FINANCING AGREEMENT

BETWEEN

ARTESIAN WATER COMPANY, INC.

AND

DELAWARE DRINKING WATER STATE REVOLVING FUND
ACTING BY AND THROUGH THE
DELAWARE DEPARTMENT OF HEALTH & SOCIAL SERVICES,
DIVISION OF PUBLIC HEALTH

Loan No.  220.25

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TABLE OF CONTENTS

PAGE

ARTICLE I DEFINITIONS
Section 1.1. Definitions.
Section 1.2. Rules of Construction.
ARTICLE II REPRESENTATIONS
Section 2.1. Representations by Borrower.
ARTICLE III ADVANCE AND USE OF LOAN PROCEEDS; CONSTRUCTION OF PROJECT
Section 3.1. Advance of Loan Proceeds.
Section 3.2. Application of Loan Proceeds.
Section 3.3. Agreement to Draw Loan Proceeds and Penalty for Delay.
Section 3.4. Agreement to Accomplish Project.
Section 3.5. Permits.
Section 3.6. Construction Contractors.
Section 3.7. Engineering Services.
Section 3.8. Borrower Required to Complete Project.
Section 3.9. Inclusion of Eligible Project Reimbursement Costs Within The Loan.
ARTICLE IV REPAYMENT OF LOAN; GENERAL OBLIGATION
Section 4.1. Repayment of Loan.
Section 4.2. General Obligation.
Section 4.3. [RESERVED]
ARTICLE V PREPAYMENTS
Section 5.1. Prepayments of Loan.
ARTICLE VI OPERATION AND USE OF SYSTEM
Section 6.1. Inspection of System and Borrower’s Books and Records.
Section 6.2. Performance Certification.
Section 6.3. Operation, Maintenance and Use of System.
ARTICLE VII INSURANCE, DAMAGE AND DESTRUCTION
Section 7.1. Insurance.
ARTICLE VIII SPECIAL COVENANTS
Section 8.1. Maintenance of Existence.
Section 8.2. Financial Records and Statements.
Section 8.3. Certificate as to No Default.
Section 8.4. Further Assurances.
Section 8.5. Other Indebtedness.
Section 8.6. Assignment by Borrower.
ARTICLE IX DEFAULTS AND REMEDIES
Section 9.1. Events of Default.
Section 9.2. Notice of Default.
Section 9.3. Remedies on Default.
Section 9.4. Delay and Waiver.
Section 9.5. Right to Cure Default.
ARTICLE X MISCELLANEOUS
Section 10.1. Successors and Assigns.
Section 10.2. Amendments.
Section 10.3. Limitation of Liability of Borrower’s Officers.
Section 10.4. Applicable Law.
Section 10.5. Severability.
Section 10.6. Notice.
Section 10.7. Headings.
Section 10.8. Terms of Agreement.
Section 10.9. Counterparts.

EXHIBIT A PROJECT DESCRIPTION
EXHIBIT B PROJECT BUDGET
EXHIBIT C FORM OF REQUISITION
EXHIBIT D SCHEDULE OF DISBURSEMENTS
EXHIBIT E FORM OF CHANGE ORDER
EXHIBIT F PROJECTED DRAWDOWN CERTIFICATE

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FINANCING AGREEMENT

THIS FINANCING AGREEMENT (this “Agreement”) is made as of this 28th day of
April, 2020, between the DELAWARE DRINKING WATER STATE REVOLVING FUND, acting by
and through the DELAWARE DEPARTMENT OF HEALTH & SOCIAL SERVICES, DIVISION OF
PUBLIC HEALTH, a public agency of The State of Delaware (the “Department”) and
ARTESIAN WATER COMPANY, INC., a corporation organized under the laws of The
State of Delaware (the “Borrower”).

Pursuant to Title 29 Delaware Code Section 7903 (the “Act”), the General
Assembly established a permanent and perpetual fund known as the “Delaware
Drinking Water State Revolving Fund” (the “Fund”) and empowered the Secretary of
the Department of Health & Social Services to administer such Fund.  From the
Fund, the Department from time to time makes loans to and acquires obligations
of eligible persons in Delaware to finance the costs of drinking water
facilities in accordance with the Federal Safe Drinking Water Act.

The Borrower requested a loan (the “Loan”) from the Fund and will evidence its
obligation to repay the Loan by the signing of this Agreement and by the
delivery of its General Obligation Note (Coventry Water Main Renewal Project),
Series 2020A-SRF (the “Note”).  The Borrower will use the Loan Proceeds from the
Fund to: (i) install approximately 4,100 linear feet of ductile iron water main
and replace all water mains along with valves and fire hydrants in the Coventry
development, as more fully described in Exhibit A and (ii) pay certain
administrative fees and costs of issuing the Note (collectively, the “Project”).

ARTICLE I
DEFINITIONS
Section 1.1. Definitions.
The capitalized terms contained in this Agreement shall have the meanings set
forth below unless the context requires otherwise and any capitalized terms not
otherwise defined herein shall have the meaning assigned to such terms in the
Act:

“Agreement” means this Financing Agreement between the Department and the
Borrower, together with any amendments or supplements hereto.

“Authorized Representative” means the Chief Financial Officer and Treasurer, the
President or any Vice President and the Secretary of the Borrower or any
employee of the Borrower authorized by resolution of the Borrower to perform the
act or sign the document in question.

