2001-101 To authorize the Execution of a Municipal Responsibility Agreement between the Township of Oro-Medonte and Azurix North America (Canada) CorporationTHE CORPORATION OF THE TOWNSHIP OF ORO-MEDONTE
BY-LAW NO. 2001-101
BEING A BY-LAW TO AUTHORIZE THE EXECUTION OF A MUNICIPAL RESPONSIBILITY
AGREEMENT BETWEEN THE TOWNSHIP OF ORO-MEDONTE
AND AZURIX NORTH AMERICA (CANADA) CORPORATION
WHEREAS the Municipal Act, R.S.O., 1990, c.M.45, Section 207, Paragraph 4, as amended, authorizes
the Council of a Municipality to enact a by-law for entering into an agreement with the owner of any
sewage works for the use of any sewage works for the disposal, interception or purification of sewage;
AND WHEREAS a Municipal Responsibility Agreement is required by the Ministry of the Environment to
satisfy Certificate of Approval criteria for the sewage treatment plant owned by Azurix North America
(Canada) Corporation;
AND WHEREAS Council of the Corporation of the Township of Oro-Medonte deems it necessary to enter
into a Municipal Responsibility Agreement with Azurix North America (Canada) Corporation;
NOW THEREFORE the Council for The Corporation of the Township of Oro-Medonte hereby enacts as
follows:
1. THAT the Mayor and Clerk are hereby authorized to sign an agreement between the Corporation
of the Township of Oro-Medonte and Azurix North America (Canada) Corporation, said agreement
attached hereto as Schedule 'A' and forming part of this by-law.
2. THAT this by-law comes into full force and effect upon final passing thereof.
BY-LAW READ A FIRST AND SECOND TIME THIS 3RD DAY OF OCTOBER 2001.
BY-LAW READ A THIRD AND FINAL TIME THIS 3rdDAY OF Oct . 2001.
THE CORPORATION OF THE TOWNSHIP OF ORO-MEDONTE
MAYOR, IAN BEARD
CLERK, �,, ARILYN PENNYCOOK
BETWEEN:
THIS AGREEMENT made this :5 day of September, 2001.
THE TOWNSHIP OF ORO MEDONTE
(herein called the "Township")
- and -
AZURIX NORTH AMERICA (CANADA) CORP.
(herein called "Azurix")
14/09/01-6
OF THE FIRST PART
OF THE SECOND PART
WHEREAS Azurix owns, operates and manages water and wastewater assets, offers
water -related services and develops and manages water resources worldwide;
AND WHEREAS Azurix is the owner of certain lands described and depicted in
Schedule "A" hereto (the "Lands"), on which is located a sewage treatment facility described in
Schedule "B" hereto (the "Original Facility");
AND WHEREAS Horseshoe Resort Corporation (the "Developer") owns certain lands
in close proximity to the Lands, on which the Developer has developed a resort, including hotel,
restaurant and condominium facilities (the "Development") and intends to further develop a
residential site entailing an adult lifestyle facility (the "Adult Resort");
AND WHEREAS Azurix is currently providing sewage treatment to the Development
through the Original Facility and the Developer requires the service to the Development to be
increased, as a result of the addition of the Adult Resort;
AND WHEREAS Azurix and the Developer have entered, or will enter, into an
agreement (the "Contract") for the construction of, inter alia, an addition to the Original Facility
as described and depicted in Schedule "C" hereto (the "Addition") and the operation,
maintenance and repair of, the Original Facility and the Addition (the Original Facility and the
Addition, collectively, the "Facility");
AND WHEREAS the Township will only support the further development of the Adult
Resort based on the construction and operation of the Addition and the continued operation of
the Facility by Azurix;
AND WHEREAS the Ministry has issued a Certificate of Approval for the Facility, a copy
of which is attached hereto as Schedule "D".
NOW THEREFORE for good and valuable consideration, the sufficiency and receipt of
which is hereby acknowledged, and the mutual covenants contained herein, the parties agree
as follows:
ARTICLE 1. DEFINITIONS AND INTERPRETATION
1.1 As used in this Agreement, in addition to those words and phrases already defined
herein, the following words and phrases mean:
a) "Arbitration Act" means the Arbitration Act, S.O. 1991, c.17, as amended or
replaced from time to time;
b) "Certificate of Approval" means an approval issued under the authority of the
Ontario Water Resources Act, the Environmental Protection Act, the Ministry or
other applicable provincial legislation for the Facility, or a portion thereof, as it
may be amended, revised or reissued, and any other applicable provincial law
relating to the operation or functioning of the Facility;
c) "Condominium Act" means the Condominium Act 1998, S.O. 1998, c. 19, as
amended or replaced from time to time;
d) "Construction Lien Act" means the Construction Lien Act, R.S.O. 1990, c.
