ARTESIAN
WATER COMPANY, INC.
TO
WILMINGTON
TRUST COMPANY,
As
Trustee
_____________________
TWENTIETH
SUPPLEMENTAL INDENTURE
Dated
as
of December 1, 2008
_____________________
Supplemental
to Indenture of Mortgage
Dated
as
of July 1, 1961
$15,000,000
First Mortgage Bonds, Series S
TWENTIETH
SUPPLEMENTAL INDENTURE, dated as of December 1, 2008, made by and between
ARTESIAN WATER COMPANY, INC. (successor to Artesian Resources Corporation,
formerly named “Artesian Water Company”, under the Original Indenture
hereinafter referred to), a corporation organized and existing under the laws
of
the State of Delaware (hereinafter called the “
Company
”), party of the first
part, and WILMINGTON TRUST COMPANY, a corporation organized and existing under
the laws of the State of Delaware, having its principal office and place of
business at Tenth and Market Streets, in the City of Wilmington, Delaware,
as
Trustee under the Original Indenture hereinafter referred to (hereinafter called
the “
Trustee
”), party of
the second part.
WHEREAS,
the Company is a wholly-owned subsidiary of ARTESIAN RESOURCES CORPORATION
(its
name having been changed from “Artesian Water Company”), a corporation organized
and existing under the laws of the State of Delaware (hereinafter called the
“
Corporation
”);
and
WHEREAS,
the Corporation has heretofore executed and delivered to the Trustee an
Indenture of Mortgage (hereinafter called the “
Original Indenture
”) dated as
of July 1, 1961, and duly recorded the Original Indenture in the Recorder’s
Office at Wilmington, in Mortgage Record A Volume 56, Page 1 etc., on the 13th
day of November, A.D. 1961, for the purpose of securing First Mortgage Bonds
of
the Corporation to be issued from time to time in one or more series as therein
provided; and
WHEREAS,
there have been issued under the Original Indenture $1,600,000 principal amount
of First Mortgage Bonds, Series A, 4 ½%, all of which were paid at maturity on
November 1, 1978; and
WHEREAS,
there have been issued under the Original Indenture $1,000,000 principal amount
of First Mortgage Bonds, Series B, 5 3/8%, the $912,750 remaining outstanding
principal amount of which was paid at maturity on July 1, 1986; and
WHEREAS,
there have been issued under the Original Indenture as supplemented by a first
supplemental indenture dated as of April 15, 1964 (hereinafter sometimes
referred to as the “
First
Supplemental Indenture
”), $1,250,000 principal amount of First Mortgage
Bonds, Series C, 5 1/8%, the $1,225,000 remaining outstanding principal amount
of which was paid at maturity on April 15, 1989; and
WHEREAS,
there have been issued under the Original Indenture, as supplemented by a second
supplemental indenture dated as of June 1, 1970 (hereinafter sometimes referred
to as the “
Second Supplemental
Indenture
”), $1,000,000 principal amount of First Mortgage Bonds, Series
D, 9 3/4%, the $640,000 remaining outstanding principal amount of which was
paid
at maturity on June 1, 1990; and
WHEREAS,
there have been issued under the Original Indenture as supplemented by a third
supplemental indenture dated as of January 1, 1973 (hereinafter sometimes
referred to as the “
Third
Supplemental Indenture
”), $800,000 principal amount of First Mortgage
Bonds, Series E, 8 ½%, due January 1, 1998, all of which were redeemed on
February 1, 1993; and
WHEREAS,
there have been issued under the Original Indenture, as supplemented by a fourth
supplemental indenture dated as of November 1, 1975 (hereinafter sometimes
referred to as the “
Fourth
Supplemental Indenture
”), $1,500,000 principal amount of First Mortgage
Bonds, Series F, 10 7/8%, due November 1, 1995, the $225,000 remaining
outstanding principal amount of which was redeemed on February 1, 1993;
and
WHEREAS,
there have been issued under the Original Indenture, as supplemented by a fifth
supplemental indenture dated as of March 1, 1977 (hereinafter sometimes referred
to as the “
Fifth Supplemental
Indenture
”), $1,800,000 principal amount of First Mortgage Bonds, Series
G, 8 7/8% due March 1, 1997, the $1,080,000 remaining outstanding principal
amount of which was redeemed on February 1, 1993; and
WHEREAS,
there have been issued under the Original Indenture, as supplemented by a sixth
supplemental indenture dated as of December 1, 1978 (hereinafter sometimes
referred to as the “
Sixth
Supplemental Indenture
”), $1,800,000 principal amount of First Mortgage
Bonds, Series H, 9 3/4%, due December 1, 1998, the $1,260,000 remaining
outstanding principal amount of which was redeemed on February 1, 1993;
and
WHEREAS,
there have been issued under the Original Indenture, as supplemented by a
seventh supplemental indenture dated as of November 1, 1981 (hereinafter
sometimes referred to as the “
Seventh Supplemental
Indenture
”), $3,000,000 principal amount of First Mortgage Bonds, Series
I, 11 7/8%, due October 1, 1987, all of which were redeemed on October 1, 1986;
and
WHEREAS,
the Company was organized for stated purposes that encompass the stated purposes
of the Corporation in order that the Company could acquire from the Corporation
substantially all of the Mortgaged Property (as such term is defined in the
Original Indenture) as an entirety and to operate the same; and
WHEREAS,
the Corporation, the Company and the Trustee entered into an eighth supplemental
indenture dated as of July 1, 1984 (hereinafter sometimes referred to as the
“
Original Eighth Supplemental
Indenture
”), providing for the succession and substitution of the Company
to and for the Corporation with the same effect as if the Company had been
named
in the Original Indenture as the mortgagor, and providing for the assumption
by
the Company of, and the release and discharge of the Corporation from, all
liability and obligation on and with respect to the Bonds and coupons issued
under the Original Indenture and all the terms, covenants and conditions of
the
Original Indenture; and
WHEREAS,
the Corporation, the Company and the Trustee executed a certain corrected eighth
supplemental indenture dated as of July 1, 1984 (hereinafter sometimes referred
to as the “
Corrected Eighth
Supplemental Indenture
”) which supplements and corrects certain
descriptions of Mortgaged Property set forth in the Original Indenture (the
Original Eighth Supplemental Indenture and the Corrected Eighth Supplemental
Indenture being hereinafter sometimes referred to collectively as the “
Eighth Supplemental
Indenture
”); and
WHEREAS,
on July 1, 1984, the Corporation conveyed and transferred substantially all
the
Mortgaged Property as an entirety, subject to the lien of the Original Indenture
and all supplemental indentures thereto, to the Company; and
WHEREAS,
the Company has assumed and agreed that it will promptly pay or cause to be
paid, the principal of and any premium that may be due and payable on and the
interest on all the Bonds issued under the Original Indenture and all indentures
supplemental thereto, and has agreed to perform, observe and fulfill, duly
and
punctually, all the terms, covenants and conditions of the Original Indenture
and all indentures supplemental thereto stated therein to be performed, observed
or fulfilled by the Corporation, and the Corporation has been released and
discharged from all liability and obligation on and with respect to the Bonds
and coupons issued under the Original Indenture and all terms, covenants and
conditions of the Original Indenture and the Trustee has executed and delivered
to the Company an instrument of partial defeasance dated April 4, 1986 pursuant
to Article II of the Eighth Supplemental Indenture; and
WHEREAS,
there have been issued under the Original Indenture, as supplemented by a ninth
supplemental indenture dated as of December 1, 1986 (hereinafter sometimes
referred to as the “
Ninth
Supplemental Indenture
”), $5,000,000 principal amount of First Mortgage
Bonds, Series J, 9.55%, all of which were paid at maturity on December 1, 1996;
and
WHEREAS,
there have been issued under the Original Indenture, as supplemented by a tenth
supplemental indenture dated as of April 1, 1989 (hereinafter sometimes referred
to as the “
Tenth Supplemental
Indenture
”), $7,000,000 principal amount of First Mortgage Bonds, Series
K, 10.17%, due April 1, 2009, all of which were redeemed on December 29, 2000;
and
WHEREAS,
there have been issued under the Original Indenture, as supplemented by a
eleventh supplemental indenture dated as of February 1, 1993 (hereinafter
sometimes referred to as the “
Eleventh Supplemental
Indenture
”), $10,000,000 principal amount of First Mortgage Bonds, Series
L, 8.03%, all of which were redeemed on January 31, 2003; and
WHEREAS,
the Original Indenture has been further supplemented pursuant to a twelfth
supplemental indenture dated as of December 5, 1995 (hereinafter sometimes
referred to as the “
Twelfth
Supplemental Indenture
”), which provided for the release from the
Indenture of certain assets of the Company; and
WHEREAS,
there have been issued under the Original Indenture, as supplemented by a
thirteenth supplemental indenture dated as of June 1, 1997 (hereinafter
sometimes referred to as the “
Thirteenth Supplemental
Indenture
”), $10,000,000 principal amount of First Mortgage Bonds, Series
M, 7.84%, due December 31, 2007, all of which were redeemed on August 1, 2005;
and
WHEREAS,
there have been issued under the Original Indenture, as supplemented by a
Fourteenth Supplemental Indenture dated as of June 1, 1997 (hereinafter
sometimes referred to as the “
Fourteenth Supplemental
Indenture
”), $5,000,000 principal amount of First Mortgage Bonds, Series
N, due December 31, 2007, all of which were redeemed on August 1, 2005;
and
WHEREAS,
there have been issued under the Original Indenture, as supplemented by a
Fifteenth Supplemental Indenture dated as of December 1, 2000 (hereinafter
sometimes referred to as the “
Fifteenth Supplemental
Indenture
”), $20,000,000 principal amount of First Mortgage Bonds, Series
0, 8.17%, all of which were outstanding as of the date hereof; and
WHEREAS,
there have been issued under the Original Indenture, as supplemented by a
Sixteenth Supplemental Indenture dated as of January 31, 2003 (hereinafter
sometimes referred to as the “
Sixteenth Supplemental
Indenture
”), $25,000,000 principal amount of First Mortgage Bonds, Series
P, 6.58%, all of which were outstanding as of the date hereof; and
WHEREAS,
there have been issued under the Original Indenture, as supplemented by a
Seventeenth Supplemental Indenture dated as of December 1, 2003 (hereinafter
sometimes referred to as the “
Seventeenth Supplemental
Indenture
”), $15,400,000 principal amount of First Mortgage Bonds, Series
Q, 4.75%, all of which were outstanding as of the date hereof; and
WHEREAS,
there have been issued under the Original Indenture, as supplemented by an
Eighteenth Supplemental Indenture dated as of August 1, 2005 (hereinafter
sometimes referred to as the “
Eighteenth Supplemental
Indenture
”), $25,000,000 principal amount of First Mortgage Bonds, Series
R, 5.96%, all of which were outstanding as of the date hereof; and
WHEREAS,
there is no “Nineteenth Supplemental Indenture” supplementing the Original
Indenture; and
WHEREAS,
the Company proposes to issue and sell not more than $15,000,000 principal
amount of a new series of bonds to be designated as First Mortgage Bonds, Series
S, to be issued under and secured by the Original Indenture, as supplemented
by
this Twentieth Supplemental Indenture dated as of December 1, 2008 (hereinafter
sometimes referred to as the “
Twentieth Supplemental
Indenture
”); and
WHEREAS,
the Company, pursuant to the provisions of the Original Indenture, has duly
resolved and determined to make, execute and deliver to the Trustee this
Twentieth Supplemental Indenture for the purpose of providing for the creation
of the First Mortgage Bonds, Series S, to be issued under and secured by the
Original Indenture, as supplemented (the Original Indenture, the First
Supplemental Indenture, the Second Supplemental Indenture, the Third
Supplemental Indenture, the Fourth Supplemental Indenture, the Fifth
Supplemental Indenture, the Sixth Supplemental Indenture, the Seventh
Supplemental Indenture, the Eight Supplemental Indenture, the Ninth Supplemental
Indenture, the Tenth Supplemental Indenture, the Eleventh Supplemental
Indenture, the Twelfth Supplemental Indenture, the Thirteenth Supplemental
Indenture, the Fourteenth Supplemental Indenture, the Fifteenth Supplemental
Indenture, the Sixteenth Supplemental Indenture, the Seventeenth Supplemental
Indenture, the Eighteenth Supplemental Indenture, this Twentieth Supplemental
Indenture and all indentures supplemental to the Original Indenture hereafter
executed, being hereinafter sometimes called the “
Indenture
”); and
WHEREAS,
all things necessary to make $15,000,000 aggregate principal amount of the
First
Mortgage Bonds, Series S, when duly executed by the Company and authenticated
and delivered by the Trustee, legally valid and binding obligations of the
Company entitled to the benefits and security of the Indenture, and to make
this
Twentieth Supplemental Indenture a legally valid and binding obligation of
the
Company, enforceable against the Company in accordance with its terms, have
been
done and performed; and
WHEREAS,
the issuance of the First Mortgage Bonds, Series S, as herein provided, has
been
in all respects duly authorized by the Company as provided in the
Indenture.