"Borrower's Engineer" means any of the Borrower's engineers, including any
in-house engineers employed by Borrower, who are of recognized standing and
experience in the field of environmental engineering.  Any such engineers shall
be subject to the reasonable approval of the Department; provided that the
Department pursuant to this Agreement confirms that the use of Borrower’s
in-house engineers are approved.

“Business Day” means a day of the year which is not a Saturday or Sunday or a
day on which banking institutions located in New York or Delaware are required
or authorized to remain closed or on which the New York Stock Exchange is
closed.

“Closing Date” means the date this Agreement is executed and delivered by the
Borrower and the Department.

“Commitment Letter” shall mean the commitment letter from the Department to the
Borrower dated March 3, 2020 and all extensions and amendments thereto.

“Department” means the Department of Health & Social Services, Division of
Public Health.

“Event of Default” shall have the meaning set forth in Section 9.1.

“Fiscal Year” means the period of twelve months established by the Borrower as
its annual accounting period.

“Loan Proceeds” means the funds applied to make the loan to the Borrower
pursuant to this Agreement.

“Notice to Proceed” means a written notice given by the Borrower and signed by
an Authorized Representative issued to each construction contractor fixing the
date on which construction, equipping, acquisition, expansion or renovation of
the Project as described in Exhibit A will commence, a copy of which must be
furnished to the Department by the Borrower within one year of the Closing Date.

“Penalty” shall have the meaning set forth in Section 3.3.

“Project” means, collectively, the various improvements and upgrades to the
System of the Borrower, as more fully described in Exhibit A, the costs of the
construction, acquisition or equipping of which are to be financed in whole or
in part with the Loan Proceeds.

“Project Budget” means the budget for the financing of the Project, a copy of
which is attached to this Agreement as Exhibit B.

“Project Costs” means the costs of the construction, acquisition or equipping of
the Project, as further described in the Project Budget, and such other costs as
may be approved in writing by the Department, provided such costs are permitted
by the Act.

“System” means all plants, systems, facilities, equipment or property, of which
the Project constitutes the whole or a part, owned, operated or maintained by
the Borrower and used in connection with the drinking water services for the
systems which comprise the Project, all as described in Exhibit A.

Section 1.2. Rules of Construction.
The following rules shall apply to the construction of this Agreement unless the
context requires otherwise:

(a) Singular words shall connote the plural number as well as the singular and
vice versa.
(b) All references in this Agreement to particular Sections or Exhibits are
references to Sections or Exhibits of this Agreement unless otherwise indicated.
(c) The headings and table of contents as used in this Agreement are solely for
convenience of reference and shall not constitute a part of this Agreement nor
shall they affect its meaning, construction or effect.
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations by Borrower.
The Borrower makes the following representations as the basis for its
undertakings under this Agreement:

(a) The Borrower is a duly organized and validly existing corporation in good
standing under the laws of the State of Delaware.
(b) The Borrower has full right, power and authority to (i) execute this
Agreement and the other documents related thereto, (ii) own and operate the
System, (iii) construct, acquire or equip the Project and finance the Project
Costs by borrowing money for such purpose pursuant to this Agreement, and (iv)
carry out and consummate all of the transactions contemplated by this Agreement.
(c) All permits, licenses, registrations, certificates, authorizations and
approvals required to have been obtained as of the date of signing of this
Agreement have been obtained for (i) the execution by the Borrower of this
Agreement, (ii) the performance and enforcement of the obligations of the
Borrower thereunder, (iii) the acquisition, construction, equipping, occupation,
operation and use of the Project, and (iv) the operation and use of the System. 
The Borrower knows of no reason why any other necessary permits or approvals
cannot be obtained as required.
(d) This Agreement has been executed by a duly authorized officer of the
Borrower and constitutes the legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with the terms of this Agreement.
(e) There are not pending nor, to the best of the knowledge of the undersigned
officer of the Borrower, threatened, any actions, suits, proceedings or
investigations of a legal, equitable, regulatory, administrative or legislative
nature, in which a judgment, order or resolution may have a material adverse
effect on the Borrower, or its business, assets, condition (financial or
otherwise), operations or prospects or in its ability to perform its obligations
under this Agreement.
(f) There have been no material defaults by any contractor or subcontractor
under any contract made in connection with the construction or equipping of the
Project.
(g) No material adverse change has occurred in the financial condition of the
Borrower from that indicated in the financial statements, application and other
information furnished to the Department in connection with this Agreement.
(h) No Event of Default has occurred and is continuing.
(i) Except as may otherwise be approved by the Department or permitted by the
terms hereof, the Project and the System at all times will be owned by the
Borrower and will not be operated or controlled by any other entity or person.
(j) The Project will be a part of the System.
(k) The Loan Proceeds and funds available from the other sources specified in
the Project Budget will be sufficient to pay the estimated Project Costs.
(l) The Borrower has received or has commitments to obtain all funds and other
financing for the Project as contemplated in the Project Budget.
(m) The Borrower expects to complete the acquisition, construction and equipping
of the Project on or before the projected date of June 30, 2021.  Noncompliance
with this condition may cause loan funds to become de-obligated and reallocated
to other drinking water projects at the discretion of the Department. The
Borrower expects to adhere to the estimated drawdown schedule attached hereto as
Exhibit D and certified to in the "Certificate of the Borrower and Projected
Drawdown Schedule of the Project" attached hereto as Exhibit F and made a part
hereof. This projected date of completion is subject to an extension if such
extension is mutually agreed upon by the Department and the Borrower.  The final
maturity date for repayment in full of the Loan will be based upon the actual
date of completion of the Project as more fully described in the Note.
ARTICLE III
ADVANCE AND USE OF LOAN PROCEEDS; CONSTRUCTION OF PROJECT
Section 3.1. Advance of Loan Proceeds.
The Department agrees to advance to the Borrower pursuant to this Agreement up
to One Million Seven Hundred Thousand Dollars ($1,700,000) to pay Project Costs
in accordance with the Project Budget.

