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R-19-117
Endorser: Mayor Jim Donchess
CHANGING THE USE OF FUNDS FOR A WASTEWATER FUND CAPITAL IMPROVEMENTS
PROJECT FROM BRIDGE STREET OVERFLOW DETENTION BASIN IMPROVEMENTS TO WET
WEATHER FACILITY SCREEN AND RAKE UPGRADES

R-19-118
Endorser: Mayor Jim Donchess
RELATIVE TO THE ACCEPTANCE AND APPROPRIATION OF UP TO $218,486 FROM THE
STATE OF NEW HAMPSHIRE DEPARTMENT OF HEALTH AND HUMAN SERVICES INTO
TRANSIT GRANT ACTIVITY “FEDERAL TRANSIT AUTHORITY (“FTA”) OPERATING GRANT”

R-19-119
Endorser: Alderman-at-Large Lori Wilshire
AUTHORIZING PENNICHUCK CORPORATION AND PENNICHUCK EAST UTILITY, INC. TO
ENTER INTO A TERM LOAN WITH COBANK, ACB

R-19-120
Endorser: Alderman-at-Large Lori Wilshire
CHANGING THE NAME OF PANTHER DRIVE TO OFFICER JAMES ROCHE DRIVE

R-19-121
Endorser: Mayor Jim Donchess
RELATIVE TO THE ACCEPTANCE AND APPROPRIATION OF $43,113 FROM THE UNITED STATES
DEPARTMENT OF JUSTICE INTO POLICE GRANT ACTIVITY “2018 JUSTICE ASSISTANCE GRANT
(MULTI-JURISDICTIONAL)”

R-19-122
Endorser: Mayor Jim Donchess
DISCONTINUING THREE EXPENDABLE TRUST FUNDS

NEW BUSINESS — ORDINANCES

O-19-040
Endorser: Mayor Jim Donchess
ESTABLISHING AN ADMINISTRATIVE SERVICES DIVISION AND DIRECTOR POSITION

PERIOD FOR GENERAL PUBLIC COMMENT

REMARKS BY THE MEMBERS OF THE BOARD OF ALDERMEN
Committee announcements:

ADJOURNMENT

a, PENNIGHUCK 25 MANCHESTER STREET

PO BOX 1947
MERRIMACK, NH 03054-1947

(603) 882-5191
FAX (603) 913-2305

VIA HAND DELIVERY WWW.PENNICHUCK.COM

March 1, 2019

Mr. Steven A. Bolton
Corporation Counsel
City of Nashua

229 Main Street
Nashua, NH 03060

Re: Pennichuck East Utility, Inc. — Request for Approval of Term Loan with CoBank, ACB

Dear Attorney Bolton:

Introduction. As you know, the City of Nashua, New Hampshire (the “City”) is the sole
corporate shareholder of Pennichuck Corporation (“Pennichuck”). The City has been the sole
shareholder since the acquisition of Pennichuck on January 25, 2012.

The purpose of this letter is to request that the City, acting in its capacity as sole shareholder,
approve resolutions authorizing Pennichuck’s regulated public water utility subsidiary,
Pennichuck East Utility, Inc. (“PEU”), to enter into a term loan with CoBank, ACB (“CoBank”).

Background. As part of the City’s acquisition of Pennichuck, in accordance with special
legislation enacted by the State Legislature, and as unanimously approved by the Mayor and
Board of Aldermen on January 11, 2011, the corporate structure of Pennichuck and its utility
subsidiaries was retained. This corporate structure was retained for several reasons. First, the
Mayor and Board of Aldermen desired to maintain stability and continuity for customers and
employees of the Pennichuck utilities and the communities they serve. Second, retaining the
corporate structure provided continuity for the existing relationships with regulatory agencies
and financial/banking partners. Third, the Mayor and Board of Aldermen unanimously agreed
that the corporate structure would encourage business-smart decisions and rely upon well-
established governance principles of corporate law, pursuant to Pennichuck’s Articles of
Incorporation and its by-laws.

Shareholder Approval of Borrowings Required. Under Article IX of Pennichuck’s Articles of
Incorporation, the City, acting in its capacity as Pennichuck’s sole shareholder, must approve: |

“(3) any action to (A) create, incur or assume any indebtedness for borrowed
money or guarantee any such indebtedness of any person, (B) issue or sell

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any debt securities or warrants or other rights to acquire any debt securities
of the [Pennichuck] Corporation or any of its Subsidiaries, or (C) guarantee
any debt securities of any person.”