NOW,
THEREFORE, THIS INDENTURE WITNESSETH THAT ARTESIAN WATER COMPANY, INC., in
consideration of the premises and of the acceptance by the Trustee of the trusts
hereby created and of the purchase and acceptance of the First Mortgage Bonds,
Series S, by CoBank, ACB (hereinafter sometimes referred to as “
CoBank
”) pursuant to the
Bond
Purchase Agreement dated as of December 1, 2008 (hereinafter sometimes referred
to as the “
Bond Purchase
Agreement
”) and of One Dollar to the Company duly paid by the Trustee at
or before the ensealing and delivery of these presents, for itself and its
successors, intending to be legally bound hereby, does hereby ratify and confirm
its mortgage and pledge to the Trustee of all property described in the Original
Indenture, the First Supplemental Indenture, the Second Supplemental Indenture,
the Third Supplemental Indenture, the Fourth Supplemental Indenture, the Fifth
Supplemental Indenture, the Eighth Supplemental Indenture, the Thirteenth
Supplemental Indenture, the Fifteenth Supplemental Indenture, the Sixteenth
Supplemental Indenture, the Seventeenth Supplemental Indenture, and this
Twentieth Supplemental Indenture (except such thereof as may heretofore have
been released from the lien of the Indenture in accordance with the terms
thereof);
TOGETHER
with all and singular the tenements, hereditaments and appurtenances belonging
or in any wise appertaining to the aforesaid property and rights or any part
thereof, with the reversion and reversions, remainder and remainders, and to
the
extent permitted by law, all tolls, rents, revenues, issues, income, product
and
profits thereof, and all the estate, right, title, interest and claim
whatsoever, at law as well as in equity, that the Company now has or may
hereafter acquire in and to the aforesaid premises, property and rights and
every part and parcel thereof;
SAVING
AND EXCEPTING, HOWEVER, from the property hereby mortgaged and pledged all
of
the property of every kind and type saved and excepted from the Original
Indenture, by the terms thereof;
SUBJECT,
HOWEVER, to the exceptions, reservations and matters of the kind and type
recited in the Original Indenture;
TO
HAVE
AND TO HOLD all said premises, property and rights granted, bargained, sold,
released, conveyed, transferred, assigned, mortgaged, pledged, set over and
confirmed by the Company as aforesaid or intended so to be unto the Trustee
and
its successors in the trust and their assigns forever;
IN
TRUST,
NEVERTHELESS, upon the terms and trusts set forth in the Original Indenture
for
the equal and proportionate benefit and security of those who shall hold or
own
the bonds and coupons issued and to be issued under the Indenture, or any of
them, without preference of any of said bonds and coupons over any others
thereof by reason of priority in the time of the issue or negotiation thereof
or
by reason of the date or maturity thereof, or for any other reason whatsoever;
subject, however, to the provisions with respect to extended, pledged and
transferred coupons contained in Section 4.02 of the Original Indenture.
AND
THIS
INDENTURE FURTHER WITNESSETH THAT, in consideration of the premises and of
such
acceptance or purchase of the First Mortgage Bonds, Series S, by CoBank, and
of
said sum of One Dollar to the Company duly paid by the Trustee at or before
the
ensealing and delivery of these presents, the Company, for itself and its
successors, intending to be legally bound hereby does covenant to and agree
with
the Trustee and its successors in the trust, for the benefit of those who shall
hold or own such Bonds, or any of them, as follows:
ARTICLE
I
FIRST
MORTGAGE BONDS, SERIES S
Section
1.1
Designation
and Amount
.
A
series of
Bonds to be issued under the Original Indenture as heretofore supplemented
and
as supplemented hereby and secured thereby and hereby is hereby created which
shall be designated as, and shall be distinguished from the Bonds of all other
series by the title, “First Mortgage Bonds, Series S” herein referred to as the
“Series S Bonds.” The aggregate principal amount of the Series S
Bonds shall not exceed $15,000,000.
Section
1.2
Bond
Terms
.
The
Series S Bonds shall be dated the date of their authentication and shall bear
interest from such date, except as otherwise provided for Bonds issued upon
subsequent exchanges and transfers by Section 2.06 of the Original Indenture,
shall mature and be subject to redemption in a principal amount equal to
$150,000 per calendar quarter, payable on the first Business Day of January,
April, July and October in each year, beginning with the first Business Day
of
January, 2009, with all then outstanding principal due and payable on December
31, 2033 (the “
Maturity
Date
”). Business Day shall mean any day that CoBank is open
for business, except any day when Federal Reserve Banks are closed.
The
Series S Bonds shall initially bear interest at 6.73% per annum, from the date
of their authentication through and including, March 1, 2016 (the “
Initial
Period
”). Thereafter, the Series S Bonds shall bear interest
at a fixed annual interest rate to be quoted by CoBank in its sole and absolute
discretion for a period extending through the Maturity Date; provided, that
at
the request of the Company with CoBank’s written consent and upon terms
acceptable to CoBank in its sole and absolute discretion, the interest rate
on
the Series S Bonds may be fixed for such shorter period as shall be agreed
to by
the Company and CoBank. The Company shall request that CoBank fix the
interest rate on the Series S Bonds no later than three Business Days prior
to
(i) the expiration of the Initial Period and (ii) the expiration of each
successive interest period (each, an “
Interest Period
”) that
terminates prior to the Maturity Date (in each case, as agreed to by CoBank
in
its sole and absolute discretion). CoBank shall notify the Company of
its determination of the new interest rate within three days of a request by
the
Company to fix the interest rate.
For
any
period following the Initial Period that either (i) the Company does not request
that CoBank fix the interest rate on the Series S Bonds in accordance with
this
Twentieth Supplemental Indenture prior to the termination of an Interest Period
or (ii) CoBank does not fix the interest rate on the Series S Bonds within
three
days of a request by the Company, unless otherwise agreed to between the Company
and CoBank, each acting in their sole and absolute discretion, the Series S
Bonds shall bear interest at a variable annual interest rate equal, on any
day,
to the higher of (a) the Prime Rate (as hereinafter defined) or
(b) the sum of the Federal Funds Rate (as hereinafter defined)
plus
0.50% (such
rate
of interest, the “
Base
Rate
”). Such Series S Bonds shall continue to accrue interest
at the Base Rate until, in the case of a failure by the Company to request
that
CoBank fix the interest rate on the Series S Bonds, three Business Days
following a request by the Company to CoBank to so fix the interest rate, or,
in
the case of CoBank not fixing the interest rate on the Series S Bonds within
three days of a request by the Company, until such time as CoBank fixes the
interest rate. The term “
Prime Rate
” shall mean a base
rate of interest per annum equal, on any day, to the rate of interest published
on such day in the Eastern Edition of
The Wall Street Journal
as
the average prime lending rate for 75% of the United States’ 30 largest
commercial banks, or if the Eastern Edition of
The Wall Street Journal
or
such rate is not published on such day, such rate as last published in the
Eastern Edition of
The Wall
Street Journal
. In the event the Eastern Edition of
The Wall Street Journal
ceases to publish such rate or an equivalent, the term “Prime Rate” shall be
determined by reference to such other regularly published prime rate based
upon
any averaging of such 30 banks, as CoBank shall determine, or if no such
published average prime rate is available, then the term “Prime Rate” shall mean
a variable rate of interest per annum as determined by CoBank equal to the
highest of the “prime rate,” “reference rate,” “base rate” or other similar rate
announced from time to time by any of Bank of America or Citibank as selected
by
CoBank (with the understanding that any such rate may merely be a reference
rate
and may not necessarily represent the lowest or best rate actually charged
to
any customer by such bank). The “Prime Rate” shall change on a date
established by CoBank as the effective date of any change therein and CoBank
shall notify the Company of any such change. The term “
Federal Funds Rate
” shall
mean, for any day, the rate of interest per annum (rounded upward, if necessary,
to the nearest whole multiple of 1/100 of 1%) equal to the weighted average
of
the rates on overnight federal funds transactions with partners of the Federal
Reserve System arranged by federal funds brokers, as published by the Federal
Reserve Bank of New York on the Business Day next succeeding such day,
provided
that
(i) if such day is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day
and
(ii) if no such rate is so published on the next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate quoted to CoBank
on such day on such transactions as determined by CoBank.
Interest
on the Series S Bonds is payable on the first Business Day (as hereinafter
defined) of January, April, July and October of each year, beginning with the
first Business Day of January, 2009, and on the Maturity Date, until the
Company’s obligation with respect to the payment of principal, premium (if any)
and interest shall be discharged.
The
Series S Bonds shall be issuable as registered bonds without coupons in the
denominations of One Hundred Fifty Thousand Dollars ($150,000) and any multiple
thereof, numbered SR-l and upwards.
Unless
otherwise agreed to in writing by the Company and the holders of the Series
S
Bonds, the payment of the principal of, premium (if any) and interest on, the
Series S Bonds shall be made by wire transfer of immediately available funds
for
the advice and credit of CoBank to ABA No. 30708875-4, reference: CoBank for
the
benefit of Artesian Water Company, Inc. (or to such other account as CoBank
may
direct by notice). Funds received by wire before 3:00 p.m. Eastern
time shall be credited on the day received and funds received by wire after
3:00
p.m. Eastern time shall be credited the next Business Day.
The
Series S Bonds shall be redeemable as provided in the Original Indenture, in
whole or in part, at any time or from time to time, either (i) at the option
of
the Company, (ii) pursuant to any provision of the Original Indenture or the
Bond Purchase Agreement requiring or authorizing such redemption or (iii)
pursuant to Section 2.5 of this Twentieth Supplemental Indenture. Any
redemption of the Series S Bonds shall be effected in accordance with the
provisions of Article V of the Original Indenture and the provisions of this
Section 1.2.
In
accordance with the provisions of Section 6.07 of the Original Indenture, in
the
event that either (i) all or substantially all the property of the Company
at
the time subject to the lien of the Indenture as a first mortgage lien thereon
or (ii) all or substantially all of the property of the Company at the time
subject to the lien of the Indenture as a first mortgage lien thereon that
is
used or useful in connection with the business of the Company as a water company
or as a water utility shall be released from the lien of the Indenture under
the
provisions of Section 6.03 or Section 6.06 of the Original Indenture, then
all
of the Bonds then outstanding including the Series S Bonds are to be
redeemed.
The
redemption of any or all of the Series S Bonds shall be at a redemption price
equal to the sum of (i) the aggregate principal amount thereof to be redeemed,
plus (ii) the interest accrued thereon to the date fixed for redemption, plus,
(iii) except with respect to a redemption of any or all Series S Bonds (a)
pursuant to Section 2.5 of this Twentieth Supplemental Indenture or (b)
occurring on the last day of the Initial Period or any Interest Period
thereafter or while the Series S Bonds are accruing interest at the Base Rate,
a
“
Redemption Premium
” (as
hereinafter defined) determined three (3) Business Days prior to the date fixed
for redemption. CoBank will furnish notice to the Company and the
Trustee, by telecopy or other same-day written communication, on a date at
least
two (2) Business Days prior to the date fixed for redemption of the Series
S
Bonds, of the Redemption Premium, if any, applicable to such redemption and
the
calculations, in reasonable detail, used to determine the amount of any such
Redemption Premium. As used herein, the term Redemption Premium shall
mean and be calculated as follows:
(A)
Determine
the difference between: (i) CoBank’s cost of funds (determined in accordance
with its standard methodology) on December 1, 2008, minus (ii) CoBank’s cost of
funds (determined in accordance with such methodology) on the Redemption Date
or
other date fixed for redemption to fund the purchase of new bonds for a period
ending on the Maturity Date. For the purposes of the remaining
calculations, if such difference is negative, such difference shall be deemed
to
equal zero.
(B)
Add
½
of
1% to such difference (such that the minimum result shall at all times be ½ of
1%).
(C)
For
each
annual period (from each January 1) or part thereof during which the Series
S
Bonds being redeemed were scheduled to be outstanding, multiply the amount
determined in (B) above by the principal amount of the Series S Bonds being
redeemed which was scheduled to be outstanding during such annual
period;
(D)
Determine
the present value of the amount determined in (C) above based upon the scheduled
time that interest on the Series S Bonds redeemed would have been payable and
a
discount rate equal to the rate referred to in (A)(ii) above. That
result shall be the Redemption Premium.
The
principal of the Series S Bonds may be declared or may become due and payable
prior to the Maturity Date, in the manner and with the effect and subject to
the
conditions provided in the Original Indenture and this Twentieth Supplemental
Indenture (i) upon the occurrence of an Event of Default as provided in the
Original Indenture, (ii) as provided in the Bond Purchase Agreement or (iii)
as
described in Section 2.5 of this Twentieth Supplemental
Indenture. Upon the principal of the Series S Bonds becoming due and
payable on (i) the Maturity Date or (ii) a date prior to the Maturity Date
as
provided in this Section 1.2 or Section 2.5 of this Twentieth Supplemental
Indenture, any unpaid principal, premium (if any) and interest payment shall
automatically accrue interest at 4% per annum in excess of the Base Rate.
The
Series S Bonds shall be registerable, transferable, and exchangeable as provided
in Article II of the Original Indenture and this Section 1.2; provided that
the
Series S Bonds shall not be issued as coupon Bonds.
Section
1.3
Form
of
Bond
.
The
text of the registered Series S Bonds and of the authentication certificate
of
the Trustee upon said Bonds shall be, respectively, substantially as
follows:
FORM
OF
REGISTERED SERIES S BOND WITHOUT COUPONS
THIS
BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND
MAY NOT BE OTHERWISE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED
PURSUANT TO THE PROVISIONS OF SAID SECURITIES ACT OR UNLESS AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE.
THIS
BOND HAS BEEN ISSUED PURSUANT TO AND SUBJECT TO THE TERMS AND CONDITIONS OF
AN
AGREEMENT WITH THE COMPANY DATED AS OF DECEMBER 1, 2008, A COPY OF WHICH IS
ON
FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
No.
