UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
or
_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-18516
ARTESIAN RESOURCES CORPORATION
(exact name of registrant as specified in its charter)
State or other jurisdiction of incorporation or organization: Delaware
I.R.S. Employer Identification Number: 51-0002090
Address of principal executive offices: 664 Churchmans Road, Newark, Delaware
Zip Code: 19702
Registrant's telephone number, including area code: (302) 453-6900
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. X Yes No
As of July 31, 1997, 1,251,955 shares and 505,589 shares of Class A
Non-Voting Common Stock and Class B Common Stock, respectively, were
outstanding.
ARTESIAN RESOURCES CORPORATION
INDEX TO FORM 10-Q
Part I - Financial Information: Page(s)
Item 1 - Financial Statements
Consolidated Balance Sheet -
June 30, 1997 and December 31, 1996 3
Consolidated Statement of Income for
the quarters ended June 30, 1997 and 1996 4
Consolidated Statement of Income for the
six months ended June 30, 1997 and 1996 5
Consolidated Statement of Retained Earnings
for the six months ended June 30, 1997 and 1996 5
Consolidated Statement of Cash Flows for the
six months ended June 30, 1997 and 1996 6
Notes to the Consolidated Financial Statements 7-9
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II - Other Information:
Item 2 - Changes in Securities 11
Item 4 - Submission of Matters to a Vote of Security Holders 11
Item 5 - Other Information 11
Item 6 - Exhibits and Reports on Form 8-K 12-51
Signatures 51
Part I - Financial Information
Item I - Financial Statements
ARTESIAN RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEET
Unaudited December 31,
June 30, 1997 1996
(,000) (,000)
ASSETS
Utility plant, at original cost
less accumulated depreciation $ 91,873 $ 88,993
Current assets
Cash and cash equivalents 242 148
Accounts receivable, net 2,042 1,884
Unbilled operation revenues 2,049 1,663
Materials and supplies-at cost
on FIFO basis 582 621
Prepaid property taxes 6 490
Prepaid expenses and other 558 320
State and federal income taxes --- 233
5,479 5,359
Other assets
Non-utility property (less accumulated
depreciation 1997-$87;1996-$1,505) 354 874
Deferred income taxes 665 731
Other deferred assets 1,421 1,156
2,440 2,761
Regulatory assets, net 2,538 2,595
$102,330 $ 99,708
LIABILITIES AND STOCKHOLDERS' EQUITY
Stockholders' equity
Common stock $ 1,755 $ 1,748
Additional paid-in capital 17,236 17,125
Retained earnings 6,467 6,614
Total common stockholders' equity 25,458 25,487
Preferred stock-mandatorily redeemable 712 825
Preferred stock 272 272
Long-term debt, net of current portion 29,586 26,259
56,028 52,843
Current liabilities
Notes payable 79 25
Current portion of long-term debt 142 350
Accounts payable 1,594 2,883
Overdraft payable 526 687
State and federal income taxes 493 ---
Deferred income taxes --- 179
Interest accrued 610 630
Customer deposits 366 378
Dividends payable 22 ---
Other 899 519
4,731 5,651
Deferred credits and other liabilities
Net advances for construction 19,291 19,080
Postretirement benefit obligation 1,763 1,759
Deferred investment tax credits 1,003 1,025
22,057 21,864
Net contributions in aid of construction 19,514 19,350
$102,330 $ 99,708
ARTESIAN RESOURCES CORPORATION
CONSOLIDATED STATEMENT OF INCOME
Unaudited
For the Quarter
Ended June 30,
1997 1996
(,000) (,000)
OPERATING REVENUES
Water sales $ 5,474 $ 5,214
Other utility operating revenue 77 51
5,551 5,265
OPERATING EXPENSES
Utility operating expenses 3,045 2,896
Related party expenses 62 61
Depreciation and amortization 641 535
State and federal income taxes 324 323
Property and other taxes 356 308
4,428 4,123
OPERATING INCOME 1,123 1,142
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION 42 37
OTHER EXPENSE (17) (31)
INCOME BEFORE INTEREST CHARGES 1,148 1,148
INTEREST CHARGES
Long-term debt 609 521
Short-term debt 2 139
Amortization of debt expense 5 7
Other (1) 5
615 672
NET INCOME $ 533 $ 476
DIVIDENDS ON PREFERRED STOCK 23 25
NET INCOME APPLICABLE TO COMMON STOCK $ 510 $ 451
PER SHARE OF COMMON STOCK:
Net income $ 0.29 $ 0.30
Cash dividends $ 0.23 $ 0.23
See Notes to the Consolidated Financial Statements.
ARTESIAN RESOURCES CORPORATION
CONSOLIDATED STATEMENT OF INCOME
Unaudited
For the Six Months
Ended June 30,
1997 1996
(,000) (,000)
OPERATING REVENUES
Water sales $ 10,365 $ 10,146
Other utility operating revenue 165 109
Non-utility operating revenue --- 80
10,530 10,335
OPERATING EXPENSES
Utility operating expenses 6,123 5,639
Non-utility operating expenses --- 50
Related party expenses 123 123
Depreciation and amortization 1,227 1,063
State and federal income taxes 450 576
Property and other taxes 735 639
8,658 8,090
OPERATING INCOME 1,872 2,245
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION 89 72
OTHER EXPENSE (39) (61)
INCOME BEFORE INTEREST CHARGES 1,922 2,256
INTEREST CHARGES
Long-term debt 1,170 1,060
Short-term debt 6 310
Amortization of debt expense 9 14
Other 8 13
1,193 1,397
NET INCOME $ 729 $ 859
DIVIDENDS ON PREFERRED STOCK 47 54
NET INCOME APPLICABLE TO COMMON STOCK $ 682 $ 805
PER SHARE OF COMMON STOCK:
Net income $ 0.39 $ 0.63
Cash dividends $ 0.46 $ 0.44
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
Unaudited
For the Six Months
Ended June 30,
1997 1996
(,000) (,000)
Balance, beginning of period $ 6,614 $ 6,317
Net income 729 859
7,343 7,176
Dividends 876 539
Balance, end of period $ 6,467 $ 6,637
See Notes to the Consolidated Financial Statements.
ARTESIAN RESOURCES CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited
For the Six Months
Ended June 30,
1997 1996
(,000) (,000)
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME $ 729 $ 859
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization 1,151 1,075
Allowance for funds used during construction (89) (72)
Write-down on rental office building --- (5)
Changes in Assets and Liabilities:
Accounts receivable (157) 232
Unbilled operating revenue (386) (346)
Materials and supplies 39 (33)
State and federal income taxes (209) 80
Prepaid property taxes 484 462
Prepaid expenses and other (199) (101)
Deferred income taxes, net 800 95
Other deferred assets (294) 111
Regulatory assets 47 71
Postretirement benefit obligation 3 (12)
Accounts payable (1,289) (1,024)
Interest accrued (19) (44)
Customer deposits and other, net 368 24
Dividends payable 22 ---
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 1,001 1,372
CASH FLOWS USED IN INVESTING ACTIVITIES
Capital expenditures (net of AFUDC) (4,041) (2,723)
Proceeds from sale of assets 183 2,094
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (3,858) (629)
CASH FLOWS FROM FINANCING ACTIVITIES
Net repayments under line of
credit agreement (8,979) (7,700)
Proceeds from issuance of mortgage bonds 12,500 ---
Overdraft payable (161) (239)
Net advances and contributions in aid
of construction 569 257
Repayment on term note --- (2,005)
Repayment on ALI note (25) ---
Proceeds from issuance of Common Stock 66 9,334
Proceeds from common stock dividends
reinvested and stock options exercised 113 385
Dividends (876) (514)
Principal payments under capital
lease obligations (143) (166)
Principal payments under long-term
debt obligations --- (11)
Redemption of preferred stock (113) (148)
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 2,951 (807)
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS 94 (64)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 148 150
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 242 $ 86
Supplemental Disclosures of Cash Flow Information:
Interest paid $ 1,212 $ 1,447
Income taxes paid --- $ 418
See Notes to the Consolidated Financial Statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The unaudited financial statements of Artesian Resources Corporation and
its wholly-owned subsidiaries (the "Company" or "Artesian Resources"),
including its principle operating company, Artesian Water Company, Inc.