Section 3.2. Application of Loan Proceeds.
(a) The Borrower agrees to apply the Loan Proceeds solely and exclusively to the
payment, or the reimbursement of the Borrower for the payment, of Project Costs
and further agrees, upon the request of the Department, to exhibit to the
Department, vouchers, statements, bills of sale or other evidence of the actual
payment of such Project Costs.  The Department shall disburse the Loan Proceeds
to or for the account of the Borrower upon execution of this Agreement and upon
receipt by the Department of the following:
(1) A requisition (upon which the Department shall be entitled to rely) signed
by an Authorized Representative and containing all information called for by,
and otherwise being in the form of, Exhibit C attached hereto.

(2) If such requisition includes an item for payment for labor or to
contractors, builders or materialmen (i) a certificate, signed by an Authorized
Representative, stating that such work was actually performed or such materials,
supplies or equipment were actually furnished or installed in or about the
construction of the Project; and (ii) a certificate signed by an Authorized
Representative stating either that such materials, supplies or equipment are not
subject to any lien or security interest or that such lien or security interest
will be released or discharged upon payment of the requisition.

Upon receipt of each such requisition and accompanying certificate or
certificates, the Department shall disburse Loan Proceeds hereunder to or for
the account of the Borrower in accordance with such requisition in an amount and
to the extent approved by the Department.  The Borrower expects to adhere to the
estimated drawdown schedule attached hereto as Exhibit D. The Department shall
have no obligation to disburse any such Loan Proceeds if the Borrower is in
default hereunder, nor shall the Department have any obligation to approve any
requisition if the Borrower is not in compliance with the terms of this
Agreement.

(b) The Borrower shall comply with all applicable State of Delaware and federal
laws, regulations and other requirements, including Uniform Grants Guidance
(UGG) 2 CFR 200 and EPA specific regulations located in 2 CFR 1500, related to
or arising out of or in connection with the Project and the funding thereto by
the Fund.  The Borrower shall also comply in all respects with the Federal
Single Audit Act and OMB’s UGG located in 2 CFR 200.501, as a sub-recipient of
Federal funds.  Except as may otherwise be approved by the Department,
disbursements shall be held at ninety-five percent (95%) of the maximum amount
authorized hereunder to ensure satisfactory completion of the Project.  Upon
receipt from the Borrower of the certificate specified in Section 3.4 and a
final requisition detailing all retainages to which the Borrower is then
entitled, the Department, to the extent approved by the Department and subject
to the provisions of this Section and Section 3.4, will disburse Loan Proceeds
to or for the account of the Borrower to the extent of such approval.
(c) The Department may apply Loan Proceeds to pay any Penalty assessed pursuant
to Section 3.3.
(d) The Department shall have no obligation to disburse Loan Proceeds in excess
of the amount necessary to pay for approved Project Costs.
(e) The Borrower shall comply with the Delaware Drinking Water State Revolving
Fund's Davis‑Bacon Wage Rate Act Requirement as set forth in the closing
documents.  The Borrower agrees that it shall use commercially reasonable
efforts to ensure that all contractors or subcontractors utilized by the
Borrower in the Project will complete and file the U.S. Department of Labor’s
payroll form WH-347.
(f) As a recipient of Fund assistance, the Borrower agrees that none of the Loan
Proceeds made available to the Borrower shall be used for the Project for the
construction, alteration, maintenance, or repair of the System unless all of the
iron and steel products used in the Project are produced in the United States
(“Buy American Iron and Steel Requirement”), unless: (i) the Borrower has
requested and obtained a waiver from the Environmental Protection Agency
pertaining to the Project or (ii) the Department has otherwise advised the
Borrower in writing that the Buy American Iron and Steel Requirement is not
applicable to the Project.
In this section 3.2(f), the term ‘‘iron and steel products’’ means the following
products made primarily of iron or steel-lined or unlined pipes and fittings,
manhole covers and other municipal castings, hydrants, tanks, flanges, pipe
clamps and restraints, valves, structural steel, reinforced precast concrete,
and construction materials.

Section 3.3. Agreement to Draw Loan Proceeds and Penalty for Delay.
The Borrower agrees after the Closing Date to commence work in earnest on the
Project and make draws on the Loan Proceeds of at least ten percent (10%) of the
Project Costs within one year of the Closing Date.  The Borrower further agrees
to provide a copy of each Notice to Proceed given by the Borrower to each
construction contractor within one year of the Closing Date.

If by April 28, 2021, which is one year from the Closing Date, (i) the Borrower
has not submitted requisition(s), in the manner required by Section 3.2, for
more than ten percent (10%) of the Project Costs, and (ii) the Department has
not received a copy of each Notice to Proceed, the Department may in its
discretion assess a penalty equal to one percent (1%) of the Loan Proceeds (the
"Penalty").  Such Penalty may be drawn by the Department from the Loan
Proceeds.  It is within the Department’s complete discretion whether to impose
the Penalty based upon its review of affirmative steps taken by the Borrower to
commence and complete the Project and the totality of the circumstances
surrounding any such delay in requesting disbursement of Loan Proceeds.