Proposed Term Loan Borrowing from CoBank

PEU is a New Hampshire public utility corporation providing retail water service to
approximately 8,100 customers in the New Hampshire towns of Atkinson, Barnstead, Bow,
Chester, Conway, Derry, Exeter, Hooksett, Lee, Litchfield, Londonderry, Middleton, Pelham,
Plaistow, Raymond, Sandown, Tilton, Weare and Windham. PEU is wholly-owned by
Pennichuck which, in turn, is wholly-owned by the City.

PEU has entered into a Master Loan Agreement with CoBank dated as of February 9, 2010 (the
“Master Loan Agreement”), which provides the framework for CoBank to make loans to PEU from
time to time. A copy of the Master Loan Agreement is attached to this letter as Attachment A.

PEU requests the City’s approval for PEU to enter into a term loan with CoBank in an amount up
to $1,450,000 with an amortization period of up to 25 years, with an interest rate to be determined
based on market conditions (currently estimated at approximately 4.5% per annum). A copy of
the term sheet for the term loan with CoBank is attached to this letter as Attachment B.

The proceeds from the CoBank loan will be used to refinance and repay up to approximately
$1,450,000 of Fixed Asset Line of Credit (“FALOC”) borrowings by PEU, under its $3 million
FALOC with CoBank, which was used to fund capital improvements to the PEU water system
infrastructure during 2018, which were not funded by State of New Hampshire Drinking Water
Revolving Loan Fund (SRF) or NH Drinking Water and Groundwater Trust Fund loans or grants.

The FALOC with CoBank was approved by the Pennichuck and PEU Boards of Directors, the
NH Public Utilities Commission (“NHPUC”), and the City of Nashua as shareholder, in March
of 2018 (in NHPUC Order No. 26,117, Docket DW 17-157), to provide for capital improvements
financing during each calendar year, with subsequent annual refinancing and repayment of
amounts borrowed with term loans, consistent with PEU’s allowed rate structure with the
NHPUC under Order No. 26,179 (Docket DW 17-128).

The CoBank loan will be secured by (i) a security interest in PEU’s equity interest in CoBank
(consisting of PEU’s $124,847 earned equity investment in CoBank from patronage dividends
received since 2010, and PEU’s right to receive future patronage dividends), and (ii) the
unconditional guarantee of PEU’s obligations to CoBank by Pennichuck pursuant to the
Guarantee of Payment (Continuing) dated as of February 9, 2010 between Pennichuck and
CoBank (the “Guaranty Agreement’), a copy of which is attached to this letter as Attachment C.

The Lender — CoBank, ACB. CoBank is a government sponsored enterprise (“GSE”) owned
by its customers, who consist of agricultural cooperatives, rural energy, communications and
water companies and other businesses that serve rural America. As a GSE, CoBank issues its
debt securities with the implicit full faith and credit of the United States Government and uses
these low-cost funds to make loans to companies like PEU that meet its charter requirements.
As a result of the implicit backing of the U.S. Government, CoBank’s borrowing costs are lower
than commercial banks and financial institutions, and these lower costs are passed on to its

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borrowers. In addition to the lower rates, CoBank loans generally have fewer covenants or
restrictions as compared to loans from commercial banks and other financial institutions.

Approval by Pennichuck and PEU. The CoBank loan and guaranty have been approved by the
Board of Directors of Pennichuck and PEU. Pennichuck recommends that the City authorize
(i) PEU to enter into the loan with CoBank; and (ii) Pennichuck to guaranty the loan.

Lower Costs Are Good for Customers. Pennichuck and its Board of Directors have
determined that the capital projects to be refinanced by the CoBank loan will allow PEU to
continue to provide safe, adequate and reliable water service to their customers on a cost-
effective basis. The terms of the loan are very favorable compared to other alternatives and will
result in lower financing costs than would be available under other debt options. These lower
financing costs will be passed on to customers.

Other Approvals. As a regulated public utility, PEU must obtain approval of the term loan from
the New Hampshire Public Utilities Commission (“NHPUC”), which will approve the term loan
if it finds the loan to be consistent with the public good. PEU will be filing a petition for approval
with the NHPUC in early March 2019 and expects the NHPUC to consider the petition promptly.

