FINANCING
AGREEMENT
THIS FINANCING AGREEMENT (this
"Agreement") is made as of this 12
th
day
of February, 2010, between the DELAWARE DRINKING WATER STATE REVOLVING FUND,
acting by and through the DELAWARE DEPARTMENT OF HEALTH & SOCIAL
SERVICES, DIVISION OF PUBLIC HEALTH, a public agency of The State of Delaware
(the "Department") and ARTESIAN WATER COMPANY, INC., a corporation organized
under the laws of The State of Delaware (the "Borrower").
Pursuant to Title 29
Delaware Code
Section
7903 (the "Act"), the General Assembly established a permanent and perpetual
fund known as the "Delaware Safe Drinking Water Revolving Fund" (the "Fund") and
empowered the Secretary of the Department of Health & Social Services to
administer such Fund. From the Fund, the Department from time to time
makes loans to and acquires obligations of eligible persons in Delaware to
finance the costs of drinking water facilities in accordance with the Federal
Safe Drinking Water Act.
The Borrower requested a loan from the
Fund and will evidence its obligation to repay the loan by the signing of this
Agreement and by the delivery of its General Obligation Note (New Castle County
Water Main Projects), Series of 2010-SRF (the "Note"). The Borrower
will use the Loan Proceeds from the Fund to finance all or a portion of the (i)
cost of various improvements and upgrades to the System of the Borrower located
throughout New Castle County, Delaware, as more fully described in
Exhibit
A
(collectively, the "Project") and (ii) costs of issuing the
Note.
ARTICLE
I
DEFINITIONS
Section
1.1.
Definitions
.
The capitalized terms contained in this
Agreement shall have the meanings set forth below unless the context requires
otherwise and any capitalized terms not otherwise defined herein shall have the
meaning assigned to such terms in the Act:
"Agreement" means this Financing
Agreement between the Department and the Borrower, together with any amendments
or supplements hereto.
"Authorized Representative" means the
Chief Financial Officer and Treasurer, the President or any Vice President and
the Secretary of the Borrower or any employee of the Borrower authorized by
resolution of the Borrower to perform the act or sign the document in
question.
"Borrower's Engineer" means any of the
Borrower's engineers who are of recognized standing and experience in the field
of environmental engineering and registered to do business in
Delaware. Any such firm shall be subject to the reasonable approval
of the Department.
"Business Day" means a day of the year
which is not a Saturday or Sunday or a day on which banking institutions located
in New York or Delaware are required or authorized to remain closed or on which
the New York Stock Exchange is closed.
"Closing Date" means the date this
Agreement is executed and delivered by the Borrower and the
Department.
"Commitment Letter" shall mean the
commitment letter from the Department to the Borrower dated January 15, 2010 and
all extensions and amendments thereto.
"Department" means the Department of
Health & Social Services, Division of Public Health.
"Event of Default" shall have the
meaning set forth in Section 9.1.
"Fiscal Year" means the period of
twelve months established by the Borrower as its annual accounting
period.
"Loan Proceeds" means the funds applied
to make the loan to the Borrower pursuant to this Agreement.
"Notice to Proceed" means a written
notice given by the Borrower and signed by an Authorized Representative issued
to each construction contractor fixing the date on which construction,
equipping, acquisition, expansion or renovation of the Project as described in
Exhibit
A
will
commence, a copy of which must be furnished to the Department by the Borrower
within one year of the Closing Date.
"Penalty" shall have the meaning set
forth in Section 3.3.
"Project" means, collectively, the
various improvements and upgrades to the System of the Borrower, as more fully
described in
Exhibit
A
, the costs of the construction, acquisition or equipping of which are
to be financed in whole or in part with the Loan Proceeds.
"Project Budget" means the budget for
the financing of the Project, a copy of which is attached to this Agreement as
Exhibit
B
.
"Project Costs" means the costs of the
construction, acquisition or equipping of the Project, as further described in
the Project Budget, and such other costs as may be approved in writing by the
Department, provided such costs are permitted by the Act.
"System" means all plants, systems,
facilities, equipment or property, of which the Project constitutes the whole or
a part, owned, operated or maintained by the Borrower and used in connection
with the drinking water services for the systems which comprise the Project, all
as described in
Exhibit
A
.
Section
1.2.
Rules of
Construction
.
The following rules shall apply to the
construction of this Agreement unless the context requires
otherwise:
(a)
Singular
words shall connote the plural number as well as the singular and vice
versa.
(b)
All
references in this Agreement to particular Sections or Exhibits are references
to Sections or Exhibits of this Agreement unless otherwise
indicated.
(c)
The
headings and table of contents as used in this Agreement are solely for
convenience of reference and shall not constitute a part of this Agreement nor
shall they affect its meaning, construction or effect.
ARTICLE
II
REPRESENTATIONS
Section
2.1.
Representations by
Borrower
.
The Borrower makes the following
representations as the basis for its undertakings under this
Agreement:
(a)
The
Borrower is a duly organized and validly existing corporation in good standing
under the laws of the State of Delaware.
(b)
The
Borrower has full right, power and authority to (i) execute this Agreement and
the other documents related thereto, (ii) own and operate the System,
(iii) construct, acquire or equip the Project and finance the Project Costs
by borrowing money for such purpose pursuant to this Agreement, and (iv) carry
out and consummate all of the transactions contemplated by this
Agreement.
