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 15 th 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 transferre