("Artesian Water"), presented herein have been prepared in accordance with the
instructions to Form 10-Q and do not include all of the information and note
disclosures required by generally accepted accounting principles. These
statements should be read in conjunction with the financial statements and
notes thereto for the year ended December 31, 1996 included in the Company's
Annual Report on Form 10-K. The accompanying financial statements have not
been examined by independent accountants in accordance with generally accepted
auditing standards, but in the opinion of management such financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary to fairly summarize the Company's financial position and results of
operations. The results of operations for the quarter and six months ended
June 30, 1997 may not be indicative of the results that may be expected for
the year ending December 31, 1997.
NOTE 2 - REGULATORY ASSETS
Certain expenses, which are recoverable through rates as permitted by the
State of Delaware Public Service Commission ("PSC"), are deferred and
amortized during future periods using various methods. Expenses related to
rate proceedings are amortized on a straight-line basis over three years. The
post retirement benefit obligation, which is being amortized over twenty
years, is adjusted for the difference between the net periodic post retirement
benefit costs and the cash payments. The deferred income taxes will be
amortized over future years as the tax effects of temporary differences
previously flowed through to the customer reverse. Regulatory assets, net of
amortization, comprise:
June 30, 1997 December 31, 1996
(,000) (,000)
Postretirement benefit obligation $1,763 $1,759
Deferred income taxes recoverable
in future rates 725 725
Expense of rate proceedings 50 111
$2,538 $2,595
NOTE 3 - NON-UTILITY OPERATING REVENUE AND EXPENSES
Non-utility operating revenue for the six months ended June 30, 1996
consisted of $79,949 in rental income received by Artesian Development
Corporation ("Artesian Development"). Non-utility operating expenses
totaled $50,472 for the six months ended June 30, 1996 due to the operation
of Artesian Development's rental office building prior to its sale on March
13, 1996. The sale of the net assets of Artesian Laboratories was completed
on April 9, 1997.
NOTE 4 - RELATED PARTY TRANSACTIONS
The office building and shop complex utilized by Artesian Water are
leased at an annual rental of $204,052 from a partnership, White Clay Realty,
in which certain of Artesian Resources' officers and directors are partners.
The lease expires in 2002, with provisions for renewals for two five year
periods thereafter. Management believes that the payments made to White Clay
Realty for the lease of its office building and shop complex are comparable
to what Artesian Water would have to pay to unaffiliated parties for similar
facilities.
Artesian Water leases certain parcels of land for water production wells
from Glendale Enterprises Limited, a company wholly-owned by Ellis D. Taylor,
Director and Chairman Emeritus of Artesian Resources, at an annual rental of
$41,707. The initial term of the lease was for ten years ending September 30,
1995 and, thereafter, renewal is automatic from year to year unless 60 days
written notice is given by either party before the end of the year's lease.
The annual rental is adjusted each year by the consumer price index as of
June 30 of the preceding year. Artesian Water has the right to terminate this
lease by giving 60 days written notice should the water supply be exhausted or
other conditions beyond the control of Artesian Water materially and adversely
affect its interest in the lease.
Expenses associated with related party transactions are as follows:
For the Quarter Ended For the Six Months
June 30, Ended June 30,
(,000) (,000)
1997 1996 1997 1996
White Clay Realty $ 51 $ 51 $ 102 $102
Glendale Enterprises 11 10 21 21
$ 62 $ 61 $ 123 $123
NOTE 5 - DEBT
On June 17, 1997, Artesian Water issued a $10.0 million, 7.84%, ten year
Series M Mortgage Bond and borrowed $2.5 million against a $5.0 million, ten
year Series N Mortgage Bond to repay the outstanding balance on the lines of
credit. The remaining $2.5 million available on the Series N Bond will be
borrowed in $500,000 increments no later than December 31, 1997, at which
time the interest rate on the entire Series N Bond will be locked in at the
then ten year U.S. Treasury yield plus 1.25%. The remaining $2.5 million
available on the Series N Bond and a portion of the $15.0 million available
lines of credit will be used to finance capital expenditures during the
second half of 1997.
NOTE 6 - EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued
statement No. 128, Earnings Per Share (SFAS 128) which supersedes APB opinion
No. 15. SFAS 128 specifies the computation, presentation, and disclosure
requirements for earnings per share for entities with publicaly held common
stock. SFAS 128 is effective for financial statements issued for periods
ending after December 15, 1997. The Company will adopt SFAS 128 in December
1997 and does not expect it to have a material impact on the Company's
earnings per share.
ITEM 2
ARTESIAN RESOURCES CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE QUARTER ENDED
JUNE 30, 1997
RESULTS OF OPERATIONS
For the quarter ended June 30, 1997, Artesian Resources recorded net
income of $533,000 which represents a $57,000 increase as compared to
earnings of $476,000 for the quarter ended June 30, 1996. For the six months
ended June 30, 1997, Artesian Resources recorded net income of $729,000
which represents a $130,000 decrease as compared to net income of $859,000 for
the six months ended June 30, 1996. The decrease is primarily due to Artesian
Water's increased purchased water expense.
Water sales revenue increased $260,000 and $219,000, respectively, for
the quarter and six months ended June 30, 1997 due to a 12% increase in per
capita customer consumption for the month of June 1997, a 2.4% growth in
customers served for the year to date and an increase in rates of 1.13%,
effective May 1, 1997, if finally approved by the rate case Hearing Examiner
and the Delaware Public Service Commission ("PSC").
Purchased water expense increased $167,000 and $413,000, respectively,
for the quarter and six months ended June 30, 1997 as compared to the same
periods in 1996 due primarily to a 19% price increase effective September 1,
1996 and a 12.3% increase in the minimum monthly contractual purchase
requirements from Chester Water Authority ("CWA"). Effective October 1996,
the minimum monthly purchase requirement from CWA increased to 121.6 million
gallons from 108.3 million gallons. Effective August 1, 1997, Artesian Water
renegotiated the contract with CWA to, among other things, reduce the minimum
purchase requirement to a minimum daily average of 3.0 million gallons on an
annual basis through the year 2021. Assuming that Artesian Water only
purchases the minimum required under the contract, purchased water expense
could be reduced by approximately $360,000 for the second half of 1997 and
approximately $720,000 on an annual basis.
For the six months ended June 30, 1997, interest expense decreased
$204,000 as compared to the same period in 1996 due primarily to the repayment
of Artesian Water's $5 million Series J Mortgage Bond on December 1, 1996
which reduced interest expense by approximately $214,000. Artesian
Development's interest expense decreased $52,000 due to the repayment of the
building mortgage in March 1996 when the building was sold. Outstanding
borrowings on Artesian Water's lines of credit, prior to the issuance of
Series M and N Mortgage Bonds on June 17, 1997, was $12.4 million which
increased interest expense by $75,000. Long-term debt interest expense
increased $35,000 due to the Series M and N Bonds.
LIQUIDITY AND CAPITAL RESOURCES
The primary source of liquidity for the six months ended June 30, 1997
is $12.5 million from the issuance of Artesian Water's Series M and N
Mortgage Bonds. On June 17, 1997 Artesian Water issued a $10.0 million,
7.84%, ten year Series M Mortgage Bond and borrowed $2.5 million against a
$5.0 million, ten year Series N Mortgage Bond to repay the outstanding balance
on the lines of credit. The remaining $2.5 million available on the Series N
Bond will be borrowed in $500,000 increments no later than December 31, 1997,
at which time the interest rate on the entire Series N Bond will be locked in
at the then ten year U.S. Treasury yield plus 1.25%. At June 30, 1997,
$79,000 was borrowed on Artesian Water's $15.0 million lines of credit and as
of August 6, 1997 $0.6 million is borrowed on the lines of credit. The
remaining $2.5 million available on the Series N Bond and a portion of the
$14.4 million available on the $15.0 million lines of credit will be used to
finance capital expenditures during the second half of 1997.