SR-__
$__________
ARTESIAN
WATER COMPANY, INC.
FIRST
MORTGAGE BONDS, SERIES S
Due
December 31, 2033
ARTESIAN
WATER COMPANY, INC., a corporation organized and existing under the laws of
the
State of Delaware (hereinafter called the “
Company
”, which term shall
include any successor corporation as defined in the Original Indenture
hereinafter referred to), for value received, hereby promises to pay to
______________________________________ or registered assigns, on the first
business day of January, April, July and October in each year, beginning with
the first Business Day of January, 2009, the sum of One Hundred Fifty Thousand
Dollars, and on December 31, 2033 (the “
Maturity Date
”), all then
outstanding principal, in each case in coin or currency of the United States
of
America that at the time of payment is legal tender for the payment of public
and private debts, and to pay in like coin or currency interest thereon to
the
registered owner hereof, from the date hereof, at a rate equal to 6.73% per
annum, through and including, March 1, 2016, and thereafter at such rate(s)
and
for such period(s) as provided in the Twentieth Supplemental Indenture
hereinafter mentioned, such interest payable on the first Business Day of
January, April, July and October of each year, beginning with the first Business
Day of January, 2009, and on the Maturity Date, until the Company’s obligation
with respect to the payment of such principal, premium (if any) and interest
shall be discharged. Overdue payments of principal, premium (if any)
and interest shall bear interest as provided in the Twentieth Supplemental
Indenture hereinafter mentioned. Unless otherwise agreed to in
writing by the Company and the holders of the Series S Bonds hereinafter
mentioned, payments of principal, premium (if any) and interest are to be made
by wire transfer of immediately available funds for the advice and credit to
CoBank to ABA No. 30708875-4, reference: CoBank for the benefit of Artesian
Water Company, Inc. (or to such other account as CoBank may direct).
This
bond
is one of an authorized issue of bonds of the Company known as its First
Mortgage Bonds (herein called the “
Bonds
”), not limited in
aggregate principal amount except as provided in the Original Indenture
hereinafter mentioned, all issued and to be issued in one or more series under
and equally secured by an Indenture of Mortgage dated as of July 1, 1961 (herein
called the “
Original
Indenture
”), executed by Artesian Resources Corporation (then named
Artesian Water Company), a corporation organized and existing under the laws
of
the State of Delaware (hereinafter called the “
Corporation
”) and by
Wilmington Trust Company, as trustee (herein called the “
Trustee
”). The
Original Indenture has heretofore been supplemented by eighteen supplemental
indentures, including an Eighth Supplemental Indenture dated as of July 1,
1984,
pursuant to which the Company assumed all of the obligations of the Corporation
under the Original Indenture, and by a Twentieth Supplemental Indenture dated
as
of December 1, 2008 (hereinafter called the “
Twentieth Supplemental
Indenture
”). Reference is hereby made to the Original
Indenture as so supplemented for a description of the property mortgaged and
pledged, the nature and extent of the security, the terms and conditions upon
which the Bonds are and are to be issued and secured and the rights of the
holders or registered owners thereof and of the Trustee in respect of such
security. As provided in the Original Indenture, the Bonds may be
issued in one or more series for various principal sums, may bear different
dates and mature at different times, may bear interest at different rates and
may otherwise vary as provided or permitted in the Original Indenture, as
supplemented. This Bond is one of the Bonds described in the
Twentieth Supplemental Indenture and designated therein as “First Mortgage
Bonds, Series S” (hereinafter called the “
Series S
Bonds
”). To the extent permitted by, and as provided in, the
Original Indenture or any indenture supplemental thereto, modifications or
alterations of the Original Indenture, or of an indenture supplemental thereto,
and of the rights and obligations of the Company and of the rights of the
holders of the Bonds issued and to be issued thereunder, may be made with the
consent of the Company by an affirmative vote of the holders of not less than
sixty-six and two-thirds per cent (66 2/3%) in aggregate principal amount of
the
Bonds then outstanding under the Original Indenture and entitled to vote and
affected by such modification or alteration, at a meeting of bondholders called
and held as provided in the Original Indenture, and, in case one or more but
less than all of the series of the Bonds then outstanding under the Original
Indenture and entitled to vote would be affected by the modification or
alteration differently from or without affecting the Bonds of any of the other
series, by an affirmative vote of the holders of not less than sixty-six and
two-thirds per cent (66 2/3%) in aggregate principal amount of the Bonds of
each
series so affected, or in either case by the written consent of the holders
of
such percentages of Bonds; provided, however, that no such modification or
alteration may be made that would extend the maturity of, or reduce the
principal amount of, or reduce the rate of, or extend the time of payment of
interest on, or reduce any premium payable upon any redemption of, this Bond,
or
modify the terms of payment of principal or interest, or reduce the percentage
required for the taking of any such action, without the express consent of
the
holder hereof.
No
reference herein to the Original Indenture or to any indenture supplemental
thereto and no provision of this Bond or of the Original Indenture or of any
indenture supplemental thereto shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of, premium
(if any) and interest on this Bond at the time and place and at the rate and
in
the coin or currency herein prescribed.
The
Series S Bonds shall be redeemable as provided in the Original Indenture and
the
Twentieth Supplemental Indenture.
The
principal of the Series S Bonds may be declared or may become due prior to
the
Maturity Date, in the manner and with the effect and subject to the conditions
provided in the Original Indenture and the Twentieth Supplemental
Indenture.
This
Bond
is transferable by the registered owner hereof, in person or by duly authorized
attorney, on books of the Company to be kept for that purpose at the principal
office of the Trustee in the City of Wilmington, Delaware, or, if there be
a
successor trustee, at its principal office, upon surrender hereof at such office
for cancellation and upon presentation of a written instrument of transfer
duly
executed, and thereupon the Company shall issue in the name of the transferee
or
transferees, and the Trustee shall authenticate and deliver, a new registered
Bond or Series S Bonds, in an authorized denomination or denominations, of
a
like aggregate principal amount; and the registered owner of any registered
Series S Bonds may surrender the same as aforesaid at said office in exchange
for a like aggregate principal amount of Bonds of like form of other authorized
denominations, all upon payment of the charges and subject to the terms and
conditions specified in the Original Indenture.
The
Company and the Trustee may deem and treat the person in whose name this Bond
shall at the time be registered on the books of the Company as the absolute
owner hereof for all purposes whatsoever (except as otherwise provided in
Article XIV of the Original Indenture with respect to bondholders’ meetings and
consents); and payment of or on account of the principal of, premium (if any)
and interest on this Bond shall be made only to or upon the order in writing
of
such registered owner hereof; and all such payments shall be valid and effectual
to satisfy and discharge the liability upon this Bond to the extent of the
sum
or sums so paid.
No
recourse under or upon any obligation, covenant or agreement contained in the
Original Indenture or in any indenture supplemental thereto, or in any Bond
thereby secured, or because of any indebtedness thereby secured, shall be had
against any incorporator or against any past, present or future stockholder,
officer or director, as such, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation under any
rule of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise; it being
expressly agreed and understood that the Original Indenture, any indenture
supplemental thereto and the obligations thereby secured, are solely corporate
obligations, and that no personal liability whatever shall attach to, or be
incurred by, any incorporators, stockholders, officers or directors, as such,
of
the Company or any successor corporation or any of them, because of the
incurring of the indebtedness thereby authorized, or under or by reason of
any
of the obligations, covenants or agreements, expressed or implied, contained
in
the Original Indenture or in any indenture supplemental thereto or in any of
the
Bonds thereby secured.
This
Bond
shall not be entitled to any benefit under the Original Indenture or any
indenture supplemental thereto, and shall not become valid or obligatory for
any
purpose until Wilmington Trust Company, as Trustee under the Indenture, or
a
successor trustee thereunder, shall have signed the form of authentication
certificate endorsed hereon.
IN
WITNESS WHEREOF, ARTESIAN WATER COMPANY, INC., has caused this Bond to be signed
in its name by its Chief Financial Officer and its corporate seal (or a
facsimile thereof) to be hereto affixed and attested by its Secretary or an
Assistant Secretary, and this Bond to be dated December 1, 2008.
ARTESIAN
WATER COMPANY, INC.
By:____________________________
Attest:
___________________________
FORM
OF
TRUSTEE’S AUTHENTICATION CERTIFICATE
FOR
SERIES S BONDS
TRUSTEE’S
AUTHENTICATION CERTIFICATE
This
Bond
is one of the Bonds, of the series designated therein, described in the
within-mentioned Original Indenture, as supplemented.
WILMINGTON
TRUST COMPANY, as Trustee,
By:________________________________
Authorized
Officer
ARTICLE
II
COVENANTS
OF THE COMPANY
The
Company hereby covenants and agrees that, without the prior written consent
of
the holders of not less than sixty-six and two-thirds percent (66 2/3%) in
principal amount of the Series S Bonds then outstanding, so long as any of
the
Series S Bonds are outstanding:
Section
2.1
Series
S
Dividend Restriction
.
No
dividends or other distributions of cash or other assets shall be declared
or
paid, directly or indirectly, on any shares of common stock of the Company,
nor
shall any shares of common stock of the Company be purchased, redeemed, retired,
or otherwise acquired by the Company, if immediately after such declaration,
payment, retirement, redemption or acquisition, the aggregate capital of the
Company and its subsidiaries, on a consolidated basis, attributable to its
common stock, surplus and retained earnings would be less than
$75,000,000. In determining the aggregate consolidated capital of the
Company and its subsidiaries attributable to its common stock, its surplus,
and
its retained earnings for the purpose of this Section 2.1, any write-up of
assets, or write-down or write-off of the excess over original cost of property
made on the books of the Company subsequent to December 31, 2007 shall be
disregarded.
Section
2.2
Restrictions
on Funded Indebtedness
.
The
Company shall not incur, assume, guarantee or in any other manner become liable,
with respect to any “
Funded
Indebtedness
” (as hereinafter defined) or permit any subsidiary to incur
any Funded Indebtedness, if immediately thereafter, the total amount of Funded
Indebtedness then outstanding, would exceed sixty-six and two-thirds per cent
(66 2/3%) of the “
Total
Permanent Capital
” (as hereinafter defined) of the Company and its
consolidated subsidiaries.
Funded
Indebtedness shall mean all bonds, debentures and other evidence of indebtedness
of the Company and its subsidiaries, secured or unsecured, for money borrowed,
but excluding (i) indebtedness maturing on demand or within one year from the
date incurred and not renewable or extendable at the option of the debtor,
(ii)
indebtedness of the Company to any subsidiary and any indebtedness of a
subsidiary to the Company, and (iii) indebtedness that has been called for
redemption and for the payment of which monies have been irrevocably deposited
with a trustee. Funded Indebtedness shall include the portion of
bonds, notes or other indebtedness maturing, or required to be redeemed, within
one year from the date as of which Funded Indebtedness is being
determined.
Total
Permanent Capital shall mean, with respect to the Company and its subsidiaries:
(i) the sum of the par or stated value of all outstanding capital stock of
the
Company and all paid-in premiums thereon; (ii) all surplus, including capital
and earned surplus but not including surplus from any revaluation of the
Company’s assets after December 31, 2007; (iii) the minority interest (if any)
in consolidated subsidiaries, but not including any earned surplus of
subsidiaries prior to the date of acquisition of such subsidiaries; and (iv)
all
Funded Indebtedness of the Company and such subsidiaries.
In
all
other respects, Funded Indebtedness and Total Permanent Capital shall be
computed as they would be for a consolidated balance sheet of the Company and
its subsidiaries on the applicable date, excluding all intercompany items,
and
in accordance with generally accepted accounting principles; provided that
for
purposes of computations under this Section 2.2, capitalized lease obligations
shall be excluded from Funded Indebtedness.
Section
2.3
Restrictions
on Issuance of Additional
Bonds
.
In
addition to the circumstances under which a Net Earnings Certificate is required
to be delivered to the Trustee under the terms of Sections 3.08 or 3.09 of
the
Original Indenture in connection with the issuance of Bonds by the Company
pursuant to either such Section, in all other circumstances under which the
Company proposes to issue additional Bonds under either Section 3.08 or 3.09
of
the Original Indenture, it shall be a requirement of such issuance and of the
authentication and delivery by the Trustee of any Bonds to be so issued that
the
Trustee shall have received a Net Earnings Certificate.
Section
2.4
Transactions
with
Affiliates
.
The
Company will not, and will not permit any subsidiary to, engage in any material
transaction with an “
Affiliate
” (as hereinafter
defined), including, without limitation, the purchase from, sale to or exchange
of property with, or the rendering of any service by or for, any Affiliate,
except upon terms that are at least as favorable to the Company or such
subsidiary in all material respects as terms that could be obtained at the
time
in a comparable arms’ length transaction with a person other than an
Affiliate. For purposes of this Section 2.4, an Affiliate of any
corporation shall mean any person or entity directly or indirectly controlling,
controlled by, or under direct or indirect common control with such corporation;
and a person or entity shall be deemed to control a corporation if such person
or entity possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise.
Section
2.5
Mandatory
Sinking Fund Redemption
.
The
Series S Bonds are subject to mandatory sinking fund redemption prior to
maturity on the first Business Day of January, April, July and October in each
year, in a principal amount of $150,000 on each such date, at a redemption
price
equal to such principal amount plus accrued interest thereon to the redemption
date (to the extent such interest is not otherwise paid pursuant to Section
1.2
of this Twentieth Supplemental Indenture). Each sinking fund
redemption provided for herein shall be effected in accordance with the
provisions set forth in Article V of the Original Indenture and the provisions
of Section 1.2 of this Twentieth Supplemental Indenture.