C.30, as amended or replaced from time to time;
e) "Director" means the director appointed by the Minister of Environment under
the Environmental Protection Act or the Ontario Water Resources Act;
f) "End Users" shall mean those residents of the Adult Resort who will receive and
pay for wastewater services from the Facility, pursuant to a service agreement
with the Developer;
g) "Environmental Protection Act" means the Environmental Protection Act,
R.S.O. 1990, c. E.19, as amended or replaced from time to time;
h) "Letter of Credit" means the irrevocable letter of credit in the form attached
hereto as Schedule "E" and in the amount of $363,000 obtained by Azurix and
issued in favour of the Township to secure the operation, maintenance and
management of the Facility in accordance with the terms and conditions of this
Agreement;
i) "Maintenance Deficiency" means any breakdown or malfunction of the
equipment or structure of the Facility, in excess of twenty thousand dollars
($20,000.00) and which is not considered to be an Operational Deficiency;
j) "Ministry" means the Ministry of the Environment for the Province of Ontario or
any other agency designated by either the Province of Ontario or the Ministry of
the Environment to act on its behalf;
k) "Municipal Act" means the Municipal Act, R.S.O. 1990, c. M.45, as amended or
replaced from time to time;
1) "Ontario Water Resources Act" means the Ontario Water Resources Act,
R.S.O. 1990, c. 0.40, as amended or replaced from time to time;
2
m) "Operational Deficiency" means any operational breakdown or malfunction of
the Facility that could cause the Facility not to comply with the requirements of
the Certificate of Approval and/or is a detriment to public health or the
environment;
n) "Planning Act" means the Planning Act, R.S.O. 1990, c. P.13, as amended or
replaced from time to time;
o) "Replacement Costs" means the estimated costs for replacing the
Replacement Parts in any given year, as set out in Schedule "F" hereto;
p) "Replacement Fund Allocation" means that portion of Revenue allocated by
Azurix to be deposited into the Fund in any given year, based on the
Replacement Costs, for the purpose of funding the Replacement Parts;
"Replacements Parts" means those mechanical and electrical elements of the
Facility as set out in Schedule "F" hereto, which may from time to time require
repair or replacing;
"Revenue" shall mean the monies collected by the Developer from the End
Users for the provision of wastewater services through the operation of the
Facility by Azurix, which shall ultimately be paid to Azurix by the Developer
pursuant to the terms of the Contract; and
r) "Trustee" means the treasurer appointed by the Township, from time to time, to
manage the financial matters of the Township.
1.2 The division of this Agreement into articles and sections is for convenience of reference
only and shall not affect the interpretation or construction of this Agreement.
1.3 The following schedules, which are attached hereto, together with all provisions therein,
are hereby made a part of this Agreement as fully and for all purposes as would be the case if
they were set out in the text of this Agreement as covenants and agreements:
p)
q)
Schedule "A" —
Schedule "B" —
Schedule "C"
Schedule "D"
Schedule "E" —
Schedule "F" —
Legal description of the Lands
Description of the Original Facility
— Description of the Addition
— Certificate of Approval for the Facility
Form of Irrevocable Letter of Credit
Reserve Fund Program
1.4 The masculine gender shall include the feminine and neuter genders, and vice versa,
the word "person" shall include firms and corporations and the singular number shall include the
plural, and vice versa.
ARTICLE 2. REPRESENTATION AND WARRANTIES
2.1 Azurix hereby represents and warrants as follows:
3
a) it is a corporation duly organized, validly existing and in good standing under the
laws of the Province of Ontario, with full legal right, power and authority to enter
into and perform its obligations under this Agreement;
b) it has duly authorized the execution and delivery of this Agreement and this
Agreement constitutes a legal, valid and binding obligation of Azurix, enforceable
against it in accordance with its terms;
c) it is the legal and beneficial owner of the Lands and the original Facility located
thereon and shall be the legal and beneficial owner of the Addition once
constructed.
