AMENDMENT TO
 
AGREEMENT FOR
 
PURCHASE OF WATER ASSETS
 
OF THE TOWN OF PORT DEPOSIT
 
AND FOR THE PROVISION OF POTABLE WATER SERVICES
 
THIS AMENDMENT TO AGREEMENT for Purchase of Water Assets of the Town of Port
Deposit and for the Provision of Potable Water Services (this “Amendment”) is
entered into as of this 1st day of November, 2010, by and among Artesian Water
Maryland, Inc. (“Artesian MD” or “Buyer”), a Delaware corporation, Artesian
Resources Corporation (“Guarantor”), a Delaware corporation, and Mayor and Town
Council of Port Deposit, Maryland, a body corporate and politic organized under
the laws of the State of Maryland (the “Town” or “Port Deposit”).
 
Artesian MD, Guarantor and the Town have previously entered into that certain
Agreement of Purchase of Water Assets of the Town of Port Deposit and for the
Provision of Potable Water Services relating, among other things, to the sale
and purchase of the Purchased Assets, which has been previously amended by the
Franchise For Water Services Agreement By And Between the Town of Port Deposit,
Artesian Water Maryland, Inc. and the Guarantor, including, without limitation,
Subsections 3.1(a) and 3.1(h) thereof (as amended, the “Agreement”).
 
WHEREAS, Artesian MD, Guarantor and the Town desire to amend the Agreement as
set forth herein.
 
NOW, THEREFORE in consideration of the representations, warranties, covenants
and agreements of the parties hereinafter set forth, as well as for other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, Artesian MD, Guarantor and Port Deposit, intending to be legally
bound hereby, do hereby agree as follows:
 
1.           Recitals; Definitions.  The recitals set forth above are hereby
incorporated herein.  Any initial capitalized term not defined herein shall have
the meaning ascribed to such term in the Agreement.
 
2.           Section 7.11 of the Agreement is hereby deleted in its entirety and
replaced with the following:
 
“7.11           Repayment of MWQFA Obligations.  This Agreement is conditioned
upon the repayment by Port Deposit, under the terms and conditions of a payoff
letter (the “MWQFA Payoff Letter”) to be delivered by the Maryland Water Quality
Financing Administration (the “MWQFA”) and a closing instruction letter (the
“Closing Instruction Letter) to be executed by and among the Town, Buyer,
Guarantor and Stewart Title (the “Title Agent”), of all of Port Deposit’s
obligations under (i) the Drinking Water Loan Agreement between MWQFA and the
Town of Port Deposit, and the underlying Promissory Note provided by Port
Deposit to the MWQFA, in the initial principal amount of up to $296,000 (the
“Primary Drinking Water Loan”) and (ii) the Drinking Water Loan Agreement (the
“Loan Agreement”) between the MWQFA and the Town of Port Deposit, and the
underlying Promissory Note provided by Port Deposit to the MWQFA, in the initial
principal amount of $74,000 (the “Forgiveness Drinking Water Loan” and,
collectively with the Primary Drinking Water Loan, the “MWQFA Obligations”),
after giving effect to any forgiveness of the Forgiveness Drinking Water Loan
approved by MWQFA, it being agreed by the parties that such a repayment may be
effectuated by and through the establishment on or prior to the Closing Date of
an irrevocable escrow funded by the Drinking Water Loan Prepayment Amount (as
defined below), providing for the repayment of such MWQFA Obligations via
disbursement by the Title Agent from said escrow on the date of the funding of
such escrow or on a later date, (as specified in the Closing Instruction
Letter).  The parties understand that the Town’s prepayment of the Primary
Drinking Water Loan may only be made by prepayment at such time and with such a
prepayment premium as may be approved by the MWQFA, pursuant to Section 3.10 of
the Loan Agreement relating thereto, and that prepayment of the Forgiveness
Drinking Water Loan may only be made on terms agreed to between the Town and
MWQFA.  In addition to the consideration described in Section 2.4 of the
Agreement (as previously amended), Buyer shall, on or prior to the Closing Date,
remit to the Town, via payment to the Title Agent, an amount equal to the
prepayment price for the Primary Drinking Water Loan, as established by the
MWQFA, which amount shall not exceed $206,000 (such deposit being the “Drinking
Water Loan Prepayment Amount”).  The Town shall irrevocably direct such escrow
agent to apply the Drinking Water Loan Prepayment Amount to repay the MWQFA
Obligations and shall obtain from the MWQFA documentation evidencing the full
satisfaction and discharge or forgiveness of the MWQFA Obligations.  The Town
shall provide Buyer with release documentation and evidences of payment in form
and substance satisfactory to Buyer and its counsel, including, without
limitation, a copy of promissory notes evidencing the MWQFA Obligations marked
“paid in full” or “forgiven” pursuant to the terms of the MWQFA Payoff Letter,
within five (5) Business Days after the Town’s receipt thereof from MWQFA.”
 