Requested Approvals. For the reasons described above, Pennichuck respectfully requests that
the City, acting in its capacity as sole shareholder of Pennichuck and pursuant to Article [X(3) of
Pennichuck’s Articles of Incorporation, authorize the following actions:

RESOLVED, that the City hereby approves the term loan to Pennichuck East Utility,
Inc. from CoBank, ACB, in an amount up to $1,450,000, with an amortization period of
up to 25 years; and

FURTHER RESOLVED, that the City hereby approves the guaranty by Pennichuck
Corporation of the payment by Pennichuck East Utility, Inc. of the term loan authorized
in the prior resolution; and

FURTHER RESOLVED, that the City hereby authorizes Pennichuck Corporation and
Pennichuck East Utility, Inc., their Boards of Directors, and their Officers, to take any
and all actions required to obtain all necessary approvals with respect to the actions
described in these resolutions and to execute and deliver such documents as are necessary
to effect the CoBank term loan and the guaranty described in these resolutions.

Respectfully submitted,

PENNICHUCK CORPORATION

, SLAL

Larrg D. Goodhue
Chief Executive Officer

cc. Mayor James Donchess

Attachment A

MLA No. RX0848
MASTER LOAN AGREEMENT

THIS MASTER LOAN AGREEMENT (this “Agreement”) is entered into as of February 9,
2010, between PENNICHUCK EAST UTILITY, INC., a New Hampshire corporation (the
“Company”), and CoBANK, ACB, a federally chartered instrumentality of the United States
(“CoBank”).

BACKGROUND

From time to time, CoBank may make loans and extend other types of credit to or for the account
of the Company. In order to facilitate the making of such loans and other types of credit, the parties are
entering into this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agrce as follows:

ARTICLE 1
DEFINITIONS AND RULES OF INTERPRETATION

SECTION 1.01. Definitions. Capitalized terms used in this Agreement and defined in
Exhibit A hereto shall have the meanings set forth in that Exhibit.

SECTION 1.02. Rules of Interpretation. The rules of interpretation set forth in Exhibit A
shall apply to this Agreement.

ARTICLE 2
THE SUPPLEMENTS

SECTION 2.01. Promissory Notes and Supplements. In the event the Company desires to
borrow from CoBank and CoBank is willing to lend to the Company, the parties will enter into a
promissory note and supplement hereto (each a "Promissory Note and Supplement"). Each Promissory
Note and Supplement will set forth CoBank’s commitment to make a loan or loans to the Company, the
amount of the loan(s), the purpose of the loan(s), the interest rate or interest rate options applicable to the
loan(s), the Company's promise to repay the loans, and any other terms and conditions applicable to the
particular loan(s). Each loan will be governed by the terms and conditions set forth in this Agreement and
in the Promissory Note and Supplement relating to that loan. In the absence of a Promissory Note and
Supplement hereto duly executed by CoBank, CoBank shall have no obligation to make a loan to the
Company under this Agreement.

SECTION 2.02. Notice and Manner of Borrowing New Loans. Except as otherwise
provided in a Promissory Note and Supplement: (A) loans will be made available on any Business Day
upon the telephonic or written request of an authorized employee of the Company (which request, if
made telephonically, shall be promptly confirmed in writing if required by CoBank); (B) requests for
loans must be received by 12:00 noon Company’s local time on the date the loan is to be made; and (C)
loans will be made available by wire transfer of immediately available funds to such account or accounts
as may be authorized by the Company on forms supplied by CoBank.

SECTION 2.03. Method of Payment. The Company shall make all payments to CoBank
under this Agreement and each Promissory Notc and Supplement hereto by wire transfer of immediately
available funds, by check, or, if specified by separate agreement between the Company and CoBank, by
automated clearing house (ACH) or other similar cash handling processes. Wirc transfers shall be made
to ABA No. 307088754 for advice to and credit of "CoBANK" (or to such other account as CoBank may
direct by notice). The Company shall give CoBank telephonic notice no later than 12:00 noon
Company’s local time of its intent to pay by wire, and funds received after 3:00 p.m. Company’s local
time shall be credited on the next Business Day. Checks shall be mailed to COBANK, Department 167,
Denver, Colorado 80291-0167 (or to such other place as CoBank may direct by notice). Credit for
payment by check will not be given until the latter of the next Business Day after receipt of the check or
the Business Day on which CoBank receives immediately available funds.

SECTION 2.04. Security and Guaranty.

(A) Security. The Company's obligations hereunder and under each other Loan
Document to which the Company is a party (whether executed contemporaneously herewith or at a later
date) shall be secured by a statutory first priority Lien on all equity which the Company may now own or
hereafter acquire or be allocated in CoBank and all proceeds thereof.

