WASTEWATER SERVICES AGREEMENT Northern Sussex Regional Water Recycling Complex
Northern
Sussex Regional Water Recycling
Complex
This
agreement is made this 30th
day of
June, 2008, among Artesian Utility Development, Inc., a Delaware Corporation
(“Artesian”) and Northern Sussex Regional Water Recycling Complex, LLC, a
Delaware limited liability company, (the “Developer”) (the
“Agreement”).
In
consideration of the mutual promises made and herein set
forth:
WHEREAS, Developer
has
entered into an agreement for the purchase of a parcel of approximately 75
acres
to be subdivided from the property known as Sussex County Tax Parcel
235-06.00-028.00 (the “Treatment Site”);
WHEREAS,
the Developer holds a
conditional use permit from Sussex County for the right and ability to use
the
Treatment Site as a regional wastewater treatment facility;
WHEREAS,
Artesian and
Developer desire to design, construct and operate a regional facility capable
of
treating and disposing of up to 12 million gallons per day (“MGD”) of wastewater
from surrounding communities or governmental entities; and
WHEREAS,
Developer intends to
enter into agreements with Citizens Bank (the “Lender”) to secure a $10 million
line of credit (the “Loan”) dedicated to and for construction of a wastewater
treatment facility.
WHEREAS,
Artesian provides
design, building and operational services for wastewater systems in
Delaware,
NOW,
THEREFORE, in
consideration of the representations, warranties, covenants and agreements
of
the parties hereinafter set forth, the Developer and Artesian, intending
to be
legally bound hereby, do hereby agree as follows:
1.0
Wastewater Treatment
Facility
The
Northern Sussex Regional Water Recycling Complex will be designed as a
wastewater treatment facility capable of treating up to 12 MGD of domestic
wastewater utilizing current technologies, including, but not limited to,
lagoon
treatment and storage, membrane filtration and other mechanical treatment
options (the “Treatment Facility”). The treatment utilized shall
assure compliance with all permits, Delaware Department of Natural Resources
Environmental Control (“DNREC”) regulations and Environment Protection Agency
(“EPA”) regulations.
The
Treatment Facility will be constructed in several phases to meet demand
projections for the ensuing five-year period. The Developer shall be
financially responsible for the first phase of the facility, as hereinafter
described.
1.1
Design and Permitting
Artesian
shall design and obtain permits for a 12 MGD wastewater treatment facility,
including collection, treatment, storage and disposal.
The
Scope
of Work for the design and permitting shall include:
a.)A
preliminary meeting to discuss treatment equipment and disposal options
and to
determine the type of facility that is most cost effective and meets
the project
needs.
b.)Preparation
of construction plans and technical specifications for the wastewater
treatment
and disposal facilities designed by a Class “C” designer. This
includes civil, mechanical and electrical design.
c.)Preparation
and construction plans and technical specifications for an economically
engineered phased approach of the treatment and disposal
facilities. The amount of treatment to be supplied in the first phase
shall be two hundred thousand (200,000) gallons per day or as mutually
agreed.
d)Application
for the DNREC permit to construct the wastewater treatment facility
and disposal
system. Artesian will submit all plans and specifications described
above and respond to changes or comments provided by DNREC as
necessary.
e)Application
for all building permits from Sussex County and other regulatory
agencies.
1.2
Construction
Developer
shall enter into an agreement with Artesian for the construction of the
first
phase of the treatment facility. The wastewater treatment and
disposal system shall be constructed to meet all applicable State of
Delaware,
DNREC and Sussex County effluent standards in effect on the date of this
agreement and, otherwise, to conform to good engineering
practices.
Services
provided will include:
a.)Review
construction bids for the treatment and disposal facilities.
b.)Selection
and management of the subcontractor(s), including on-site
inspections.
c.)Preparation
of a Plan of Operations and Management for the facilities as required
by
DNREC.
d.)Submit
copies of the O&M manual to DNREC for review and provide six (6) copies of
the final plan.
e.)Review
marked-up drawings prepared by the contractors to record field changes
made
during construction. Prepare record drawings by modifying design
drawings to include Contractor modifications.
f.)Submit
copies of the Record Drawings to DNREC.