3.           (a)           The second sentence of Section 2.3(b) of the
Agreement is hereby amended by inserting “the MWQFA Obligations (as defined in
Section 7.11), any Liabilities related to grants or loans received by the Town
or the Port Deposit Water and Sewer Authority from the Maryland Department of
the Environment (including, without limitation, as relates to Maryland
Department of the Environment Water Supply Financial Assistance Project No. WSG
03.08 or the Port Deposit Water Supply System), or” between “assumed” and “any
of the following Excluded Liabilities…”
 
(b)           A new sentence shall be added at the end of Section 2.3(b) of the
Agreement, as follows:
 
“Nothing in this Section 2.3(b) shall be construed to create a representation by
the Town to any third party that the Town has any Liability for any grants or
loans received by the Port Deposit Water and Sewer Authority.”
 
4.           The first paragraph of Section 2.4(b) of the Agreement is hereby
amended by deleting it in its entirety and replacing it with the following:
 
“In consideration of the sale, assignment, transfer, conveyance and delivery of
the Purchased Assets by Port Deposit to the Buyer and in reliance on the
representations, warranties, covenants and agreements made by Port Deposit in
this Agreement, at the Closing, the Buyer shall (a) pay to Port Deposit Two
Hundred Fifty Thousand Dollars, less (i) the Deposit, (ii) any moneys owed to
Artesian Utility Development, Inc. for operating the plant and equipment prior
to Closing, and (iii) any additional closing proration adjustments calculated
pursuant to Section 2.4(d) or as otherwise agreed between the parties, (b)
deliver a Promissory Note in the sum of Eight Hundred Thousand Dollars
($800,000) (the “Promissory Note”) payable in four installments of $200,000, the
first installment of which shall be paid on the Closing Date (or the day after
the Closing Date) and the remaining three installments of which shall be paid on
the first day of July following the Closing and annually thereafter on the first
day of July, and (c) assume the Assumed Liabilities.  Additionally, Buyer shall
fund at Closing such amounts as required to be funded by Buyer under Section
7.11 hereof.”
 
5.           Section 3.1 of the Agreement is hereby amended by adding the
following sentence to the end of Section 3.1:
 
“Notwithstanding the foregoing provisions of this Section 3.1, the parties agree
that the Closing shall occur on the date occurring on or prior to the Closing
Deadline (as defined in the Franchise Agreement For Water Services Agreement By
and Between Port Deposit and Buyer, dated April 27, 2010) that is mutually
acceptable to the Buyer, Port Deposit and Guarantor.
 
6.           (a)           Section 3.2(a) of the Agreement is hereby amended by
adding the following at the end of clause (vii):
 
“, including information referenced on Schedule 2.1(g).”
 
(b)           Section 3.2(a)(ix) of the Agreement is hereby amended by deleting
the words “a resolution” and replacing them with “an ordinance”.
 
(c)           Section 3.2(a) of the Agreement is hereby amended by adding the
following clauses (xiv) and (xv) to the end of Section 3.2(a):
 
“(xiv) a copy of the Payoff Letter related to payment of the MWQFA Obligations
(as defined in Section 7.11) in the form mutually acceptable to the Buyer and
Port Deposit, duly executed by an authorized officer of MWQFA (as defined in
Section 7.11).
 
