond Resolution authorizing the execution
of this Loan Agreement and the Indenture and the issuance of the Bonds. The Company hereby approves the Indenture. It is hereby agreed that the foregoing approval of the Indenture constitutes the acknowledgment and agreement of the Company that
the Bonds, when issued, sold and delivered as provided in the Bond Resolution and the Indenture, will be issued in accordance with and in compliance with this Loan Agreement, notwithstanding any other provisions of this Loan Agreement or any other
contract or agreement to the contrary. Any Registered Owner is entitled to rely fully and unconditionally on the foregoing approval. Notwithstanding any provisions of this Loan Agreement or any other contract or agreement to the contrary, the
Company’s approval of the Indenture shall be the Company’s agreement that all covenants and provisions in this Loan Agreement and the Indenture affecting the Company shall, upon the delivery of the Bonds and the Indenture, become valid and binding
covenants and obligations of the Company so long as the Bonds, premium, if any, and the interest thereon are outstanding and unpaid. Particularly, the obligation of the Company to pay, promptly when due, all Installment Loan Payments specified in
this Loan Agreement and the Indenture shall be absolute and unconditional, and said obligation may be enforced as provided in this Loan Agreement and the Indenture.
SECTION 6.2. Refunding of Bonds.
After the issuance of any Bonds, the Issuer shall not refund any of the Bonds or change or
modify the Bonds in any way, except as provided for in the Indenture, without the prior written approval of an Authorized Company Representative; nor shall the Issuer redeem any Bonds prior to the maturity date except upon the written request of an
Authorized Company Representative, unless such redemption is required or permitted by the Indenture without such request.
SECTION 6.3. Redemption of Bonds.
The Issuer, upon the written request of the Company (and provided that the affected Bonds
are subject to redemption prior to maturity at the option of the Issuer or the Company, and provided that such request is received in sufficient time prior to the date upon which such redemption is proposed), shall promptly take or cause to be
taken all action that may be necessary under the applicable redemption provisions to effect such redemption prior to maturity, to the full extent of funds either made available for such purpose by the Company or already on deposit in the Debt
Service Fund and available for such purpose. The redemption of any Outstanding Bonds prior to maturity at any time shall not relieve the Company of its absolute and unconditional obligation to pay each remaining Installment Loan Payment with
respect to any Outstanding Bonds, as specified in the Indenture. If a redemption of Bonds is required pursuant to the provisions of the Indenture, the Company agrees as provided herein to promptly make Installment Loan Payments sufficient to pay
the principal of, premium, if any, and interest on the Bonds due on such redemption date.
SECTION 6.4. Installment Loan Payments.
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(a)
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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.
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(b)
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The Company shall make Installment Loan Payments, subject to the limitations of subsection (e) below of
this Loan Agreement, in immediately available funds directly to the Trustee for deposit in the Debt Service Fund at least one Business Day before each day on which any payment of Debt Service shall become due (whether at maturity or upon
redemption or acceleration or otherwise) in an amount which, together with other money held by the Trustee under the Indenture and available therefor, will enable the Trustee to make such payment in full when due.
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(c)
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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.
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(d)
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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.
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(e)
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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.
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(f)
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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.
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(g)
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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.
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SECTION 6.5. Administrative Expenses.
The Company shall pay, or cause to be paid, an amount equal to the reasonable and
documented fees and charges of the Trustee for services rendered as Trustee or Paying Agent under the Indenture and its reasonable and documented expenses incurred as Trustee under the Indenture, including reasonable and documented fees and
expenses of its counsel; the Company shall also reimburse the Trustee for any reasonable and documented costs or expenses properly incurred in discharging its duties under the Indenture. The Trustee’s right to receive its reasonable fees, charges
and expenses hereunder shall be secured by a lien on moneys held by it in the Debt Service Fund and, upon an Event of Default hereunder, the Trustee shall have a right of payment prior to the payment of the owners of the Bonds as provided in
Section 8.11 of the Indenture. This Section 6.5 shall survive the payment of all Debt Service due relating to the Bonds and termination of this Loan Agreement and the Indenture.
SECTION 6.6. Payments to Issuer and Local ▇▇▇.
The Company shall pay or cause to be paid all of the Issuer’s and Local IDA’s reasonable, actual out-of-pocket
expenses and costs in connection with the issuance of the Bonds, including, without limitation, all financing, legal, printing, and other expenses and all Costs of Issuance incurred in issuing the Bonds (including the fees and expenses of bond
counsel and the Issuer’s financial advisor) and the Issuer’s fee of 0.20% of the principal amount of the Bonds for issuing the Bonds, less an application fee of $50,740. Also, in the future the Company shall pay to the Issuer upon receipt of
statements therefor from time to time, such amounts as are necessary to pay or reimburse the Issuer for its reasonable and necessary expenses and costs attributable to the Bonds and the Project, including, but not limited to, an annual
audit/service fee and any amounts incurred by the Issuer in connection with requests related to the Bonds made by the Internal Revenue Service. This Section 6.6 shall survive the payment of all Debt Service due relating to the Bonds and termination
of this Loan Agreement and the Indenture.
SECTION 6.7. Obligations of the Company Absolute and Unconditional.
The obligations of the Company to make the payments required and to perform the covenants contained in Sections
6.4, 6.5, 6.6, 6.9, 6.10, 7.1 and 8.3 and to perform and observe the other agreements on its part contained herein shall be absolute and unconditional and shall not be subject to diminution by set-off, counterclaim, abatement or otherwise. Until
payment of all amounts relating to the Bonds has been made, the Company (a) will not suspend or discontinue any payments provided for in this Loan Agreement, except to the extent the same have been prepaid, (b) will perform and observe all its
other agreements contained herein, and (c) except as provided in Section 9.1, will not terminate this Loan Agreement for any cause, including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure
of consideration, sale, loss, eviction or constructive eviction, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the Commonwealth or any political
subdivision of either, or any failure of the Issuer to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or in connection herewith or with the Indenture. Nothing contained in this
Section shall be construed to release the Issuer from the performance of any of the agreements on its part herein contained and in the event the Issuer shall fail to perform any such agreement on its part, the Company may take such action as the
Company may deem necessary to perform or compel performance, provided that no such action shall violate the agreements on the part of the Company contained in this Loan Agreement or postpone or diminish the amounts required to be paid by the
Company pursuant to this Loan Agreement. Upon the issuance and delivery of the Bonds to the initial purchasers thereof, the Company shall have received, and the Issuer shall have given, full and complete consideration for the Company’s obligation
hereunder to make Installment Loan Payments.