1.3
Design Build Service Agreement
1.3.1
Design and Permit.
Developer
shall enter into an agreement with Artesian to design and obtain
the permit to
construct the Treatment Facility. The agreement shall include
customary and reasonable terms and conditions at competitive
prices that may be
found with other engineering firms. The fee will be cost plus
twenty-five percent (25%) and will include all materials and
labor necessary to
obtain all required permits to construct the Treatment
Facility.
1.3.2
Construction.
The
Treatment Facility will be built in phases. The Developer, or his
assignee (Site Developer or Homebuilder), will pay for the
first phase.
Artesian, as the construction manager, will be entitled to
a fee equal to 20% of
all direct cost to the project including any on-site engineering
and
inspection.
2.0
Developer
Compensation.
2.1
Construction Reimbursement.
Artesian
will reimburse Developer for the construction of phase
1 of the Treatment
Facility through customer connection fees. The connection fee will be
split 40% to Artesian and 60% to developer until the Developer’s investment in
the design, treatment, storage and disposal facilities
are
reimbursed.
Artesian
shall calculate the portion of connection fees accruing
to the benefit of the
Developer by the 15th
calendar day following the end of the month. That amount, and no
more, shall be remitted to the lender charged with administering
the debt
associated with the construction of Phase 1 of the Treatment
Facility until the
debt and interest associated with the debt has been fully
repaid.
2.2
Additional Compensation.
Artesian
will also provide additional compensation to Developer
based on the following
conditions and accommodations, beginning with the execution
of this
agreement.
2.2.1
Land.
Artesian
shall remit to Developer $300,000 beginning with the
execution of this agreement
and for the ensuing nine (9) year anniversary of this
agreement in compensation
for the Treatment Site and contract for the option
to purchase the additional
land associated with the Treatment Site. Artesian and Developer agree
that these payments do not compensate Developer for
the entire investment in the
land, but further agree that the payments made under
Sections 2.2.2 and 2.2.3
reimburse Developer for the remaining investment in
the Land as well as the
business development incentive.
2.2.2
Business
Development
–
Future Incentive Payments.
In
addition to the compensation to the Developer pursuant
to Section 2.2.1,
Artesian shall provide future payments to the Developer
as described in Schedule
A. Such future payments shall only commence upon
the
completion of the construction of the Treatment Facility
and commencement of
operations.
3.0
Ownership
and
Operation of the Treatment Site and Facility.
3.1
Ownership: Phase 1
Developer
shall retain ownership of the Treatment Site and
Treatment Facility until
Artesian has reimbursed Developer through connection
fees and any underlying
debt has been repaid. Developer shall upon acquisition of the
Treatment Site grant to Artesian an exclusive easement
for the Treatment Site
for a nominal consideration of Ten Dollars ($10). Once the cost of
the Treatment Site and Treatment Facility has been
fully reimbursed, then
Developer shall transfer all rights, title and
interest (fee simple ownership)
in the Treatment Site and Treatment Facility to
Artesian or affiliates for a
nominal fee of $10. Developer may offer the Treatment Site and
Treatment Facility as collateral for only those
funds borrowed to purchase,
design and construct the Treatment Site and Treatment
Facility and interest
accrued on funds borrowed. Once the debt and accrued interest have
been repaid Developer is prohibited from securing
any debt with the use of the
Treatment Site and Treatment Facility.
3.2
Operations.
Developer
shall lease to Artesian Wastewater Management,
Inc. (“Artesian Wastewater”) the
Treatment Facility until at such time the fee
simple ownership is transferred to
Artesian. Consideration for leasing the Treatment Facility
is
included in the additional compensation paid
to Developer under Paragraph 2.2.2
of this agreement. Artesian Wastewater will provide service,
utilizing the Treatment Facility, to all mutually
agreed upon customers
connecting to the Treatment Facility, charging
rates and collecting revenues as
approved and adjusted from time to time by the
Delaware Public Service
Commission (“PSC”).
4.0
Developer
Insolvency
4.1 Developer’s
Insolvency
In
the
event Developer is unable to fulfill its
obligations to repay outstanding debt
or interest accruing thereto as a result
of Developer’s insolvency then Artesian
shall assume fee simple ownership of the
Treatment Site and Treatment Facility
along with any outstanding liens and debts
associated with the
property.