(xv)           such documents regarding the satisfaction and discharge of the
MWQFA Obligations as required under Section 7.11 hereof shall have been
deposited into the escrow described in Section 7.11 hereof.”
 
7.           Section 3.2(b) of the Agreement is hereby amended as follows:
 
(b)           Clause (iii) of Section 3.2(b) of the Agreement is hereby deleted
in its entirety and replaced with the following:
 
“(iii)           [Intentionally deleted];”
 
(b)           The first clause (v) of Section 3.2(b) of the Agreement is hereby
deleted in its entirety and replaced with the following:
 
“(v)           [Intentionally deleted];”
 
(c)           The second clause (iv) of Section 3.2(b) of the Agreement is
hereby deleted in its entirety and replaced with the following:
 
“The Guaranty of the Guarantor with respect to the Promissory Note;”
 
8.           A New Section 3.2(c) shall be added to the Agreement, as follows:
 
“(c)           Billing and Accounting for Water System; Post Closing
Adjustments.
 
Billing and accounting for Customers of the Water System is conducted in
arrears.  The Town has issued to Customers bills for the calendar quarter which
ended on September 30, 2010 and for prior quarters.  Following Closing, the Town
shall be entitled to all payments it receives for amounts billed Customers of
the Water System prior to Closing.  If the Buyer collects any payments from
Customers for services rendered prior to September 30, 2010, it shall account
for and remit such payments to the Town not later than ten (10) days after the
end of each month in which such payments are received by Buyer.
 
(i)           With respect to the days of water service provided by the Town
between October 1, 2010 and the Closing Date (the “Partial Period”), and all
billing and collection efforts related thereto, it shall be handled by the Town
and Buyer as follows:
 
(A)           Buyer will read the meters on or about the customary end of
quarter December 31;
 
(B)           Buyer shall prepare and send to Customers bills for the quarter
commencing October 1, 2010, no later than January 15, 2010.
 
(C)           Buyer will calculate the ratio of days served by the Town during
the Partial Period and days served by Artesian, and determine for each
individual customer the appropriate amount to send to the Town to account for
the period of time during the Partial Period when service was provided by the
Town.  All time periods will be based upon actual meter reading dates; and
 
(C)           Buyer will pay the Town the amounts it collects and is properly
attributable to the provision of service by the Town during the Partial Period
(the “Collected Amounts”) not later than ten (10) days after the end of each
month in which such payments are received by Buyer.
 
(ii)           After Closing, the Buyer shall undertake to collect Customer
accounts due and owing to the Town for the Partial Period by the same methods
and with the same diligence as the Buyer used to collect user fees from
Customers that it services, including, without limitation, the shutting off of
water service to the properties of delinquent Customers.
 
(iii)           Should the Town collect any payments from Customers for services
rendered after Closing, it shall account for and remit such payments to the
Buyer later than ten (10) days after the end of each month in which such
payments are received by the Town.
 
(iv)           The provisions of this Section 3.2(c) shall survive Closing.”
 
9.           Section 4.9 of the Agreement is hereby amended in its entirety to
read as follows:
 
“4.9           Taxes; Rebates.
 
(a)           Port Deposit has no unpaid liability for Taxes required to have
been paid with respect to any taxable periods ending on or prior to the Closing
Date.
 
(b)           Port Deposit has no unpaid liability for any rebates or penalties
in lieu of rebate pursuant to Section 148 of the Code and with respect to bonds
or other evidences of indebtedness of the Town relating to the Purchased Assets
(the “Bond Indebtedness”), including the MWQFA Obligations (as defined in
Section 7.11 hereof).
 
(c)           Port Deposit has filed or will cause to be timely filed all
filings to be made with the Internal Revenue Service or any other Governmental
Authority in respect of the Bond Indebtedness, including such filings with
respect to the MWQFA Obligations following the Closing Date.
 
(d)           Port Deposit has not made or permitted to be made any use of the
proceeds of the Bond Indebtedness that has caused or would cause the Bond
Indebtedness to be “arbitrage bonds” within the meaning of Section 148 of the
Code.  Port Deposit has complied with the provisions of Section 148 that are
applicable to the Bond Indebtedness.
 