2.2 The Township hereby represents and warrants as follows:
a) it is a municipal corporation duly organized, validly existing and in good standing
under the laws of the Province of Ontario, with full legal right, power and authority
to enter into and perform its obligations under this Agreement;
b) it has duly authorized the execution and delivery of this Agreement and this
Agreement constitutes a legal, valid and binding obligation of the Township,
enforceable against it in accordance with its terms; and
c) no approval, authorization, order or consent of, or declaration, registration or
filing with, any governmental authority is required for the valid execution and
delivery by the Township of this Agreement, except those that have been duly
obtained or made.
ARTICLE 3. DUTIES AND RESPONSIBILITIES OF AZURIX
3.1 Azurix covenants and agrees that it shall:
a) construct the Addition according to current acceptable engineering practices and
operate, maintain, and if necessary, repair and/or replace all or part of the Facility
in accordance with the operating standards and the terms and conditions
contained herein;
b) prepare, at its own cost, all plans, specifications, profiles, contours, and other
engineering material, drawings and data required in the opinion of the Township,
acting reasonably, in respect of the construction of the Addition and shall submit
such plans, specifications, profiles, contours and other engineering material,
drawings and data to the Township for approval;
c) obtain, at its own cost, any and all approvals and licenses required in connection
with the Facility and its operation;
d) replace the financial assurance currently issued in favour of the Ministry in the
amount of Three Hundred and Sixty Three Thousand Dollars ($363,000), with the
Letter of Credit, acceptable to the Township;
e) not commence any work on the construction of the Addition until it has received a
Certificate of Approval in respect of such construction and the Township's
4
approval to commence the work, provided that the Township shall act reasonably
and promptly in providing such approval;
f) prepare a contingency plan for sewage haulage in the event of a Deficiency that
results in a type of failure of the Facility that requires haulage of sewage;
prepare and provide to the Township, a copy of all FepOrts, including any plans or
specifications contained thenoin, in respect of the operation and maintenance of
h)the Facility or required to be provided to the Ministry, from time to time; and
provide to the Township, a copy of any and all documents submitted to the
Ministry, including but not limited, to an operation and maintenance manual and a
sludge disposal prOgnam, and a copy of any and all field ondero, work orders or
compliance documents issued by the K4in|stry, in respect of the operation and
maintenance of the Facility.
3.2 Azurix acknowledges and agrees that the design and construction of the Addition and
the operating standards of the Faci|itvvVi|| be those upon which a Certificate of Approval and
any orders or other requirements imposed under the Environmental Protection Act or the
Ontario Water Resources Act are based, by the Ministry or together with such additional
requirements as the Township may reasonably impose pursuant to any authority within its
jurisdiction and responsibility. The parties agree that the Township may impose any of the
r[ns of this Agreement as conditions for the approval of any Certificate of Approval or other
approval issued ``bythe Ministry or under the Planning Act or the CondominiumCondominiumAct and Azurix
shall not object to or otherwise appeal the imposition of such terms as conditions to any such
approval or Certificate of Approval issued to Azurix.
3.3 &zuhxfU�he[acknowledges and agrees that all nlgt8ri@|sk]besupplied hereunder vvith respect the Facility shall be in accordance with Ontario Provincial Standards or appropriate
design guidelines and if nomaterials are specied in any particular case, then the same shall be
of good quality and approprite in designand construction for the Facility, and shall be subject
to the approval of the Township acting reasonably.
34 Nothing contained herein shall |innit the ob|igadonofAzuriXt000nUnu8toprovide rep0�s
to - the Ministry in respect of the Facility, and Azurix shall be solely responsible for providing such
reports to the Ministry.
ARTICLE 4. DUTIES AND RESPONSIBILITIES OF THE TOWNSHIP
g)
4.1 The Township covenants and agrees that it shall:
a) set up a mechanism to advise any customers of the Facility,whomay inadvertently call the Township regarding complaints or issues related to the
services provided by Azurix that any such complaints or matters relating to the
service provided by Azurix, should be directed to:[to be determined by Azurix at a
future date];
b) review within fifteen (15) days of receipt all capital expenditure plans prepared
and provided by Azurix in respect of the Facility; and
5
c) assume responsibility for the operation of the Facility in the event of a default
pursuant to Article 11 herein in which case the Township shall be entitled to call
in and utilize the Letter of Credit and monies from the Fund for purposes of
replacing the Replacement Parts pursuant to Article 7 herein.