Section 3.4. Agreement to Accomplish Project.
The Borrower will cause the Project to be acquired, constructed, expanded,
renovated or equipped as described in Exhibit A and in accordance with the
Project Budget and the plans, specifications and designs prepared by the
Borrower’s Engineer and approved by the Department.  The Borrower will complete
the Project by the date set forth in Section 2.1(m).  All plans, specifications
and designs have been or will be approved by all applicable regulatory
agencies.  The Borrower agrees to maintain complete and accurate books and
records of the Project Costs and permit the Department through its duly
authorized representatives to inspect such books and records at any reasonable
time.  The Borrower and the Department may amend the description of the Project
set forth in Exhibit A.

The Borrower will deliver to the Department a certificate signed by an
Authorized Representative of the Borrower and by the Borrower’s Engineer stating
(i) that the Project has been completed substantially in accordance with this
Section, the plans and specifications as amended from time to time, as approved
by the Department, and in substantial compliance with all material applicable
laws, ordinances, rules and regulations, (ii) the date of such completion, (iii)
that all certificates of occupancy or other material permits necessary for the
Project’s use, occupancy and operation have been issued or obtained, and (iv)
the amount, if any, to be reserved for payment of Project Costs.

Section 3.5. Permits.
The Borrower, at its sole cost and expense, shall comply with, and shall obtain
all permits, consents and approvals required by local, state or federal laws,
ordinances, rules, regulations or requirements in connection with the
acquisition, construction, equipping, occupation, operation or use of the
Project.  The Borrower shall, upon request, promptly furnish to the Department
copies of all such permits, consents and approvals.  The Borrower shall also
comply with all lawful program or procedural guidelines or requirements duly
promulgated and amended as of the date hereof by the Department in connection
with the acquisition, construction, equipping, occupation, operation or use of
projects financed by the Fund under the Act.  The Borrower shall also comply in
all respects with all applicable State of Delaware and federal laws, regulations
and other requirements relating to or arising out of or in connection with the
Project and the funding thereof by the Fund.

Section 3.6. Construction Contractors.
Each construction contractor employed in the accomplishment of the Project shall
be required in the construction contract to furnish a performance bond and a
payment bond, each in an amount equal to one hundred percent (100%) of the
particular contract price.  Such bonds shall list the Borrower as beneficiary. 
Each contractor shall be required to maintain, during the construction period
covered by the particular construction contract, builder’s risk insurance,
workers compensation insurance, public liability insurance, property damage
insurance and vehicle liability insurance in amounts and on terms customarily
maintained on such projects.  Upon request of the Department, the Borrower shall
cause each contractor to furnish evidence of such bonds and insurance to the
Department.  In addition to the foregoing,

(a) Each construction contractor employed in the accomplishment of the Project
is required to comply with the Anti-Kickback Act (and is required to insert
similar requirements in all subcontracts) and all other applicable federal laws
and regulations.
(b) All construction contracts and contractors’ estimate forms will be prepared
so that materials and equipment may be readily itemized and identified as to
eligible and noneligible costs.
(c) Any change in a construction contract that will alter the contract price or
completion time or will substantially modify the proposed treatment processes
must be submitted to the Department via a change order for prior approval in the
form of the change order attached hereto as Exhibit E.
(d) The construction of the Project facilities will conform to applicable
federal, state and local laws, ordinances and regulations.
(e) The Borrower will proceed expeditiously and complete the Project facilities
in accordance with the approved application, project schedule, surveys, plans,
profiles, cross-sections, specifications and amendments approved by the
Department.
Recipients and sub-recipients of Fund assistance, including the Borrower, shall
not make any award or permit any award (sub-grant or contract) at any tier to
any party which is debarred or suspended or is otherwise excluded from or
ineligible for participation in Federal assistance programs under Executive
Order 12549, “Debarment and Suspension.”  Grantees and sub-grantees, including
the Borrower, shall refer to the "List of Parties Excluded From Federal
Procurement and Non-Procurement Programs" to insure that the contractor or
subcontracts are not on this list.  A search for exclusion records can be made
at the official US government System for Award Management website at
https://www.sam.gov.  For assistance visit the Federal Service Desk online at
www.fsd.gov or by calling (866) 606-8220.

Section 3.7. Engineering Services.
The Borrower’s Engineer will provide engineering services covering planning and
design, operation of the System, and the supervision and inspection of the
construction of the Project.  The Borrower’s Engineer will provide to the
Department the certificate required by Section 3.4.

Section 3.8. Borrower Required to Complete Project.
Subject to the provisions of Section 8.5 hereof, if the Loan Proceeds are not
sufficient to pay in full the cost of the Project, the Borrower will complete
the Project at its own expense and shall not be entitled to any reimbursement
therefor from the Department or the Fund or to any abatement, diminution or
postponement of the Borrower’s repayments under this Agreement.

Section 3.9. Inclusion of Eligible Project Reimbursement Costs Within The Loan.
Project Costs incurred prior to the initiation of construction and after
approval of the Project by the Department are eligible for reimbursement from
Loan Proceeds provided that the Project continues to meet all the criteria and
requirements set forth by the Department.  Notwithstanding anything to the
contrary herein, costs incurred and associated with the initial stages of the
Project, such as planning and design, are eligible for reimbursement regardless
of when such costs were incurred.

ARTICLE IV
REPAYMENT OF LOAN; GENERAL OBLIGATION
Section 4.1. Repayment of Loan.
The Borrower shall repay the Loan pursuant to the terms of the Note issued to
the Department.

Section 4.2. General Obligation.
The Borrower’s repayment obligation constitutes a general obligation of the
Borrower secured by a pledge of its full faith and revenue.