Further,
in the event Artesian is required to act
under this provision, then any
additional compensation, pursuant to paragraph
2.2 herein, shall only be payable
after fee simple ownership of the Treatment
Site and Treatment Facility is
transferred to Artesian and all debts and
liens assumed as a result of this
provision, have been fully satisfied and
those liens discharged. For
purposes of this provision, full satisfaction
of the debt shall occur only when
connection fees sufficient to repay the debt
and interest accrued, pursuant to
the calculation in paragraph 2.1 herein,
have been collected from new customers
following enactment of this provision. Artesian shall not be required
to expedite any repayment in satisfaction
of this provision.
4.2
Artesian’s Guaranty.
Notwithstanding
any other provisions of this Agreement,
Artesian agrees to absolutely,
unconditionally and irrevocably guaranty,
as a contract of suretyship, the Loan
and any and all debts and other obligations
as were mutually agreed upon by the
parties which are incurred by Developer
to acquire the Treatment Site and to
construct the Treatment Facility as the
same shall become due and payable,
whether at or after maturity, or by acceleration
on default or
otherwise. All loan documents with third party lenders
shall include
such guaranty provisions. Any actual payment by Artesian to third
party lenders shall be credited against
Artesian’s obligations set forth in
Sections 2.1 and 2.2., but shall not divest
Developer of legal or equitable
title to the Treatment Site or Treatment
Facility except as otherwise set forth
herein. Artesian is granted a security interest
in the Facility Site
that is subordinate to third-party Lendors.
5.0
Developer’s
Warranties, Representations and Covenants
Developer
represents to Artesian that to its actual
knowledge based upon its internal
records and not to any attributed knowledge,
that Developer is duly organized,
validly existing, qualified and empowered
to perform and comply with the terms
of this Agreement. Neither the execution and delivery of
this
Agreement nor its performance will conflict
with or result in the breach of any
contract or agreement to which Developer
is a party or by which Developer is
bound. Developer has full authority and power
to enter into and carry
out the transactions contemplated by
this Agreement, and this Agreement
constitutes the valid and binding obligations
of Developer, and is enforceable
in accordance with its terms.
6.0
Artesian’s
Warranties,
Representations and Covenants
Artesian
represents and warrants to Developer
that it has full power and authority
to
enter into and carry out the transactions
contemplated by this Agreement and
this Agreement constitutes the valid
and binding legal obligation of Artesian,
enforceable in accordance with its
terms.
7.0
General
Matters
7.1
Term.
This
agreement shall terminate 30 years
from the execution date of this
agreement,
unless otherwise provided for elsewhere
herein.
7.2
Approvals from Governmental Authorities.
Developer
and Artesian agree that the transactions,
design and construction of the
Treatment Facilities are subject
to various approvals, including
but not limited
to, the PSC and DNREC. Developer and Artesian also recognize
that
there may be changes to permits
or rates and connection fees
charged to
customers that may prohibit Artesian
from satisfactorily fulfilling
its
obligations under this agreement. If such events occur during the
term of this agreement then Developer
and Artesian agree to renegotiate
the
terms of this agreement in good
faith to equitably address the
required
change. The purchase of the Treatment
Site, as provided in Section
2.2.1 of this agreement, shall
not be subject to any such adjustment
and shall
remain in full force and effect.
7.3
Severability.
If
one or more provisions of this
Agreement shall be held invalid,
illegal or unenforceable, such
provision shall,
to the extent possible, be
modified in such manner as
to be valid, legal and
enforceable but so as to most
nearly retain the intent of
the parties, and if
such modification is not possible,
such provision shall be severed
from this
Agreement. In either case, the balance
of this Agreement shall be
interpreted as if such provision
were so modified or excluded,
as the case may
be, and shall be enforceable
in accordance with its
terms.