ARTICLE
III
THE
TRUSTEE
Section
3.1
Trustee
Acceptance
.
The
Trustee hereby accepts the trust hereby declared and provided and agrees to
perform the same upon the terms set forth in the Original Indenture as further
supplemented by this Twentieth Supplemental Indenture and upon the additional
terms and conditions that the Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Twentieth
Supplemental Indenture or the due execution hereof by the Company or for or
in
respect of the recitals contained herein, all of which recitals are made by
the
Company solely.
ARTICLE
IV
MISCELLANEOUS
Section
4.1
Incorporation
of Original Indenture Terms
.
This
instrument shall be construed as an indenture supplemental to the Original
Indenture, and shall form a part thereof. The Original Indenture as
heretofore supplemented by the First Supplemental Indenture, the Second
Supplemental Indenture, the Third Supplemental Indenture, the Fourth
Supplemental Indenture, the Fifth Supplemental Indenture, the Sixth Supplemental
Indenture, the Seventh Supplemental Indenture, the Eighth Supplemental
Indenture, the Ninth Supplemental Indenture, the Tenth Supplemental Indenture,
the Eleventh Supplemental Indenture, the Twelfth Supplemental Indenture, the
Thirteenth Supplemental Indenture, the Fourteenth Supplemental Indenture, the
Fifteenth Supplemental Indenture, the Sixteenth Supplemental Indenture, the
Seventeenth Supplemental Indenture, the Eighteenth Supplemental Indenture and
as
further supplemented by this Twentieth Supplemental Indenture is hereby ratified
and confirmed. Terms defined in the Original Indenture that are used
herein and not otherwise defined herein are used as defined in the Original
Indenture.
Section
4.2
Counterparts
.
This
Twentieth Supplemental Indenture may be simultaneously executed in any number
of
counterparts, each of which when so executed shall be deemed to be an original;
but such counterparts shall together constitute but one and the same
instrument.
IN
WITNESS WHEREOF, ARTESIAN WATER COMPANY, INC. has caused these presents to
be
signed in its corporate name by its Chief Financial Officer and sealed with
its
corporate seal, attested by its Secretary or one of its Assistant Secretaries,
and WILMINGTON TRUST COMPANY, as Trustee, has caused these presents to be signed
in its corporate name by one of its Vice Presidents and sealed with its
corporate seal, attested by one of its Assistant Secretaries, all as of the
day
and year first above written.
ARTESIAN
WATER COMPANY, INC.
By:_______________________________
David
B. Spacht
Chief
Financial Officer and Treasurer
[SEAL]
Attest: ___________________
(Signatures
continue on next page.)
(Signatures
continued from previous page.)
|
|
WILMINGTON
TRUST COMPANY,
|
As
Trustee,
By:_________________________________
[SEAL]
Attest:
__________________________
STATE
OF
DELAWARE
)
) SS.:
COUNTY
OF
NEW
CASTLE
)
On
this,
the _____ day of ________________, 2008, before me, the undersigned, notary
public, personally appeared David B. Spacht, who acknowledged himself to be
the
Chief Financial Officer and Treasurer of Artesian Water Company, Inc., a
corporation organized under the laws of the State of Delaware, and that he
as
such officer, being authorized to do so, executed the foregoing Twentieth
Supplemental Indenture for the purposes therein contained by signing the name
of
Artesian Water Company, Inc. by himself as Chief Financial Officer and
Treasurer.
IN
WITNESS WHEREOF, I hereunto set my hand and official seal.
___________________________
Notary Public
Wilmington,
New Castle County
My
Commission Expires
___________________________
[Seal]
STATE
OF
DELAWARE
)
)
SS.:
COUNTY
OF
NEW
CASTLE )
On
this,
the ______ day of _______________, 2008, before me, the undersigned, notary
public, personally appeared __________________________, who acknowledged
himself/herself to be a Vice President of Wilmington Trust Company, a
corporation organized under the laws of the State of Delaware, and that he/she
as such officer, being authorized to do so, executed the foregoing Twentieth
Supplemental Indenture for the purposes therein contained by signing the name
of
Wilmington Trust Company by himself/herself as Vice President.
I
certify
that I am not an officer or director of said trust company.
IN
WITNESS WHEREOF, I hereunto set my hand and official seal.
___________________________,
Notary Public
Wilmington,
New Castle County
My
Commission Expires
___________________________
[Seal]
RECORDATION
Recorded
as follows:
1.
In the office of the Recorder of Deeds, in and for New Castle County and State
of Delaware, in Mortgage Record ____________, Volume ______, Page _____, on
the
_____day of ________________, 2008.
2.
In the office of the Recorder of Deeds, in and for Kent County and State of
Delaware, in Mortgage Record ____________, Volume ______, Page _____, on the
_____day of ________________, 2008.
3.
In the office of the Recorder of Deeds, in and for Sussex County and State
of
Delaware, in Mortgage Record ____________, Volume ______, Page _____, on the
_____day of ________________, 2008.
ARTESIAN
WATER COMPANY, INC.
BOND
PURCHASE AGREEMENT
Dated
as
of December 1, 2008
RE: $15,000,000
FIRST MORTGAGE BONDS, Series S
Due
December 31, 2033
ARTESIAN
WATER COMPANY, INC.
664
Churchmans Road
Newark,
Delaware 19702
BOND
PURCHASE AGREEMENT
Re:
$15,000,000 First Mortgage Bonds, Series S
Due
December 31, 2033
Dated
as
of
December
1, 2008
CoBank,
ACB
5500
S.
Quebec Street
Greenwood
Village, CO 80111
Attn:
Communications and Energy Banking Group
Ladies
and Gentlemen:
ARTESIAN
WATER COMPANY, INC., a Delaware corporation (the “
Company
”) and CoBank, ACB
(“
CoBank
” or the “
Purchaser
”)
hereby agree as
follows:
SECTION
1.
DESCRIPTION OF BONDS.
Section
1.1.
Series
S
Bonds
.
The
Company proposes to issue $15,000,000 aggregate principal amount of the Series
S
Bonds, to be dated the date of their authentication, to mature and be subject
to
redemption in a principal amount equal to $150,000 per calendar quarter, payable
on the first business day of January, April, July and October in each year,
beginning with the first Business Day of January, 2009, with all outstanding
principal remaining due and payable on December 31, 2033 (the “
Maturity Date
”), to bear
interest from their date of authentication (except as otherwise provided in
the
“
Indenture
” (as
hereinafter defined)) at 6.73% per annum, through and including, March 1, 2016,
and thereafter at such rate(s) and for such period(s) as provided in the
Twentieth Supplemental Indenture (as hereinafter defined), such interest payable
on the first business day of January, April, July and October in each year
and
on the Maturity Date, beginning the first business day of January, 2009, and
to
be issued as fully registered bonds without coupons under an Indenture of
Mortgage (the “
Original
Indenture
”) dated as of July 1, 1961, between the Company (successor to
Artesian Resources Corporation, formerly named “
Artesian Water Company
”) and
Wilmington Trust Company (the “
Trustee
”), as Trustee, as
heretofore supplemented, and as further supplemented by a Twentieth Supplemental
Indenture (the “
Twentieth
Supplemental Indenture
”) dated as of December 1, 2008, between the
Company and the Trustee, providing for the creation and issuance of the Series
S
Bonds. The Twentieth Supplemental Indenture shall be substantially in
the form of the draft attached hereto as Exhibit A. The Original
Indenture as heretofore supplemented and as further supplemented by the
Twentieth Supplemental Indenture is hereinafter referred to as the “
Indenture
.”
Section
1.2.
Definitions
.
Capitalized
terms used and not otherwise defined herein have the respective meanings given
to such terms in the Indenture. Except as otherwise specified or as
the context may otherwise require “
Bond Documents
” shall mean
this Agreement, the Indenture and the Bonds, and the “
Bonds
” shall mean the Series
S
Bonds.
SECTION
2.
SALE OF
BONDS.
Subject
to the terms and conditions herein set forth, including, without limitation,
the
conditions set forth in Section 5 of this Agreement, the Company agrees to
sell
to the Purchaser, and the Purchaser agrees to purchase from the Company, not
more than $15,000,000 principal amount of Bonds at a price of 100% of the
principal amount thereof. Notwithstanding any provision of this
Agreement to the contrary, the Purchaser shall have no obligation to purchase
any Bond after December 31, 2008.
SECTION
3.
CLOSING.
Section
3.1.
Location
.
Delivery
of, and payment for, the Bonds being purchased by the Purchaser shall be made
at
one closing (the “
Closing
”) to be held at the
offices of Morris, Nichols, Arsht & Tunnell, LLP, 1201 North Market Street,
Wilmington, Delaware 19801, on such date, or at such other location, as shall
be
mutually agreed upon by the Purchaser and the Company.
Section
3.2.
Payment
.
Payment
shall be made by the Purchaser on the date of the Closing by the wire transfer
of Federal or other U.S. funds immediately available in the amount of the
applicable purchase price to such account or accounts as directed by the Company
or in accordance with other wiring instructions furnished to you in writing
by
the Company no less than five (5) days prior to the applicable Closing.
Section
3.3.
Denominations
and
Registration
.
Delivery
of the Bonds shall be made to the Purchaser in the form of one or more fully
registered definitive Bonds in the aggregate principal amount not to exceed
$15,000,000, each registered in the Purchaser’s name, in such authorized
denominations as the Purchaser may have specified to the Company at least five
(5) days prior to the Closing.
SECTION
4.
REPRESENTATIONS.
The
Company represents and warrants that:
Section
4.1.
Corporate
Organization and
Authority
.
The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, with corporate power and
authority to own and operate its properties and to carry on its business as
now
conducted, which consists of the gathering, purification, transportation,
storage and distribution of water solely in the State of
Delaware. The Company is a wholly-owned subsidiary of Artesian
Resources Corporation, a corporation duly incorporated and validly existing
in
good standing under the laws of the State of Delaware (the “
Corporation
”), which as part
of a corporate restructuring in 1984 changed its name to Artesian Resources
Corporation and transferred substantially all of the “
Mortgaged Property
” (as
defined in the Indenture) subject to the lien of the Indenture to the Company
which assumed all of the Corporation’s obligations under the Indenture from
which the Corporation has been released and discharged. The Company
has duly and lawfully obtained and maintains all licenses, certificates,
permits, authorizations, approvals, and the like that are necessary to the
conduct of its business, or which may be otherwise required by law.
Section
4.2.
Subsidiaries
.
The
Company has no subsidiaries.
Section
4.3.
Financial
Statements
.
(a) The
consolidated
balance sheets of the Company and any subsidiary for the year ended December
31
in each of the years 2005, 2006 and 2007 and the related consolidated statements
of income, retained earnings and cash flows for the years ended on said dates,
copies of all of which have been furnished to the Purchaser, accompanied by
a
report thereon containing an opinion unqualified as to scope limitations imposed
by the Company and otherwise without qualification except as therein noted,
by
BDO Seidman, LLP, have been prepared in accordance with generally accepted
accounting principles consistently applied and the applicable provisions of
the
regulatory authorities having jurisdiction in the premises except as therein
noted, are correct and complete and present fully and fairly the financial
position of the Company and any subsidiaries as of such dates and the results
of
their operations and changes in their financial position for such
periods.
(b)
Since
December 31, 2007, there has been no change in the condition, financial or
otherwise, of the Company as shown on the consolidated balance sheet as of
such
date except increases, if any, in its current indebtedness to banks incurred
for
working capital and except changes in the ordinary course of business, none
of
which individually or in the aggregate has had a material adverse effect upon
the condition (financial or otherwise), operations, properties or business
of
the Company.
(c)
All
budgets, projections, feasibility studies, and other similar documentation
submitted by the Company to the Purchaser in connection with the transactions
contemplated by this Agreement were based upon assumptions that were reasonable
and, as of the date hereof, no fact has come to light, and no event has
occurred, that would cause any such assumption not to be
reasonable.
Section
4.4.
Litigation
.
There
are no actions, suits or proceedings pending or to the best of the knowledge
of
the Company threatened against or affecting the Company at law or in equity
or
before or by any federal, state, municipal or other governmental commission,
board, bureau, agency or instrumentality, domestic or foreign, that would
reasonably be expected to involve the possibility of any material judgment
or
liability against the Company, or may result in any material, adverse change
in
the business or assets or in the condition, financial or otherwise, of the
Company. The Company is not in default with respect to any order of
any court or governmental commission, board, bureau, agency or instrumentality,
domestic or foreign.
Section
4.5.
Taxes
.
The
Company has filed prior to delinquency all required tax returns and paid all
applicable federal, state and local taxes, other than taxes not yet due or
that
may hereafter be paid without penalty, and the Company has no knowledge of
any
material deficiency or additional assessment in connection therewith not
provided for on the books of the Company.
Section
4.6.
Liens
.
The
Indenture
constitutes a valid and perfected first priority lien as to the Mortgaged
Property, subject only to “
Permitted Encumbrances
” (as
defined in the Indenture), enforceable against the Company and third parties
and
secures the obligations of the Company issued pursuant to the Indenture,
including the Bonds, and all filings, recordations, and other actions necessary
to establish and protect such lien as a first priority lien, subject only to
Permitted Encumbrances, on the Mortgaged Property have been duly taken.
Section
4.7.
Title
to
Properties
.