(c)
All
permits, licenses, registrations, certificates, authorizations and approvals
required to have been obtained as of the date of signing of this Agreement have
been obtained for (i) the execution by the Borrower of this Agreement, (ii) the
performance and enforcement of the obligations of the Borrower thereunder, (iii)
the acquisition, construction, equipping, occupation, operation and use of the
Project, and (iv) the operation and use of the System. The Borrower
knows of no reason why any other necessary permits or approvals cannot be
obtained as required.
(d)
This
Agreement has been executed by a duly authorized officer of the Borrower and
constitutes the legal, valid and binding obligation of the Borrower enforceable
against the Borrower in accordance with the terms of this
Agreement.
(e)
There are
not pending nor, to the best of the knowledge of the undersigned officer of the
Borrower, threatened, any actions, suits, proceedings or investigations of a
legal, equitable, regulatory, administrative or legislative nature, in which a
judgment, order or resolution may have a material adverse effect on the
Borrower, or its business, assets, condition (financial or otherwise),
operations or prospects or in its ability to perform its obligations under this
Agreement.
(f)
There
have been no material defaults by any contractor or subcontractor under any
contract made in connection with the construction or equipping of the
Project.
(g)
No
material adverse change has occurred in the financial condition of the Borrower
from that indicated in the financial statements, application and other
information furnished to the Department in connection with this
Agreement.
(h)
No Event
of Default has occurred and is continuing.
(i)
Except as
may otherwise be approved by the Department or permitted by the terms hereof,
the Project and the System at all times will be owned by the Borrower and will
not be operated or controlled by any other entity or person.
(j)
The
Project will be a part of the System.
(k)
The Loan
Proceeds and funds available from the other sources specified in the Project
Budget will be sufficient to pay the estimated Project Costs.
(l)
The
Borrower has received or has commitments to obtain all funds and other financing
for the Project as contemplated in the Project Budget.
(m)
The
Borrower will complete the acquisition, construction and equipping of the
Project on or before February 11, 2011.
ARTICLE
III
ADVANCE AND USE OF LOAN
PROCEEDS; CONSTRUCTION OF PROJECT
Section
3.1.
Advance of Loan
Proceeds
.
The Department agrees to advance to the
Borrower pursuant to this Agreement up to Three Million Nine Hundred and
Seventeen Thousand Dollars ($3,917,000) to pay Project Costs in accordance with
the Project Budget.
Section
3.2.
Application of Loan
Proceeds
.
(a)
The
Borrower agrees to apply the Loan Proceeds solely and exclusively to the
payment, or the reimbursement of the Borrower for the payment, of Project Costs
and further agrees, upon the request of the Department, to exhibit to the
Department, vouchers, statements, bills of sale or other evidence of the actual
payment of such Project Costs. The Department shall disburse the Loan
Proceeds to or for the account of the Borrower upon execution of this Agreement
and upon receipt by the Department of the following:
(1) A
requisition (upon which the Department shall be entitled to rely) signed by an
Authorized Representative and containing all information called for by, and
otherwise being in the form of,
Exhibit
C
.
(2) If
such requisition includes an item for payment for labor or to contractors,
builders or materialmen (i) a certificate, signed by an Authorized
Representative, stating that such work was actually performed or such materials,
supplies or equipment were actually furnished or installed in or about the
construction of the Project; and (ii) a certificate signed by an Authorized
Representative stating either that such materials, supplies or equipment are not
subject to any lien or security interest or that such lien or security interest
will be released or discharged upon payment of the requisition.
Upon receipt of each such requisition
and accompanying certificate or certificates, the Department shall disburse Loan
Proceeds hereunder to or for the account of the Borrower in accordance with such
requisition in an amount and to the extent approved by the Department and shall
note the date and amount of each such disbursement on a schedule of principal
disbursements appended hereto as
Exhibit
D
. The Department shall have no obligation to disburse any
such Loan Proceeds if the Borrower is in default hereunder, nor shall the
Department have any obligation to approve any requisition if the Borrower is not
in compliance with the terms of this Agreement.
(b)
The
Borrower shall comply with all applicable State and federal
laws. Except as may otherwise be approved by the Department,
disbursements shall be held at ninety-five percent (95%) of the maximum amount
authorized hereunder to ensure satisfactory completion of the
Project. Upon receipt from the Borrower of the certificate specified
in Section 3.4 and a final requisition detailing all retainages to which
the Borrower is then entitled, the Department, to the extent approved by the
Department and subject to the provisions of this Section and Section 3.4,
will disburse Loan Proceeds to or for the account of the Borrower to the extent
of such approval.
(c)
The
Department may apply Loan Proceeds to pay any Penalty assessed pursuant to
Section 3.3.
(d)
The
Department shall have no obligation to disburse Loan Proceeds in excess of the
amount necessary to pay for approved Project Costs.
Section
3.3.
Agreement to Draw Loan
Proceeds and Penalty for Delay
.
The Borrower agrees after the Closing
Date to commence work in earnest on the Project and make draws on the Loan
Proceeds of at least ten percent (10%) of the Project Costs within one year of
the Closing Date. The Borrower further agrees to provide a copy of
each Notice to Proceed given by the Borrower to each construction contractor
within one year of the Closing Date.