PART II - OTHER INFORMATION
ITEM 2 - CHANGES IN SECURITIES
On July 14, 1997, Artesian Resources filed a Registration Statement on
Form S-8 registering 200,000 shares of $1.00 par value Class A Non-Voting
Common Stock available for purchase through the Artesian Retirement Plan and
the Artesian Supplemental Retirement Plan. An Annual Resort on Form 11-K for
each plan was also filed on July 14, 1997.
ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
(a) The annual meeting of Class B Common Shareholders was held on
April 30, 1997.
(b) With 435,108 votes in favor, and 284 votes withheld, the Class B Common
Shareholders elected Kenneth R. Biederman to serve a three year term on
Artesian Resources' Board of Directors (the "Board") until his
successor shall have been elected and qualified or until his earlier
resignation or removal. Mr. Biederman has served as a member of the
Board since 1991. He was last re-elected at the 1994 Annual Meeting
of Shareholders. Mr. Biederman has also served on the Executive;
Audit; Personnel, Compensation and Benefits; Incentive Stock Option;
PAYSOP; and Budget Committees of the Board. Following the reelection
of Mr. Biederman, the members of the Board and their respective terms
are as follows:
Kenneth R. Biederman-- term expires at the 2000 annual meeting
Dian C. Taylor-- term expires at the 1999 annual meeting
John R. Eisenbrey, Jr.-- term expires at the 1999 annual meeting
Ellis D. Taylor-- term expires at the 1998 annual meeting
William C. Wyer-- term expires at the 1998 annual meeting
ITEM 5 OTHER INFORMATION
On or about July 23, 1997, Artesian Water reached a settlement of its
current rate case with the Office of the Public Advocate and the PSC Staff.
The settlement, if approved by the Hearing Examiner and the PSC, will result
in an annualized revenue increase of approximately $248,000 or 1.13%,
effective May 1, 1997. Revenues collected from May 1, 1997 through August
30, 1997 under a 4.5% temporary rate increase, which are in excess of the
final increase of 1.13%, if approved, will be refunded to customers.
Artesian Water issued at the end of July a "Notice of Intent" to file
for full rate relief. The formal rate request will be filed on October 1,
1997. Although the exact amount of the increase has yet to be determined,
Artesian expects the requested increase will provide the Company with a fair
rate of return.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed for the quarter ended June 30, 1997.
EXHIBIT 4 - SERIES M AND SERIES N MORTGAGE BOND INDENTURES
ARTESIAN WATER COMPANY, INC.
TO
WILMINGTON TRUST COMPANY,
As Trustee
_____________________
THIRTEENTH SUPPLEMENTAL INDENTURE
Dated as of June 1, 1997
_____________________
Supplemental to Indenture of Mortgage
Dated as of July 1, 1961
$10,000,000 First Mortgage Bonds, Series M, 7.84%
THIRTEENTH SUPPLEMENTAL INDENTURE, dated as of June 1, 1997, made by
and between ARTESIAN WATER COMPANY, INC. (successor to Artesian Resources
Corporation 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 1/2%, 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, 81/2%, 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, 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%, due
December 1, 1996, 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 outstanding as of the date hereof; 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%, due February 1, 2003, all of which were outstanding as of the date
hereof; 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, 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, the Company proposes to issue and sell not more than $10,000,000
principal amount of a new series of bonds to be designated as First Mortgage
Bonds, Series M, 7.84%, to be issued under and secured by the Original
Indenture, as supplemented by this thirteenth supplemental indenture dated as
of June 1, 1997 (hereinafter sometimes referred to as the "Thirteenth
Supplemental Indenture"); and
WHEREAS, concurrently with the creation of the First Mortgage Bonds,
Series M, 7.84%, the Company proposes to issue and sell not more than
$5,000,000 principal amount of a new series of bonds to be designated as
First Mortgage Bonds, Series N, to be issued under and secured by 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"); 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 Thirteenth Supplemental Indenture and the Fourteenth
Supplemental Indenture for the purpose of providing for the creation of the
First Mortgage Bonds, Series M, 7.84% and the First Mortgage Bonds, Series N
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, this Thirteenth Supplemental Indenture, the Fourteenth
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 $10,000,000 aggregate principal
amount of the First Mortgage Bonds, Series M, 7.84% 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 Thirteenth 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 M, 7.84%, 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 M, 7.84% by CoBank, ACB (hereinafter sometimes
referred to as "CoBank") pursuant to the Amended and Restated Bond Purchase
Agreement dated as of June 1, 1997 (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 and the Eighth
Supplemental Indenture (except such thereof as may heretofore have been
released from the lien of the Indenture in accordance with the terms thereof),
and has granted, bargained, sold, released, conveyed, assigned, transferred,
mortgaged, pledged, set over and confirmed, and by these presents does grant,
bargain, sell, release, convey, assign, transfer, mortgage, pledge, set over
and confirm, unto Wilmington Trust Company, as Trustee, and to its successors
in the trust, and their and each of their assigns forever, all and singular
the following described pieces or parcels of land:
MILL CREEK HUNDRED
All the following described real estate situate in Mill Creek Hundred,
New Castle County and State of Delaware:
Parcel 1
ALL that certain lot, piece or parcel of land situate in Mill Creek
Hundred, New Castle County, State of Delaware, being a 0.72 acre tract
located on the northerly side of Letitia Drive as shown on the Record
Resubdivision Plan of Stenning Woods, prepared by Karins and Associates, Inc.,
Drawing No. 687-2473, dated July 8, 1988 and recorded in the Office of the
Recorder of Deeds in and for New Castle County, State of Delaware, in
Microfilm No. 9368, and more particularly bounded and described as follows,
to wit:
BEGINNING at a point on the northerly side of Letitia Drive (at 50 feet
wide R/W), a common corner for herein described lands and Lot No. 82, said
point being further located from the westerly end of a 25.00 foot radius
junction curve joining the said northerly side of Letitia Drive with the
northwesterly side of Gormley Court (at 50 feet wide R/W) by the following
described courses and distances: (1) along the northerly side of Letitia
Drive, in a general northwesterly direction by a curve to the left described
by a radius of 275.00 feet, an arc distance of 103.40 feet to a point, being
the first mentioned point and place of Beginning and running thence the five
(5) following described courses and distances: (1) continuing along the
northerly side of Letitia Drive in a general northwesterly direction by a
curve to the left described by a radius of 275.00 feet, an arc distance of
43.14 feet to a point, a common corner with Lot No. 81, thence with same;
(2) North 02 31' 45" East, 140.89 feet to a point, a corner for Lot No. 81
and Lot No. 53, thence; (3) with the division line of Lot No. 53, North 03
45' 14" West, 124.16 feet to an existing iron pipe, a common corner of lands
now or formerly of Phillip Pierson, thence (4) along the same South 87
31' 04" East, 200.00 feet to a point, a common corner with Lot No. 84; and
thence thereby (5) with the division line of Lots Nos. 84, 83 and 82 South 30
42' 05" West, 303.83 feet to the aforesaid northerly side of Letitia Drive,
the point and place of Beginning. Containing with said metes and bounds 0.72
acres of land, be the same more or less.
UNDER AND SUBJECT to all applicable covenants, conditions, easements,
rights-of-way, reservations, restrictions, and agreements of record in the
Office of the Recorder of Deeds in and for New Castle County and State of
Delaware, including, without limitation, the conditions and restrictions set
forth in the Deed conveying the same to Artesian Water Company by Deed
recorded in the Office of the Recorder of Deeds, in and for New Castle
County and the State of Delaware, in Deed Book 888, Page 135.
Being the same lands conveyed to Artesian Water Company by Deed recorded
as aforesaid in Deed Book 888, Page 135. Tax Parcel No. 08-012.10-060.