SECTION 6.8. Option to Prepay Amounts Under Loan Agreement in Certain Events.
The Company shall have, and is hereby granted, the option to prepay the amounts required to be paid by the
Company under Section 6.4(b) in whole or in part and to direct the Trustee to redeem the Bonds in whole or in part, as the case may be, if the Company determines to exercise any optional redemption rights under the terms of the Bonds or if any of
the events described in Article V of the Indenture requiring the redemption of Bonds shall have occurred. The Company may at any time deliver money, and/or Government Obligations, to the Trustee with written instructions to the Trustee to hold
such money, and/or Government Obligations, pursuant to Article X of the Indenture in connection with a discharge of the Indenture. The Issuer agrees that, at the request at any time of the Company, it will cooperate with the Company to cause the
Bonds or any portion thereof to be redeemed, or to cause the Indenture to be discharged, to the extent permitted by the Indenture.
SECTION 6.9. Company’s Performance Under Indenture.
The Company acknowledges receipt of the Indenture and agrees to do and perform all acts and things contemplated
in the Indenture to be done or performed by it and to not interfere with the exercise of the power and authority granted to the Trustee in the Indenture. The Company further agrees to aid in furnishing any documents, certificates or opinions that
may be required under the Indenture.
SECTION 6.10. Covenants Regarding Tax Exemption.
It is the intention of the Company and the Issuer that the interest on the Bonds be excludable from the gross
income of the holders thereof for federal income tax purposes by reason of Section 103(a) of the Code, except for any Bond for any period that such Bond is owned by a person who is a “substantial user” of the Project or a “related person” within
the meaning of Section 147(a) of the Code, and that substantially all of the proceeds of the Bonds will be used to refinance “facilities for the furnishing of water” within the meaning of Section 142(a)(4) of the Code and any Regulations
promulgated with respect thereto. To that end, the Company and the Issuer (to the extent reasonably within the control of the Issuer) covenant with each other to refrain from any action which would adversely affect, or to take such action to
assure, the treatment of the Bonds as obligations described in Section 103(a) of the Code, the interest on which is not includable in the gross income of the holders thereof (other than the income of a “substantial user” of the Project or a
“related person” within the meaning of Section 147(a) of the Code) for purposes of federal income taxation. None of the covenants and agreements herein contained shall require either the Company or the Issuer to enter an appearance or intervene in
any administrative, legislative or judicial proceeding in connection with any changes in applicable laws, rules or regulations or in connection with any decisions of any court or administrative agency or other governmental body affecting the
taxation of interest on the Bonds.
The Trustee shall not be responsible for any determination or calculation concerning arbitrage rebate with
respect to the Bonds, or for determining whether the yield on any investments made in accordance with the Indenture would cause, or whether any other facts exist which would cause, any of the Bonds to become “arbitrage bonds” under Section 148 of
the Code.
SECTION 6.11. Bonds Purchased in Lieu of Redemption.
Pursuant to Section 5.6 of the Indenture, the Company is given the right to purchase Bonds
in lieu of redemption. Provided that, prior to the date that any such Bonds are sold by the Company, the Company shall receive a Favorable Opinion of Bond Counsel.
SECTION 6.12. Nondiscrimination - Sexual Harassment.
The Company hereby accepts and agrees to be bound by the Nondiscrimination - Sexual
Harassment clause set forth in Exhibit B attached hereto.
SECTION 6.13. Right to Know.
The Company acknowledges that the Refunding Project is subject to the Right to Know Law set
forth in Exhibit C hereto.
ARTICLE VII
PARTICULAR AGREEMENTS
SECTION 7.1. Indemnified Parties’ Release and Indemnification Provisions.
The Company agrees, whether or not the transactions contemplated by this Loan Agreement and
the Indenture shall be consummated:
(a) to pay, and save the Indemnified Parties harmless against liability for the payment of, all reasonable out-of-pocket documented expenses arising in connection with said
contemplated transactions, including the reasonable fees and documented expenses of counsel to the Indemnified Parties; and
(b) to defend, protect, indemnify and save the Indemnified Parties harmless from and against all liability, losses, damages, costs, fines, suits, actions, demands, penalties,
reasonable documented expenses (including out-of-pocket expenses, incidental expenses and reasonable counsel fees and expenses), taxes, causes of action, suits, claims, demands and judgments of any nature or form, by or on behalf of any Person
arising in any manner from the transactions of which this Loan Agreement or the Indenture is a part or arising in any manner in connection with the Refunding Project or the financing or refinancing of the Refunding Project, and, without limiting
the generality of the foregoing, arising from (i) the issuance, offering, sale, or delivery of the Bonds, the Indenture, the Bond Purchase Agreement and this Loan Agreement and the obligations imposed on the Issuer hereby and thereby and the
Trustee’s performance of its obligations under this Loan Agreement or the Indenture; or the design, construction, installation, operation, use, occupancy, maintenance, or ownership of the Project; (ii) any written directions, requests, statements
or representations made or given by the Company or any of its officers or employees to the Indemnified Parties or any underwriters or purchasers of any of the Bonds, with respect to the Issuer, the Company, the Project, the Bonds or the Bond
Purchase Agreement, including, but not limited to, statements or representations of facts, financial information, or corporate affairs; (iii) damage to property or any injury to or death of any person that may be occasioned by any cause
whatsoever pertaining to the Project; (iv) any breach or default on the part of the Company in the performance of any of its obligations under this Loan Agreement; (v) any violation of contract, agreement or restriction by the Company relating to
the Project; or (vi) any violation of law, ordinance or regulation by or permitted by the Company affecting the Project or any part thereof or the ownership or occupancy or use thereof.