The
Company has good and marketable title in fee simple to all real estate and
fixed
property specifically described in the Indenture, subject to the lien of the
Indenture and Permitted Encumbrances, and the Company has good title to all
its
other property and assets reflected on the balance sheet of the Company as
of
December 31, 2007 (other than property or assets subsequently disposed of in
the
normal and ordinary course of business), except liens for current taxes not
yet
due and payable, subject only to liens or other encumbrances either not material
in the aggregate or described in the financial statements (or notes or schedules
thereto) of the Company referred to in Section 4.3 of this
Agreement. The real estate specifically described in the Indenture
constitutes substantially all the real estate owned by the
Company. None of the real estate or fixed property subject to the
lien of the Indenture is located outside of New Castle, Kent and Sussex
Counties,
Delaware. No real property or interests in real property of the
Company necessary for utility purposes is subject to title defects (other than
Permitted Encumbrances) that the Company does not have the right to cure by
condemnation proceedings and that impair the use of such property by the
Company. The Permitted Encumbrances to which the Mortgaged Property
is subject do not in the aggregate materially impair the use of the Mortgaged
Property taken as a whole for the purposes for which it is to be used by the
Company and do not materially affect adversely the value of the Mortgaged
Property.
Section
4.8.
[Reserved].
Section
4.9.
Calamities,
Strikes,
etc
.
Since
December 31, 2007, the business, properties and assets of the Company have
not
been adversely affected in any substantial way as the result of any fire,
explosion, accident, windstorm, strike, labor disturbance, lockout, combination
of workmen, requisition or taking of property by the United States or any agency
thereof or by the State of Delaware or any municipality or other agency thereof,
flood, drought, embargo, riot, war or act of God or the public enemy.
Section
4.10.
Restrictions
on the
Company
.
The
Company is not a party to or bound by any contract, indenture, agreement or
instrument, or any law, rule or regulation, any judgment or order of any court
or governmental agency that restricts or limits the right or ability of the
Company to issue the Bonds or comply with and perform this Agreement; and no
approval, authorization, consent or withholding of objection on the part of
any
governmental authority or regulatory body is necessary in connection with the
issuance of the Bonds or the entering into this Agreement by the Company, except
the approval of the Delaware Public Service Commission which has been obtained
and remains in full force and effect. No action on the part of any
shareholder of the Company is necessary in connection with the execution and
delivery by the Company of and the performance by the Company of its obligations
under the Bond Documents.
Section
4.11.
No
Conflicts
.
The
execution and delivery of this Agreement and the consummation of the
transactions herein contemplated, and the compliance with this Agreement by
the
Company, will not conflict with or result in a breach of any of the terms,
conditions or provisions of, or constitute a default under, or, except as
contemplated by the Indenture, result in the creation or imposition of any
lien,
charge or encumbrance upon any of the property or assets of the Company pursuant
to the terms of, the charter or by-laws of the Company, or any indenture,
mortgage, deed of trust or other agreement or instrument to which the Company
or
the Corporation is a party, or by which the property or assets of either may
be
bound or affected.
Section
4.12.
No
Defaults
.
The
Company is not
in default under the Indenture or under any other agreement or instrument under
which any indebtedness has been issued to the Company, and no event has occurred
that, but for the giving of notice or lapse of time, would constitute an event
of default thereunder.
Section
4.13.
Compliance
with
Laws
.
(a) The
Company is not (i) in default with respect to any order, writ, injunction or
decree of any court or (ii) in default in any material respect under any law,
ordinance, order, regulation, license or demand (including ERISA, the
Occupational Safety and Health Act of 1970 and laws and regulations establishing
quality criteria and standards for air, water, land and toxic waste) of any
federal, state, municipal or other governmental agency, default under which
would have consequences that would materially and adversely affect the condition
(financial or otherwise), operations, properties or business of the Company
or
of the Company and its subsidiary on a consolidated basis.
(b)
The
Company is not in violation of any applicable Federal, state or local laws,
statutes, rules, regulations, ordinances, permit, licenses or authorizations
relating to public health, safety or the environment, including, without
limitation, relating to releases, discharges, emissions or disposals to air,
water, land or ground water, to the withdrawal or use of ground water, to the
use, handling or disposal of polychlorinated biphenyls (PCBs), asbestos or
urea
formaldehyde, to the treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, crude oil or any fraction
thereof or other hydrocarbons), pollutants or contaminants, to exposure to
toxic, hazardous or other controlled, prohibited or regulated substances which
violation could have a material adverse effect on the business, prospects,
profits, properties or condition (financial or otherwise) of the
Company. The Company does not know of any liability or class of
liability of the Company under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601
et
seq
.),
or the
Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C. Section
6901
et
seq
.).
Section
4.14.
Validity
.
The
Bonds, when executed, delivered, issued and authenticated and the purchase
price
therefor paid, all as contemplated by this Agreement, will be validly
authorized, issued and outstanding under the Indenture, will constitute legally
binding obligations of the Company, enforceable in accordance with their terms
and will be entitled to the benefits of the Indenture, equally and ratably
with
all other bonds issued and outstanding thereunder in accordance with the terms
thereof (subject to any applicable bankruptcy, insolvency, reorganization,
moratorium or other laws or equitable principles affecting the enforcement
of
the rights of creditors). This Agreement, when duly executed and
delivered, will be a valid and legally binding instrument in accordance with
its
terms.
Section
4.15.
Full
Disclosure
.
The
financial statements referred to in Section 4.3 of this Agreement do not, nor
does any other written statement furnished to the Purchaser by the Company
in
connection with the negotiation of the sale of the Bonds, contain any untrue
statement of a material fact or omit to state a material fact necessary to
make
the statements contained therein or herein not misleading. There is
no fact peculiar to the Company that the Company has not disclosed to the
Purchaser in writing that materially affects adversely nor, so far as the
Company now can reasonably foresee, will materially affect adversely the
properties, business, prospects, profits or condition (financial or otherwise)
of the Company.
Section
4.16.
Use
of
Proceeds
.
The
proceeds from the sale of the Bonds will be used to repay short-term
indebtedness of the
Company and finance the expansion of the Company’s headquarters. None
of the transactions contemplated in the Agreement (including, without
limitation, the use of proceeds from the issuance of the Bonds) will violate
or
result in a violation of Section 7 of the Securities Exchange Act of 1934,
as
amended, or any regulation issued pursuant thereto, including, without
limitation, Regulations G, T and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Chapter II. The Company does not intend to
purchase, with the proceeds from the sale of the Bonds, any “margin stock”
within the meaning of said Regulation G. None of the proceeds from
the sale of the Bonds will be used to purchase, or refinance any borrowing
the
proceeds of which were used to purchase, any “security” within the meaning of
the Securities Exchange Act of 1934, as amended.
Section
4.17.
ERISA
.
The
consummation of the transactions provided for in the Agreement and compliance
by
the Company with the provisions thereof will not involve any prohibited
transaction within the meaning of the Employee Retirement Income Security Act
of
1974, as amended (“ERISA”) or Section 4975 of the Internal Revenue Code of 1986,
as amended. Each “Plan” (as hereinafter defined) complies in all
material respects with all applicable statutes and governmental rules and
regulations, and (i) no “Reportable Event” (as hereinafter defined) has occurred
and is continuing with respect to any Plan, (ii) the Company has not withdrawn
from any Plan or instituted steps to do so, and (iii) no steps have been
instituted to terminate any Plan. No condition exists or event or
transaction has occurred in connection with any Plan that could result in the
incurrence by the Company of any material liability, fine or
penalty. No Plan maintained by the Company, nor any trust created
thereunder, have incurred any “accumulated funding deficiency” as defined in
Section 302 of ERISA nor does the present value of all benefits vested under
all
Plans exceed, as of the last annual valuation date, the value of the assets
of
the Plans allocable to such vested benefits. The Company does not
have any contingent liability with respect to any post-retirement “welfare
benefit plans” (as such term is defined in ERISA) except as has been disclosed
to the Purchaser. As used herein, the following terms shall have the
meanings set forth: “
Plan
” shall mean a “pension
plan,” as such term is defined in ERISA, established or maintained by the
Company or as to which the Company contributed or is a member or otherwise
may
have any liability; and “
Reportable Event
” shall have
the meaning given to such term in ERISA.
Section
4.18.
Principal
Place of Business;
Records
.
The
principal place of business and chief executive office of the Company and the
place where the records of the Company are kept is at the address of the Company
shown in Section 20 of this Agreement.
Section
4.19.
Rate
Matters
.
The
Company’s current rates for the provision of water services have been approved
by all necessary governmental authorities, including, without limitation, the
Delaware Public Service Commission. There are no pending, nor to the
Company’s knowledge, any threatened, proceedings before any governmental
authority the objective or result of which is or could be to materially reduce
or otherwise materially change adversely any of the Company’s rates for the
provision of water services or otherwise have a material adverse effect on
the
condition, financial or otherwise, operations, properties or business of the
Company.
Section
4.20.
System
Condition; Water
Rights
.
The
Company’s utility facilities reasonably meet present demand in all material
respects, are constructed in a good and workmanlike manner, are in good working
order and condition, and comply in all material respects with all applicable
laws. The Company has water rights with such quantities, priorities
and qualities as are necessary adequately to service the present and reasonably
anticipated needs of its customers. The Company controls, owns, or
has access to all such water rights free and clear of the interest of any third
party which would individually or in the aggregate materially adversely affect
the Company’s intended use thereof and has not suffered or permitted any
transfer or encumbrance of such water rights, has not abandoned such water
rights, or any of them, and has not done any act or thing which would materially
impair or cause a material loss of any such water rights.
Section
4.21.
Condemnation
Powers
.
The
Company has the right under Delaware law to exercise the power of eminent
domain; in any proceeding pursuant to which the Company exercises its power
of
eminent domain, the compensation to be paid by the Company would be based only
on the value of the property actually taken and would not include compensation
for the value of improvements made by the Company to the property
condemned.
Section
4.22.
Investment
Company
Act
.
The
Company is not an “investment company” as that term is defined in, or otherwise
subject to regulation under, the Investment Company Act of 1940, as
amended.
SECTION
5.
CLOSING
CONDITIONS.
The
Purchaser’s obligation to purchase the Bonds shall be subject to the
satisfaction of the following conditions on or prior to the date of the
applicable Closing:
Section
5.1.
Legal
Opinions
.
The
Purchaser shall have received opinions of counsel for the Company and the
Corporation (who shall be acceptable to the Purchaser) in form and content
acceptable to the Purchaser, as to such matters related to the transactions
contemplated hereby as the Purchaser may reasonably request, including, without
limitation, the following:
(a)
From
Morris, Nichols, Arsht & Tunnell, LLP, counsel for the Company, an opinion,
in form and substance reasonably satisfactory to the Purchaser and the
Purchaser’s special counsel, as to such matters as the Purchaser may reasonably
require, including, without limitation, the following:
(i)
The
Twentieth Supplemental Indenture has been duly authorized, executed and
delivered by the Company and constitutes a legally valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
subject to any applicable bankruptcy, insolvency, reorganization, receivership,
fraudulent conveyance, moratorium or other laws or equitable principles
affecting the enforcement of creditors’ rights and remedies, as from time to
time in effect (regardless of whether such enforceability is considered in
a
proceeding in equity or at law).
(ii)
The
Bonds
have been duly authorized, executed, authenticated and delivered in accordance
with the terms of the Indenture, and are legally valid and binding obligations
of the Company enforceable in accordance with their terms, and are entitled
to
the benefits and security of the Indenture equally and ratably with all other
bonds issued thereunder in accordance with its terms, subject to any applicable
bankruptcy, insolvency, reorganization, receivership, fraudulent conveyance,
moratorium or other laws or equitable principles affecting the enforcement
of
creditors’ rights and remedies, as from time to time in effect (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Without limiting the generality of the preceding sentence, the Bonds are subject
to redemption in accordance with the terms of this Agreement.
(iii)
This
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a legally valid and binding obligation of the Company enforceable
against the Company in accordance with its terms subject to any applicable
bankruptcy, insolvency, reorganization, receivership, fraudulent conveyance,
moratorium or other laws or equitable principles affecting the enforcement
of
creditors’ rights and remedies, as from time to time in effect (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).
(iv)
It
is not
necessary in connection with the sale of the Bonds to the Purchaser under the
circumstances contemplated by this Agreement that such Bonds be registered
under
the Securities Act of 1933, as now in effect, or that the Indenture be qualified
under the Trust Indenture Act of 1939, as now in effect.
(v)
The
Company is a duly organized and validly existing corporation in good standing
under the laws of the State of Delaware and the Company has full corporate
power
and authority to carry on its business as now conducted and to enter into and
perform the transactions contemplated by this Agreement.
(vi)
The
Company has filed with the Delaware Public Service Commission all information
and documents required by law in connection with the issuance and sale of the
Bonds by the Company and all necessary approvals of such commission in
connection therewith have been obtained. No other approval of, or
filing with, any public body is required in connection with such issuance and
sale, except for a report to said commission following issuance of the
Bonds. The order entered by said commission authorizing the issuance
and sale of the Bonds is not subject to any suspension, modification, or appeal
that would affect the terms or the validity of such Bonds.
(vii)
The
authorization, execution, delivery and performance of this Agreement, the
Twentieth Supplemental Indenture and the Bonds will not violate or constitute
a
default under any law, requirement or restriction imposed on the Company by
any
judicial or governmental instrumentality, the charter or bylaws of the Company
or, to the best of the knowledge of such counsel after due inquiry, any
agreement or instrument to which the Company is a party or by which it or its
property and assets may be bound or affected.