ARTICLE 5. THIRD PARTY ENGINEER
5.1 For the purposes of monitoring the Facility and providing comments on and approval of
reports prepared by Azurix, the Township may, in its sole discretion, retain an engineer (the
"Township Engineer") to perform the following:
a) monitor the construction of the Addition by Azurix and provide to the Township a
certificate that the construction of the Addition has been completed in
accordance with the Certificate of Approval;
b) monitor the operation of the Facility on an annual basis to confirm compliance
with the provisions of the Certificate of Approval;
c) review any and all Rectification Plans (as defined below) proposed by Azurix for
any Deficiency which may arise during the term of this Agreement in respect of
the condition or operation of the Facility; and
d) review any and all capital expenditure plans in respect of the Facility prepared by
Azurix and submitted to the Township.
5.2 Azurix hereby covenants and agrees to reimburse the Township for the costs associated
with retaining the Township Engineer and performing the tasks herein, provided that such costs
shall not exceed seven thousand dollars ($7,000.00) in any given year and further provided that
any amount not reimbursed to the Township for any given year up to the maximum amount,
shall not carry over to any subsequent years as a benefit or credit to the Township. Such
amount shall be reimbursed annually up to the agreed amount of seven thousand dollars
($7,000.00).
5.3 Each of the Township and Azurix hereby acknowledges and agrees that the Township
Engineer, acts solely for and in the discretion of the Township in performing his duties
hereunder and the Township Engineer shall not be required to report to or act for the benefit of
Azurix.
ARTICLE 6. REPAIR, MAINTENANCE OR REPLACEMENT OF FACILITY
6.1 In the event the Ministry determines that an Operational Deficiency exists Azurix shall
promptly notify the Township in writing (the "Deficiency Notice") of the particulars of such
Operational Deficiency, which Deficiency Notice shall include any order issued by the Ministry to
rectify the Operational Deficiency or Azurix's intended plan of action for rectifying the
Operational Deficiency if ordered to create one by the Ministry (the "Operational Rectification
Plan"), including the minimum and maximum time period in which the Operational Rectification
Plan shall be completed. Azurix shall rectify any such Operational Deficiency in accordance
with the terms of the Operational Rectification Plan and upon completion, shall certify to the
Township that all Operational Deficiencies have been rectified in accordance with the
Operational Rectification Plan.
6
6.2 Notwithstanding any provision contained herein, the obligation of Azurix to provide a
Deficiency Notice does not preclude any obligation it may have to report such Operational
Deficiency to the Ministry or any other authority as required by law, and Azurix shall report the
occurrence of such Operational Deficiency as required by the Ministry or any other authority.
6.3 If Azurix, the Ministry or the Township determines that the Operational Deficiency is of a
type that may cause a material danger to human he@|th, the environment or property, the
Township may provide a copy of such Deficiency Notice to any public authority it deems
appropriate and necessary to advise to ensure adequate protection of the pub|iC, environment
or property from the effects of the Operational Deficiency.
6.4 In the event Azurix learns of, or the Township determines that a Maintenance Deficiency
exists, Azurix shall promptly notify the Township of the particulars of such Maintenance
Deficiency, which shall include its intended plan of action to rectify such Maintenance Deficiency
(the "Maintenance Rectification Plan") and the minimum and maximum times within which
such Maintenance Rectification Plan shall be completed. Azurix shall rectify such Maintenance
Deficiency in accordance with the terms of the Maintenance Rectification P|8D, provided that
such plan has been approved by the Township or the Township Engineer, and upon completion,
shall certify to the Township that the Maintenance Deficiency has been rectified in accordance
with Maintenance Rectification Plan.
6.5 Azurix, at its own cost, shall obtain any and all approvals required under statute or by the
Ministry to rectifyOperational the Operational Deficiency or the Maintenance Deficiency or as may be
required pursuant to the Operational Rectification Plan or the Maintenance Rectification Plan,
respectively.
6.6 The Township may seek the assistance of the Director in the event (a) the Township
believes that a Maintenance Deficiency has occurred for which it has not received a
Maintenance Rectification Plan pursuant to section 6.4 herein, or (b) the 7-ownohip, acting
reasonably, is not satisfied with the terms of the Operational Rectification Plan proposed by
Azurix in respect of a particular Operational Deficiency and the Township and Azurix are unable
to agree upon changes to the Operational Rectification Plan to satisfy the Township's concerns.