If by February 12, 2011, which is
one year from the Closing Date, (i) the Borrower has not submitted
requisition(s), in the manner required by Section 3.2, for more than ten percent
(10%) of the Project Costs, and (ii) the Department has not received a copy of
each Notice to Proceed, the Department may in its discretion assess a penalty
equal to one percent (1%) of the Loan Proceeds (the "Penalty"). Such
Penalty may be drawn by the Department from the Loan Proceeds. It is
within the Department’s complete discretion whether to impose the Penalty based
upon its review of affirmative steps taken by the Borrower to commence and
complete the Project and the totality of the circumstances surrounding any such
delay in requesting disbursement of Loan Proceeds.
Section
3.4.
Agreement to Accomplish
Project
.
The Borrower will cause the Project to
be acquired, constructed, expanded, renovated or equipped as described in
Exhibit
A
and in accordance with the Project Budget and the plans, specifications
and designs prepared by the Borrower’s Engineer and approved by the
Department. The Borrower will complete the Project by the date set
forth in Section 2.1(m). All plans, specifications and designs have
been approved by all applicable regulatory agencies. The Borrower
agrees to maintain complete and accurate books and records of the Project Costs
and permit the Department through its duly authorized representatives to inspect
such books and records at any reasonable time. The Borrower and the
Department may amend the description of the Project set forth in
Exhibit
A
.
The Borrower will deliver to the
Department a certificate signed by an Authorized Representative of the Borrower
and by the Borrower’s Engineer stating (i) that the Project has been completed
substantially in accordance with this Section, the plans and specifications as
amended from time to time, as approved by the Department, and in substantial
compliance with all material applicable laws, ordinances, rules and regulations,
(ii) the date of such completion, (iii) that all certificates of occupancy or
other material permits necessary for the Project’s use, occupancy and operation
have been issued or obtained, and (iv) the amount, if any, to be reserved for
payment of Project Costs.
Section
3.5.
Permits
.
The Borrower, at its sole cost and
expense, shall comply with, and shall obtain all permits, consents and approvals
required by local, state or federal laws, ordinances, rules, regulations or
requirements in connection with the acquisition, construction, equipping,
occupation, operation or use of the Project. The Borrower shall, upon
request, promptly furnish to the Department copies of all such permits, consents
and approvals. The Borrower shall also comply with all lawful program
or procedural guidelines or requirements duly promulgated and amended as of the
date hereof by the Department in connection with the acquisition, construction,
equipping, occupation, operation or use of projects financed by the Fund under
the Act. The Borrower shall also comply in all respects with all
applicable State and federal laws, regulations and other requirements relating
to or arising out of or in connection with the Project and the funding thereof
by the Fund.
Section
3.6.
Construction
Contractors
.
Each construction contractor employed
in the accomplishment of the Project shall be required in the construction
contract to furnish a performance bond and a payment bond, each in an amount
equal to one hundred percent (100%) of the particular contract
price. Such bonds shall list the Borrower as
beneficiary. Each contractor shall be required to maintain, during
the construction period covered by the particular construction contract,
builder’s risk insurance, workers compensation insurance, public liability
insurance, property damage insurance and vehicle liability insurance in amounts
and on terms customarily maintained on such projects. Upon request of
the Department, the Borrower shall cause each contractor to furnish evidence of
such bonds and insurance to the Department. In addition to the
foregoing,
(a)
Each
construction contractor employed in the accomplishment of the Project is
required to comply with the Anti-Kickback Act (and is required to insert similar
requirements in all subcontracts) and all other applicable federal laws and
regulations.
(b)
All
construction contracts and contractors’ estimate forms will be prepared so that
materials and equipment may be readily itemized and identified as to eligible
and noneligible costs.
(c)
Any
change in a construction contract that will alter the contract price or
completion time or will substantially modify the proposed treatment processes
must be submitted to the Department via a change order for prior approval in the
form of the change order attached hereto as
Exhibit
E
.
(d)
The
construction of the Project facilities will conform to applicable federal, state
and local laws, ordinances and regulations.
(e)
The
Borrower will proceed expeditiously and complete the Project facilities in
accordance with the approved application, project schedule, surveys, plans,
profiles, cross-sections, specifications and amendments approved by the
Department.
Section
3.7.
Engineering
Services
.
The Borrower’s Engineer will provide
engineering services covering planning and design, operation of the System, and
the supervision and inspection of the construction of the
Project. The Borrower’s Engineer will provide to the Department the
certificate required by Section 3.4.
ARTICLE
IV
REPAYMENT OF LOAN; GENERAL
OBLIGATION
Section
4.1.
Repayment of
Loan
.
The Borrower shall repay the Loan
pursuant to the terms of the Note issued to the Department.
Section
4.2.
General
Obligation
.
The Borrower’s repayment obligation
constitutes a general obligation of the Borrower.
Section
4.3.
[
RESERVED]
ARTICLE
V
PREPAYMENTS
Section
5.1.
Prepayments of
Loan
.
At its option and upon giving prior
written notice to the Department, the Borrower may prepay the Loan, in whole or
in part, without penalty, at any time. Such prior written notice
shall specify the date on which the Borrower will make such prepayment and
whether the Loan will be prepaid in full or in part, and if in part, the
principal amount to be prepaid. Any such prepayment shall be applied
against Loan principal installments then outstanding as shall be directed by the
Borrower.
ARTICLE
VI
OPERATION AND USE OF
SYSTEM
Section
6.1.
Inspection of System and
Borrower’s Books and Records
.
The Department and its duly authorized
representatives and agents shall have such reasonable rights of access to the
System as may be necessary to determine whether the Borrower is in compliance
with the requirements of this Agreement and shall have the right at all
reasonable times and upon reasonable prior notice to the Borrower to examine and
copy the books and records of the Borrower insofar as such books and records
relate to the System.