(b)
From
Whittington & Aulgur, counsel for the Company, an opinion, in form and
substance reasonably satisfactory to the Purchaser and the Purchaser’s special
counsel, as to such matters as the Purchaser may reasonably require, including,
without limitation, the following:
(i)
The
Original Indenture and the first through eighteenth supplemental indentures
have
been duly authorized, executed and delivered by the Corporation or the Company,
as applicable, and each constitutes a legally valid and binding obligation
of
the Company, enforceable against the Company in accordance with its terms,
subject to any applicable bankruptcy, insolvency, reorganization, receivership,
fraudulent conveyance, moratorium or other laws or equitable principles
affecting the enforcement of creditors’ rights and remedies, as from time to
time in effect (regardless of whether such enforceability is considered in
a
proceeding in equity or at law).
(ii)
The
Company has good and marketable title in fee simple to all real estate
specifically described in the Indenture, except property released from the
lien
of the Indenture in accordance with the terms thereof, subject to no lien other
than the lien of the Indenture and Permitted Encumbrances, and the Indenture
by
its terms subjects to the lien thereof substantially all real estate and fixed
property owned by the Company at the time of any delivery of the
Bonds.
(iii)
The
Company possesses, with minor exceptions or qualifications, such valid
franchises, water rights, licenses or permits, free from unduly burdensome
restrictions, as are necessary for the adequate conduct of the business of
the
Company as now conducted.
(iv)
The
Indenture and all necessary Uniform Commercial Code financing statements have
been duly filed for recordation in such manner and in such places as are
required by law in order to establish, preserve and protect the lien of the
Indenture on all real estate and fixed property of the Company described in
the
Indenture as subject to the lien thereof.
(v)
The
Indenture creates a valid, binding and direct, first lien on all real estate
and
fixed property of the Company described therein as subject to the lien thereof
and owned by the Company at the time of the issuance of the Bonds, subject
to no
liens or encumbrances other than Permitted Encumbrances.
Section
5.2.
Representations
and
Warranties
.
The
representations and warranties of the Company contained in Sections 4 and 6
of
this Agreement shall be true at and as of the date of the Closing with the
same
effect as if made at and as of said date.
Section
5.3.
Fee
and
Expenses
.
Concurrently
with consummation of the Closing hereunder, the Company shall pay to the
Purchaser an origination fee of Fifty Thousand Dollars ($50,000), and shall
pay
the expenses required to be paid by the Company pursuant to Section 7 of this
Agreement.
Section
5.4.
PSC
Approval
.
The
Delaware Public Service Commission shall have approved (subject to no condition
or conditions deemed by the Company or the Purchaser to be unduly burdensome
to
the Company) the issuance and sale of the Bonds and the order entered by said
Commission authorizing the issuance and sale of such Bonds shall be in effect
on
the date of the Closing and shall not be subject to any suspension, modification
or appeal that would adversely affect the terms or the validity of such
Bonds.
Section
5.5.
Bond
Documents
.
The
Purchaser shall have received duly executed originals of this Agreement, the
Twentieth Supplemental Indenture and the Bonds.
Section
5.6.
Authorization
.
The
Purchaser shall have received copies of all corporate documents and proceedings
of the Company authorizing the execution, delivery and performance of the Bond
Documents.
Section
5.7.
Approvals
.
The
Purchaser shall have received evidence reasonably satisfactory to the Purchaser
that all federal and state consents and approvals that are necessary for the
execution and delivery of, or required as a condition of the validity and
enforceability of, the Bond Documents or the creation or perfection of the
liens
and security interests identified therein have been obtained and are in full
force and effect.
Section
5.8.
Environmental
Matters
.
The
Purchaser shall have received from the Company such information regarding
environmental compliance and conditions associated with the Company’s assets as
the Purchaser shall reasonably require, all such information to be reasonably
satisfactory to the Purchaser.
Section
5.9.
No
Material Adverse
Change
.
From
December 31, 2007, to the date of the Closing, there shall not have occurred
any
event that has had or could have a material adverse effect on the condition,
financial or otherwise, operations, properties or business of the
Company.
Section
5.10.
No
Injunction
.
No
court or other government body or public authority shall have issued an order
that shall then be in effect restraining or prohibiting the completion of the
transactions contemplated hereby.
Section
5.11.
Event
of
Redemption
.
No
Event of Redemption (as that term is defined in Section 11 of this Agreement)
shall have occurred or exist, and there shall have occurred no event that with
the passage of time or the giving of notice, or both, could become an Event
of
Redemption.
Section
5.12.
Officer’s
Certificate
.
The
Purchaser shall have received a certificate, in form and substance reasonably
satisfactory to the Purchaser, signed by an officer of the Company certifying
as
to the continuing truth and accuracy of the representations and warranties
of
the Company under the Bond Documents, the satisfaction of each of the conditions
to the Closing and such other matters as Purchaser shall reasonably
require.
Section
5.13.
Repayment
of Certain
Indebtedness
.
The
Purchaser shall have received evidence, in form and substance reasonably
satisfactory to the Purchaser, that, after payment of the fees and expenses
pursuant to Section 5.3 and Section 7, a portion of the proceeds of the Series
S
Bonds have been used to repay indebtedness and other obligations of the Company
under certain non-CoBank line(s) of credit.
Section
5.14.
Other
Information;
Etc.
All
instruments incident to the authorization, issue and sale of the Bonds and
all
proceedings taken in connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory in form and substance to the
Purchaser and the Purchaser’s special counsel, and the Purchaser shall have
received such other information regarding the condition, financial or otherwise,
and operations of the Company as the Purchaser shall reasonably request and
such
other opinions, certificates or documents as the Purchaser shall reasonably
request.
SECTION
6.
PRIVATE
PLACEMENT EXEMPTION.
Section
6.1.
Company
Representation
.
The
Company represents and warrants that it has not, directly or indirectly, sold
or
offered, or attempted to offer or dispose of, any of the Bonds to or solicited
any offers to buy any of the Bonds from, or otherwise approached or negotiated
in respect thereof with, any person or persons other than the Purchaser.
Section
6.2.
Purchaser
Representations
and Agreement
.
The
Purchaser represents, acknowledges and agrees as follows:
(a)
The
Purchaser is an “accredited investor” as defined in Rule 501(a) of the
Securities Act of 1933.
(b)
This
Agreement is made with the Purchaser in reliance upon the Purchaser’s
representation to the Company, which by the Purchaser’s acceptance hereof and by
the Purchaser’s purchase of the Bonds hereunder the Purchaser confirms, that the
Purchaser is purchasing the Bonds for the Purchaser’s own account, for
investment and with no present intention of distributing the Bonds or any part
thereof, but without prejudice, however, to the Purchaser’s right at all times
to sell or otherwise dispose of all or any part of the Bonds under a
registration under the Securities Act of 1933, as amended, or under an exemption
from such registration available under such Act. It is understood
that the disposition of the Purchaser’s property shall at all times be and
remain within the Purchaser’s control. The Purchaser further
represents that either: (i) no part of the funds to be used by the
Purchaser to purchase the Bonds constitutes assets allocated to any separate
account maintained by the Purchaser; or (ii) no part of the funds to be used
by
the Purchaser to purchase the Bonds constitutes assets allocated to any separate
account maintained by the Purchaser such that the application of such funds
constitutes a prohibited transaction under Section 406 of ERISA; or (iii) all
or
a part of such funds constitute assets of one or more separate accounts
maintained by the Purchaser, and the Purchaser has disclosed to the Company
the
names of such employee benefit plans whose assets in such separate account
or
accounts exceed 10% of the total assets of such separate account as of the
date
of such purchase and the Company has advised the Purchaser in writing (and
in
making the representations set forth in this clause (iii) the Purchaser is
relying on such advice) that the Company is not a party-in-interest nor are
the
Bonds employer securities with respect to the particular employee benefit plan
disclosed to the Company by the Purchaser as aforesaid (for the purpose of
this
clause (iii), all employee benefit plans maintained by the same employer or
employee organizations are deemed to be a single plan). As used in
this Section 6.2, the terms “separate account,” “party-in-interest,” “employer
securities” and “employee benefit plan” shall have the respective meanings
assigned to them in ERISA. The Company’s obligation to sell the Bonds
to the Purchaser hereunder is subject to the condition that at that Closing
the
Purchaser confirms, by accepting delivery of the Bonds, the aforesaid
representations as if made at such time.
(c)
The
Purchaser acknowledges that the Purchaser has been informed that the Bonds
will
not be registered under the Securities Act of 1933, as amended, by reason of
their issuance in a transaction exempt from the registration requirements of
said Act pursuant to Section 4(2) thereof, and accordingly, must be held
indefinitely unless (i) such Bonds are registered under said Act and the
Indenture is qualified under the Trust Indenture Act (neither of which the
Company has any obligation to do), or (ii) such Bonds are sold or transferred
in
a transaction that qualifies as an exempt transaction under the Act and any
other applicable securities laws and all rules and regulations promulgated
thereunder and, to the extent requested by the Company, the Purchaser provides
an opinion of counsel reasonably satisfactory to the Company to such
effect.
(d)
The
Purchaser agrees that the instrument or instruments representing the Bonds
and
issued to the Purchaser pursuant hereto may bear the following
legend:
THIS
BOND
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT TO
THE
PROVISIONS OF SAID SECURITIES ACT OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE.
SECTION
7.
PAYMENT
OF EXPENSES; BROKERAGE FEES.
Whether
or not the transaction herein contemplated is consummated, the Company agrees
to
pay (i) all expenses in connection with the printing, issuance and delivery
of
the Bonds, (ii) the reasonable fees and out-of-pocket disbursements of
Sutherland Asbill & Brennan LLP, the Purchaser’s special counsel in
connection with the preparation, execution and delivery of this Agreement,
(iii)
the Purchaser’s reasonable out-of-pocket expenses incident to the preparation,
execution and delivery of this Agreement, and so long as the Purchaser holds
any
of the Bonds, all such expenses relating to any amendment, waivers or consents
to this Agreement or the Indenture, whether the same are actually executed
and
delivered, (iv) the cost of obtaining a private placement number, and (v) all
expenses incurred by the Purchaser in connection with proceedings brought to
enforce compliance by the Company with respect to any of its obligations under
this Agreement or the Bonds. The Company also agrees to pay the cost
of delivering to the Purchaser’s home office or to the office of the custodian
of the Purchaser’s securities, insured to the Purchaser’s satisfaction, the
Bonds purchased by the Purchaser. The Company agrees to protect and
indemnify the Purchaser against any liability for any and all brokerage fees
and
commissions payable or claimed to be payable in connection with the transactions
contemplated by this Agreement. The Purchaser represents that the
Purchaser has not engaged any broker or securities dealer in connection with
the
Purchaser’s purchase of the Bonds.
SECTION
8.
FAILURE
OF CONDITIONS.
In
the
event that the sale of the Bonds herein contemplated is not carried out by
reason of the inability of either party to fulfill any of the conditions
specified in Section 5 of this Agreement, neither party shall be responsible
to
the other for damages, or the expenses of the other party, or otherwise by
reason of such inability except as otherwise provided in Section 7 of this
Agreement and the portion, if any, of the commitment fee previously paid by
the
Company to the Purchaser.
SECTION
9.
FURNISHING FINANCIAL AND OTHER INFORMATION.
The
Company agrees so long as the Purchaser, or any institutional holder (that
is an
“accredited investor” as defined in Rule 501(a) of the Securities Act of 1933)
or other holder, hold any of the Bonds then outstanding, as follows:
(a)
Annual
Financial Statements
of the Company
. As soon as available and in any event within
one hundred twenty (120) days after the close of each fiscal year of the
Company, the Company will deliver to the Purchaser (and any such institutional
or other holder), copies in duplicate of:
(i) consolidated
balance sheets of the Company and its subsidiaries as of the close of such
fiscal year, and
(ii) consolidated
statements of income, retained earnings and cash flow of the Company and its
subsidiaries 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 conformity with generally accepted accounting
principles consistently applied and present fairly the financial condition
of
the Company and its subsidiaries as of the end of such fiscal year and the
results of their operations for the fiscal year then ended and a written
statement from such accountants that their examination in connection with such
financial statements has been made in accordance with generally accepted
auditing standards and auditing procedures as were considered necessary in
the
circumstances, and, to the extent applicable, disclosing all defaults by the
Company in the performance of any obligation or under its certificate of
incorporation of which they have obtained knowledge in making the examination
necessary to their opinion.
(b)
Financial
Statements of the
Corporation
.
(i)
Quarterly
Statements
. As soon as available and in any event within forty
five (45) days after the end of each quarterly fiscal period (except the last)
of each fiscal year, the Company will deliver to the Purchaser (and any such
institutional or other holder) copies of:
(A) consolidated
balance sheets of the Corporation and its subsidiaries as of the close of such
quarterly period, and
(B) consolidated
statements of income, retained earnings and cash flows of the Corporation and
its subsidiaries, for such quarterly period and for the portion of the fiscal
year ending with such period,
in
each
case setting forth in comparative form the figures for the corresponding period
of the preceding fiscal year, all in reasonable detail and certified as
presenting fairly the financial condition of the Corporation and its
subsidiaries as of the end of such period and the results of their operations
for such period, subject to changes resulting from year-end adjustments, by
the
chief financial officer of the Corporation.