Parcel 2
ALL that certain lot, piece or parcel of land situate in Mill Creek
Hundred, New Castle County, State of Delaware, being lands designated "To Be
Conveyed To Artesian Water Company" as shown on the Record Major Subdivision
Plan for "Silverwood", prepared by Karins and Associates, Professional
Engineers and Land Surveyors, Drawing No. 694-2335, Sheet 3 of 3, dated
January 18, 1988, recorded June 17, 1988, in the Office of the Recorder of
Deeds in and for New Castle County on Microfilm No. 9255, more particularly
bounded and described as follows, to wit:
BEGINNING at a point on the northwesterly side of Silverwood Boulevard
(50.00 feet wide right of way), a common corner for herein described property
and Lot 45, said point being further located along the various sides of said
Silverwood Boulevard from the northeasterly end of a 25.00 feet radius
junction curve joining the northwesterly side of Silverwood Boulevard with the
northeasterly side of Valleywood Circle (50.00 feet wide right of way) by the
following four (4) described courses and distances: 1) North 42 degrees 47
minutes 32 seconds East, 211.58 feet to a point of curvature,
2) Northeasterly, along a 100.00 feet radius curve to the left, said curve
having a chord bearing of North 25 degrees 31 minutes 11 seconds East and a
chord distance of 59.38 feet, an arc distance of 60.29 feet to a point of
compound curvature, 3) Northwesterly, along a 30.00 feet radius curve to the
left, said curve having a chord bearing of North 41 degrees 49 minutes 12
seconds West and a chord distance of 46.01 feet, an arc distance of 52.43 feet
to a point of reverse curvature, and 4) Northwesterly, along a 52.00 feet
radius cul-de-sac curve to the right, (said curve having a chord bearing of
North 31 degrees 49 minutes 26 seconds West and a chord distance of 90.12
feet), an arc distance of 109.03 feet to the point and place of Beginning;
thence, from said point of Beginning, leaving said northwesterly side of
Silverwood Boulevard, along lands of the aforementioned Lot 45, in part, and
along lands designated "Private Open Space (To Remain Undeveloped)", in part,
North 65 degrees 04 minutes 25 seconds West, 206.67 feet to a point, a corner
in common with said lands designated "Private Open Space (To Remain
Undeveloped)"; thence, along said lands designated "Private Open Space (To
Remain Undeveloped)", the following four (4) described courses and distances:
1) North 70 degrees 38 minutes 57 seconds West, 235.00 feet to a point, 2)
South 19 degrees 21 minutes 03 seconds West, 25.00 feet to a point, 3) North
70 degrees 38 minutes 57 seconds West, 50.00 feet to a point, and 4) North 19
degrees 21 minutes 03 seconds East, 50.00 feet to a point along lands now or
formerly of H. Dale and Susan Wilson; thence, thereby, South 70 degrees 38
minutes 57 seconds East, 285.00 feet to a point, a corner in common with
lands designated "4.75 +/- Acs. To Be Retained by Brill Associates (For
Future Establishment of Historic Zoning)"; thence, along said lands designated
"4.75 Acs. To Be Retained by Brill Associates", in part, and along lands of
Lot 46, in part, South 65 degrees 04 minutes 25 seconds East, 217.13 feet to
a point along the aforementioned northwesterly side of Silverwood Boulevard;
thence, thereby, Southwesterly, along a 52.00 feet radius cul-de-sac curve to
the left, said curve having a chord bearing of South 42 degrees 47 minutes 55
seconds West and a chord distance of 26.14 feet, an arc distance of 26.43
feet to the point and place of Beginning. Containing within said described
metes and bounds 0.31 acres of land, be the same more or less.
UNDER AND SUBJECT to all applicable covenants, conditions, easements,
rights-of-way, reservations, restrictions, and agreements of record in the
Office of the Recorder of Deeds in and for New Castle County and State of
Delaware, including, without limitation, the conditions and restrictions set
forth in the Deed conveying the same to Artesian Water Company by Deed
recorded in the Office for the Recorder of Deeds, in and for New Castle
County and the State of Delaware, in Deed Book 1786, Page 321.
Being the same lands conveyed to Artesian Water Company by Deed recorded
as aforesaid in Deed Book 1786, Page 321. Tax Parcel No. 08-036.10-192.
PENCADER HUNDRED
All the following described real estate situate in Pencader Hundred, New
Castle County and State of Delaware:
ALL that certain lot, piece or parcel of land situate in Pencader Hundred,
New Castle County, State of Delaware, as shown on the Property Survey Plan,
dated 9 March 1995, prepared by Franco Bellafante Associates, Inc., more
particularly bounded and described as follows, to wit:
BEGINNING at an iron pipe set on the reserved northerly right-of-way line
of the Chesapeake City Road (also known as Delaware State Road Reference
No. 399) said northerly right-of-way or reservation line was described in Deed
Record P, Volume 94, Page 57, and said corner being a point in the line of
lands of the United States of America; and further located from the point of
intersection formed by the centerline of the Chesapeake City Road with the
centerline of Frazer Road (also known as Delaware State Road Reference
No. 391) by the following two (2) courses and distances: 1) Westerly along
the centerline of the Chesapeake City Road 1,193.5 feet; and 2) leaving the
centerline of the Chesapeake City Road, North 23 degrees 25 minutes 30 seconds
West, 52.00 feet; Thence from the point and place of Beginning, along the
reserved northerly right-of-way line of the Chesapeake City Road, said
right-of-way line being distant 50.00 feet from the centerline of the
Chesapeake City Road, South 82 degrees 30 minutes 00 seconds West, 1078.03
feet to an iron pipe set on a division line of lands, now or formerly, of
John H. Brown, III, formerly the May B. Janvier Estate; Thence leaving the
northerly reserved right-of-way line of the Chesapeake City Road, along the
lands, now or formerly, of John H. Brown, III, through an Osage Orange
hedgerow, by the following two (2) courses and distances: 1) North 06 degrees
51 minutes 44 seconds West, 1,330.62 feet to found concrete monument; and
2) North 10 degrees 43 minutes 02 seconds West, 1,393.60 feet to an iron pipe
set, at a corner of lands, now or formerly, of Herman W. Cook, Jr.; Thence
leaving the lands, now or formerly, of John H. Brown, III, along the lands,
now or formerly, of Herman W. Cook, Jr., South 84 degrees 30 minutes
00 seconds East, 1,036.61 feet to a found concrete monument in the line of
lands of the United States of America; Thence along the lands of the United
States of America, by the following two (2) courses and distances: 1) South
43 degrees 25 minutes 46 seconds West, 605.23 feet to a set iron pipe; and
2) South 23 degrees 25 minutes 30 seconds East, 2,191.40 feet to the first
mentioned point and place of Beginning. Containing within the said described
metes and bounds, 46.7544 acres of land, be the same, more or less.
UNDER AND SUBJECT to all applicable covenants, conditions, easements,
rights-of-way, reservations, restrictions, and agreements of record in the
Office of the Recorder of Deeds in and for New Castle County and State of
Delaware, including, without limitation, the conditions and restrictions set
forth in the Deed conveying the same to Artesian Water Company by Deed
recorded in the Office for the Recorder of Deeds, in and for New Castle
County and the State of Delaware, in Deed Book 1894, Page 325.
Being the same lands conveyed to Artesian Water Company by Deed recorded
as aforesaid in Deed Book 1894, Page 325. Tax Parcel No. 11-050.00-001.
ST. GEORGES HUNDRED
All the following described real estate situate in St. Georges Hundred,
New Castle County and State of Delaware:
Parcel 1
ALL that certain lot, piece or parcel of land, with the improvements
thereon, situate in St. Georges Hundred, New Castle County and State of
Delaware, commonly known as 122 Bakerfield Drive, being Lot No. 35 as
designated and shown on that certain Record Major Subdivision Plan for Lands
of COMMODORE ESTATES II, prepared by Clifton L. Bakhsh, Jr., Professional
Land Surveyor of Middletown, Delaware, dated June 27, 1988, revised July 17,
1989, and recorded November 16, 1989 in the Office of the Recorder of Deeds
in and for New Castle County and State of Delaware at Microfilm No. 10137.
UNDER AND SUBJECT to all applicable covenants, conditions, easements,
rights-of-way, reservations, restrictions, and agreements of record in the
Office of the Recorder of Deeds in and for New Castle County and State of
Delaware, including, without limitation, the conditions and restrictions set
forth in the Deed conveying the same to Artesian Water Company by Deed
recorded in the Office for the Recorder of Deeds, in and for New Castle
County and the State of Delaware, in Deed Book 2252, Page 78.