In the event that any action or proceeding is brought against any Indemnified Party by reason of any such claim,
such action or proceeding shall be defended against by counsel to the Company, unless the Indemnified Party shall determine, upon advice of counsel to the Indemnified Party, that the Indemnified Party’s interests conflict with the interests of
Company, in which event the Indemnified Party may select its own counsel. In the event such defense is by counsel to the Indemnified Party on behalf of the Indemnified Party, the Company shall indemnify the Indemnified Party for reasonable costs
of counsel to the Indemnified Party allocated to such defense and charged to the Indemnified Party. The Company, upon notice from the Indemnified Party, shall resist and defend such an action or proceeding on behalf of the Indemnified Party. The
Indemnified Party shall provide the Company prompt written notice of any claim or suit with respect to which it has a right of indemnity hereunder, but the failure to provide such notice shall not limit or impair the rights of any Indemnified Party
hereunder except to the extent that such failure causes actual damage or loss to the Company. The Indemnified Party shall, at the Company’s expense, provide all reasonable assistance requested by the Company in its defense and/or settlement of any
such claim or suit. Neither party shall settle or pay any such claim or suit without the prior written consent of the other party, which shall not be unreasonably withheld.
The provisions of this Section shall not apply to any claim or liability to the extent
resulting from the Indemnified Party’s acts of negligence, bad faith, fraud or deceit or for any claim or liability which the Company was not given the opportunity to contest (except as set forth in the preceding paragraph), due to the negligence
of the Indemnified Party.
The Company also agrees to pay the documented expenses (including reasonable attorneys’
fees) of any Indemnified Party in enforcing this Section 7.1. The provisions of this Section shall survive the payment of the Bonds, the termination of this Loan Agreement, the termination of the Indenture, and, as to the Trustee, the removal or
resignation of the Trustee.
SECTION 7.2. Maintenance of Corporate Existence.
The Company agrees that during the term of this Loan Agreement it will maintain its
corporate existence, will not dissolve or otherwise dispose of all or substantially all of its assets and will not consolidate with or merge into another corporation; provided, however, that the Company may, without violating the agreement
contained in this Section, consolidate with or merge into another corporation, or sell or otherwise transfer to another corporation all or substantially all of its assets as an entirety and thereafter dissolve, if (a) the Issuer consents in
writing, which consent shall not be unreasonably withheld (b) the surviving, resulting or transferee corporation, as the case may be, assumes in a writing delivered to the Trustee all of the obligations of the Company herein and under the Tax
Documents, and is duly qualified to do business in the Commonwealth, (c) at the time of such consolidation or merger and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing, (d) after giving effect to
such consolidation or merger the surviving corporation would be permitted to incur at least $1.00 of additional Funded Debt under the provisions of Section 7.9 hereof, and (e) the provisions of Section 7.6 are satisfied.
SECTION 7.3. Financial Information.
The Company will keep proper books of record and account in which full and correct entries
will be made of all dealings or transactions of or in relation to the business and affairs of the Company, in accordance with generally accepted accounting principles consistently maintained (except for changes disclosed in the financial statements
furnished pursuant to this Section 7.3 and concurred in by the independent public accountants referred to herein), and will furnish to the Trustee and upon request, to the Issuer:
(a) Quarterly Statements.
As soon as available and in any event within 60 days after the end of each quarterly fiscal period (except the last) of each fiscal year, duplicate copies of:
(i) a consolidated balance sheet of the Company as of the close of such quarter setting forth in comparative form the consolidated figures for the year end or annual period of the
preceding fiscal year,
(ii) consolidated statements of income and shareholders’ investment of the Company for such quarterly period, setting forth in comparative form the consolidated figures for the
corresponding period of the preceding fiscal year, and
(iii) consolidated statements of cash flows of the Company for the portion of the fiscal year ending with such quarter, setting forth in comparative form the consolidated figures
for the corresponding period of the preceding fiscal year,
all in reasonable detail and certified as complete and correct, by an authorized financial officer of the
Company;
(b) Annual Statements.
As soon as available and in any event within 120 days after the close of each fiscal year of the Company, duplicate copies of:
(i) a consolidated balance sheet of the Company as of the close of such fiscal year,
(ii) consolidated statements of income and shareholders’ investment and cash flows of the Company for such fiscal year,
in each case setting forth in comparative form the consolidated figures for the preceding fiscal year, all in
reasonable detail and accompanied by an opinion thereon of a firm of independent public accountants of recognized national standing selected by the Company to the effect that the consolidated financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied (except for changes in application in which such accountants concur) and present fairly, in all material respects, the financial condition of the Company and that the examination of
such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards and accordingly, includes such tests of the accounting records and such other auditing procedures as were
considered necessary in the circumstances;
(c) Audit Reports. Promptly upon receipt thereof, one copy of each interim or special
audit made by independent accountants of the books of the Company;
(d) SEC and Other Reports. Promptly upon their becoming available, one copy of each
financial statement, report, notice or proxy statement sent by the Company to stockholders generally and of each regular or periodic report, and any registration statement or prospectus filed by the Company with any securities exchange or the
Securities and Exchange Commission or any successor agency, and copies of any orders in any proceedings substantially affecting the financial condition of the Company to which the Company is a party, issued by any governmental agency, Federal or
state, having jurisdiction over the Company; and
(e) Officers’ Certificates. Within the periods provided in paragraphs (a) and (b)
above, a certificate of an authorized financial officer of the Company stating that he has reviewed the provisions of this Agreement and setting forth: (1) the information and computations (in sufficient detail) required in order to establish
whether the Company was in compliance with the requirements of Sections 7.9 through 7.11, inclusive, at the end of the period covered by the financial statements then being furnished, and (2) whether there existed as of the date of such financial
statements and whether, to the best of his knowledge, there exists on the date of the certificate or existed at any time during the period covered by such financial statements any Default or Event of Default and, if any such condition or event
exists on the date of the certificate, specifying the nature and period of existence thereof and the action the Company is taking and proposes to take with respect thereto.