Section
6.2.
Performance
Certification
.
The Borrower will notify the Department
when the Project is completed and operation commenced on or before the date set
out in Section 2.1(m).
Section
6.3.
Operation, Maintenance and
Use of System
.
At its own cost and expense, the
Borrower shall operate the System in a proper, sound and economical manner and
in compliance with all legal requirements, shall maintain the System in good
repair and operating condition and from time to time shall make all necessary
repairs, renewals and replacements.
ARTICLE
VII
INSURANCE, DAMAGE AND
DESTRUCTION
Section
7.1.
Insurance
.
Unless the Department otherwise agrees
in writing, the Borrower shall maintain or cause to be maintained insurance
against such risks as are customarily insured against by owners of systems
similar in size and character to the System.
ARTICLE
VIII
SPECIAL
COVENANTS
Section
8.1.
Maintenance of
Existence
.
The Borrower shall maintain its
existence as a "Person" (as defined in the Federal Safe Drinking Water Act) and,
without consent of the Department, which consent shall not be unreasonably
withheld, shall not dissolve or otherwise dispose of all or substantially all of
its assets or consolidate or merge with or into another
entity. Notwithstanding the foregoing, the Borrower may consolidate
or merge with or into, or sell or otherwise transfer all or substantially all of
its assets to a political subdivision of The State of Delaware, and the Borrower
thereafter may dissolve, if the surviving, resulting or transferee political
subdivision, if other than the Borrower, assumes, in written form acceptable to
the Department, all of the obligations of the Borrower contained in this
Agreement, and there is furnished to the Department an Opinion of Counsel
acceptable to the Department subject to customary exceptions and qualifications,
to the effect that such assumption constitutes the legal, valid and binding
obligations of the surviving, resulting or transferee entity in accordance with
its terms.
Section
8.2.
Financial Records and
Statements
.
The Borrower shall maintain proper
books of record and account in which proper entries shall be made in accordance
with generally accepted accounting principles, consistently applied, of all its
business and affairs related to the System. The Borrower shall have
an annual audit made by an independent certified public accountant within one
hundred and twenty (120) days after the end of each Fiscal
Year.
Such report shall include
a certificate of the accountants to the effect that, during the course of such
accountant's regular examination of the Borrower's financial condition, nothing
came to such accountant's attention that would constitute an Event of Default
hereunder.
A copy of the audited annual report shall be
forwarded to the Department when completed.
Section
8.3.
Certificate as to No
Default
.
The Borrower shall deliver to the
Department, within one hundred and twenty (120) days after the close of
each Fiscal Year, a certificate signed by an Authorized Representative stating
that, during such year and as of the date of such certificate, no event or
condition has happened or existed, or is happening or existing, which
constitutes an Event of Default, or if such an event or condition has happened
or existed, or is happening or existing, specifying the nature and period of
such event or condition and what action the Borrower has taken, is taking or
proposes to take to rectify it.
Section
8.4.
Further
Assurances
.
The Borrower shall to the fullest
extent permitted by law pass, make, do, execute, acknowledge and deliver such
further resolutions, acts, deeds, conveyances, assignments, transfers and
assurances as may be necessary or desirable for the better assuring, conveying,
granting, assigning and confirming the rights of the Department under this
Agreement, or as may be required to carry out the purpose of this
Agreement. The Borrower shall at all times, to the fullest extent
permitted by law, defend, preserve and protect all rights of the Department
under this Agreement against all claims and demands of all persons.
Section
8.5.
Other
Indebtedness
.
In the event that the Borrower is
required to borrow additional funds in order to complete the Project, the
Borrower agrees to consult with the Department before borrowing any such
additional funds. The Borrower agrees to pay when due all amounts
required by any other bonded indebtedness and to perform all of its obligations
in connection therewith.
Section
8.6.
Assignment by
Borrower
.
The Borrower may not assign its rights
under this Agreement without the prior written consent of the Department, which
consent shall not be unreasonably withheld. If the Borrower desires
to assign its rights under this Agreement to another "Person" (as defined in the
Federal Safe Drinking Water Act), the Borrower shall give notice of such fact to
the Department. If the Department consents to the proposed
assignment, the Borrower may proceed with the proposed assignment, but such
assignment shall not become effective until the Department is furnished:
(i) an assumption agreement in form and substance satisfactory to the
Department by which the assignee agrees to assume all of the Borrower’s
obligations under this Agreement, and (ii) an Opinion of Counsel to the
assignee, subject to customary exceptions and qualifications, that the
assumption agreement and this Agreement constitute legal, valid and binding
obligations of the assignee enforceable against the assignee in accordance with
their terms and that the assignment and assumption comply in all respects with
the provisions of this Agreement. Notwithstanding the foregoing, the
assignment of the rights of the Borrower under this Agreement or the assumption
of the obligations thereunder by the assignee shall in no way be construed as
releasing the Borrower’s obligations unless specifically agreed to by the
Department.
ARTICLE
IX
DEFAULTS AND
REMEDIES
Section
9.1.
Events of
Default
.