(B) Credit Support. In addition to the above, the Company’s obligations hereunder
and under each Promissory Note and Supplement hereto shall be guarantied by Pennichuck Corporation
(the “Guarantor”) pursuant to a guarantee of payment in form and content acceptable to CoBank (as
amended or restated from time to time, the “Guaranty”).

ARTICLE 3
CONDITIONS PRECEDENT

SECTION 3.01. Conditions Precedent to the Initial Promissory Notes and Supplements
Hereto. CoBank’s obligation to make a loan or loans under the initial Promissory Note and Supplement
hereto (or, in the event that more than one Promissory Note and Supplement is being executed on the
date hereof, each initial Promissory Note and Supplement hereto), is subject to the following conditions
precedent, which, in the case of instruments and documents, must be in form and content acceptable to
CoBank:

(A) This Agreement. CoBank shall have received a duly executed original of this
Agreement.

(B) Guaranty and Related Documents. (1) A duly executed original Guaranty; (2)
copies, certified by the Secretary of the Guarantor as of the date hereof (or as of another date acceptable
to CoBank), of such board resolutions, evidence of incumbency, and other evidence as CoBank may
require that the Guaranty has been duly authorized, executed and delivered by the Guarantor; and (3) an
opinion of counsel to the Guarantor, which counsel and opinion must be in form and content acceptable
to CoBank.

(C) Consent and Agreement. A consent and agreement (the “Consent_and
Agreement”) between the Company, Pennichuck Water Works, Inc. (“PWW”), and CoBank in form and
content acceptable to CoBank.

(D) Secretary’s Certificate. CoBank shall have received an original certificate of
the Secretary of the Company dated as of the date hereof (or as of another date acceptable to CoBank)

attaching and certifying as to each of the following, all of which must be in form and content acceptable
to CoBank: (1) the Articles of Incorporation of the Company, certified by the Secretary of State of New
Hampshire within 30 days of the date hereof; (2) the Bylaws of the Company; and (3) a certificate of the
Secretary of State of New Hampshire issued within 30 days of the date hereof attesting to the due
formation and good standing of the Company in the State of New Hampshire.

(C) Delegation and Wire Transfer Form. CoBank shall have received a duly
executed original delegation and wire transfer authorization form.

(D) Equity In CoBank. The Company shall have purchased $1,000 in equity in
CoBank.

SECTION 3.02. Conditions to Each Supplement. CoBank’s obligation to make the initial
loan under each Promissory Note and Supplement hereto (including the initial Promissory Note(s) and
Supplement(s) hereto) is subject to the following conditions precedent (which in the case of instruments
and documents, must be originals and in form and content acceptable to CoBank):

(A) Supplement. CoBank shall have received a duly executed Promissory Note and
Supplement and all Loan Documents required by the Promissory Note and Supplement.

(B) Evidence of Authority. CoBank shall have received copies, certified by the
Secretary of the Company as of the date of the Promissory Note and Supplement (or as of another date
acceptable to CoBank), of such board resolutions, evidence of incumbency, and other evidence as
CoBank may require that the Promissory Note and Supplement and all Loan Documents executed in
connection therewith have been duly authorized, executed and delivered.

(C) Consents and Approvals. CoBank shall have received such evidence as
CoBank may require that all consents and approvals referred to in Section 4.11 hereof, have been
obtained and are in full force and effect.

(D) Fees and Other Charges. CoBank sha!l have received all fees or other charges
provided for herein or in the Promissory Note and Supplement.

(E) Application. CoBank shall have received a duly executed and completed copy of
an application for the credit and all instruments and documents required by the application for credit.

(F) Insurance. CoBank shall have received such evidence as CoBank may
reasonably require that the Company is in compliance with Section 5.03 hereof.

(G) Opinion of Counsel. CoBank shall have received an opinion of counsel to the
Company, which counsel and opinion must be reasonably acceptable to CoBank.