To the extent not furnished pursuant to the foregoing provisions of this Section 7.3, the Company agrees to
furnish to the Issuer and Trustee, copies of the annual financial statements and other information filed with MSRB pursuant to the Company’s continuing disclosure undertaking referred to in the Bond Purchase Agreement. Such statements and other
information shall be filed with the Issuer and the Trustee within ten (10) days of the filings made pursuant to such continuing disclosure undertaking.
Delivery of reports to the Trustee under this Section 7.4 is for informational purposes only and the Trustee’s
receipt of the foregoing shall not imply a duty to review and shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of their
covenants hereunder.
SECTION 7.4. Agreement of Issuer Not to Assign or Pledge.
Except for the assignment and pledge described in the Indenture, the Issuer agrees that it will not attempt to
further assign, pledge, transfer or convey its interest in or create any assignment, pledge, lien, charge or encumbrance of any form or nature with respect to the rights and interests herein described.
SECTION 7.5. Reference to Bonds Ineffective after Bonds Paid.
Upon payment of all Debt Service due relating to the Bonds, and payment of all fees and charges of the Issuer and
the Trustee, all as provided in Article X of the Indenture, all references herein to the Bonds and the Trustee shall be ineffective and neither the Issuer, the Local ▇▇▇, the Trustee, the Paying Agent nor the holders of any of the Bonds shall
thereafter have any rights hereunder and the Company shall have no further obligation hereunder, saving and excepting those that shall have theretofore vested and remain unsatisfied and any right of the Issuer, the Local ▇▇▇, the Trustee or the
Paying Agent to indemnification under Section 7.1 and payment of fees and costs under Section 6.5, Section 6.6, and Section 8.3, which rights shall survive the payment of all Debt Service due relating to the Bonds and the termination of this Loan
Agreement and the Indenture.
SECTION 7.6. Assignment, Sale or Lease of Project.
(a) The Company shall not assign this Loan Agreement or any interest of the Company herein, either in whole or in
part, without the prior written consent of the Trustee, which consent shall be given if the following conditions are fulfilled:
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(i)
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The assignee assumes in writing all of the obligations of the Company hereunder;
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(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;
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(iii)
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The Project shall continue in the written opinion of Bond Counsel provided to the Trustee to be a
“project” as such term is defined in the Act after such assignment;
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(iv)
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Such assignment shall not, in the written opinion of Bond Counsel provided to the Trustee, have an
adverse effect on the exclusion from gross income for federal income tax purposes of interest on the Bonds; and
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(v)
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The assignee shall not be a Disqualified Contractor; and
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(vi)
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Consent by the Issuer, which consent shall not be unreasonably withheld.
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(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:
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(i)
|
No such lease shall relieve the Company from its obligations under this Loan Agreement;
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(ii)
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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;
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(iii)
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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;
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(iv)
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Any such lease shall require the lessee to operate the Project as a “project” under the Act as long as
the Bonds are outstanding;
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(v)
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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
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(vi)
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The lessees under any such leases shall be subject to the applicable terms and conditions of Section
6.10.
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(c) The Company shall not sell, assign or otherwise dispose of (whether in one transaction or in a series of transactions) its interest in the
Project or any material portion thereof, other than is permitted by Section 7.6(a) and other than leases permitted under Section 7.6(b) or undertake or permit the demolition or removal of the Project or any material portion thereof without the
prior written consent of the Issuer; provided that the Company shall be permitted to sell, transfer, assign or otherwise dispose of or remove any portion of the Project which is retired or replaced in the ordinary course of business.
SECTION 7.7. Amendment of Loan Agreement or Indenture.
No amendment, change, addition to, or waiver of any of the provisions of this Loan Agreement
or the Indenture shall be made except pursuant to Article IX and Article XI of the Indenture.
SECTION 7.8. Waiver of Vendor’s Lien.
Notwithstanding anything in this Loan Agreement to the contrary, it is the intention of the parties hereto that
no vendor’s lien and/or privilege, mortgage, right of rescission or stipulation for the benefit of a third party shall be created by execution of this Loan Agreement, and if any such lien, privilege, condition, or benefit should be deemed to have
been created by execution of this Loan Agreement, they are expressly released, renounced, waived and abandoned by the parties hereto.
SECTION 7.9. Limitations on Certain Indebtedness.
(a) The Company will not have outstanding, or in any manner be liable in respect of, any Funded Debt or Seasonal
Indebtedness, except the following:
(i) current operating liabilities and current or other obligations (other than for borrowed money) incurred in the ordinary course of business;
(ii) Seasonal Indebtedness, provided that (A) such Seasonal Indebtedness has not existed for a period of at least 30 consecutive days in the twelve preceding months or (B) the
amount of such Seasonal Indebtedness, when added to the outstanding amount of Funded Debt, does not exceed 60% of the Plant Account on the books of the Company at any one time outstanding; and
(iii) Funded Debt (including the Bonds) in an amount not in excess of 60% of the Plant Account on the books of the Company at any one time outstanding.
(b) The renewal, extension or refunding of any Funded Debt issued or incurred in accordance with the limitations of
this Section 7.9 shall constitute the issuance of additional Funded Debt, which is, in turn, subject to the limitations of the applicable provisions of this Section 7.9, but any Indebtedness paid or defeased from the proceeds of additional Funded
Debt may be excluded from outstanding Indebtedness for purposes of this Section 7.9.
(c) Subject to compliance with this Section 7.9, nothing contained in this Agreement shall prohibit the Company from
incurring, issuing or permitting to exist any Indebtedness.
SECTION 7.10. Limitation on Liens.
(a) The Company will not create or incur, or suffer to be incurred or to exist, any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind on its Property or assets, whether now owned or hereafter acquired, or upon any income or profits therefrom, or transfer any Property for the purpose of subjecting the same to the payment of
obligations in priority to the payment of its or their general creditors, or acquire or agree to acquire any Property or assets upon conditional sales agreements or other title retention devices, except Excepted Encumbrances; provided, however,
that this requirement shall not be applicable to, nor prevent:
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(i)
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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
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(ii)
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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
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(iii)
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making good faith deposits in connection with tenders, contracts or leases to which the Company is a
party; or
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(iv)
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the pledging by the
Company of any assets for the purpose of securing Indebtedness of the Company not otherwise permitted by clauses (i) through (iii) or permitted as an
Excepted Encumbrance, provided that Priority
Debt at any one time outstanding shall not at any time exceed 10% of the Plant Account of the Company (determined as of the end of the then most recently ended quarterly fiscal period).