(ii)
Annual
Statements
. As soon as available and in any event within one
hundred twenty (120) days after the close of each fiscal year of the
Corporation, the Company will deliver to the Purchaser (and any such
institutional or other holder), copies in duplicate of:
(A) consolidated
balance sheets of the Corporation and its subsidiaries as of the close of such
fiscal year, and
(B) consolidated
statements of income, retained earnings and cash flow of the Corporation and
its
subsidiaries 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 Corporation to the effect that the consolidated
financial statements have been prepared in conformity with generally accepted
accounting principles consistently applied and present fairly the financial
condition of the Corporation and its subsidiaries as of the end of such fiscal
year and the results of their operations for the fiscal year then ended and
a
written statement from such accountants that their examination in connection
with such financial statements has been made in accordance with generally
accepted auditing standards and auditing procedures as were considered necessary
in the circumstances, and, to the extent applicable, disclosing all defaults
by
the Corporation in the performance of any obligation or under its certificate
of
incorporation of which they have obtained knowledge in making the examination
necessary to their opinion.
(c)
SEC
and Other Related
Reports
. The Company will deliver to the Purchaser (and any
such institutional holder), promptly upon their becoming available, copies
of
all registration and proxy statements and reports that the Company or the
Corporation shall file with the Securities and Exchange Commission or any
successor and corresponding governmental agency, and copies of such financial
statements, reports, proxy statements and returns as it, or the Corporation,
shall send to its or their stockholders or to the Trustee or file with any
securities exchange.
(d)
Requested
Information
. The Company with reasonable promptness shall
furnish the Purchaser (and any such institutional holder) such other data and
information as may reasonably be requested.
(e)
Officer’s
Annual
Certificate
. Concurrently with delivery of the financial
statements referred to in clause (a) of this Section 9, the Company will deliver
to the Purchaser (and any such institutional or other holder) a certificate
of
its President or its Treasurer or Controller stating that after a review of
the
Company’s affairs to the best of his or her knowledge after due inquiry the
Company is not in default under this Agreement or any covenant of the Indenture
nor is there any “
Event of
Default
” (as defined in the Indenture) or any Event of Redemption
hereunder, or other event or condition that with the passage of time or the
giving of notice would result in such an Event of Default or Event of
Redemption.
(f)
Inspection
. The
Company will permit the Purchaser (and any such institutional holder), or such
person or persons as the Purchaser (or such institutional holder) may designate
in writing, to visit and inspect any of the properties of the Company and to
examine its books of account and discuss its affairs, finances and accounts
with
its officers and independent public accountants (and by this provision the
Company authorizes said accountants to discuss with the Purchaser the finances
and affairs of the Company), all at such reasonable times and as often as the
Purchaser (or such institutional holder) may desire;
provided
that the
Purchaser (or such institutional holder) shall bear the cost of any such
inspection.
(g)
Notice
of
Default
. Promptly after becoming aware thereof, the Company
will deliver to the Purchaser notice of (i) the occurrence of any (a) Event
of
Redemption or (b) any event that with the passage of time or the giving of
notice, or both, could become an Event of Redemption, (c) any Event of Default,
or (d) any event that with the passage of time or the giving of notice, or
both,
could become an Event of Default, or (ii) the occurrence of any material breach,
default, event of default, or event that with the giving of notice or lapse
of
time, or both, could become a breach, default, or event of default under any
agreement, indenture, mortgage, or other instrument (other than the Bond
Documents) to which the Company is a party or by which it or any of its property
is bound or affected if the effect of such breach, default, event of default
or
event is to accelerate, or to permit the acceleration of, the maturity of any
indebtedness in excess of Five Hundred Thousand Dollars ($500,000) under such
agreement, indenture, mortgage, or other instrument
provided
,
however
,
that the
failure to give such notice shall not affect the Purchaser’s rights and power to
exercise any and all of the remedies specified herein.
(h)
Notice
of Non-Environmental
Litigation
. Promptly after the commencement thereof, the
Company will deliver to the Purchaser notice of the commencement of all actions,
suits, or proceedings before any court, arbitrator, or governmental department,
commission, board, bureau, agency, or instrumentality affecting it that, if
adversely determined, could have a material adverse effect on the business
or
assets or on the condition, financial or otherwise, of the Company.
(i)
Notice
of Environmental
Matters
. Without limiting the provisions of clause (h)
above, promptly after receipt thereof, the Company will deliver to the Purchaser
notice of its receipt of all pleadings, orders, complaints, indictments, or
other written communications alleging a condition that would reasonably be
expected to require the Company to undertake or to contribute to a cleanup
or
other response under any environmental law, or that seeks material penalties,
damages, injunctive relief, or criminal sanctions related to alleged violations
of any environmental law, or that makes any material claim for personal injury
or property damage as a result of environmental factors or conditions or that,
if adversely determined, could otherwise have a material adverse effect on
the
Company.
(j)
ERISA
Reportable
Events
. Within 10 days after the Company becomes aware of the
occurrence of any Reportable Event (as defined in Section 4043 of ERISA) with
respect to the Company, a statement describing such Reportable Event and the
actions proposed to be taken in response to such Reportable Event.
SECTION
10.
COVENANTS.
The
Company covenants and agrees that on and after the date hereof, so long as
any
Bond shall be outstanding and shall be held by the Purchaser, without the
Purchaser’s prior written consent:
Section
10.1.
Compliance
With Laws and
Agreements
.
The
Company will, and will cause each of its subsidiaries to, comply with (i) all
applicable statutes, rules, regulations, orders and restrictions of all
governmental authorities and of any court, arbitrator or grand jury, in respect
of the conduct of their respective businesses and the ownership of their
respective properties (including, without limitation, applicable statutes,
rules, regulations, orders and restrictions relating to equal employment
opportunities or environmental laws), the violation of which could reasonably
be
expected to have a material adverse effect on the business or assets or the
condition, financial or otherwise, of the Company; and (ii) all agreements,
indentures, mortgages and other instruments to which it is a party or by which
it or any of its property is bound, the violation of which could reasonably
be
expected to have a material adverse effect on the business or assets or the
condition, financial or otherwise, of the Company.
Section
10.2.
Capitalization
.
The
Company agrees to purchase such equity in the Purchaser as the Purchaser may
from time to time require in accordance with its Bylaws and Capital Plan (as
each may be amended from time to time), except that the maximum amount of equity
that the Company may be required to purchase in the Purchaser in connection
with
the Series S Bonds may not exceed the maximum amount permitted by the Bylaws
at
the time this Agreement is entered into. The rights and obligations
of the parties with respect to such equity and any distributions made on account
thereof or on account of Borrower’s patronage with CoBank shall be governed by
the Purchaser’s Bylaws and Capital Plan (as each may be amended from time to
time). The Company hereby consents and agrees that the amount of any
distributions with respect to its patronage with the Purchaser that are made
in
qualified written notices of allocation (as defined in 26 U.S.C. § 1388)
and that are received by the Company from the Purchaser, will be taken into
account by the Company at the stated dollar amounts whether the distribution
is
evidenced by a Participation Certificate or other form of written notice that
such distribution has been made and recorded in the name of the Company on
the
records of the Purchaser. All such investments and all other equities
that the Company may now own or hereafter acquire or be allocated in the
Purchaser shall be subject to a statutory first lien in favor of the
Purchaser. The Purchaser shall not be obligated to set off or
otherwise apply such equities to the Company’s obligations to the
Purchaser.
Section
10.3.
Licenses,
Etc
.
The
Company will duly and lawfully obtain and maintain in full force and effect
all
licenses, certificates, permits, authorizations, approvals and the like that
are
material to the conduct of its business or that otherwise may be required by
laws, to the extent the failure to do so could have a material adverse effect
on
its business, assets or condition, financial or otherwise.
Section
10.4.
Water
Rights
.
The
Company will maintain and procure water rights with such quantities, priorities
and qualities as are necessary adequately to serve the present and reasonably
anticipated needs of its customers. The Company will continue to
control, own or have access to all such water rights free and clear of the
interest of any third party, will not suffer or permit any transfer or
encumbrance of such water rights, will not abandon such water rights, or any
of
them, and will not do any act or thing which would impair or cause the loss
of
such water rights.
Section
10.5.
Loans
and
Investments
.
The
Company will not, after the date hereof, make any loan or advance to, invest
in,
purchase or make any commitment to purchase any commercial paper, stock, bonds,
notes, or other securities of any person or entity (each, whether made directly
or indirectly, (an “Investment”), other than:
(a)
commercial
paper maturing not in excess of one year from the date of acquisition and rated
“P1” by Moody’s Investors Service, Inc., or “A1” by Standard & Poor’s
Corporation on the date of acquisition;
(b)
certificates
of deposit in North American commercial banks rated “C” or better by Keefe,
Bruyette & Woods, Inc., or “3” or better by Cates Consulting Analysts,
maturing not in excess of one year from the date of acquisition;
(c)
securities
or deposits issued, guaranteed, or fully insured as to payment by the United
States government or any agency thereof, and Class C Stock or other securities
of the Purchaser;
(d)
repurchase
agreements of any bank or trust company incorporated under the laws of the
United States of America or any state thereof and fully secured by a pledge
of
obligations issued or fully and unconditionally guaranteed by the United States
government;
(e)
stocks
and other voting securities that are not included within the scope of clauses
(a) through (d) above and are issued by corporations or other entities not
engaged in any business other than the water or wastewater utility business
and
that are incorporated or organized under the laws of the United State of America
or any state thereof; provided that prior to or as a result of such investment
the Company holds not less than seventy five percent (75%) of the voting
securities of such corporation or entity; and
(f)
commercial
paper, bonds, stocks or other securities that are not included within the scope
of clauses (a) through (e) above and are issued by corporations or other
entities incorporated or organized under the laws of the United State of America
or any state thereof (collectively, “
Other Investments
”); provided
that the aggregate amount (calculated based on cost) of all such Other
Investments shall not at any time exceed One Million Dollars
($1,000,000).
Section
10.6.
Guarantees
.
The
Company will not guarantee, assume or otherwise become obligated or liable
with
respect to the indebtedness or other obligations of any person or entity, other
than in the ordinary course of its business.
Section
10.7.
Mergers;
Acquisitions;
Etc.
The
Company will not merge or consolidate with any other entity unless the Company
shall be the continuing and surviving corporation and, after such merger or
consolidation, there shall exist no Event of Redemption or event that, with
the
passage of time or giving of notice, or both, would constitute an Event of
Redemption, or commence operations under any other name, organization or entity,
including any joint venture.
Section
10.8.
Transfer
of
Assets
.
The
Company will not sell, transfer, lease, enter into any contract for the sale,
transfer or lease of, or otherwise dispose of, any of its assets, except in
the
ordinary course of its business.
Section
10.9.
Change
in
Business
.
The
Company will not engage in any business activity or operation different from
or
unrelated to its current business activities or operations.
Section
10.10.
Distributions
.
The
Company will not make, declare or pay, directly or indirectly, any dividend
or
other distribution of assets to shareholders of the Company, or retire, redeem,
purchase or otherwise acquire for value any shares of stock of the Company,
if
such dividend, distribution, retirement, redemption, purchase or acquisition
would cause the Company’s consolidated capital to be less than Seventy Five
Million Dollars ($75,000,000).
SECTION
11.
REDEMPTION.
Section
11.1.
Events
of Redemption
Defined
.
The
following events are herein called “
Events of Redemption
”:
(a)
Representations
and
Warranties
. Any representation or warranty made by the Company
herein shall prove to have been false or misleading in any material respect
on
or as of the date made; or
(b)
Certain
Covenants
. The failure by the Company to perform or comply
with any covenant set forth in Section 9 (excluding Sections 9(g), (h) and
(i)),
Section 10, Section 16, Section 17, or Section 18 of this Agreement, and such
failure continues for thirty (30) days after written notice thereof shall have
been delivered by the Purchaser to the Company; or
(c)
Other
Covenants
. The failure by the Company to perform or comply
with any other covenant or agreement set forth in Section 9(g), 9(h) or 9(i)
of
this Agreement; or
(d)
Cross-Default
. The
occurrence of any Event of Default under, or lapse of or failure on the part
of
the Company to observe, keep, or perform any covenant or agreement contained
in
any other agreement (other than the Bond Documents) between the Company and
the
Purchaser, including, without limitation, any guaranty, loan agreement, security
agreement, pledge agreement, indenture, mortgage or other agreement;
or
(e)
Other
Indebtedness
. Default under any bond, debenture, note or other
evidence of indebtedness for any money borrowed by the Company in excess of
Five
Hundred Thousand Dollars ($500,000) or under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured
or
evidenced any indebtedness of the Company in excess of Five Hundred
Thousand Dollars ($500,000), whether such indebtedness exists or shall hereafter
be created, which default has not been waived and shall constitute a failure
to
pay any portion of the interest accruing on or the principal of such
indebtedness when due and payable after the expiration of any applicable grace
period with respect thereto or shall have resulted in such indebtedness becoming
or being declared due and payable prior to the date on which it would otherwise
have become due and payable, without such indebtedness having been discharged,
or such acceleration having been rescinded or annulled; or
(f)
Judgment
. The
rendering against the Company of a judgment for the payment of moneys in excess
of Five Hundred Thousand Dollars ($500,000) and the continuance of such judgment
unsatisfied and without stay of execution thereon for a period
of forty-five (45) days after the entry of such judgment, or the
continuance of such judgment unsatisfied for a period of forty-five (45) days
after the termination of any stay of execution thereon entered within such
first
mentioned forty-five (45) days; or
Section
11.2.
Redemption
.