SECTION 3.03. Conditions to Each Loan. CoBank’s obligation under each Promissory
Note and Supplement (including the initial Promissory Note(s) and Supplement(s) hereto) to make any
loan to the Company thereunder, including the initial loan, is subject to the conditions precedent that: (A)
no Default or Event of Default shall have occurred and be continuing; (B) each of the representations and
warranties of the Company set forth herein, in the Promissory Note and Supplement, and in all other
Loan Documents shall be true and correct as of the date of the loan; and (C) the Company shall have

Note 12 — Transaction with the City of Nashua

On January 25, 2012, in full settlement of an ongoing Eminent Domain lawsuit filed by the
City of Nashua (“City”) and with the approval of the New Hampshire Public Utilities
Commission (“NHPUC”), the City acquired all of the outstanding shares of Pennichuck
Corporation (“Pennichuck”) and, thereby, indirect acquisition of its regulated subsidiaries.
The total amount of the acquisition was $150.6 million (“Acquisition Price”) of which
$138.4 million was for the purchase of the outstanding shares, $5.0 million for the
establishment of a Rate Stabilization Fund, $2.6 million for legal and due diligence costs,
$2.3 million for severance costs, $1.3 million for underwriting fees, and $1.0 million for
bond discount and issue costs. The entire purchase of $150.6 million was funded by General
Obligation Bonds (“Bonds”) issued by the City of Nashua. Pennichuck is not a party to the
Bonds and has not guaranteed nor is obligated in any manner for the repayment of the Bonds.
Pennichuck remains an independent corporation with an independent Board of Directors with
the City of Nashua as its sole shareholder.

Pennichuck Water Works, Inc. (““PWW”), Pennichuck East Utility, Inc. (“PEU”), Pittsfield
Aqueduct Company, Inc. (“PAC”), Pennichuck Water Service Corporation, and The
Southwood Corporation will continue as subsidiaries of Pennichuck Corporation and PWW,
PEU and PAC will continue as regulated companies under the jurisdiction of the New
Hampshire Public Utilities Commission. The terms of the merger and the requisite
accounting and rate-setting mechanisms were agreed to in the NHPUC Order 25,292 (“PUC
Order”) dated November 23, 2011.

Transactions with Related Party — City of Nashua

Pennichuck issued a promissory note to the City of Nashua in the amount of approximately
$120 million to be repaid over a thirty (30) year period with monthly payments of
approximately $707,000, including interest at 5.75%. Pennichuck recorded an additional
amount of approximately $30.6 million as contributed capital. The remaining outstanding
balance of the note payable to the City at December 31, 2015 and 2014 was approximately
$112.9 million and $114.7 million, respectively, as disclosed in Note 10 to these consolidated
financial statements. During 2015 and 2014, dividends of approximately $278,000 and
$277,000, respectively, were declared and paid to the City. The dividends paid to the City
during 2015 comprised approximately $278,000 of regular quarterly dividends declared and
paid; and no special dividend was declared or paid in 2015. The dividends paid to the City
during 2014 comprised approximately $277,000 of regular quarterly dividends declared and
paid, and no special dividend was declared or paid in 2014.

Additional ongoing transactions occur in the normal course of business, between the
Company and the City, related to municipal water usage, fire protection and sewer billing
Support services, and property taxes related to real property owned by the Company within
the City of Nashua. For the years ended December 31, 2015 and 2014, respectively,
approximately $3.1 million and $3.3 million were paid to the Company by the City for
municipal water consumption, fire protection charges, and sewer billing support services.
Conversely, the Company paid property taxes to the City of Nashua of approximately

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satisfied all conditions and requirements set forth in the Promissory Note and Supplement relating to that
loan.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES

To induce CoBank to enter into and make loans under each Promissory Note and Supplement,
the Company represents and warrants that:

SECTION 4.01. Organization, Ete. The Company: (1) ts a corporation duly organized,
validly existing, and in good standing under the Laws of the State of New Hampshire; (2) has the power
and authority to own its assets and to transact the business in which it is engaged or proposes to engage
and to enter into and perform the Loan Documents; and (3) is duly qualified to do business in, and is in
good standing under the Laws of, each jurisdiction in which such qualification is required.

SECTION 4.02. Loan Documents. This Agreement, the Promissory Note and Supplement,
and all other Loan Documents: (1) have bcen duly authorized, executed and delivered by the Company
and each other Person that is a party thereto; and (2) create legal, valid and binding obligations of the
Company and each other Person that is a party thereto which are enforceable in accordance with their
terms, except to the extent that enforcement may be limited by applicable bankruptcy, insolvency or
similar Laws affecting creditors’ rights generally.

SECTION 4.03. Operation of Business. The Company possesses all licenses, certificates,
permits, authorizations, approvals, franchises, patents, copyrights, trademarks, trade names, rights
thercto, or the like which are material to the operation of its business or required by Law, and the
Company is not in violation of the rights of others with respect thereto.