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(b) In the event any Property or assets of the Company are subject to a lien or charge not otherwise permitted by
Section 7.10(a) above to secure any Indebtedness of the Company (for purposes of this Section 7.10, the “Liened Property”), such lien or charge shall
nevertheless be deemed permitted if the Company makes effective provision whereby the Bonds shall (so long as any other Indebtedness shall be so secured) be secured (along with any other Indebtedness similarly entitled to be equally and ratably
secured) by a direct lien on the Liened Property on parity to the lien or liens securing any and all such other Indebtedness.
SECTION 7.11. Dividends, Stock Purchases.
The Company will not, except as hereinafter provided:
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(a)
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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
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(b)
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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
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(c)
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Make any other payment or distribution, either directly or indirectly, in respect of its capital stock;
or
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(d)
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Make any payment, distribution, conveyance or transfer of any Property to any subsidiary or affiliate;
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(such declarations or payments of dividends, purchases, redemptions or retirements of
capital stock and warrants, rights or options, and all such other distributions, conveyances and transfers being herein collectively called “Restricted Payments”),
if after giving effect thereto the aggregate amount of Restricted Payments made during the period from and after December 31, 1982 to and including the date of the making of the Restricted Payment in question, would exceed the sum of (1) $1,500,000
plus (2) earned surplus of the Company, on a non-consolidated basis, accumulated after December 31, 1982, determined without any deduction on account of such Restricted Payments, provided, however, that notwithstanding the foregoing, in no event
shall the Company make any distribution, conveyance or transfer to any subsidiary or affiliate of any Property constituting the Plant Account.
The Company will not declare any dividend which constitutes a Restricted Payment payable
more than 60 days after the date of declaration thereof.
For the purposes of this Section 7.11, the amount of any Restricted Payment declared, paid
or distributed in Property of the Company shall be deemed to be the greater of the book value or fair market value (as determined in good faith by the Board of Directors of the Company) of such Property at the time of the making of the Restricted
Payment in question.
SECTION 7.12. [Reserved.]
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.1. Defaults and Remedies.
(a) The Company is advised and recognizes that the Issuer will assign all of its right, title, and interest in and to all of the Installment Loan Payments required to be made
pursuant to this Loan Agreement, and the right to receive and collect same, to the Trustee under the Indenture. All rights of the Issuer (other than Unassigned Issuer’s Rights) against the Company arising under this Loan Agreement or the
Indenture may be enforced by the Trustee, or the Registered Owners of the Bonds, to the extent provided in the Indenture, without making the Issuer a party.
(b) The following shall constitute an “Event of Default” hereunder:
(i) Payment of any Installment Loan Payment is not made when due and payable and such failure shall continue for one Business Day; or
(ii) Payment of any amount due under this Loan Agreement other than Installment Loan Payments is not made when due and payable and such failure shall continue for fifteen (15)
Business Days after the Trustee shall have given written notice to the Company specifying such default; or
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(iii)
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Failure to pay the principal of or interest on any Indebtedness of the Company for borrowed money
that is outstanding in an aggregate principal amount of at least $5,000,000, as and when the same shall become due and payable by the lapse of time, by declaration, by call for redemption or otherwise, and such default shall continue
beyond the period of grace, if any, allowed with respect thereto; or
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(iv)
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Default or the happening of any event shall occur under any indenture, agreement, or other instrument
under which any Indebtedness of the Company for borrowed money that is outstanding in an aggregate principal amount of at least $5,000,000 and such default or event shall continue for a period of time sufficient to permit the acceleration
of the maturity of any Indebtedness of the Company outstanding thereunder; or
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(v)
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Default shall occur in the observance or performance of any covenant or agreement contained in
Sections 7.9 through 7.11 hereof;
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(vi)
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Subject to Section 7.1(c) of the Indenture relating to force majeure, failure by the Company to
observe or perform any other covenant, condition or agreement on its part to be observed or performed under the Indenture or the Loan Agreement, other than as referred to in subsections (i) through (v) inclusive above, for a period of 60
days after written notice, specifying such failure and requesting that it be remedied, is given to the Company by the Issuer or the Trustee; provided, however, that if the failure stated in the notice is such that can be remedied but not
within such 60-day period, it shall not constitute an Event of Default if the default, in the judgment of the Trustee in reliance upon advice of counsel, is correctable without material adverse effect on the Bondholders and if corrective
action is instituted by the Company, within such period and is diligently pursued until the default is remedied; or
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(vii)
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Final judgment or judgments for the payment of money aggregating in excess of $5,000,000 is or are
outstanding against the Company and which judgments have remained unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a period of 60 days from the date of entry; or
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(viii)
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The occurrence of an Event of Default under the Indenture.
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(c) Upon the occurrence of an Event of Default of which the Trustee has actual knowledge, the Trustee (or in the
case of an Event of Default arising out of Unassigned Issuer’s Rights, the Issuer) shall have the power to proceed with any right or remedy granted by the Constitution and laws of the Commonwealth, as it may deem best, including without
limitation any suit, action or special proceeding in equity or at law, including mandamus proceedings, for the specific performance of any agreement, obligation or covenant contained herein or for the enforcement of any proper legal or equitable
remedy as the Trustee shall deem most effectual to protect the rights of the Registered Owners, including without limitation, acceleration of all amounts payable hereunder; provided, however, any such proceedings shall be subject to the
provisions of Section 7.1(c) of the Indenture relating to force majeure. Upon the occurrence of an Event of Default under Section 7.1(a)(ii) of the Indenture and upon the occurrence of any other Event of Default under the Indenture pursuant to
the terms of which the Trustee shall have declared the Bonds immediately due and payable, then all payments required to be made by the Company under Section 6.4(b) (other than interest not yet accrued) shall become immediately due and payable.