In
the event that any Event of Redemption shall have occurred and be continuing,
the Purchaser shall have the right to require the Company, and the Company
shall
be obligated, to redeem all Bonds then held by the Purchaser. Any
such redemption shall be made by the Company on the “
Mandatory Redemption Date
” (as
hereinafter defined), as specified in the “
Notice of Redemption
” (as
hereinafter defined). Notice of Redemption shall mean written notice
(i) signed by the President or any Vice President of the Purchaser, (ii) sent
to
the Company and the Trustee, (iii) dated the date it is sent to the Company
and
the Trustee, (iv) specifying the Mandatory Redemption Date, which shall be
no
less than thirty (30) days from the date of such notice, and (v) specifying
the
Event of Redemption or Events of Redemption requiring such redemption under
this
Section 11. The Notice of Redemption shall be sent to the Company and
the Trustee by express mail or overnight courier service. The Bonds
shall be redeemed at a purchase price equal to the redemption price for such
Bonds specified in the Twentieth Supplemental Indenture.
Section
11.3.
Suits
for
Enforcement
.
If
any Event of Redemption shall have occurred and be continuing, in addition
to
its rights under Section 11.2 of this Agreement, the Purchaser may proceed
to
protect and enforce its rights, either by suit in equity or by action at law,
or
both, whether for the specific performance of any covenant or agreement
contained in this Agreement or in aid of the exercise of any power granted
in
this Agreement, or the Purchaser may proceed to enforce the payment of all
sums
due upon any Bond held by the Purchaser or to enforce any other legal or
equitable right of the Purchaser.
The
Company covenants that, if it shall default in the making of any payment due
under any Bond or in the performance or observance of any agreement contained
in
this Agreement and other Bond Documents, it will pay to the Purchaser such
further amounts, to the extent lawful, as shall be sufficient to pay the
reasonable costs and expenses of collection or of otherwise enforcing the
Purchaser’s rights, including reasonable counsel fees.
Section
11.4.
Remedies
Cumulative
.
No
remedy herein conferred upon the Purchaser (including, without limitation,
the
rights under this Section 11) is intended to be exclusive of any other remedy
and each and every such remedy shall be cumulative and shall be in addition
to
every other remedy given hereunder or under any other Bond Document or now
or
hereafter existing at law or in equity or by statute or otherwise.
Section
11.5.
Remedies
Not
Waived
.
No
course of dealing between the Company and the Purchaser and no delay or failure
in exercising any right hereunder or under any Bond and other Bond Document
in
respect thereof shall operate as a waiver of any of the rights of the
Purchaser.
SECTION
12.
SURVIVAL
OF REPRESENTATIONS AND WARRANTIES, ETC.
All
covenants, agreements and representations made by the Company or by the
Purchaser herein or in any certificate delivered pursuant hereto shall be deemed
to have been relied upon by the party hereto for whose benefit such covenant,
agreement or representation was made and shall survive delivery of and payment
for the Bonds. The Purchaser’s obligation to purchase the Bonds
shall, however, remain subject to the accuracy of the Company’s representations
contained herein without modification unless and until the Purchaser shall
have
so accepted such modification. It is understood that in entering into
this Agreement the Purchaser has not relied on any oral representation or
warranty or information made or given to the Purchaser orally by anyone acting
on behalf of the Company.
SECTION
13.
LOST
BONDS.
If
the
Purchaser (or any institutional holder that is an “accredited investor” as
defined in Rule 501(a) under the Securities Act of 1933) is the registered
owner of any Bond, then an affidavit of the Purchaser’s (or such institutional
holder’s) authorized officer setting forth the fact of loss, theft or
destruction and of the Purchaser’s (or such institutional holder’s) ownership of
any such Bond at the time of such loss, theft or destruction shall be accepted
as satisfactory evidence thereof and no indemnity, other than the Purchaser’s
(or such institutional holder’s) written agreement to indemnify the Company and
the Trustee, shall be required as a condition to the issuance of a new Bond
or
the making of any payment under Section 2.12 of the Original
Indenture. At the Closing, the Company will deliver to you the signed
consent of the Trustee to the provision of this Section 13.
SECTION
14.
PAYMENTS.
All
payments of principal, interest and premium, if any, upon any Bond registered
in
the Purchaser’s name or in the name of any nominee designated by you shall be
made by wire transfer of immediately available funds for advice to and credit
of
CoBank to ABA No. 3070-8875-4, reference: CoBank for the benefit of
Artesian Water Company, Inc. (or to such other account as the Purchaser may
direct by notice). Funds received by wire before 3:00 p.m. Eastern
time shall be credited on the day received and funds received by wire after
3:00
p.m. Eastern time shall be credited on the next business day. The
Purchaser or the Purchaser’s nominee shall not be required to present or
surrender any of the Bonds for notation of partial payments or redemptions
in
order to receive payment of any monies then due thereon. All other
notices to the Purchaser shall be given in accordance with the provisions of
Section 20.2(b) hereof. The Company will make payments or cause them
to be made by the Trustee in accordance with the foregoing without requiring
such prior presentation or surrender of such Bonds. The Purchaser
agrees that neither the Purchaser nor any nominee designated by the Purchaser
will dispose of any such Bond without having first noted thereon the amounts
of
any payment made thereon other than interest; the Purchaser will also notify
the
Company and the Trustee of the name and address of any transferee of such
Bond. The Purchaser agrees to reimburse the Company and/or the
Trustee for any loss suffered by either of them by reason of payments so made
without requiring prior presentation or surrender of any such
Bond. At each applicable Closing, the Company will deliver to the
Purchaser the signed consent of the Trustee pursuant to the provisions of this
Section 14.
SECTION
15.
DELIVERY
EXPENSE.
If
the
Purchaser surrenders any Bond to the Company or a transfer agent of the Company
for exchange for Bonds of other denominations or for registration in another
name or names, the Company will pay the reasonable cost of insurance and
delivery to such place as the Purchaser may designate from the Company or its
transfer agent of the Bond or Bonds issued in substitution or replacement for
the surrendered Bond.
SECTION
16.
USE OF
PROCEEDS COVENANT.
The
Company hereby covenants and agrees that the Company will apply the proceeds
of
the sale of the Bonds to (i) repay
short-term indebtedness,
and (ii) finance the expansion of the Company’s headquarters building.
SECTION
17.
TAXES.
The
Company will pay all taxes (including interest and penalties) that may be
payable in respect of the execution and delivery of this Agreement or the
Indenture or of the execution and delivery (but not the transfer) of any of
the
Bonds or of any amendment of, or waiver or consent under or with respect to,
this Agreement, the Indenture or any of the Bonds and will hold the Purchaser
harmless against any loss or liability resulting from nonpayment or delay in
payment of any such tax. The obligations of the Company under this
Section 17 shall survive the payment of the Bonds.
SECTION
18.
INDEMNIFICATION.
The
Company hereby agrees to indemnify, exonerate and hold the Purchaser and each
of
the Purchaser’s officers, directors, employees and agents (collectively herein
called the “
Indemnitees
”
and individually called
an “
Indemnitee
”) free and harmless
from and against any and all actions, causes of action, suits, citations,
losses, liabilities, damages and expenses, including, without limitation,
reasonable attorney’s fees and disbursements (collectively herein called the
“Indemnified Liabilities”) incurred, suffered, sustained or required to be paid
by the Indemnitees or any of them as a result of, or arising out of, or relating
to (a) the issuance or sale hereunder of the Bonds (including any requirements
to register or qualify the Bonds under any applicable securities Law), (b)
transactions financed in whole or in part directly or indirectly with proceeds
of any of the Bonds, (c) the exercise, protection or enforcement of your rights,
remedies, powers or privileges under this Agreement, or (d) the
failure of the Company to comply with the provisions of this Agreement or the
presence of hazardous materials on, or the escape, seepage, leakage, spillage,
discharge, emission or release of hazardous materials from, any of the
properties of the Company or any site, facility or location to which any
material, products, wastes or other substances from or attributable to the
business or operations of the Company have been transported for treatment,
disposal, storage or deposit or the applicability of any environmental law
relating to hazardous materials to any such property, site, facility or
location, except for any such Indemnified Liabilities arising on account of
such
Indemnitee’s negligence or willful misconduct, and if and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Company hereby
agrees to make the maximum contribution to the payment and satisfaction of
each
of the Indemnified Liabilities that is permissible under applicable
law. The obligations of the Company under this Section 18 shall
survive the payment of the Bonds.
SECTION
19.
CONFIDENTIALITY.
The
Purchaser (and any such institutional or other holder) shall keep the
information obtained pursuant to Section 4 (to the extent not otherwise publicly
disclosed) confidential and shall not disclose the same, except:
(i)
as
may be
appropriate in connection with enforcing compliance with the terms and
conditions of this Agreement,
(ii)
as
may be
required or appropriate in any report, statement or testimony submitted to
or
required by any municipal, state, or Federal regulatory body, agency, authority
or commission having or claiming to have jurisdiction over you or such
institutional or other holder, or
(iii)
as
may be
necessary in connection with any sale of or participation in the Bonds to or
by
any prospective bona fide purchaser or participant;
and
at
the Purchaser’s request the Company will furnish duplicate copies of any of such
financial statements, information or reports.
SECTION
20.
MISCELLANEOUS.
Section
20.1.
Successors
and Assigns;
Legend
.
The
Company may not transfer or assign any of its rights or obligations hereunder
without the Purchaser’s prior written consent, which consent shall not be
unreasonably withheld. From time to time, the Purchaser may sell to
one or more banks, financial institutions or other lenders a participation
in
one or more of the loans or other extensions of credit made pursuant to this
Agreement. However, no such participation shall relieve the Purchaser
of any commitment made to the Company hereunder. In connection with
the foregoing, the Purchaser may disclose information concerning the Company
and
its subsidiaries, if any, to any participant or prospective participant,
provided that such participant or prospective participant agrees to keep such
information confidential. A sale of a participation interest may
include certain voting rights of the participants regarding the loans hereunder
(including without limitation the administration, servicing and enforcement
thereof). The Purchaser agrees to give written notification to the
Company of any sale of a participation interest. All agreements
herein by or on behalf of the Purchaser shall bind and inure to the benefit
of
the Purchaser’s successors, transferees and assigns (including, but not limited
to, any purchaser or transferee of the Bonds) and the Purchaser agrees that
the
instrument or instruments representing the Bonds issued to the Purchaser
pursuant hereto may bear the following legend:
THIS
BOND
HAS BEEN ISSUED PURSUANT TO AND IS SUBJECT TO THE TERMS AND CONDITIONS OF THE
BOND PURCHASE AGREEMENT DATED AS OF DECEMBER 1, 2008 BETWEEN THE COMPANY AND
COBANK, ACB, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
COMPANY.
Section
20.2.
Notices
.
All
communications provided for hereunder shall be in writing, and
(a)
if
to the
Company,
mailed
by “Express Mail” or certified mail to:
Artesian
Water Company, Inc.
664
Churchmans Road
Newark,
Delaware 19702
in
either
case to the attention of its Secretary and Chief Financial Officer, or at such
other address as shall be set forth in a notice given in the same manner.
(b)
if
to the
Purchaser, similarly mailed or delivered to the Purchaser as set forth in
Schedule I
hereto,
or
at such other address as shall be set forth in a notice given in the same
manner.
Section
20.3.
Governing
Law
.
This
Agreement, the Indenture and the Bonds shall be governed by the laws of the
State of Delaware.
Section
20.4.
Counterparts
.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
Section
20.5.
Amendments
.
This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto, and the respective rights and obligations set forth in this
Agreement shall be binding on and inure to the benefit of the parties hereto
and
their respective successors and assigns.
Section
20.6.
Severability
.
Should
any part of this Agreement for any reason be declared invalid by a court of
competent jurisdiction, such decision shall not affect the validity of any
remaining portion, which remaining portion shall remain in force and effect
as
if this Agreement had been executed with the invalid portion thereof
eliminated.
If
the
foregoing is in accordance with the Purchaser’s understanding of our agreement,
please sign and return to the Company the enclosed copy hereof, whereupon this
Agreement shall become a binding agreement between us.
Very
truly yours,
ARTESIAN
WATER COMPANY, INC.
By:
David
B. Spacht
Its
Chief Financial Officer and Treasurer
Attest:
Its
Executive Vice President and Secretary
(Signatures
Continued On Next Page)
(Signatures
Continued From Previous Page)
|
ACKNOWLEDGED
AND
AGREED
TO THIS 1st DAY
OF
DECEMBER, 2008.
|
COBANK,
ACB
By:
David
Dornbirer
Vice
President
|
|
|
|
SCHEDULE
I
(to
Bond
Purchase Agreement)
|
NAME
AND ADDRESS OF PURCHASER
|
PRINCIPAL
AMOUNT OF BONDS TO BE PURCHASED
|
|
|
|
|
COBANK,
ACB
5500
S. Quebec Street
Greenwood
Village, CO 80111
Attention: Communications
and Energy
Banking
Group
Telefacsimile: (303)
224-2556
Confirmation: (303)
740-4310
|
$15,000,000
(Series S)
|
All
notices concerning payment on or in respect of the Bonds, to:
CoBank,
ACB
5500
S.
Quebec Street
Greenwood
Village, CO 80111
Attention: Communications
and Energy Banking Group
All
notices and communications other than those in respect
to
payments to be addressed as first provided above.
Name
of
Nominee in which Bonds are to be issued: None
Taxpayer
ID # 84-1286705
EXHIBIT
I
(to
Bond
Purchase Agreement)