Being the same lands conveyed to Artesian Water Company by Deed recorded
as aforesaid in Deed Book 2252, Page 78. Tax Parcel No. 13-013.40-050.
Parcel 2
ALL that certain lot, piece or parcel of land situate in St. Georges
Hundred, New Castle County, State of Delaware and known as Lot 4 on the
Record Minor Subdivision Plan For Lands Of Robert L. & Sarah C. Emerson as
said Plan is of record in the Office of the Recorder of Deeds in and for
New Castle County, Delaware, at Microfilm No. 12110, recorded September 1,
1994, and being more particularly bounded and described by Clifton L. Bakhsh,
Jr., Inc., Middletown, Delaware, as follows, to wit:
BEGINNING at a point on the northwesterly side of Jamison Corner Road (30
feet from centerline) said point being located the following four (4) courses
and distances from the centerline intersection of Jamison Corner Road with
the center point of bridge over Scott Run: (1) By the arc of a circle curving
to the right, 161.83 feet (R=338.10 feet) to a point; (2) South 24 degrees 13
minutes 15 seconds West, 225.87 feet to a point; (3) North 62 degrees 46
minutes 45 seconds West, 30.04 feet to a point; (4) South 24 degrees 13
minutes 15 seconds West, 581.33 feet to the point of Beginning. Thence from
the point of Beginning, along the northwesterly side of Jamison Corner Road
(30 feet from centerline) South 24 degrees 13 minutes 15 seconds West, 300
feet to a point, a corner for remaining lands now or formerly of Robert L. and
Sarah C. Emerson. Thence by the same, the following two (2) courses and
distances: (1) North 65 degrees 46 minutes 45 seconds West, 300.00 feet to a
point; (2) North 24 degrees 13 minutes 15 seconds East, 114.15 feet to a
point, a corner for Lot 5. Thence by the same, the following two (2) courses
and distances: (1) North 24 degrees 13 minutes 15 seconds East, 185.85 feet
to a point; (2) South 65 degrees 46 minutes 45 seconds East, 300 feet to the
point and place of Beginning. Containing within said metes and bounds 2.0661
acres of land be the same more or less.
UNDER AND SUBJECT to all applicable covenants, conditions, easements,
rights-of-way, reservations, restrictions, and agreements of record in the
Office of the Recorder of Deeds in and for New Castle County and State of
Delaware, including, without limitation, the conditions and restrictions set
forth in the Deed conveying the same to Artesian Water Company by Deed
recorded in the Office for the Recorder of Deeds, in and for New Castle
County and the State of Delaware, in Deed Book 1833, Page 311.
Being the same lands conveyed to Artesian Water Company by Deed recorded
as aforesaid in Deed Book 1833, Page 311. Tax Parcel No. 13-008.00-041.
Parcel 3
ALL that certain piece, parcel or tract of land known as Lot 4, Chestnut
Grove, situate in St. Georges Hundred, New Castle County, Delaware, according
to a Plan entitled, "Record Resubdivision Plan, Chestnut Grove," recorded in
the Office of the Recorder of Deeds in and for New Castle County, Delaware,
in Microfilm No. 12445, and being further described in accordance with a
survey prepared by Franco Bellafante Associates, Inc., dated September 21,
1995, as follows, to wit:
BEGINNING for the same at a point, said point being a corner for this Lot
and Lot 3 and also being located on the northerly side of Cedarshake Court
the following three (3) courses and distances from the easterly end of a
25.00 foot radius junction curve joining the easterly side of Chestnut Way
(50 feet wide), with the northerly side of Cedarshake Court (50 feet wide);
Thence, along the northerly side of Cedarshake Court, (1) North 64 degrees 01
minutes 33 seconds East, 194.46 feet to a point; (2) By a curve to the right
having a radius of 1125.00 feet, and an arc distance of 13.175 feet to a
point; and (3) North 79 degrees 54 minutes 12 seconds East, 39.49 feet to the
point and place of beginning; Thence, from said point of beginning and along
Lot 3 North 10 degrees 05 minutes 48 seconds West, 140.71 feet to a corner for
lands now or formerly of John W. Thomas and wife; thence, thereby, North 57
degrees 05 minutes 32 seconds East, 624.55 feet to a point in line of land now
or formerly of Baker Farms, Inc.; thence, thereby, the following seven (7)
courses and distances: (1) South 35 degrees 08 minutes 53 seconds West,
46.78 feet to a point; (2) South 60 degrees 23 minutes 05 seconds East, 71.98
feet to a point; (3) South 15 degrees 47 minutes 54 seconds East, 74.38 feet
to a point; (4) South 23 degrees 55 minutes 08 seconds East, 60.56 feet to a
point; (5) South 16 degrees 05 minutes 46 seconds East, 75.07 feet to a point;
(6) South 35 degrees 54 minutes 10 seconds East, 38.68 feet to a point; and
(7) South 42 degrees 04 minutes 56 seconds East, 48.36 feet to a corner for
Lot 5; thence, thereby, the following five (5) courses and distances:
(1) South 76 degrees 47 minutes 49 seconds West, 254.69 feet to a point;
(2) North 89 degrees 54 minutes 28 seconds West, 90.00 feet to a point;
(3) North 43 degrees 54 minutes 28 seconds West, 84.00 feet to a point;
(4) South 57 degrees 22 minutes 13 seconds West, 135.83 feet to a point; and
(5) South 13 degrees 56 minutes 59 seconds West, 34.08 feet to a point on
the easterly side of Cedarshake Court; Thence, thereby, and with the northerly
side of Cedarshake Court the following three (3) courses and distances:
(1) By a curve to the left having a radius of 52.00 feet, an arc distance of
89.07 feet to a point; (2) By a curve to the right having a radius of 25.00
feet, an arc distance of 21.60 feet to a point; and (3) South 79 degrees 54
minutes 12 seconds West, 43.43 feet to the point and place of beginning.
Containing therein 3.375 acres of land be the same more or less.
UNDER AND SUBJECT to all applicable covenants, conditions, easements,
rights-of-way, reservations, restrictions, and agreements of record in the
Office of the Recorder of Deeds in and for New Castle County and State of
Delaware, including, without limitation, the conditions and restrictions set
forth in the Deed conveying the same to Artesian Water Company by Deed
recorded in the Office for the Recorder of Deeds, in and for New Castle
County and the State of Delaware, in Deed Book 1998, Page 36.
Being the same lands conveyed to Artesian Water Company by Deed recorded
as aforesaid in Deed Book 1998, Page 36. Tax Parcel No. 13-013.00-194.
Parcel 4
ALL that certain lot, piece or parcel of land situate in St. Georges
Hundred, New Castle County, Delaware, with the improvements thereon erected,
known as Lot 47 as shown on the Record Re-Subdivision Plan for Lands of
Bayview Improvement Co. Inc. prepared by Clifton L. Bakhsh, Jr., Inc., Land
Surveyors, Engineers, & Planners, recorded in the Office of the Recorder of
Deeds in and for New Castle County, Delaware, at Microfilm No. 12732, more
particularly bounded and described as follows, to wit:
BEGINNING at a point along the southwesterly side of Belts Road (30 feet
wide Private Right of Way) a distance of 85.36 feet northwesterly from the
intersection of the westerly side of Road 423 A (30 feet wide) and the
southwesterly side of Belts Road; thence from said point of Beginning South 24
degrees 39 minutes 52 seconds West 370.83 feet to a point; thence North 65
degrees 20 minutes 08 seconds West 228.86 feet to a point in line of lands now
or formerly of the State of Delaware; thence continuing along the line of
lands now or formerly of the State of Delaware North 69 degrees 09 minutes 53
seconds East 182.84 feet to a point; thence North 40 degrees 39 minutes 57
seconds East 39.60 feet to a point; thence North 24 degrees 39 minutes 52
seconds East 208.48 feet to a point on the southerly side of Belts Road;
thence along Belts Road South 61 degrees 25 minutes 57 seconds East 90.00 to
the point and place of Beginning. Containing within said metes and bounds
1.0000 acre of land be the same more or less.