(d) Any amounts collected for non-payment of amounts described in Section 6.4 hereof pursuant to actions taken under this Section shall be paid
into the Debt Service Fund and applied in accordance with the provisions of the Indenture.
SECTION 8.2. Annulment of Acceleration.
If, in compliance with the requirements of Section 7.2 of the Indenture, the Trustee shall annul an acceleration
declared due to any Event of Default under the Indenture, such annulment shall be deemed to also rescind any acceleration of all payments required under Section 6.4. In case of any such annulment, or in case any proceeding taken by the Trustee on
account of any such Event of Default shall have been discontinued or abandoned or determined adversely, then and in every such case the Issuer, the Company, the Trustee and the Registered Owners shall be restored to their former positions and
rights hereunder, but no such annulment shall extend to any subsequent or other Event of Default or impair any right consequent thereon.
SECTION 8.3. Agreement to Pay Attorneys’ Fees and Expenses.
In the event the Company should default under any of the provisions of this Loan Agreement and the Issuer or the
Trustee should employ attorneys or incur other expenses for the collection of payments required hereunder or the enforcement of performance or observance of any obligation or agreement on the part of the Company herein contained, the Company agrees
that it will upon demand therefore pay to the Issuer or the Trustee the reasonable fees and expenses of such attorneys and such other expenses so incurred by the Issuer or the Trustee. This Section 8.3 shall survive the payment of all Debt Service
due relating to the Bonds and the termination of this Loan Agreement and the Indenture.
SECTION 8.4. General Enforcement Provisions.
(a) The terms of this Loan Agreement may be enforced as to one or more breaches either separately or cumulatively.
(b) No remedy conferred upon or reserved to the Issuer, the Trustee, or the Registered Owners of the Bonds in this Loan Agreement is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power
accruing upon any default, omission, or failure of performance hereunder shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be
deemed expedient. In the event any provision contained in this Loan Agreement should be breached by the Company and thereafter duly waived, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any
other breach of this Loan Agreement. No waiver by any party of any breach by any other party of any of the provisions of this Loan Agreement shall be construed as a waiver of any subsequent breach, whether of the same or of a different provision
of this Loan Agreement.
SECTION 8.5. Notice of Default.
The Company shall notify the Trustee and the Issuer in writing immediately if it becomes aware of the
occurrence of any Event of Default hereunder or of any fact, condition or event which, with the giving of notice or passage of time or both, would become an Event of Default.
SECTION 8.6. Unassigned Issuer’s Rights.
Notwithstanding any other provision hereof, upon the occurrence of an Event of Default arising out of
Unassigned Issuer’s Rights, the Issuer reserves the right to exercise or refrain from exercising remedies under the Loan Agreement with respect to such Event of Default and such Event of Default may not be waived or annulled without the prior
written consent of the Issuer.
SECTION 8.7. Determination of Taxability Not an Event of Default.
Notwithstanding any other provision of this Loan Agreement to the contrary, the occurrence
of a Determination of Taxability caused by any failure by the Company to observe or perform any covenant, condition or agreement on its part to be observed or performed hereunder or under the Indenture or the Tax Compliance Agreement, or caused by
the failure of any representation or warranty by the Company herein or in the Tax Compliance Documents to be true and correct, shall not, by itself, be deemed an event of default under this Loan Agreement, provided that the Bonds are redeemed on
account of such Determination of Taxability as and to the extent required under the Indenture.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Term of Loan Agreement.
Subject to all provisions hereof which expressly state that the same shall survive termination hereof, this
Loan Agreement shall terminate when payment of all Debt Service relating to the Bonds shall have been made and all fees, indemnities, expenses and charges of the Issuer and the Trustee have been fully paid or provision satisfactory to such parties
made for such payment.
SECTION 9.2. Notices.
All notices, approvals, consents, requests and other communications hereunder shall be in writing and shall be
deemed to have been given when delivered by hand or overnight courier service or mailed by first class registered or certified mail, return receipt requested, postage prepaid, or sent by telecopy and addressed as follows:
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(a)
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to the Company, to:
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The York Water Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: CFO
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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(b)
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to the Issuer, to:
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Department of Community and Economic Development
Pennsylvania Economic Development Financing Authority
Center for Private Financing
Commonwealth Keystone Building
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Executive Director
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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(c)
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to the Trustee, to:
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Manufacturers and Traders Trust Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Corporate Trust Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
A duplicate copy of each notice, approval, consent, request or other communication given hereunder by the Issuer, the Company or the
Trustee to any one of the others shall also be given to all of the others at the address furnished from time to time. The Issuer, the Company and the Trustee may, by notice given hereunder, designate any further or different addresses to which
subsequent notices, approvals, consents, requests or other communications shall be sent or persons to whose attention the same shall be directed.
SECTION 9.3. Benefit of Parties.
This Loan Agreement is made for the exclusive benefit of the Issuer, the Trustee, the Paying Agent, the
Registered Owners, the Beneficial Owners, the Company, and their respective successors and assigns herein permitted, and not for any other third party or parties; and nothing in this Loan Agreement, expressed or implied, is intended to confer upon
any party or parties other than the Issuer, the Trustee, the Paying Agent, the Registered Owners, the Beneficial Owners, the Company, and their respective successors and assigns herein permitted, any rights or remedies under or by reason of this
Loan Agreement.
SECTION 9.4. Severability.
If any provision hereof shall be held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision hereof.
SECTION 9.5. Counterparts.
This Loan Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all of which together shall constitute one and the same instrument.
SECTION 9.6. Captions.
The captions and headings herein are for convenience only and in no way define, limit or
describe the scope or intent of any provisions hereof.
SECTION 9.7. Law Governing Construction of Loan Agreement.
This Loan Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth.
SECTION 9.8. Payments on Non-Business Days.
If any payment required hereunder is due on a date that is not a Business Day, payment shall
be made on the next succeeding Business Day with the same force and effect as if made on the date fixed for such payment, and no interest shall accrue on such amount for the period after such date.
SECTION 9.9. Payments to be Sufficient to Meet DTC Requirements.