Each of the following events shall be
an "Event of Default" hereunder:
(a)
The
failure to pay any payment of principal, interest and/or any administrative fee
when due hereunder or under the Note;
(b)
The
Borrower’s failure to perform or observe any of the other covenants, agreements
or conditions of this Agreement and the continuation of such failure for a
period of thirty (30) days after the Department gives the Borrower written
notice specifying such failure and requesting that it be cured, unless the
Department shall agree in writing to an extension of such time prior to its
expiration;
provided,
however,
if the failure stated in the notice is correctable but cannot be
corrected within the applicable period, the Department will not unreasonably
withhold its consent to an extension of such time if corrective action is
instituted by the Borrower within the applicable period and diligently pursued
until the default is corrected;
(c)
Any
warranty, representation or other statement by or on behalf of Borrower
contained in this Agreement or in any instrument furnished in compliance with or
in reference to this Agreement is false or misleading in any material
respect;
(d)
An order
or decree shall be entered, with the Borrower’s consent or acquiescence,
appointing a receiver or receivers of the System or any part thereof or of the
income thereof, or if such order or decree, having been entered without the
Borrower’s consent or acquiescence, shall not be vacated, discharged or stayed
on appeal within ninety (90) days after the entry thereof;
(e)
Any
proceeding shall be instituted, with the Borrower’s consent or acquiescence, for
the purpose of effecting a composition between the Borrower and its creditors,
pursuant to any federal or state statute now or hereafter enacted, if the claims
of such creditors are under any circumstances payable from the revenues of the
System; or
(f)
Any
bankruptcy, insolvency or other similar proceeding shall be instituted by or
against the Borrower under any federal or state bankruptcy or insolvency law now
or hereinafter in effect and, if instituted against the Borrower, is not
dismissed within ninety (90) days after filing.
Section
9.2.
Notice of
Default
.
The Borrower agrees to give the
Department prompt written notice if any order, decree or proceeding referred to
in Section 9.1(d)-(f) is entered or instituted against the Borrower or of the
occurrence of any other event or condition which constitutes an Event of Default
immediately upon becoming aware of the existence thereof.
Section
9.3.
Remedies on
Default
.
Whenever any Event of Default referred
to in Section 9.1 shall have happened and be continuing, the Department shall,
in addition to any other remedies provided herein or by law, have the right, at
its option without any further demand or notice, to take one or both of the
following remedial steps:
(a)
Discontinue
advances of Loan Proceeds hereunder;
(b)
Declare
immediately due and payable all payments due or to become due under this
Agreement, and upon notice to the Borrower, the same shall become immediately
due and payable by the Borrower without further notice or demand;
and
(c)
Take
whatever other action at law or in equity may appear necessary or desirable to
collect the payments then due and thereafter to become due under this Agreement
or to enforce any other of the Department’s rights under this Agreement or to
enforce performance by the Borrower of its covenants, agreements or undertakings
contained herein.
Section
9.4.
Delay and
Waiver
.
No delay or omission to exercise any
right or power accruing upon any Event of Default shall impair any such right or
power or shall be construed to be a waiver of any such Event of Default or
acquiescence therein, and every such right and power may be exercised from time
to time and as often as may be deemed expedient. No waiver of any
Event of Default under this Agreement shall extend to or shall affect any
subsequent Event of Default or shall impair any rights or remedies consequent
thereto.
Section
9.5.
Right to Cure
Default
.
If the Borrower shall fail to make any
payment or to perform any act required by it under this Agreement, the
Department without prior notice to or demand upon the Borrower and without
waiving or releasing any obligation or default, may (but shall be under no
obligation to) make such payment or perform such act. All amounts so
paid by the Department and all costs, fees and expenses so incurred shall be
payable by the Borrower as an additional obligation under this Agreement,
together with interest thereon at the rate of interest of five percent (5%) per
annum until paid. The Borrower’s obligation under this Section shall
survive the repayment of the Note.
ARTICLE
X
MISCELLANEOUS
Section
10.1.
Successors and
Assigns
.
This Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
Section
10.2.
Amendments
.
The Department and the Borrower shall
have the right to amend from time to time any of the terms and conditions of
this Agreement,
provided
that all amendments
shall be in writing and shall be signed by or on behalf of the Department and
the Borrower.
Section
10.3.
Limitation of Liability of
Borrower’s Officers
.
No present or future director,
official, officer, employee or agent of the Borrower shall be liable personally
in respect of this Agreement or for any other action taken by such individual
pursuant to or in connection with the financing provided for in this
Agreement.
Section
10.4.
Applicable
Law
.
This Agreement shall be governed by the
applicable laws of the State of Delaware.
Section
10.5.
Severability
.
If any clause, provision, or section of
this Agreement shall be held illegal or invalid by any court, the illegality or
invalidity of such clause, provision or Section shall not effect the remainder
of this Agreement which shall be construed and enforced as if such illegal or
invalid clause, provision or section had not been contained in this
Agreement. If any agreement or obligation contained in this Agreement
is held to be in violation of law, then such agreement or obligation shall be
deemed to be the agreement or obligation of the Department and the Borrower, as
the case may be, only to the extent permitted by law.
Section
10.6.
Notice
.
Unless otherwise provided for herein,
all demands, notices, approvals, consents, requests, opinions and other
communications under this Agreement shall be in writing and shall be deemed to
have been given when delivered in person or mailed by first class registered or
certified mail, postage prepaid, addressed as follows:
|
|
Department:
|
Delaware
Department of Health & Social
Services
|
|
|
Division
of Public Health
|
|
|
Blue
Hen Corporate Center
|
|
|
Attention: DWSRF
Program Director
|
Delaware
Department of Natural Resources & Environmental Control
Division
of Water Services
Financial
Assistance Branch
5 East
Reed Street – Suite 200
Dover,
DE 19901
Attention: Program
Director
and
|
|
Borrower:
|
Artesian
Water Company, Inc.
|
|
|
Attention: David
B. Spacht
|
The
Department, and the Borrower may designate, by notice given hereunder, any
further or different addresses to which subsequent demands, notices, approvals,
consents, requests, opinion or other communications shall be sent or persons to
whose attention the same shall be directed.