SECTION 4.04. Litigation. Except as disclosed in any application submitted in connection
with the Promissory Note and Supplement, there are no pending or threatened actions or proceedings
against or affecting the Company before any court, governmental agency, mediator, arbitrator, or the like
which could, in any one case or in the aggregate, if adversely decided, have a Material Adverse Effect.

SECTION 4.05. Ownership and Subsidiaries. The Company: (A) is owned 100% by the
Guarantor; and (2) has no Subsidiaries.

SECTION 4.06. Financial Statements. The Financial Statements are complete and correct
and fairly present the financial condition of the Company, and the results of the operations of the
Company as of the date and for the periods covered by such Financial Statements, all in accordance with
GAAP consistently applied. Since the date of the most recent Financial Statement, there has been no
material adverse change in the condition, financial or otherwise, business or operations of the Company.
There are no liabilities of the Company which are material but not reflected in the Financial Statements
or in the notes thereto.

SECTION 4.07. Ownership and Liens. The Company has title to, or valid easement or
leasehold interests in, all of its properties, real and personal, including the property and leasehold
interests reflected in the Financial Statements (other than any property disposed of in the ordinary course
of business), and none of the properties or leasehold interests of the Company are subject to any Lien,
except such as may be permitted under Section 6.01 of this Agreement.

SECTION 4.08. Compliance with Law. All of the Company’s properties and all of its
operations, are in compliance in all material respects with all Laws. Without limiting the foregoing, all
property owned or leased by the Company, all property proposed to be acquired with the proceeds of the
Promissory Note and Supplement, and all operations conducted thereon on all such property, are in
compliance in all material respects with all Laws relating to the environment

SECTION 4.09. Environment. Except as disclosed in any application submitted in
connection with the Promissory Note and Supplement: (A) no property owned or leased by the Company
is being used, or to its knowledge, has been used for the disposal, treatment, storage, processing or
handling of hazardous waste or materials (as defined under any applicable environmental Law); (B) no
investigation, claim, litigation, proceedings, order, judgment, decree, settlement, Lien or the like with
respect to any environmental matter is proposed, threatened, anticipated or in existence with respect to
the properties or operations of the Company; and (C) no environmental contamination or condition
currently exists on any property of the Company which could delay the sale or other disposition of such
property or could have, or already has had, an adverse effect on the value of such property.

SECTION 4.10. ERISA. All plans (‘ERISA Plans”) of a type described in Section 3(3) of
ERISA in respect of which Company is an “Employer”, as defined in Section 3(5) of ERISA, are, to the
best knowledge of the Company, in substantial compliance with ERISA, and nonce of such ERISA Plans
is insolvent or in reorganization, or has an accumulated or waived funding deficiency within the meaning
of Section 412 of the Internal Revenue Code. The Company has not incurred any material liability
(including any material contingent liability) to or on account of any such ERISA Plan pursuant to
Sections 4062, 4063, 4064, 4201 or 4204 of ERISA. No proceedings have been instituted to terminate
any such ERISA Plan.

SECTION 4.11. Consents and Approvals. Except for such as shall have been obtained and
are in full force and effect, no consent, permission, authorization, order or license of any governmental
authority or of any party to any agreement to which the Company is a party or by which it or any of its
property may be bound or affected, is necessary in connection with: (A) the execution, delivery,
performance or enforcement of the Loan Documents; and (B) the project, acquisition, or other activity
being financed by the Promissory Note and Supplement.

SECTION 4.12. Conflicting Agreements. None of the Loan Documents conflicts with, or
constitutes (with or without the giving of notice and/or the passage of time and/or the occurrence of any
other condition) a default under, any other agreement to which the Company is or expects to become a
party or by which the Company or any of its properties may be bound or affected, and do not conflict
with any provision of the articles of incorporation, bylaws, or other organizational documents of the
Company.

SECTION 4.13. Compliance and No Default. ‘The Company is operating its business in
compliance with all of the terms of the Ioan Documents, and no Default or Event of Default exists.

SECTION 4.14. Applications. Each representation and warranty and all information set
forth in the application submitted in connection with, or to induce CoBank to enter into, the Promissory
Note and Supplement is correct in all material respects.

SECTION 4.15. Budgets, Etc. All budgets, projections, feasibility studies, and other
documentation submitted by or on behalf of the Company to CoBank in connection with, or to induce
CoBank to enter into, the Promissory Note and Supplement, are based upon assumptions that are