The Township may request the Director to make a determination in the case of (a), that an
Maintenance Deficiency has occurred requiring Azurix to prepare an Maintenance Rectification
Plan and rectifyth� Maintenance[}efiCienoyaccordingly, Orin the case of (b), any additional
Dl8asun88Orterms that shouid be inciuded in the Operationai Rectification Pian and the manner
in which the rectifications should be completed. The parties acknowledge and agree that the
decision of the Director shall be final and binding and that any requirement imposed by order of
the Director shall be incorporated into the respective rectification plan.
6.7 Azurix shall not add to, aiter or extend the Facility without advising and providing the
Township with a copy of any and all such additions, alterations or extensions. In the event
Azurix makes any changes to the Facility, Azurix shall provide to the Township certified updated
"as built" plans.
ARTICLE 7. CAPITAL REPLACEMENT RESERVE FUND
7.1 Azurix and the Township shaii be required for the term of this Agreement to enter into an
agreement with the Trustee for the establishment and maintenance of a capital replacement
reserve fund (the "Fund"). The parties hereby acknowledge and agree that Azurix shall
subsidize the Fund throughout the term of this Agreement with the Replacement Fund
7
Allocation. Azurix hereby covenantscovenantsand agrees to deposit any and all of the ReplacementReplacementFUnd Allocation collected bvthe Developer and received by Azurix into the Fund. Azurix shall
ens4no that the monies held'by the Trustee in the Fund shall be held in an interest bearing
account, which interest shall be added to the Fund.
7.2 Azurix shall be required to maintain a sufficient amount of monies in the Fund to pay for
the Repiacement Costs budgeted for replacing the Replacement Parts in any given year, as set
out inSchedule ''F''hereto for the term Ofthis Aoree[OenL The pG�ieSacknowledge and agree
Replacement
be Iess than the amount required for the Replacement Costs for such year. The parties further
acknowiedge and agree that any surpius of the Replacement Fund AUocation deposited into the
Fund and not expended in any given year, shall remain in the Fund and be carried forward to be
applied to the Replacement Costs for the foliowing years. The parties acknowiedge and agree
that under no circumstance shall Azurix be required to pay into the Fund monies other than the
Replacement Fund Allocation.
7.3 Azurix shall annually update the Replacement Costs for the Replacement Parts (the
"updated estimate") of the Facility and provide the Township with a copy of the updated
estimate. In determining the updated estimate, Azurix shall at a minimum take into
ConsideraboO, the actual cost paid to replace any Replacement Parts from the preceding year,
the decreased lifespan of any of the Replacement Parto, which may require early replacement,
and any fluctuation in the market for the costs of the Replacement Parts. Azurix hereby
Covenants and agrees to negotiate with the Developer any increase to the costs of services
charged to the End Users, which may be required to subsidize any increase in the Replacement
Costs resulting from the updated estimate.
7.4 Each of the parties acknowiedges and agrees that the amount required to be reserved in
the Fund shall be adjusted from time to time to the extent that such reserve fluctuates up or
down as a result of changing costs, the updated estimate or other circumstances.
7.5 Each of the parties acknowledges and agrees that Azurix �h@|| OCdif« the Township in
writing Repiacement Part(s) and the repiacement cost associated
therewith. Upon receipt of any such notice, the Township or the Township Engineer shall
--knnvv|e- ge in writing its consent to the replacement ofReplacement Part(s) and shall
authorize the Trustee to withdrawffromLhe Fund the amount requiredto replace such
Replacement Part(s), upon delivery of@ receipt by Azurix to the Trustee evidencing the costs of
such Repiacement Part(s).
ARTICLE 8. ACCESS TO THE FACILITY
8.1 For purposes of inspecting the Facility on an annual b@siS, conducting testing of the
Facility fnJrD time to time, and in cases of rnergenCy. Azurix hereby agrees to permit and
facilitate the Township and/or the Township Engineer access to the Facility during hours of
operation �upon the receipt of reasonabie notice by Azurix, provided that notice to/��urixshall
not be req
uired in the case of an emergency necessitating access by the Township and/or the
Township Eg|Oeerandfurth8rpnJvideutha,Azurixeha||pe[nit and faciiitate immediate access
to the Faciiity in the case of an emergency.
8.2 Azurix hereby grants to the Township all necessary easements for the appropriate
access and egress over and across the Lands for purposes of inspecting the Facility and
reasonabie appurtenances thereto pursuant to section 8.1. Azurix further agrees to do aii acts
8
or things necessary to ensure the access of the Township as may be required by the Township
and/or the Township Engineer to inspect the Facility.