(e)           (i) No deficiency for any amount of rebates or penalties in lieu
of rebates has been asserted or assessed by the Internal Revenue Service or any
other Governmental Authority with respect to the Bond Indebtedness; (ii) no
notice of audit or possible assessment has been received by Port Deposit from
the Internal Revenue Service or any other Governmental Authority with respect to
the Bond Indebtedness, and (iii) Port Deposit has not agreed to any waiver or
extension of the statute of limitations applicable to the imposition, assessment
or collection of any rebate or penalties in lieu of rebate with respect to the
Bond Indebtedness.”
 
10.           Section 7.1 of the Agreement is hereby deleted in its entirety and
replaced with the following:
 
“7.1           Payment of Taxes and Rebates; Audits.  From and after the Closing
through and including the date that is the seventh (7th) anniversary of the
Closing Date, Port Deposit and the Buyer shall cooperate fully with each other
and make available or cause to be made available to each other in a timely
fashion such data relating to Taxes, prior Tax Returns, filings with the
Internal Revenue Service or other Governmental Authorities in respect of Taxes
and other information as may be reasonably requested for the preparation by the
Buyer or Port Deposit of any Tax Returns or other filings with the Internal
Revenue Service or other Governmental Authorities in respect of elections,
consents or certificates required to be prepared and filed by the Buyer or Port
Deposit and any audit or other examination by the Internal Revenue Service
or any Governmental Authority, or judicial or administrative examination,
proceeding or other enforcement action relating to liability for Taxes by the
Internal Revenue Service or other Governmental Authority (each, an “Audit”). The
Buyer and Port Deposit will each retain and provide to the other party all Books
and Records and other information which may be relevant to any such Tax Return
or filings with the Internal Revenue Service or other Governmental Authorities
in respect of any Audit or determination, and will each provide the other party
with any final determination of any such Audit or determination that affects any
amount required to be shown on any Tax Return of the other party for any
period.  Without limiting the generality of the foregoing, each of the Buyer and
Port Deposit shall retain copies of all Tax Returns or other filings with the
Internal Revenue Service, supporting work schedules and other records relating
to tax or other reporting periods or portions thereof ending prior to or on the
Closing Date.
 
The Town acknowledges that, following the Closing, it shall remain responsible
for any filings, audits or other examinations by the Internal Revenue Service
or any Governmental Authority, or any judicial or administrative examination,
proceeding or other enforcement action, in each case relating to or in respect
of the Bond Indebtedness.”
 
11.           Counterparts.  This Amendment may be executed and delivered in any
number of original or facsimile counterparts, each of which so executed and
delivered shall be deemed to be an original and all of which shall constitute
one and the same instrument.
 
12.           Ratification.  The Agreement, as amended hereby, remains in full
force and effect and is hereby ratified and confirmed, as amended by this
Amendment.
 
[signature pages follow]
 
IN WITNESS WHEREOF, the parties have executed this Amendment to Agreement for
Purchase of Water Assets of the Town of Port Deposit and for the Provision of
Potable Water Services.
 
ATTEST:
 
 
/s/ John J. Schreppler, II
Name: John J. Schreppler, II
Title: Vice President and General Counsel
 
BUYER:
 
ARTESIAN WATER MARYLAND, INC., a Delaware corporation
By: /s/ Joseph A. DiNunzio
Name: Joseph A. DiNunzio
Title: Executive Vice President
 
 
ATTEST:
 
/s/ Terry Adams
Name: Terry Adams
Title:    Secretary
 
 
 
THE TOWN OF PORT DEPOSIT, by the Mayor and Town Council
 
By:  /s/ Kerry Anne Abrams
                                                           
Kerry Anne Abrams, Mayor
 
 
 
 
ATTEST:
 
/s/ John J. Schreppler, II
 
Name:  John J. Schreppler, II
Title: Vice President and General Counsel
 
 
GUARANTOR:
 
ARTESIAN RESOURCES CORPORATION, a Delaware corporation
By: /s/ Joseph A. DiNunzio
Name: Joseph A. DiNunzio
Title: Executive Vice President