TOGETHER WITH the free and uninterrupted right, use and privilege of those
two certain roads designated on said plat of Bay View as Main Street and North
New Road, in common with others entitled thereto forever; and together with
the free and uninterrupted right, use and privilege of that certain strip of
land extending to the Delaware River, in common with others entitled thereto
forever, as an open and unobstructed space for the free passage of light.
AND TOGETHER WITH the easement as contained in Easement Agreement between
Bay View Improvement Company and Artesian Water Company, Inc. dated July 2,
1996.
UNDER AND SUBJECT to all applicable covenants, conditions, easements,
rights-of-way, reservations, restrictions, and agreements of record in the
Office of the Recorder of Deeds in and for New Castle County and State of
Delaware, including, without limitation, the conditions and restrictions set
forth in the Deed conveying the same to Artesian Water Company by Deed
recorded in the Office for the Recorder of Deeds, in and for New Castle
County and the State of Delaware, in Deed Book 2130, Page 50.
Being the same lands conveyed to Artesian Water Company by Deed recorded
as aforesaid in Deed Book 2130, Page 50. Tax Parcel No. 13-020.01-051.
Parcel 5
ALL that lot, piece or parcel of land situate in St. Georges Hundred, New
Castle County, State of Delaware, and known as Central Well Site, on the plan
of Choptank on the Hill, and of record in the Office of the Recorder of Deeds
in and for New Castle County, Delaware, in Microfilm No. 12694, recorded
December 29, 1995, and being more particularly bounded and described by
Clifton L. Bakhsh, Jr., Inc., Middletown, Delaware, as follows to-wit:
BEGINNING at a point on the southwesterly side of Choptank Road (30 feet
from centerline) said point being located the following (6) courses and
distances from the southeasterly end of a 25 foot radius junction curve
joining the southerly side of Ernest Drive (60 feet wide), with the
southwesterly side of Choptank Road (30 feet from centerline): (1) South 15
degrees 28 minutes 26 seconds East, 95.00 feet to a point; (2) By the arc of
a circle curving to the left, 398.50 feet (Radius = 2585.49 feet) to a point;
(3) South 24 degrees 18 minutes 18 seconds East, 737.27 feet to a point;
(4) By the arc of a circle curving to the left, 205.21 feet (Radius = 1055.00
feet) to a point; (5) South 35 degrees 26 minutes 58 seconds East, 331.33 feet
to a point; (6) By the arc of a circle curving to the right, 55.00 feet
(Radius = 6970.00 feet) to the point of beginning. Thence from the point of
beginning, along the southwesterly side of Choptank Road (30 feet from
centerline), and with a 20 foot wide landscape easement, the following
(2) courses and distances: (1) By the arc of a circle curving to the right,
378.88 feet (Radius = 6970.00 feet) to a point; (2) South 31 degrees 49
minutes 15 seconds East, 15.05 feet to a point, a corner for lands now or
formerly of Delmarva Power & Light Co.; Thence by the same, South 81 degrees
35 minutes 14 seconds West, 326.44 feet to a point, a corner for Lot 126.
Thence by the same, the following (2) courses and distances: (1) North
35 degrees 26 minutes 58 seconds West, 245.23 feet to a point; (2) North 54
degrees 33 minutes 02 seconds East, 305.00 feet to the first mentioned point
or place of beginning. Containing within said metes and bounds 2.2133 acres.
SUBJECT to a covenant running with the land that the above described
property shall only be used for a water well or wells together with a water
distribution system and appurtenant improvements to supply the subdivision
known as Choptank on the Hill.
UNDER AND SUBJECT to all applicable covenants, conditions, easements,
rights-of-way, reservations, restrictions, and agreements of record in the
Office of the Recorder of Deeds in and for New Castle County and State of
Delaware, including, without limitation, the conditions and restrictions set
forth in the Deed conveying the same to Artesian Water Company by Deed
recorded in the Office for the Recorder of Deeds, in and for New Castle
County and the State of Delaware, in Deed Book 2152, Page 250.
Being the same lands conveyed to Artesian Water Company by Deed recorded
as aforesaid in Deed Book 2152, Page 250. Tax Parcel No. 13-012.30-029.
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 M, 7.84%, by the holders or registered owners thereof, 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 hereby 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 M, 7.84% 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 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 M,
7.84%", herein referred to as the "Bonds of Series M". The aggregate
principal amount of the Bonds of Series M shall not exceed $10,000,000.
Section 1.2. Bond Terms. The Bonds of Series M 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 due on
December 31, 2007 (the "Maturity Date"), and shall bear interest at the rate
of 7.84% per annum, payable on the first day of January, April, July and
October of each year beginning July 1, 1997 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.
The Bonds of Series M shall be issuable as registered bonds without
coupons in the denominations of Five Hundred Thousand Dollars ($500,000) and
any multiple thereof, numbered LRl and upwards.
Unless otherwise agreed to in writing by the Company and the holders of
the Bonds of Series M, the payment of the principal of, premium (if any) and
interest on, the Bonds of Series M shall be made by wire transfer of
immediately available funds to ABA No. 307088754 for the advice and credit
of CoBank (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" (as hereinafter defined). Business Day shall
mean any day that CoBank is open for business, except any day when Federal
Reserve Banks are closed.
The Bonds of Series M 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 or (ii) pursuant to any provision of the
Original Indenture or the Bond Purchase Agreement requiring or authorizing
such redemption. Any redemption of the Bonds of Series M 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
Bonds of Series M are to be redeemed.
The redemption of any or all of the Bonds of Series M 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) 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 Bonds of
Series M 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 June 11, 1997
minus (ii) CoBank's cost of funds (determined in accordance with such
methodology) on the Mandatory 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 1/2 of 1% to such difference (such that the minimum
result shall at all times be 1/2 of 1%).
(C) For each annual period (from each January 1) or part thereof
during which the Bonds of Series M being redeemed were scheduled to be
outstanding, multiply the amount determined in (B) above by the principal
amount of the Bonds of Series M 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 Bonds of Series M
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 Bonds of Series M 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
Thirteenth Supplemental Indenture, (i) upon the occurrence of an Event of
Default as provided in the Original Indenture or (ii) as provided in the Bond
Purchase Agreement. Upon the principal of the Bonds of Series M 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, any unpaid principal, premium (if any) and
interest payment shall automatically accrue interest at 4% per annum in excess
of the "National Variable Rate" (as hereinafter defined). The National
Variable Rate shall mean the rate of interest established by CoBank from time
to time as its National Variable Rate. The National Variable Rate is intended
by CoBank to be a reference rate, and CoBank may charge other borrowers rates
at, above, or below that rate. Any change in the National Variable Rate shall
take effect on the date established by CoBank as the effective date of such
change.
The Bonds of Series M shall be registerable, transferable, and
exchangeable as provided in Article II of the Original Indenture; provided
that Bonds of Series M shall not be issued as coupon Bonds.
Section 1.3 Form of Bond. The text of the registered Bonds of Series M
and of the authentication certificate of the Trustee upon said Bonds shall be,
respectively, substantially as follows:
FORM OF REGISTERED BOND OF SERIES M WITHOUT COUPONS
No. MR________ $__________
ARTESIAN WATER COMPANY, INC.
FIRST MORTGAGE BONDS, SERIES M, 7.84%
December 31, 2007
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
December 31, 2007, the sum of _____________Dollars 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 7.84% per annum, payable on the first day of January, April,
July and October of each year, beginning July 1, 1997 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 Thirteenth Supplemental Indenture. Unless otherwise agreed
to in writing by the Company and the holders of the Bonds of Series M,
payments of principal, premium (if any) and interest are to be made by wire
transfer of immediately available funds to ABA No. 307088754 for the advice
and credit to CoBank 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 twelve 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 thirteenth supplemental
indenture dated as of June 1, 1997 (hereinafter called the "Thirteenth
Supplemental Indenture"). Reference is hereby made to such 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 Thirteenth Supplemental Indenture
and designated therein as "First Mortgage Bonds, Series M, 7.84%" (hereinafter
called the "Bonds of Series M"). 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 Bonds of Series M shall be redeemable as provided in the Original
Indenture and the Thirteenth Supplemental Indenture.