The Company hereby acknowledges that the Bonds are intended to be issued in book-entry form
through DTC and that DTC has certain timing requirements and notice requirements. The Company hereby agrees to make payments and give notices in a manner sufficient to comply from time to time with the DTC requirements, for so long as the Bonds
are in book-entry form at DTC and so long as the Company is informed of such requirements. If, in the judgment of the Company, there are any changes in such DTC requirements that will require the Company to make payments and give notices in a
manner materially different than otherwise required under this Agreement, then the Issuer and the Trustee agree to cooperate with any request by the Company to utilize another securities depository for the Bonds or terminate the book-entry only
system for the Bonds.
SECTION 9.10. Reserved.
SECTION 9.11. Limitation of Liability: No Personal Liability.
(a) In the exercise of the powers of the Issuer or the Trustee hereunder or under the Indenture, including without
limitation the application of moneys and the investment of funds, neither the Issuer or the Trustee nor their members, directors, officers, employees, attorneys or agents shall be accountable to the Company for any action taken or omitted by any
of them in good faith and without negligence and with the belief that it is authorized or within the discretion or rights or powers conferred. The Issuer and the Trustee and their members, directors, officers, employees, attorneys and agents
shall be protected in acting upon any paper or document believed to be genuine, and any of them may conclusively rely upon the advice of counsel and may (but need not) require further evidence of any fact or matter before taking any action. In
the event of any default by the Issuer hereunder, the liability of the Issuer to the Company shall be enforceable only out of the Issuer’s interest under this Loan Agreement and there shall be no other recourse for damages by the Company against
the Issuer, its members, directors, officers, employees, attorneys and agents, or any of the property now or hereafter owned by it or them. All covenants, obligations and agreements of the Issuer contained in this Loan Agreement or the Indenture
shall be effective to the extent authorized and permitted by applicable law. No such covenant, obligation or agreement shall be deemed to be a covenant, obligation or agreement of any present or future member, director, officer, employee,
attorney or agent of the Issuer, and no official executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof or by reason of the covenants, obligations or
agreements of the Issuer contained in this Loan Agreement or the Indenture.
(b) No claim shall be made by the Company or any of the Company’s affiliates against the Issuer or the Trustee or any of their affiliates,
directors, employees, attorneys or agents for any special, indirect, consequential or punitive damages in respect of any breach or wrongful conduct (whether or not the claim therefore is based on contract, tort or duty imposed by law), in
connection with, arising out of or in any way related to the transactions contemplated by this Loan Agreement, the Indenture or the other financing arrangements entered into in connection with the Project, or any act or omission or event
occurring in connection therewith; and the Company hereby waives, releases and agrees not to ▇▇▇ upon any such claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.
IN WITNESS WHEREOF, the Issuer and the Company have caused this Loan Agreement to be executed in their respective
names by their authorized officers or representatives and their respective seals to be affixed hereto and have caused its execution hereof to be attested by its authorized officer, all as of the date first above written.
PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Director
[Seal]
Attest:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(Assistant) Secretary
THE YORK WATER COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Executive Officer
[Seal]
Attest:
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Chief Financial Officer and Treasurer
EXHIBIT A
PROJECT DESCRIPTION
PROJECT DESCRIPTION
The 2006 Project consisted of the financing of (i) a portion of the Company’s 2006 Capital Budget, including, but not limited to the design, acquisition,
construction, improvement, renovation, equipping and installation of (a) various structures, including distribution buildings, booster stations, pumping stations, and various plant and ancillary buildings, (b) spillway upgrades, standpipes,
transmission and distribution mains, service lines, meters, fire hydrants, and pumping, water treatment and purification equipment, and (c) various other capital improvements, replacements and equipment for the Company’s water system located
throughout York County, Pennsylvania, and (ii) the payment of all or a portion of the costs of issuance of the 2006 Bonds.
The 2008B Project consisted of the financing of (i) a portion of the Company's 2008 Capital Budget, including, but not limited to the design,
acquisition, construction, improvement, extension, renovation, equipping and installation of (a) various structures, including distribution buildings, booster stations, pumping stations, and various plant and ancillary buildings, (b) spillway
upgrades, standpipes, transmission and distribution mains, service lines, meters, fire hydrants, water treatment, pumping and purification equipment, and (c) various other capital improvements, replacements and equipment for the Company’s water
system located throughout York County and ▇▇▇▇▇ County, Pennsylvania, and (ii) the payment of all or a portion of the costs of issuance of the 2008B Bonds.
The 2014 Bonds were issued to currently refund the outstanding Exempt Facilities Revenue Bonds, Series 2008B (The York Water Company Project).
EXHIBIT B
NONDISCRIMINATION/SEXUAL HARASSMENT CLAUSE (Contracts)
NONDISCRIMINATION/SEXUAL HARASSMENT CLAUSE (Contracts)
The Contractor agrees:
1. In the hiring of any employee(s) for the
manufacture of supplies, performance of work, or any other activity required under the contract or any subcontract, the Contractor, each subcontractor, or any person acting on behalf of the Contractor or subcontractor shall not discriminate by
reason of race, gender, creed, color, sexual orientation, gender identity or expression, or in violation of the Pennsylvania Human Relations Act (PHRA)
and applicable federal laws, against any citizen of this Commonwealth who is qualified and available to perform the work to which the employment relates.
2. Neither the Contractor nor any subcontractor
nor any person on their behalf shall in any manner discriminate by reason of race, gender, creed, color, sexual orientation, gender identity or expression, or in violation of the PHRA and applicable federal laws, against or intimidate any employee
involved in the manufacture of supplies, the performance of work, or any other activity required under the contract.
3. Neither the Contractor nor any subcontractor
nor any person on their behalf shall in any manner discriminate by reason of race, gender, creed, color, sexual orientation, gender identity or
expression, or in violation of the PHRA and applicable federal laws, in the provision of services under the contract.
4. Neither the Contractor nor any subcontractor
nor any person on their behalf shall in any manner discriminate against employees by reason of participation in or decision to refrain from participating in labor activities protected under the Public Employee Relations Act, Pennsylvania Labor Relations Act or National Labor Relations Act, as applicable and to the extent determined by entities charged with such Acts’ enforcement, and shall comply with any
provision of law establishing organizations as employees’ exclusive representatives.