ARTICLE 9. COLLECTION OF FEES
9.1 The' - acknowledge and agree that as a private service provider, Azurix
shall contract with the Developer, who will be solely responsible for issuing invoices to the End
Users and collecting all fees payable under such invoices. The Township shall not be required
to collect any such fees and shall have no role in the enforcement of remitting fees for services
provided by Azurix.
ARTICLE 10. INSURANCE
10.1 Azurix shall, throughout the term of this Agreement, at its sole cost and expense, take
out and keep in full force and effect in the names of Azurix and the Township, as their
respective interests may appear, the following insurance:
a) insurance on the pn}pS�vofevery description and kind owned by Azurix and
located within the Facilityn an amount equal to the full rep|acenOgntcost thereof,
without deduction for depreciation, with coverage for all major pe[i|s, including,
fire and standard extended coverage, sprinkler leakages (where applicable),
earthquake, flood and collapse;
b) general liability coverage to a limit of $5,000,000;
c) auto liability insurance coverage to a limit to $5.000.000;
d) professional liability and errors and omissions insurance coverage to a limit of
$5.000.000;
e) environmental impairment liability coverage to a limit of $5,000,000; and
f) umbrella liability coverage to a limit of the value of the full replacement cost of the
Facility;
10.2 The parties acknowledge and agree that the aforementioned insurance may be subject
to
loss deductible clause and that any payments for claims arising from the operation of the
Facility that fall within the deductible limit are the sole responsibility of Azurix.
10.3 Azurix shall provide to the TovvnShip, certificates of insurance evidencing the insurance
obtained fourteen (14) days prior to the date of commencement of the operation of the Facility.
A\\Such policies shall contain an undertaking by the insurers to notify the Township in writing
not less than thirty (30) days priormaterial�o any ohange, cancellation, failure to review or
termination thereof.
104 In the event of default by Azurix to pay the premiums of such insurance, the Township'
shall have authoritythe right and the /V�pay such p[enDiU0SOObehalf 0fAzurix, tor the purpose
Of ensuring the policies remain in effect. Azurix hereby agrees to reimburse the Township for
any such payment made on its behalf.
9
ARTICLE 11. DEFAULT
11.1 An operating default (an "Operating Default") shall be deemed to have occurred if any
one or more of the following events occur:
a) failure by Azurix to remedy an Operating Deficiency within the timeframe required
by the Ministry or allocated by Azurix to be remedied in the Operational
Rectification Plan pursuant to section 6.1 herein, which timeframe shall include
any extensions granted or agreed to by the Ministry;
b) failure by Azurix or its agents to comply with a condition of an order of approval
issued by the Ministry with respect to the Facility within the timeframe stipulated
by the Ministry, which timeframe shall include any extensions granted or agreed
to by the Ministry; and
c) any act or omission of Azurix or its agents which, in the opinion of the Township,
acting reasonably, causes the operation and maintenance of the Facility by
Azurix to be or become so faulty as to be detrimental to those persons being
served by the Facility;
11.2 In the event of an Operating Default, the parties acknowledge and agree that the Facility
shall be operated and maintained at the discretion of the Ministry and by such persons as the
Ministry may direct. Notwithstanding the foregoing, the Township acknowledges and agrees
that the Ministry may in its discretion direct that Azurix continue as the operator of the Facility
despite the occurrence of an Operating Default and the Township hereby agrees that the
operation of the Facility by Azurix shall continue in accordance with any directives issued by the
Ministry. If the Township is directed to or otherwise assumes the responsibility of operating the
Facility as a result of an Operating Default, it may use the Letter of Credit for the operation or
maintenance of the Facility.
11.3 A default (a "Default") shall be deemed to have occurred if any one or more of the
following events occur:
a) receipt by the Township of notice of a proposed cancellation or non -renewal of
the Letter of Credit, where no replacement letter of credit or financial assurance
has been provided by Azurix three (3) months prior to the cancellation or expiry
of the Letter of Credit;
b) receipt by the Township of notice that Azurix has ceased or threatens to cease to
carry on business, whether such cessation of business be either voluntary or
involuntary;
c) receipt by the Township of notice of the impending insolvency of Azurix;
e) failure by Azurix to meet its obligations to any third party that would affect the
operation of the Facility; and
f) failure by Azurix to remedy an Maintenance Deficiency within the timeframe
allocated by Azurix to be remedied in the Maintenance Rectification Plan
pursuant to section 6.4 herein, which timeframe shall include any extensions
granted or agreed to by the Township.