The principal of the Bonds of Series M 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 Thirteenth
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 Bonds of Series M, in an
authorized denomination or denominations, of a like aggregate principal
amount; and the registered owner of any registered Bond or Bonds of Series M
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 consent); 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 indenture corporators,
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 President or a Vice President 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
______________________, 19___.
ARTESIAN WATER COMPANY, INC.
By:____________________________
Attest:
___________________________
FORM OF TRUSTEE'S AUTHENTICATION CERTIFICATE
FOR BONDS OF SERIES M
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 Bonds of Series M then outstanding, so
long as any of the Bonds of Series M are outstanding:
Section 2.1 Series M 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 $20,000,000.
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, 1996 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, 1996; (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.
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 Thirteenth
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 Thirteenth 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 and as further
supplemented by this Thirteenth 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 Thirteenth 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.
(Signatures follow on next page.)
IN WITNESS WHEREOF, ARTESIAN WATER COMPANY, INC. has caused these
presents to be signed in its corporate name by its President or one of its
Vice Presidents 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:_______________________________
Title:____________________________
[SEAL]
Attest: ___________________
(Signatures continue on next page.)
(Signatures continue from previous page.)
WILMINGTON TRUST COMPANY,
As Trustee,
By:_________________________________
[SEAL]
Attest: __________________________
STATE OF DELAWARE )
) SS.:
COUNTY OF NEW CASTLE )
On this, the _____ day of _____________, 1997, before me, the undersigned,
notary public, personally appeared ________________, who acknowledged himself
to be the ______________________ 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 Thirteenth
Supplemental Indenture for the purposes therein contained by signing the name
of Artesian Water Company, Inc. by himself as _______________________.
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 ______________, 1997, before me, the
undersigned, notary public, personally appeared ___________________, who
acknowledged herself to be the _______________ 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
Thirteenth Supplemental Indenture for the purposes therein contained by
signing the name of Artesian Water Company, Inc. by herself as
______________________.
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 ______________, 1997, before me, the
undersigned, notary public, personally appeared __________________________,
who acknowledged himself to be a Vice President of Wilmington Trust Company,
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 Thirteenth
Supplemental Indenture for the purposes therein contained by signing the name
of Wilmington Trust Company by himself 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]
STATE OF DELAWARE )
)SS.:
COUNTY OF NEW CASTLE )
On this, the _______ day of ______________, 1997, before me, the
undersigned, notary public, personally appeared ____________________, who
acknowledged herself to be a Vice President of Wilmington Trust Company, 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 Thirteenth
Supplemental Indenture for the purposes therein contained by signing the name
of Wilmington Trust Company by 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 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 ________________, 1997.
ARTESIAN WATER COMPANY, INC.
TO
WILMINGTON TRUST COMPANY,
As Trustee
_____________________
FOURTEENTH SUPPLEMENTAL INDENTURE
Dated as of June 1, 1997
_____________________
Supplemental to Indenture of Mortgage
Dated as of July 1, 1961
$5,000,000 First Mortgage Bonds, Series N
FOURTEENTH SUPPLEMENTAL INDENTURE, dated as of June 1, 1997, made by
and between ARTESIAN WATER COMPANY, INC. (successor to Artesian Resources
Corporation 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 1/2%, 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 1/2%, 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, 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 outstanding as of the date hereof; 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%, due
February 1, 2003, all of which were outstanding as of the date hereof; 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, 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, the Company proposes to issue and sell not more than $10,000,000
principal amount of a new series of bonds to be designated as First Mortgage
Bonds, Series M, 7.84% to be issued under and secured by 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"); and
WHEREAS, concurrently with the creation of the First Mortgage Bonds,
Series M, 7.84% the Company proposes to issue and sell not more than
$5,000,000 principal amount of a new series of bonds to be designated as
First Mortgage Bonds, Series N to be issued under and secured by the Original
Indenture, as supplemented by this fourteenth supplemental indenture dated as
of June 1, 1997 (hereinafter sometimes referred to as the "Fourteenth
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 the Thirteenth Supplemental Indenture and this Fourteenth
Supplemental Indenture for the purpose of providing for the creation of the
First Mortgage Bonds, Series M, 7.84% and the First Mortgage Bonds, Series N
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, this Fourteenth
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 $5,000,000 aggregate principal
amount of the First Mortgage Bonds, Series N 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 Fourteenth 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 N, 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 N by CoBank, ACB (hereinafter sometimes referred to
as "CoBank") pursuant to the Amended and Restated Bond Purchase Agreement
dated as of June 1, 1997 (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, (i) 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 and the Thirteenth Supplemental Indenture (except such
thereof as may heretofore have been released from the lien of the Indenture
in accordance with the terms thereof) and (ii) does hereby 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 N
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 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 N", herein referred to as the "Bonds of Series
N". The aggregate principal amount of the Bonds of Series N shall not exceed
$5,000,000.
Section 1.2 Bond Terms. The Bonds of Series N 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 due on
December 31, 2007 ( the "Maturity Date"), and shall bear interest at a rate
determined as hereinafter provided. Until the "Fixed Rate Date" (as
hereinafter defined) the Bonds of Series N shall bear interest at a rate equal
to the "Weekly Quoted Variable Rate" (as hereinafter defined). The Weekly
Quoted Variable Rate shall mean a variable annual interest rate equal at all
times to the rate of interest established by CoBank on the first Business Day
(as hereinafter defined) of each week and which shall be effective from and
including the first Business Day of such week to but excluding the first
Business Day of the next week; provided, however, that the Weekly Quoted
Variable Rate may not exceed the lesser of (i) the "National Variable Rate"
(as hereinafter defined) and (ii) the "Prime Rate" (as hereinafter defined).
The National Variable Rate shall mean the rate of interest CoBank shall
establish from time to time as its National Variable Rate, which rate is
intended to be a reference rate and not CoBank's lowest rate. The Prime Rate
shall mean the rate published from time to time in the Eastern Edition of The
Wall Street Journal as the average prime lending rate for seventy five percent
(75%) of the United States' thirty (30) largest commercial banks, or if The
Wall Street Journal shall cease publication or cease publishing the Prime Rate
on a regular basis, such other regularly published prime rate determined on a
substantially similar basis as CoBank shall specify. Business Day shall mean
any day that CoBank is open for business, except any day when Federal Reserve
Banks are closed.
From and after the Fixed Rate Date, the Bonds of Series N shall bear
interest at a rate equal to the "U.S. Treasury Rate" (as hereinafter defined)
plus 1.25% per annum (the "Fixed Rate"). The U.S. Treasury Rate shall be
determined by CoBank as of a date not more than five (5) days prior to the
Fixed Rate Date and shall be equal to the yield to maturity on U.S. Treasury
instruments maturing on the Maturity Date, as calculated from the bid price
indicated by Telerate (page 5) on the date of determination. In the event no
instrument matures on the Maturity Date, then the rate shall be interpolated
based on the bid prices quoted for the next longest and shortest maturities
so indicated. In the event Telerate ceases to provide such quotations or
materially changes the form or substance of page 5 (as reasonably determined
by CoBank), then CoBank will notify the Company, and CoBank and the Company
will agree upon a substitute basis for obtaining such quotations. The Fixed
Rate Date shall mean the earlier to occur of (i) January 1, 1998, (ii) the
date on which an aggregate of $5,000,000 principal amount of the Bonds of
Series N has been issued and (iii) the date the Company selects as the Fixed
Rate Date by written notice to CoBank and the Trustee specifying the Fixed
Rate Date, which notice shall be received not less than ten (10) days and not
more than fifteen (15) days before the date selected as the Fixed Rate Date.
On the Fixed Rate Date, any Bond of the Series N bearing interest at the
Weekly Quoted Variable Rate shall be exchanged as provided in Sections 2.06
and 2.09 of the Original Indenture for a Bond of the Series N bearing interest
at the Fixed Rate.