Section 4.3. [RESERVED]
ARTICLE V
PREPAYMENTS
Section 5.1. Prepayments of Loan.
At its option and upon giving prior written notice to the Department, the
Borrower may prepay the Loan, in whole or in part, without penalty, at any
time.  Such prior written notice shall specify the date on which the Borrower
will make such prepayment and whether the Loan will be prepaid in full or in
part, and if in part, the principal amount to be prepaid.  Any such prepayment
shall be applied against Loan principal installments then outstanding as shall
be directed by the Borrower.

ARTICLE VI
OPERATION AND USE OF SYSTEM
Section 6.1. Inspection of System and Borrower’s Books and Records.
The Department and its duly authorized representatives and agents shall have
such reasonable rights of access to the System as may be necessary to determine
whether the Borrower is in compliance with the requirements of this Agreement
and shall have the right at all reasonable times and upon reasonable prior
notice to the Borrower to examine and copy the books and records of the Borrower
insofar as such books and records relate to the System.

Section 6.2. Performance Certification.
The Borrower will notify the Department when the Project is completed and
operation commenced (the "Initiation of Operations") on or before the date set
out in Section 2.1(m).

Section 6.3. Operation, Maintenance and Use of System.
At its own cost and expense, the Borrower shall operate the System in a proper,
sound and economical manner and in compliance with all legal requirements, shall
maintain the System in good repair and operating condition and from time to time
shall make all necessary repairs, renewals and replacements.

ARTICLE VII
INSURANCE, DAMAGE AND DESTRUCTION
Section 7.1. Insurance.
Unless the Department otherwise agrees in writing, the Borrower shall maintain
or cause to be maintained insurance against such risks as are customarily
insured against by owners of systems similar in size and character to the
System.

ARTICLE VIII
SPECIAL COVENANTS
Section 8.1. Maintenance of Existence.
The Borrower shall maintain its existence as a “Person” (as defined in the
Federal Safe Drinking Water Act) and, without consent of the Department, which
consent shall not be unreasonably withheld, shall not dissolve or otherwise
dispose of all or substantially all of its assets or consolidate or merge with
or into another entity.  Notwithstanding the foregoing, the Borrower may
consolidate or merge with or into, or sell or otherwise transfer all or
substantially all of its assets to a political subdivision of The State of
Delaware, and the Borrower thereafter may dissolve, if the surviving, resulting
or transferee political subdivision, if other than the Borrower, assumes, in
written form acceptable to the Department, all of the obligations of the
Borrower contained in this Agreement, and there is furnished to the Department
an opinion of counsel acceptable to the Department subject to customary
exceptions and qualifications, to the effect that such assumption constitutes
the legal, valid and binding obligations of the surviving, resulting or
transferee entity in accordance with its terms.

Section 8.2. Financial Records and Statements.
The Borrower shall maintain proper books of record and account in which proper
entries shall be made in accordance with generally accepted accounting
principles, consistently applied, of all its business and affairs related to the
System.  The Borrower shall have an annual audit made by an independent
certified public accountant within one hundred and twenty (120) days after the
end of each Fiscal Year.  A copy of the audited annual report shall be forwarded
to the Department when completed.

Section 8.3. Certificate as to No Default.
The Borrower shall deliver to the Department, within one hundred and twenty
(120) days after the close of each Fiscal Year, a certificate signed by an
Authorized Representative stating that, during such year and as of the date of
such certificate, no event or condition has happened or existed, or is happening
or existing, which constitutes an Event of Default, or if such an event or
condition has happened or existed, or is happening or existing, specifying the
nature and period of such event or condition and what action the Borrower has
taken, is taking or proposes to take to rectify it.

Section 8.4. Further Assurances.
The Borrower shall to the fullest extent permitted by law pass, make, do,
execute, acknowledge and deliver such further resolutions, acts, deeds,
conveyances, assignments, transfers and assurances as may be necessary or
desirable for the better assuring, conveying, granting, assigning and confirming
the rights of the Department under this Agreement, or as may be required to
carry out the purpose of this Agreement.  The Borrower shall at all times, to
the fullest extent permitted by law, defend, preserve and protect all rights of
the Department under this Agreement against all claims and demands of all
persons.

Section 8.5. Other Indebtedness.
In the event that the Borrower is required to borrow additional funds in order
to complete the Project, the Borrower agrees to consult with the Department
before borrowing any such additional funds.  The Borrower agrees to pay when due
all amounts required by any other bonded indebtedness and to perform all of its
obligations in connection therewith.

Section 8.6. Assignment by Borrower.
The Borrower may not assign its rights under this Agreement without the prior
written consent of the Department, which consent shall not be unreasonably
withheld.  If the Borrower desires to assign its rights under this Agreement to
another “Person” (as defined in the Federal Safe Drinking Water Act), the
Borrower shall give notice of such fact to the Department.  If the Department
consents to the proposed assignment, the Borrower may proceed with the proposed
assignment, but such assignment shall not become effective until the Department
is furnished: (i) an assumption agreement in form and substance satisfactory to
the Department by which the assignee agrees to assume all of the Borrower’s
obligations under this Agreement, and (ii) an opinion of counsel to the
assignee, subject to customary exceptions and qualifications, that the
assumption agreement and this Agreement constitute legal, valid and binding
obligations of the assignee enforceable against the assignee in accordance with
their terms and that the assignment and assumption comply in all respects with
the provisions of this Agreement.  Notwithstanding the foregoing, the assignment
of the rights of the Borrower under this Agreement or the assumption of the
obligations thereunder by the assignee shall in no way be construed as releasing
the Borrower’s obligations unless specifically agreed to by the Department.

ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.1. Events of Default.
Each of the following events shall be an “Event of Default” hereunder:

(a) The failure to pay any payment of principal, interest and/or any
administrative fee when due hereunder or under the Note;
(b) The Borrower’s failure to perform or observe any of the other covenants,
agreements or conditions of this Agreement and the continuation of such failure
for a period of thirty (30) days after the Department gives the Borrower written
notice specifying such failure and requesting that it be cured, unless the
Department shall agree in writing to an extension of such time prior to its
expiration; provided, however, if the failure stated in the notice is
correctable but cannot be corrected within the applicable period, the Department
will not unreasonably withhold its consent to an extension of such time if
corrective action is instituted by the Borrower within the applicable period and
diligently pursued until the default is corrected;
(c) Any warranty, representation or other statement by or on behalf of Borrower
contained in this Agreement or in any instrument furnished in compliance with or
in reference to this Agreement is false or misleading in any material respect;
(d) An order or decree shall be entered, with the Borrower’s consent or
acquiescence, appointing a receiver or receivers of the System or any part
thereof or of the income thereof, or if such order or decree, having been
entered without the Borrower’s consent or acquiescence, shall not be vacated,
discharged or stayed on appeal within ninety (90) days after the entry thereof;
(e) Any proceeding shall be instituted, with the Borrower’s consent or
acquiescence, for the purpose of effecting a composition between the Borrower
and its creditors, pursuant to any federal or state statute now or hereafter
enacted, if the claims of such creditors are under any circumstances payable
from the revenues of the System; or
(f) Any bankruptcy, insolvency or other similar proceeding shall be instituted
by or against the Borrower under any federal or state bankruptcy or insolvency
law now or hereinafter in effect and, if instituted against the Borrower, is not
dismissed within ninety (90) days after filing.
Section 9.2. Notice of Default.
The Borrower agrees to give the Department prompt written notice if any order,
decree or proceeding referred to in Section 9.1(d)-(f), inclusive, is entered or
instituted against the Borrower or of the occurrence of any other event or
condition which constitutes an Event of Default immediately upon becoming aware
of the existence thereof.

Section 9.3. Remedies on Default.
Whenever any Event of Default referred to in Section 9.1 shall have happened and
be continuing, the Department shall, in addition to any other remedies provided
herein or by law, have the right, at its option without any further demand or
notice, to take one or both of the following remedial steps:

(a) Discontinue advances of Loan Proceeds hereunder;
(b) Declare immediately due and payable all payments due or to become due under
this Agreement, and upon notice to the Borrower, the same shall become
immediately due and payable by the Borrower without further notice or demand;
and
(c) Take whatever other action at law or in equity may appear necessary or
desirable to collect the payments then due and thereafter to become due under
this Agreement or to enforce any other of the Department’s rights under this
Agreement or to enforce performance by the Borrower of its covenants, agreements
or undertakings contained herein.
Section 9.4. Delay and Waiver.
No delay or omission to exercise any right or power accruing upon any Event of
Default shall impair any such right or power or shall be construed to be a
waiver of any such Event of Default or acquiescence therein, and every such
right and power may be exercised from time to time and as often as may be deemed
expedient.  No waiver of any Event of Default under this Agreement shall extend
to or shall affect any subsequent Event of Default or shall impair any rights or
remedies consequent thereto.

Section 9.5. Right to Cure Default.
If the Borrower shall fail to make any payment or to perform any act required by
it under this Agreement, the Department without prior notice to or demand upon
the Borrower and without waiving or releasing any obligation or default, may
(but shall be under no obligation to) make such payment or perform such act. 
All amounts so paid by the Department and all costs, fees and expenses so
incurred shall be payable by the Borrower as an additional obligation under this
Agreement, together with interest thereon at the rate of interest of five
percent (5%) per annum until paid.  The Borrower’s obligation under this Section
shall survive the repayment of the Note.

ARTICLE X
MISCELLANEOUS
Section 10.1. Successors and Assigns.
This Agreement shall be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.

Section 10.2. Amendments.
The Department and the Borrower shall have the right to amend from time to time
any of the terms and conditions of this Agreement, provided that all amendments
shall be in writing and shall be signed by or on behalf of the Department and
the Borrower.

Section 10.3. Limitation of Liability of Borrower’s Officers.
No present or future director, official, officer, employee or agent of the
Borrower shall be liable personally in respect of this Agreement or for any
other action taken by such individual pursuant to or in connection with the
financing provided for in this Agreement.

Section 10.4. Applicable Law.
This Agreement shall be governed by the applicable laws of the State of
Delaware.

Section 10.5. Severability.
If any clause, provision, or section of this Agreement shall be held illegal or
invalid by any court, the illegality or invalidity of such clause, provision or
Section shall not effect the remainder of this Agreement which shall be
construed and enforced as if such illegal or invalid clause, provision or
section had not been contained in this Agreement.  If any agreement or
obligation contained in this Agreement is held to be in violation of law, then
such agreement or obligation shall be deemed to be the agreement or obligation
of the Department and the Borrower, as the case may be, only to the extent
permitted by law.