7.4
Confidentiality.
a)The
parties recognize and acknowledge
that in the past, currently,
and in the future
each may have access to certain
non-public confidential information
of the other
parties (including, without
limitation, the terms and
conditions of this
Agreement) (collectively,
“Confidential Information”), such as operational
policies, pricing and cost
policies, which are valuable,
special and unique
assets. The parties agree that each
will not disclose any
Confidential Information
to any person for any purpose
or reason whatsoever,
except
(i) to the authorized representatives
of a party who need to know
information in
connection with the transactions
contemplated hereby, and
(ii) to its own
representatives, counsel
and other advisors who first
agree to the
confidentiality provisions
of this Section 7.3, unless
(A) such information
becomes known to the public
generally through no fault
of any party, or (B)
disclosure is required by
Law or valid legal process;
provided, that prior to
disclosing any information
pursuant to this clause (B),
a party shall, to the
extent permitted by law or
valid legal process, give
prior written notice
thereof to the other parties
and provide the other parties
with the opportunity
to contest such disclosure. In the event of a breach
or threatened
breach of the provisions
of this Section 7.4 by a
party, the other parties
shall
be entitled to an injunction
restraining the other party
from disclosing, in
whole or in part, such confidential
information. Nothing herein shall
be construed as prohibiting
a party from pursuing any
other available remedy for
such breach or threatened
breach, including the recovery
of
damages.
b)Because
of the difficulty of measuring
economic losses as a result
of the breach of the
foregoing covenants in
this Section 7.4, and because
of the immediate and
irreparable damage that
would be caused for which
they would have no other
adequate remedy, the parties
agree that, in the event
of a breach of this
Section 7.4 by a party,
the covenant may be enforced
by the other parties
against the party in breach
by any equitable remedy,
including, without
limitation, injunction,
specific performance and
restraining order, without
the
necessity of proving actual
damages or posting a bond
or other
security.
c)This
Section 7.4 shall survive
the termination of, or
closing under, this Agreement
for a period of five
(5) years.
7.5
Amendments
and
Waivers.
Any
term
of this Agreement
may be amended, supplemented
or modified only
with the written
consent of Artesian
and Developer and
the observance of
any term of this
Agreement may be
waived (either generally
or in a particular
instance and either
retroactively or
prospectively), only
with the written
consent of the party
against whom the
waiver is sought
to be enforced. No waiver of any
of
the provisions of
this Agreement shall
be deemed or shall
constitute a waiver
of
any other provision
hereof (whether or
not similar), nor
shall such waiver
constitute a continuing
waiver unless otherwise
expressly provided.
7.6
Choice of Law;
Venue.
This
Agreement shall
be governed by
and construed
under, and the
rights of the
parties determined,
in accordance
with the Laws
of the State
of Delaware
(without reference
to the choice
of Law provisions
of the State
of
Delaware). Each of the parties
hereto irrevocably
consents to the
service of any
process, pleading,
notices or other
papers by the
mailing of
copies thereof
by registered,
certified or
first class mail,
postage prepaid,
to
such party at
such party’s address set
forth herein,
or by any other
method
provided or permitted
under the Laws
of the State
of Delaware. Each
party hereby
irrevocably submits
to the jurisdiction
of any federal
or state
court located
in State of Delaware
(and any appellate
court there from)
over any
action or proceeding
arising out of
or relating to
this
Agreement. Each party hereby
irrevocably and
unconditionally
waives
and agrees not
to plead, to
the fullest extent
provided by Law,
any objection
it
may have to venue
and the defense
of an inconvenient
forum to the
maintenance of
such action or
proceeding in
such courts.
7.7
Waiver
of Jury
Trial.
EACH
PARTY HERETO
HEREBY IRREVOCABLY
WAIVES ALL
RIGHT TO TRIAL
BY JURY IN
ANY
PROCEEDING
(WHETHER BASED
IN CONTRACT,
TORT OR OTHERWISE)
ARISING OUT
OF OR
RELATING TO
THIS AGREEMENT
OR ANY TRANSACTION
OR AGREEMENT
CONTEMPLATED
HEREBY
OR THE ACTIONS
OF ANY PARTY
HERETO IN THE
NEGOTIATION,
ADMINISTRATION,
PERFORMANCE
OR ENFORCEMENT
HEREOF.
Execution
Page to Follow
IN
WITNESS WHEREOF,
the parties
have duly executed,
sealed and
delivered this
Agreement as
of the date
and year first
above written.