Section
10.7.
Headings
.
The headings of the several articles
and sections of this Agreement are inserted for convenience only and do not
comprise a part of this Agreement.
Section
10.8.
Terms of
Agreement
.
This Agreement shall be effective upon
its execution and delivery by the Borrower and the Department. Except
as otherwise specified, the Borrower’s obligations under this Agreement shall
expire upon payment in full of the Note and all other amounts payable by the
Borrower under this Agreement.
Section
10.9.
Counterparts
.
This Agreement may be executed in any
number of counterparts, each of which shall be an original and all of which
together shall constitute but one and the same instrument.
WITNESS the following signatures, all
duly authorized.
DELAWARE
DRINKING WATER STATE REVOLVING FUND ACTING BY AND THROUGH THE DELAWARE
DEPARTMENT OF HEALTH & SOCIAL SERVICES, DIVISION OF PUBLIC
HEALTH
By:
Thomas V. May, REHS/RS
Chief
Health Systems Protection
ARTESIAN
WATER COMPANY, INC.
By:
David B. Spacht
Chief Financial Officer and
Treasurer
(SEAL)
Attest:
By:
Joseph A. Dinunzio
Secretary
EXHIBIT
A
Project
Description
Artesian Water Company, Inc. has
submitted applications for Delaware Drinking Water State Revolving Fund
financing for water main renewals for the following six service areas, all of
which projects are located in New Castle County: Willow Run,
Brookemeade, Middleboro Manor, Silview, Stanton and Collins Park.
Each of the projects will replace
transmission mains constructed of asbestos cement, unlined cast iron and
galvanized pipe which when installed met industry design specifications, but
over the passage of time has been deemed inferior by industry standards to the
current products available such as ductile iron pipe or PVC
alternatives. All of the three installed types of pipes are subject
to service interruptions as a result of main breaks due to reduced strength
after 50 to 60 years of service. Maintenance of asbestos cement type
of pipe also creates health and safety concerns since asbestos particles become
airborne when the pipe is cut during routine repairs. Unlined cast
iron and galvanized pipe have been well documented to produce rust or iron
deposits which create secondary water quality problems and reduce the ability of
the transmission main to deliver optimum flows and pressures.
EXHIBIT
B
Project
Budget
|
|
|
|
Non-Construction:
|
|
Administrative
Expense
|
$213,868.20
|
|
Engineer
Basic Fees
|
$229,144.50
|
|
Project
Inspection Fees
|
$61,105.20
|
|
Other
|
$5,092.10
|
|
Sub-Total
|
$509,210.00
|
|
Construction:
|
|
Distribution
|
$2,762,268.40
|
|
Other
|
$449,671.60
|
|
Contingencies
|
$195,850.00
|
|
Construction
Sub-Total
|
$3,407,790.00
|
|
|
|
|
Totals
|
$3,917,000.00
|
|
|
|
Drinking Water SRF
Loan
$3,917,000.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXHIBIT
C
Form of
Requisition
PROJECT
NAME:___________________________ FUNDING
RECIPIENT:___________________________
E. I. #
____________________
UNITED
STATES
AND
/
STATE OF
DELAWARE
REQUISITION
NO:___________
DEPARTMENT OF
AGRICULTURE
OR
DHSS OR
DNREC
RURAL
DEVELOPMENT DATE:______________________
USDA
LOAN
NO._______________ STATE
LOAN NO.____________
USDA
GRANT
NO._____________
SEPARATELY
OR
STATE
GRANT NO.___________
JOINTLY FUNDED PROJECT
ACCOUNT SUMMARY AND REQUEST FOR
LOAN/GRANT DISBURSEMENT
|
DISBURSEMENT
ITEMS
|
AMOUNT
BUDGETED
|
PREVIOUS
DISBURSEMENTS
|
THIS
PERIOD
|
TOTAL
TO
DATE
|
REMAINING
FUNDS
|
|
CONSTRUCTION
|
|
|
|
|
|
|
CONTRACT
NAME
OR #
|
|
|
|
|
|
|
CONTRACT
NAME
OR #
|
|
|
|
|
|
|
CONTRACT
NAME
OR #
|
|
|
|
|
|
|
LAND AND
R.O.W.