Section 10.6. Notice.
Unless otherwise provided for herein, all demands, notices, approvals, consents,
requests, opinions and other communications under this Agreement shall be in
writing and shall be deemed to have been given when delivered in person or
mailed by first class registered or certified mail, postage prepaid, addressed
as follows:

Department: Delaware Department of Health and Social Services
Division of Public Health
Office of Drinking Water
Jesse Cooper Building
417 Federal Street – Room 226
Dover, DE 19901
Attention: DWSRF Program Director

With a copy to:

Delaware Department of Natural Resources
& Environmental Control, on behalf of the Delaware Department of Health and
Social Services
Office Of The Secretary, Environmental Finance
97 Commerce Way, Suite 106
Dover, DE  19904
Attention:  Robert Zimmerman, Chief of Administration

and

Borrower: Artesian Water Company, Inc.
664 Churchmans Road
Newark, DE   19702
Attention:  David B. Spacht

The Department, and the Borrower may designate, by notice given hereunder, any
further or different addresses to which subsequent demands, notices, approvals,
consents, requests, opinion or other communications shall be sent or persons to
whose attention the same shall be directed.

Section 10.7. Headings.
The headings of the several articles and sections of this Agreement are inserted
for convenience only and do not comprise a part of this Agreement.

Section 10.8. Terms of Agreement.
This Agreement shall be effective upon its execution and delivery by the
Borrower and the Department.  Except as otherwise specified, the Borrower’s
obligations under this Agreement shall expire upon payment in full of the Note
and all other amounts payable by the Borrower under this Agreement.

Section 10.9. Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be an original and all of which together shall constitute but one and the
same instrument.

--------------------------------------------------------------------------------

WITNESS the following signatures, all duly authorized.

DELAWARE DRINKING WATER STATE REVOLVING FUND, ACTING BY AND THROUGH THE DELAWARE
DEPARTMENT OF HEALTH & SOCIAL SERVICES, DIVISION OF PUBLIC HEALTH

By: 
Robert J. Zimmerman
DNREC, Chief of Administration
Delaware Department of Natural Resources & Environmental Control, on behalf of
the Delaware Department of Health and Social Services

ARTESIAN WATER COMPANY, INC.

By: 
Name:  David B. Spacht
Title: Chief Financial Officer and Treasurer

(SEAL)

Attest:

By:  
Joseph A. Dinunzio
Secretary

--------------------------------------------------------------------------------

EXHIBIT A

Project Description

This project proposes to address the failing and older water mains located in
the Coventry development. The project consists of the installation of
approximately 4,100 linear feet of ductile iron water main. All existing water
mains will be abandoned and all water services will be replaced along with
valves and fire hydrants.

--------------------------------------------------------------------------------

EXHIBIT B

Project Budget

Non-Construction:
 
Administrative Expense
 
$
158,100
 
Engineer Basic Fees
 
$
76,500
 
Project Inspection Fees
 
$
20,400
 
Sub-Total
 
$
255,000
 
Construction:
 
Distribution
 
$
1,445,000
 
Construction Sub-Total
 
$
1,445,000
 
 
       
Totals
 
$
1,700,000
 
Sources of Funds
                 
Drinking Water SRF Loan
 
$
1,700,000
 

--------------------------------------------------------------------------------

EXHIBIT C

Form of Requisition

PROJECT NAME:___________________________ FUNDING
RECIPIENT:___________________________

E. I. #____________________

UNITED STATES AND/STATE OF DELAWAREREQUISITION NO:___________
    DEPARTMENT OF AGRICULTURE   OR    DHSS
    RURAL DEVELOPMENT DATE:______________________

    USDA LOAN NO._______________ STATE LOAN NO.____________

    USDA GRANT NO._____________ SEPARATELYORSTATE GRANT NO.___________
JOINTLY  FUNDED  PROJECT

ACCOUNT SUMMARY AND REQUEST FOR LOAN/GRANT DISBURSEMENT

DISBURSEMENT
        ITEMS
  AMOUNT
BUDGETED
    PREVIOUS
DISBURSEMENTS
        THIS
      PERIOD
        TOTAL
      TO DATE
   REMAINING
         FUNDS
CONSTRUCTION
 
         
CONTRACT
NAME OR #
         
CONTRACT
NAME OR #
         
CONTRACT
NAME OR #
         
 
LAND  AND R.O.W.
         
 
LEGAL  AND  ADMIN
         
 
ENGINEERING  FEES
         
 
INTEREST
         
 
CONTINGENCIES
         
 
INITIAL  O & M
         
OTHER
(describe)
         
DISBURSEMENT
TOTALS
         
 
SOURCES  OF  FUNDING
         
 
USDA  LOAN
         
 
USDA  GRANT
         
 
STATE  LOAN
         
 
STATE  GRANT
         
OTHER
(describe)
         
OTHER
(describe)
         
OTHER
(describe)
         
SOURCE  TOTALS (must
equal disbursement totals above)
         

See Notes on Page 2 (other side)
Page 2
LOAN/GRANT DISBURSEMENT FORM
Requisition No._________

________________________________________________ ______________________________________
PREPARED BY (BORROWER/GRANTEE)         DATE APPROVED BY  (DHSS/ODW)    DATE

________________________________________________ _______________________________________
APPROVED BY   (ARCHITECT/ENGINEER)      DATE APPROVED BY   (USDA/RD)         
DATE

                   Borrower/Grantee’s Certification
 
The undersigned certifies that (1) the amounts requested by
this requisition will be applied solely and exclusively to the
payment, or the reimbursement of the recipient for the payment,
of Project Costs, and (2) any materials, supplies or equipment
covered by this requisition are not subject to any lien or
security interest or such lien or security interest will be released upon
payment of this requisition.
 