While the Bonds of Series N bear interest at the Weekly Quoted Variable
Rate, interest shall be due and payable on the first day of each calendar
month. While the Bonds of Series N bear interest at the Fixed Rate, interest
shall be due and payable on the first day of January, April, July and October
of each year and on the Maturity Date. In either event, interest shall accrue
until the Company's obligation with respect to the payment of principal,
premium (if any) and interest shall be discharged.
The Bonds of Series N shall be issuable as registered bonds without
coupons in the denominations of Five Hundred Thousand Dollars ($500,000) and
any multiple thereof, numbered LRl and upwards.
Unless otherwise agreed to in writing by the Company and the holders of
the Bonds of Series N, the payment of the principal of, premium (if any) and
interest on, the Bonds of Series N shall be made by wire transfer of
immediately available funds to ABA No. 307088754 for the advice and credit of
CoBank (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 Bonds of Series N 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 or (ii) pursuant to any provision of the
Original Indenture or the Bond Purchase Agreement requiring or authorizing
such redemption. Any redemption of the Bonds of Series N 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
Bonds of Series N are to be redeemed.
The redemption of any or all of the Bonds of Series N accruing interest at
the Weekly Quoted Variable Rate 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. The
redemption of any or all of the Bonds of Series N accruing interest at the
Fixed Rate 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) 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
Bonds of Series N, 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 the Fixed Rate
Date minus (ii) CoBank's cost of funds (determined in accordance with such
methodology) on the Mandatory 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 1/2 of 1% to such difference (such that the minimum
result shall at all times be 1/2 of 1%).
(C) For each annual period (from each January 1) or part thereof
during which the Bonds of Series N being redeemed were scheduled to be
outstanding, multiply the amount determined in (B) above by the principal
amount of the Bonds of Series N 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 Bonds of Series N
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 Bonds of Series N 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
Fourteenth Supplemental Indenture (i) upon the occurrence of an Event of
Default as provided in the Original Indenture or (ii) as provided in the Bond
Purchase Agreement. Upon the principal of the Bonds of Series N 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, any unpaid principal, premium (if any) and
interest payment shall automatically accrue interest at 4% per annum in excess
of the National Variable Rate.
The Bonds of Series N shall be registerable, transferable, and
exchangeable as provided in Article II of the Original Indenture and this
Section 1.2; provided that the Bonds of Series N shall not be issued as
coupon Bonds.
Section 1.3 Form of Bond. The text of the registered Bonds of Series N
and of the authentication certificate of the Trustee upon said Bonds shall be,
respectively, substantially as follows:
FORM OF REGISTERED BOND OF SERIES N WITHOUT COUPONS
No. NR________ $__________
ARTESIAN WATER COMPANY, INC.
FIRST MORTGAGE BONDS, SERIES N
December 31, 2007
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
December 31, 2007, the sum of _____________Dollars 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 determined as hereinafter provided.
[Alternative No. 1 For Bonds Issued Before the Fixed Rate Date]
This bond shall bear interest at a rate equal to the "Weekly Quoted Variable
Rate" (as hereinafter defined), due and payable on the first day of each
calendar month. The Weekly Quoted Variable Rate shall mean a variable annual
interest rate equal at all times to the rate of interest established by CoBank
on the first Business Day (as hereinafter defined) of each week and which
shall be effective from and including the first Business Day of such week to
but excluding the first Business Day of the next week; provided, however, that
the Weekly Quoted Variable Rate may not exceed the lesser of (i) the "National
Variable Rate" (as hereinafter defined) and (ii) the "Prime Rate" (as
hereinafter defined). The National Variable Rate shall mean the rate of
interest CoBank shall establish from time to time as its National Variable
Rate, which rate is intended to be a reference rate and not CoBank's lowest
rate. The Prime Rate shall mean the rate published from time to time in the
Eastern Edition of The Wall Street Journal as the average prime lending rate
for seventy five percent (75%) of the United States' thirty (30) largest
commercial banks, or if The Wall Street Journal shall cease publication or
cease publishing the Prime Rate on a regular basis, such other regularly
published prime rate determined on a substantially similar basis as CoBank
shall specify. Business Day shall mean any day that CoBank is open for
business, except any day when Federal Reserve Banks are closed.
[Alternative No. 2 For Bonds Issued On or After the Fixed Rate Date]
This bond shall bear interest at _______% per annum, payable on the first day
of January, April, July and October of each year, beginning July 1, 1997 and
on the Maturity Date.
Interest shall accrue 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 Fourteenth Supplemental Indenture. Unless
otherwise agreed to in writing by the Company and the holders of the Bonds of
Series N, payments of principal, premium (if any) and interest are to be made
by wire transfer of immediately available funds to ABA No. 307088754 for the
advice and credit to CoBank 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 thirteen 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 fourteenth supplemental
indenture dated as of June 1, 1997 (hereinafter called the "Fourteenth
Supplemental Indenture"). Reference is hereby made to such 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 Fourteenth Supplemental Indenture
and designated therein as "First Mortgage Bonds, Series N" (hereinafter
called the "Bonds of Series N"). 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 Bonds of Series N shall be redeemable as provided in the Original
Indenture and the Fourteenth Supplemental Indenture.
The principal of the Bonds of Series N 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 Fourteenth
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 Bonds of Series N, in an
authorized denomination or denominations, of a like aggregate principal
amount; and the registered owner of any registered Bond or Bonds of Series N
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 consent); 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 indenture corporators,
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.
(Signatures follow on next page.)
IN WITNESS WHEREOF, ARTESIAN WATER COMPANY, INC., has caused
this Bond to be signed in its name by its President or a Vice President 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 ______________________, 19___.
ARTESIAN WATER COMPANY, INC.
By:____________________________
Attest:
___________________________
FORM OF TRUSTEE'S AUTHENTICATION CERTIFICATE
FOR BONDS OF SERIES N
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 Bonds of Series N then outstanding, so
long as any of the Bonds of Series N are outstanding:
Section 2.1 Series N 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 $20,000,000.
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, 1996 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, 1996; (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.
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 Fourteenth
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 Fourteenth 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 and as further supplemented by this Fourteenth
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 Fourteenth 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 President or one of its
Vice Presidents 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:_______________________________
Title:____________________________
[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 _____________, 1997, before me, the undersigned,
notary public, personally appeared ________________, who acknowledged himself
to be the ______________________ 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 Fourteenth
Supplemental Indenture for the purposes therein contained by signing the name
of Artesian Water Company, Inc. by himself as _______________________.
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 ______________, 1997, before me, the
undersigned, notary public, personally appeared ___________________, who
acknowledged herself to be the _______________ 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
Fourteenth Supplemental Indenture for the purposes therein contained by
signing the name of Artesian Water Company, Inc. by herself as
______________________.
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 ______________, 1997, before me, the
undersigned, notary public, personally appeared __________________________,
who acknowledged himself to be a Vice President of Wilmington Trust Company,
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 Fourteenth
Supplemental Indenture for the purposes therein contained by signing the name
of Wilmington Trust Company by himself 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]
STATE OF DELAWARE )
)SS.:
COUNTY OF NEW CASTLE )
On this, the _______ day of ______________, 1997, before me, the
undersigned, notary public, personally appeared ____________________, who
acknowledged herself to be a Vice President of Wilmington Trust Company, 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 Fourteenth
Supplemental Indenture for the purposes therein contained by signing the name
of Wilmington Trust Company by 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 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 ________________, 1997.
EXHIBIT 11 - COMPUTATION OF EARNINGS PER COMMON SHARE
For the Six Months Ended
June 30,
1997 1996
Earnings
Income applicable to Common Stock $ 681,836 $ 804,967
Shares
Weighted average number of
shares outstanding 1,765,079 1,267,899
Net income per Common Share $ 0.39 $ 0.63
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
Filed as an exhibit to this Form 10-Q.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ARTESIAN RESOURCES CORPORATION
8/14/97 /s/ Dian C. Taylor
Dian C. Taylor
President, CEO, and Chair of the Board
Artesian Resources Corporation and Subsidiaries
8/14/97 /s/ David B. Spacht
David B. Spacht
Vice President, Chief Financial Officer, and
Treasurer
Artesian Resources Corporation and Subsidiaries