|
|
|
|
|
|
|
LEGAL AND ADMIN
|
|
|
|
|
|
|
ENGINEERING FEES
|
|
|
|
|
|
|
INTEREST
|
|
|
|
|
|
|
CONTINGENCIES
|
|
|
|
|
|
|
INITIAL O
& M
|
|
|
|
|
|
|
OTHER
(describe)
|
|
|
|
|
|
|
DISBURSEMENT
TOTALS
|
|
|
|
|
|
|
SOURCES OF FUNDING
|
|
|
|
|
|
|
USDA LOAN
|
|
|
|
|
|
|
USDA GRANT
|
|
|
|
|
|
|
STATE LOAN
|
|
|
|
|
|
|
STATE GRANT
|
|
|
|
|
|
|
OTHER
(describe)
|
|
|
|
|
|
|
OTHER
(describe)
|
|
|
|
|
|
|
OTHER
(describe)
|
|
|
|
|
|
|
SOURCE TOTALS
(must
equal
disbursement totals above)
|
|
|
|
|
|
See Notes on Page 2 (other
side)
Page 2
LOAN/GRANT DISBURSEMENT
FORM
Requisition No._________
________________________________________________ ______________________________________
PREPARED
BY (BORROWER/GRANTEE) DATE APPROVED
BY (DHSS/ODW) DATE
________________________________________________ _______________________________________
APPROVED
BY (ARCHITECT/ENGINEER) DATE APPROVED
BY (USDA/RD) DATE
|
Borrower/Grantee’s
Certification
The
undersigned certifies that (1) the amounts requested by
this
requisition will be applied solely and exclusively to the
payment,
or the reimbursement of the recipient for the payment,
of
Project Costs, and (2) any materials, supplies or equipment
covered
by this requisition are not subject to any lien or
security
interest or such lien or security interest will be released
upon
payment
of this requisition.
Recipient’s
Authorized
Representative Date
|
Consulting Engineer’s Certification
The
undersigned Consulting Engineer for the Recipient hereby
Certifies
that insofar as the amounts covered by this
Requisition
include payment for labor or to contractors,
builders
or materialmen, such work was actually performed or
such
materials, supplies or equipment were actually furnished
to
or installed in the Project.
Authorized
Consulting
Engineer Date
|
|
|
NOTES:
|
1.
|
Include
copies of all invoices or other acceptable documentation to support above
request. Provide one (1)
s
et for each funding
agency.
|
2. On
jointly funded projects, disbursements will not be processed
until this document is approved by authorized representatives of both
the U. S. Department of Agriculture and the State of Delaware, Department of
Health and Social Services.
Forms-Jointly
Funded-Disbursement.doc This
form provides all information required by USDA Form RD 440-11
EXHIBIT
D
Schedule of
Disbursements
Date
Amount
($)
EXHIBIT
E
Form of Change
Order
UNITED STATES
AND
STATE OF DELAWARE
ORDER NO:________
DEPARTMENT OF AGRICULTURE
OR DHSS OR DNREC
RURAL DEVELOPMENT
DATE______________
STATE:_____________
SEPARATELY OR JOINTLY FUNDED PROJECT
COUNTY:___________
CONTRACT CHANGE ORDER
CONTRACT FOR:________________________________
OWNER:___________________________________________________________________________________________
To:________________________________________________________________________________________________
(Contractor)
You are
hereby requested to comply with the following changes from the contract plans
and specifications:
|
Description
of Changes (Supplemental Plans and Specifications Attached)
|
DECREASE
in
Contract Price
|
INCREASE
In
Contract Price
|
|
|
$
|
$
|
|
TOTALS
|
$
|
$
|
|
NET CHANGE IN CONTRACT PRICE
|
$
|
$
|
JUSTIFICATION:
Explain (Differing Site Conditions) (Errors or Omissions in Drawings or
Specifications) (Changes in Regulatory Requirements) (Design Changes) (Over run
or Under run in Quantities) (Factors Affecting Time of Completion) (Other:
Describe below)
___________________________________________________________________________________________________
___________________________________________________________________________________________________
The
original amount of the
Contract:_____________________________________________________________________
__________________________________________________________________Dollars
($________________________)
The
amount of the Contract as adjusted by all previously approved Change
Orders:________________________________
__________________________________________________________________Dollars
($________________________)
The
amount of the Contract will be (Decreased) (Increased) through this Change Order
by the sum of:_________________
__________________________________________________________________Dollars
($________________________)
The
Contract Total including this and all previous Change Orders will
be:_______________________________________
__________________________________________________________________Dollars
($________________________)
The
Contract Period provided for completion will be (Increased) (Decreased)
(Unchanged) by:___________ Calendar Days
Page
2
CONTRACT
CHANGE ORDER FORM
CHANGE ORDER NO.____________
This
document will become a supplement to the contract and all provisions will apply
hereto.
Requested:______________________________________________________________________ ________________
(Owner) (Date)
Recommended:___________________________________________________________________ ________________
(Owner’s
Architect/Engineer) (Date)
Accepted:_______________________________________________________________________ _________________
(Contractor) (Date)
Approved
by State of
Delaware:_____________________________________________________ _________________
(Date)
Approved
by U. S. Department of
Agriculture:__________________________________________ _________________
(Date)
After all
five (5) copies of the Change Order have been signed and dated by authorized
representatives of all the applicable parties in the spaces provided above,
transmit one (1) copy to each party as listed below.
( )
U. S. Department of Agriculture’s Copy
( )
State of Delaware’s Copy
( )
Contractor’s Copy
( )
Borrower/Grantee’s Copy
( )
Architect/Engineer’s Copy
Forms-
Jointly Funded-Change
Order.doc This
form provides all information required by USDA Form RD 1924 (Rev.
2-97)
REGISTERED
R-1
$3,917,000
ARTESIAN
WATER COMPANY, INC.