 
Recipient’s Authorized Representative                 Date
 
               Consulting  Engineer’s  Certification
 
The undersigned Consulting Engineer for the Recipient hereby
Certifies that insofar as the amounts covered by this
Requisition include payment for labor or to contractors,
builders or materialmen, such work was actually performed or
such materials, supplies or equipment were actually furnished
to or installed in the Project.
 
 
 
Authorized Consulting Engineer                              Date

NOTES: 1.  Include copies of all invoices or other acceptable documentation to
support above request.  Provide one (1) set for each funding agency.

2. On jointly funded projects, disbursements will  not be processed until  this
document is approved by authorized representatives of both the U. S. Department
of Agriculture and the State of Delaware, Department of Health and Social
Services.

Forms-Jointly Funded-Disbursement.doc This form provides all information
required by USDA Form RD 440-11

--------------------------------------------------------------------------------

EXHIBIT D

Schedule of Disbursements

Date
 
Amount ($)
 
3/31/2021
 
 
$
510,000.00
(30
%)
4/30/2021
 
 
$
255,000.00
(15
%)
5/31/2021
 
 
$
255,000.00
(15
%)
6/30/2021
 
 
$
255,000.00
(15
%)
7/31/2021
 
 
$
340,000.00
(20
%)
8/31/2021
 
 
$
85,000.00
(5
%)

--------------------------------------------------------------------------------

EXHIBIT E

Form of Change Order

UNITED  STATES AND STATE  OF  DELAWARE ORDER  NO:________
DEPARTMENT  OF  AGRICULTURE OR     DHSS   OR   DNREC
RURAL  DEVELOPMENT
DATE______________

STATE:_____________
SEPARATELY  OR  JOINTLY  FUNDED  PROJECT
COUNTY:___________
CONTRACT  CHANGE  ORDER

CONTRACT  FOR:________________________________

OWNER:___________________________________________________________________________________________

To:________________________________________________________________________________________________
(Contractor)

You are hereby requested to comply with the following changes from the contract
plans and specifications:
Description of Changes (Supplemental Plans and Specifications Attached)
 
 
DECREASE
in Contract Price
   
INCREASE
In Contract Price
     
$
     
$
   
 
                                                                                            TOTALS
 
$
     
$
   
 
                                                        NET  CHANGE  IN 
CONTRACT  PRICE
 
$
     
$
   

JUSTIFICATION: Explain (Differing Site Conditions) (Errors or Omissions in
Drawings or Specifications) (Changes in Regulatory Requirements) (Design
Changes) (Over run or Under run in Quantities) (Factors Affecting Time of
Completion) (Other: Describe below)

___________________________________________________________________________________________________

___________________________________________________________________________________________________

The original amount of the
Contract:_____________________________________________________________________

__________________________________________________________________Dollars
($________________________)

The amount of the Contract as adjusted by all previously approved Change
Orders:________________________________

__________________________________________________________________Dollars
($________________________)

The amount of the Contract will be (Decreased) (Increased) through this Change
Order by the sum of:_________________

__________________________________________________________________Dollars
($________________________)

The Contract Total including this and all  previous Change Orders will
be:_______________________________________

__________________________________________________________________Dollars
($________________________)

The Contract Period provided for completion will be (Increased) (Decreased)
(Unchanged) by:___________ Calendar Days

Page 2
CONTRACT CHANGE  ORDER  FORM
CHANGE  ORDER  NO.____________

This document will become a supplement to the contract and all provisions will
apply hereto.

Requested:______________________________________________________________________ 
________________
(Owner) (Date)

Recommended:___________________________________________________________________ 
________________
(Owner’s Architect/Engineer) (Date)

Accepted:_______________________________________________________________________ 
_________________
(Contractor) (Date)

Approved by State of
Delaware:_____________________________________________________ 
_________________
(Date)

Approved by U. S. Department of
Agriculture:__________________________________________  _________________
(Date)

After all five (5) copies of the Change Order have been signed and dated by
authorized representatives of all the applicable parties in the spaces provided
above, transmit one (1)  copy to each party as listed below.

(  ) U. S. Department of Agriculture’s Copy

(  ) State of Delaware’s Copy

(  ) Contractor’s Copy

(  ) Borrower/Grantee’s Copy

(  ) Architect/Engineer’s Copy

Forms- Jointly Funded-Change Order.doc This form provides all information
required by USDA Form RD 1924 (Rev. 2-97)

--------------------------------------------------------------------------------

EXHIBIT F

CERTIFICATE OF THE BORROWER CONCERNING THE
PROJECTED DRAWDOWN SCHEDULE OF THE
PROJECT

The undersigned, representatives of Artesian Water Company, Inc. (the
"Borrower") in connection with the issuance of its $1,700,000 General Obligation
Note (Coventry Water Main Renewal Project), Series 2020A-SRF, have reviewed the
estimated drawdown schedule prepared by the Borrower, attached hereto as Exhibit
D and made a part hereof.

We hereby certify that the estimated drawdown schedule attached hereto as
Exhibit D and statements made under Section 2.1(m) "Representations by Borrower"
in the foregoing Financing Agreement between the Borrower and the Delaware
Drinking Water State Revolving Fund, acting by and through the Delaware
Department of Health and Social Services, Division of Public Health are to the
best of our knowledge true and correct as of the date hereof.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

--------------------------------------------------------------------------------

Date: April 28, 2020
ARTESIAN WATER COMPANY, INC.

By:  
David B. Spacht
Chief Financial Officer and Treasurer

Attest:

By:  
Joseph A. Dinunzio
Secretary