5. The Contractor and each subcontractor shall
establish and maintain a written nondiscrimination and sexual harassment policy and shall inform their employees in writing of the policy. The policy must contain a provision that sexual harassment will not be tolerated and employees who practice
it will be disciplined. Posting this Nondiscrimination/Sexual Harassment Clause conspicuously in easily-accessible and well-lighted places customarily frequented by employees and at or near where the contracted services are performed shall satisfy
this requirement for employees with an established work site.
6. The Contractor and each subcontractor shall
not discriminate by reason of race, gender, creed, color, sexual orientation, gender identity or expression, or in violation of PHRA and applicable federal laws, against any subcontractor or supplier who is qualified to perform the work to which
the contract relates.
7. The Contractor and each
subcontractor represents that it is presently in compliance with and will maintain compliance with all applicable federal, state, and local laws, regulations and policies relating to nondiscrimination and sexual harassment. The Contractor and each
subcontractor further represents that it has filed a Standard Form 100 Employer Information Report (“EEO-1”) with the U.S. Equal Employment Opportunity Commission (“EEOC”) and shall file an annual EEO-1 report with the EEOC as required for
employers’ subject to Title VII of the Civil
Rights Act of 1964, as amended, that have 100 or more employees and employers that have federal government contracts or first-tier subcontracts and have 50 or more employees. The Contractor and each subcontractor shall, upon request and
within the time periods requested by the Commonwealth, furnish all necessary employment documents and records, including EEO-1 reports, and permit access to their books, records, and accounts by the contracting agency and the Bureau of Diversity,
Inclusion and Small Business Opportunities for purpose of ascertaining compliance with provisions of this Nondiscrimination/Sexual Harassment Clause.
8. The Contractor shall include the provisions of
this Nondiscrimination/Sexual Harassment Clause in every subcontract so that those provisions applicable to subcontractors will be binding upon each subcontractor.
9. The Contractor’s and each subcontractor’s
obligations pursuant to these provisions are ongoing from and after the effective date of the contract through the termination date thereof. Accordingly, the Contractor and each subcontractor shall have an obligation to inform the Commonwealth if,
at any time during the term of the contract, it becomes aware of any actions or occurrences that would result in violation of these provisions.
10. The Commonwealth may
cancel or terminate the contract and all money due or to become due under the contract may be forfeited for a violation of the terms and conditions of this Nondiscrimination/Sexual Harassment Clause. In addition, the agency may proceed with
debarment or suspension and may place the Contractor in the Contractor Responsibility File.
EXHIBIT C
RIGHT-TO-KNOW LAW
RIGHT-TO-KNOW LAW
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a.
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The Pennsylvania Right-to-Know Law, 65 P.S. §§ 67.101-3104, (“RTKL”) applies to this Contract. For the purpose of these provisions, the term
“the Commonwealth” shall refer to the contracting Commonwealth agency.
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b.
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If the Commonwealth needs the Contractor's assistance in any matter arising out of the RTKL related to this Contract, it shall notify the
Contractor using the legal contact information provided in this Contract. The Contractor, at any time, may designate a different contact for such purpose upon reasonable prior notice to the Commonwealth.
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c.
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Upon written notification from the Commonwealth that it requires the Contractor's assistance in responding to a request under the RTKL for
information related to this Contract that may be in the Contractor's possession, constituting, or alleged to constitute, a public record in accordance with the RTKL (“Requested Information”), the Contractor shall:
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1.
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Provide the Commonwealth, within ten (10) calendar days after receipt of written notification, access to, and copies of, any document or
information in the Contractor's possession arising out of this Contract that the Commonwealth reasonably believes is Requested Information and may be a public record under the RTKL; and
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2.
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Provide such other assistance as the Commonwealth may reasonably request, in order to comply with the RTKL with respect to this Contract.
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d.
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If the Contractor considers the Requested Information to include a request for a Trade Secret or Confidential Proprietary Information, as those
terms are defined by the RTKL, or other information that the Contractor considers exempt from production under the RTKL, the Contractor must notify the Commonwealth and provide, within seven (7) calendar days of receiving the written
notification, a written statement signed by a representative of the Contractor explaining why the requested material is exempt from public disclosure under the RTKL.
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e.
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The Commonwealth will rely upon the written statement from the Contractor in denying a RTKL request for the Requested Information unless the
Commonwealth determines that the Requested Information is clearly not protected from disclosure under the RTKL. Should the Commonwealth determine that the Requested Information is clearly not exempt from disclosure, the Contractor shall
provide the Requested Information within five (5) business days of receipt of written notification of the Commonwealth's determination.
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f.
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If the Contractor fails to provide the Requested Information within the time period required by these provisions, the Contractor shall
indemnify and hold the Commonwealth harmless for any damages, penalties, costs, detriment or harm that the Commonwealth may incur as a result of the Contractor's failure, including any statutory damages assessed against the Commonwealth.
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g.
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The Commonwealth will reimburse the Contractor for any costs associated with complying with these provisions only to the extent allowed under
the fee schedule established by the Office of Open Records or as otherwise provided by the RTKL if the fee schedule is inapplicable.
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h.
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The Contractor may file a legal challenge to any Commonwealth decision to release a record to the public with the Office of Open Records, or in
the Pennsylvania Courts, however, the Contractor shall indemnify the Commonwealth for any legal expenses incurred by the Commonwealth as a result of such a challenge and shall hold the Commonwealth harmless for any damages, penalties,
costs, detriment or harm that the Commonwealth may incur as a result of the Contractor's failure, including any statutory damages assessed against the Commonwealth, regardless of the outcome of such legal challenge. As between the
parties, the Contractor agrees to waive all rights or remedies that may be available to it as a result of the Commonwealth's disclosure of Requested Information pursuant to the RTKL.
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i.
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The Contractor's duties relating to the RTKL are continuing duties that survive the expiration of this Contract and shall continue as long as
the Contractor has Requested Information in its possession.
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