Developer:
|
Witness:
|
NORTHERN
SUSSEX
REGIONAL
WATER
RECYCLING
COMPLEX,
LLC
|
___________________________ By:
_________________________________
(Seal)Authorized
Manager
Artesian:
Attest:
ARTESIAN
UTILITY DEVELOPMENT,
INC.
___________________________ By:
_________________________________
(Seal)
Name:
▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
JOINDER
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
joins this
Agreement
for the purposes
of guaranteeing
the obligations
of NORTHERN
SUSSEX
REGIONAL
WATER RECYCLING
COMPLEX,
LLC.
and the confidentiality
provisions
of
Section 7.4.
Witness:
________________________________
______________________________
(Seal)
▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇
|
STATE
OF
DELAWARE
|
)
|
|
)
ss
|
|
|
COUNTY
OF
NEW
CASTLE
|
)
|
BE
IT
REMEMBERED
that
on
this
______day
of
June,
A.D.
2008,
personally
came
before
me,
the
Subscriber,
a Notary
Public
of
the
State
of
Delaware,
_________________________,
Managing
Member
of
NORTHERN
SUSSEX
REGIONAL
WATER
RECYCLING
COMPLEX,
LLC existing
under
the
laws
of
the
State
of
Delaware,
party
to
this
agreement,
known
to
me
as
such,
and
acknowledged
this
agreement
to
be
his
act
and
deed
and
the
act
and
deed
of
said
L.L.C.;
that
the
signature
of
the
Managing
Member
thereto,
is
in
his
own
handwriting
and
that
his
act
of
sealing,
executing,
acknowledging
and
delivering
said
agreement
was
duly
authorized
by
the
L.L.C.
GIVEN
under
my
Hand
and
Seal
of
Office
the
day
and
year
aforesaid.
Notary Public
Name:_________________________
Title: _________________________
|
STATE
OF
DELAWARE
|
)
|
|
)
ss
|
|
|
COUNTY
OF
_____________________
|
)
|
BE
IT
REMEMBERED
that
on
this
______day
of
June,
A.D.
2008,
personally
came
before
me,
the
Subscriber,
a
Notary
Public
of
the
State
of
Delaware,
▇▇▇▇▇
▇.
▇▇▇▇▇▇▇▇,
residing
in the
State
of
Delaware,
party
to
this
agreement,
known
to
me
as
such,
and
acknowledged
this
agreement
to
be
his
GIVEN
under
my
Hand
and
Seal
of
Office
the
day
and
year
aforesaid.
Notary
Public
Name:_________________________
Title: _________________________
|
STATE
OF
DELAWARE
|
)
|
|
)
ss
|
|
|
COUNTY
OF
_____________________
|
)
|
BE
IT
REMEMBERED
that
on
this day
of
June,
A.D.
2008,
personally
came
before
me,
the
Subscriber,
a
Notary
Public
of
the
State
of
Delaware,
_______________,
__________
of
ARTESIAN
UTILITY
DEVELOPMENT,
INC.,
a
corporation
existing
under
the
laws
of
the
State
of
Delaware,
party
to
this
agreement,
known
to
me
as
such,
and
acknowledged
this
agreement
to
be
his
act
and
deed
and
the
act
and
deed
of
said
corporation;
that
the
signature
of
the
Vice
President
thereto,
is
in
his
own
proper
handwriting
and
that
his
act
of
sealing,
executing,
acknowledging
and
delivering
said
agreement
was
duly
authorized
by
a
resolution
of
the
Board
of
Directors
of
said
corporation.
GIVEN
under
my
Hand
and
Seal
of
Office
the
day
and
year
aforesaid.
Notary
Public
Name:_________________________
Title: _________________________
SCHEDULE
A
Business
Development
–
Future
Incentive
Payments
|
1.
|
New
Customers. [CONFIDENTIAL
PORTION
DELETED
AND
FILED
SEPARATELY
WITH
THE
COMMISSION].
|
|
2.
|
Municipalities
and
Private
Wastewater
Providers. [CONFIDENTIAL
PORTION
DELETED
AND
FILED
SEPARATELY
WITH
THE
COMMISSION].
|