10
11.4 In the event of a Default the Township shall give written notice to Azurix of the nature of
the Default, and the timeframe, if applicable, within which Azurix shall be required to remedy the
Default. If Azurix is unable to or fails to remedy such Default within the time frame and the
manner required by the Township, the Township may, in its sole discretion, assume
responsibility for the operation of the Facility and use the Letter of Credit, to effect such
assumption of operations. Notwithstanding anything to the contrary, the Township
acknowledges and agrees that it may not be entitled to assume responsibility for the operation
of the Facility in the event of a Default pursuant to section 11.3(c), and that such responsibility
may be determined by a trustee in bankruptcy.
11.5. In the event an Operating Default or a Default continues twenty-four (24) months beyond
the timeframe within which Azurix was required to remedy such default, Azurix shall immediately
upon demand by the Township, transfer ownership of the Lands and the Facility to the
Township, and do whatever acts as may be necessary to affect such transfer. In the event of
such transfer, this Agreement shall terminate and neither the Township nor Azurix shall have
any further obligation hereunder, with the exception of Azurix's obligation pursuant to Article 13
herein. The transfer referred to herein shall also refer to any interest Azurix may have in the
Letter of Credit and the Fund. In addition, to the remedies provided herein, the Township shall
have any and all remedies available to it under law for termination of this Agreement pursuant to
a default.
11.6 In the event the Township is required to assume responsibility for operation of the
Facility hereunder, Azurix shall assist and cooperate with the Township and/or its agents with
effecting such assumption of operations, including but not limited to, providing: documentation
and records relevant to the operation of the Facility: employees and/or contractors to assist in
operating the Facility: and unrestricted access to the Facility.
ARTICLE 12. COSTS OF ADMINISTRATION
12.1 Azurix hereby covenants and agrees to pay, in addition to the costs associated with the
retention of the Township Engineer, to the Township, any and all reasonable costs associated
with the negotiation and administration of this Agreement, including any and all costs charged to
the Township for retaining legal counsel or other consultants, excluding the maximum amount
allocated to the Township Engineer, to the maximum of ten thousand dollars ($10,000.00). For
any amounts greater than such amount, the Township shall provide a copy of the invoice to
Azurix for its review and approval as to payment.
ARTICLE 13. INDEMNITY
13.1 Azurix agrees to indemnify and shall keep indemnified and save harmless the Township
from all loss, damage, cost and expense damage, claims, demands or actions of every nature
and kind whatsoever, including death or injury, arising from or in consequence of the negligent
maintenance or operation of the Facility or any matter under this Agreement, whether such loss,
damage, cost or expense damage, claims, demands or actions is sustained by the Township,
Azurix, or their several and respective employees, workmen, servants, agents or councilors or
any other person.
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ARTICLE 14. TERMINATION
14.1 Unless earlier terminated as a result of an Operating Default or a Default, this
Agreement shall remain in effect until such time as Azurix transfers ownership of the Facility and
the Lands and/or Azurix transfers operation of the Facility to another party and the Agreement
referred to in section 14.2 below is executed.
14.2 Prior to any transfer of ownership or operation of the Facility, Azurix shall have provided
the Township with thirty (30) days notice of such impending transfer and shall have advised the
prospective owner or operator of this Agreement and its requirement to enter into a similar
agreement with the Township and such similar agreement shall have been executed by the
prospective owner or operator and the Township. Notwithstanding the foregoing, nothing
contained herein shall restrict Azurix from effecting any changes in corporate ownership or
structure and continuing its obligations hereunder subsequent to any such change in corporate
ownership or structure.
ARTICLE 15. GENERAL PROVISIONS
15.1 All notices, requests, demands or other communications by the terms hereof required or
permitted to be given by one party to another shall be given in writing by personal delivery or by
registered mail, postage prepaid, addressed to such other party or delivered to such other party
as follows:
to the Township at: Box 100
Oro Station, ON LOL 2X0
to Azurix at:
Attention: Township Clerk
Fax: (705) 487-0133
100 King Street West
P.O. Box 57159, Jackson Station
Hamilton, ON L8P 4X1
Attention:
Fax:
(905) 521-9613
or at such other address as may be given by any of them to the others in writing from time to
time and such notices, requests, demands or other communications shall be deemed to have
been received when delivered, if facsimile transmission three (3) business hours after
transmission, or, if mailed, three (3) days after the day following the day of the mailing thereof;
provided that if any such notice, request, demand or other communication shall have been
mailed and if regular mail service shall be interrupted by strikes or other irregularities, such
notices, requests, demands or other communications shall be deemed to have been received
three (3) days after the day following the resumption of normal mail service.