GENERAL
OBLIGATION NOTE
(NEW
CASTLE COUNTY WATER MAIN PROJECTS)
SERIES
OF 2010-SRF
Final Maturity Date: February 1,
2031
|
REGISTERED
OWNER:
|
Delaware
Drinking Water State Revolving Fund, Delaware Department of Health &
Social Services, Division of Public
Health
|
|
PRINCIPAL
AMOUNT:
|
Three Million
Nine Hundred and Seventeen Thousand Dollars
($3,917,000)
|
ARTESIAN WATER COMPANY, INC., a
corporation of the State of Delaware (hereinafter referred to as the "Company"),
for value received hereby acknowledges itself indebted and promises to pay to
DELAWARE DRINKING WATER STATE REVOLVING FUND, or to any other registered owner
hereof, the principal sum of THREE MILLION NINE HUNDRED AND SEVENTEEN
THOUSAND DOLLARS ($3,917,000) or so much thereof as shall actually be advanced
to the Company by the Delaware Drinking Water State Revolving Fund acting by and
through Delaware Department of Health & Social Services, Division of Public
Health (the "Department") pursuant to the Financing Agreement dated as of
February 12, 2010 (the "Financing Agreement") between the Company and the
Department.
This Note is being issued in order to
provide funds to: (i) finance the cost of various improvements and
upgrades to the System (as defined in the Financing Agreement) of the Company,
as more fully described in
Exhibit A
to the
Financing Agreement (the "Project") and (ii) pay certain administrative costs
and costs of issuing this Note. Capitalized terms used herein and not
otherwise defined shall have the meaning ascribed to them in the Financing
Agreement.
The Company shall pay to the
Department, on the principal amount drawn down and outstanding hereunder from
the date(s) drawn, interest at the rate of 1.705% per annum and an
administrative fee at the rate of 1.705% per annum (collectively, interest and
the administrative fee are referred to herein as "Fee"). Such Fee
shall accrue starting on the date hereof (the "Closing") through the Final
Maturity Date or prepayment in full hereof. The Company shall pay Fee
hereunder initially on August 1, 2010 and semiannually thereafter on each
February 1 and August 1 (each, a "Payment Date"). The Company shall
pay only Fee and no principal during the period commencing with the Closing
through the earlier of (i) the Payment Date next succeeding the date on
which the Project is actually completed and (ii) February 11, 2011 (which,
as of the Closing, is the date by which the Project is projected to be
completed) (the date which is the earlier of (i) and (ii) is herein referred to
as the "Amortization Start Date"). After the Amortization Start Date,
Fee and principal shall be payable on the outstanding principal amounts drawn
hereunder semiannually, on each Payment Date, commencing on the Payment Date
next succeeding the Amortization Start Date and continuing on each of the next
39 following Payment Dates, in an amount sufficient to amortize all principal
drawn with substantially equal semiannual payments of principal and Fee over
twenty (20) years.
If by February 12, 2011, which is
one year from the date of Closing, (i) the Company has not submitted
requisition(s), in the manner required by Section 3.2 of the Financing
Agreement, for more than ten percent (10%) of the Project Costs, and (ii) the
Department has not received a copy of each Notice to Proceed, the Department may
in its discretion assess a penalty equal to one percent (1%) of the Loan
Proceeds (the "Penalty"). Such Penalty may be drawn by the Department
from the Loan Proceeds. It is within the Department’s complete
discretion whether to impose the Penalty based upon its review of affirmative
steps taken by the Company to commence and complete the Project and the totality
of the circumstances surrounding any such delay in requesting disbursement of
Loan Proceeds.
Notwithstanding the foregoing, all
unpaid principal and Fee shall be paid in full on February 1, 2031 (the “Final
Maturity Date”). The Fee hereon shall be calculated on the basis of a
360-day year and paid for the actual number of days elapsed. Both the
principal of and Fee on this Note are payable in lawful money of the United
States of America. Principal and Fee on this Note shall be paid by
check or draft mailed or remitted electronically to the Registered Owner, as
shown on the books and records of the Company, not later than 5:00 p.m. (eastern
time zone) on the Payment Date.
This Note is authorized and issued
pursuant to the governing laws of the Company and the laws of the State of
Delaware and resolution(s) adopted by the Company on February 3,
2010.
At the option of the Company and upon
providing prior written notice to the Registered Owner hereof, as shown on the
books and records of the Company, this Note may be prepaid in whole or in part,
without penalty, at any time, and any prepayment in part of this Note shall be
applied to all or a portion of the principal installments then outstanding as
shall be specified by the Company. If all or a portion of this Note
is called for redemption, it or the portion so called will cease to bear Fee on
the specified redemption date provided that funds for the payment of the
principal amount of the portion of the Note so called for redemption and the
accrued Fee thereon to the redemption date are on deposit at the place of
payment on the redemption date.
It is hereby certified and recited that
all conditions, acts, and things required to exist, be performed or happen,
precedent to or in the issuance of this Note, do exist, have been performed and
have happened. This Note is a valid and legally binding general
obligation of the Company.
This Note may be transferred by the
Registered Owner hereof in person or by its attorney duly authorized in
writing. The Company may deem and treat the Registered Owner as the
absolute owner hereof for the purpose of receiving payment of, or on account of,
the principal hereof and Fee due hereon and for all other purposes.
The provisions of this Note shall be
construed and enforced under the laws of the State of Delaware.
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Company has
caused this Note to be signed by a duly authorized officer of the Company and
its seal to be impressed hereon and attested by the manual signature of the
Secretary of the Company, and this Note to be dated February 12,
2010.
ARTESIAN
WATER COMPANY, INC.
(SEAL) By:
Name: David
B. Spacht
|
|
Title:
|
Chief
Financial Officer and Treasurer
|
___________________________________
Joseph A.
Dinunzio
Secretary