15.2 The parties hereto shall sign such further and other documents, cause such meetings to
be held, resolutions passed and by-laws enacted, exercise their vote and influence, do and
perform and cause to be done and performed such further and other acts and things as may be
necessary or desirable in order to give full effect to this Agreement and every part hereof.
12
15.3 The parties hereto acknowledge and agree that this Agreement shall be registered on
title to the Lands and any existing encumbrances registered on title to the Lands shall be
postponed in favour of the registration of this Agreement.
15.4 Time shall be of the essence of this Agreement and of every part hereof and no
extension or variation of this Agreement shall operate as a waiver of this provision.
15.5 This Agreement constitutes the entire agreement between the parties hereto with
respect to all of the matters herein and its execution has not been induced by, nor do any of the
parties hereto rely upon or regard as material, any prior or concurrent representations or
writings whatsoever not incorporated herein and made a part hereof.
15.6 In the event that any provision of this Agreement shall, for any reason, be determined to
be invalid, illegal or unenforceable in any respect, the parties hereto shall negotiate in good faith
and agree as to such amendments, modifications or supplements of this Agreement, that to the
maximum extent practicable in light of such determination, implement and give effect to the
intentions of the parties as reflected herein, and the other provisions of this Agreement shall, as
so amended, modified or supplemented, or otherwise affected by such action, remain in full
force and effect.
15.7 This Agreement may be executed in counterparts and by fax, each of which counterpart
shall be deemed an original, and all of which when executed and delivered, shall together
constitute one and the same instrument.
15.8 Neither this Agreement nor any provision hereof may be changed, modified, amended or
waived except by written agreement executed by each party hereto.
15.9 This Agreement shall be construed in accordance with, and governed by, the laws of the
Province of Ontario.
15.10 This Agreement and the covenants, provisions, conditions and schedules therein, shall
enure to the benefit of and be binding upon the respective successors and assigns of each of
the parties hereto.
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as of
the date first written above.
THE TOWNSHIP OF ORO MEDONTE
AZURIX NORTH AMERICA
(CANADA) CORP.
Per: Per:
Name: Name: te,
Title: Mayor Title:
Per:
Name:
Title: Township Clerk
13
Per:
Name:
Title:
SCHEDULE "A"
LEGAL DESCRIPTION OF THE LANDS
Part of Parcel 1-3, Section 51 -MED -3, in the Township of Oro-Medonte (formerly in the
Township of Medonte), in the County of Simcoe, designated as Part 1 on Plan 51R-30017,
being Part of the East Half of Lot 2, Concession 3
SCHEDULE "Er
DESCRIPTION OF THE ORIGINAL FACILITY
• Design treatment capacity of 405 (daily average flow basis)
• 300 mm diameter inlet sewer
• Parshall flume for sewage flow measurement
• Two concrete sequencing batch reactor basins, each 14 metres long x 4.57 metres wide
and 5.6 metres deep with a top operating water level Of 5 metres. Each SBR basin
includes: a fine bubble aeration system, a motorized effluent decanter and a submersible
waste sludge pump with piping valves and instrumentation
�
A covered concrete aerated sludge storage tank 9.25 metres long u4.57 metres wide
and 5.6 metres high. The aerated sludge storage tank includes a submersible sludge
loading pump, a submersible supernatant pump and coarse bubble air diffusers.
• A covered concrete effluent tank with dimensions 9.25 metres long x 4.57 metres wide
and 5.6 metres high. The effluent tank includes two submersible pumps for pumping to
the filters.
• Three exfiltration ponds approximately 25 metres long x 14 metres wide
• A preengineered steel building 18.3 metres long x 9.86 metres wide containing an Offio8,
vvGehnJo[n, electrical room / |obona0ory, blower noorn, and filter room.
• The filter system includes two downflow continuous backwash filters each having a
surface area of 1.77 square meters.
• The chemical system includes two 850 gallon polyethylene storage tanks with two
chemical metering pu/Ops, piping and valves.
• The blower room contains three positive displacement blowers each with a capacity of
130SCFW1and 7.5pSig.piping and valves.
• The electrical room contains a motor control center for power distribution, a PLC based
control panel, and instruments.
15
SCHEDULE "C"
DESCRIPTION OF THE ADDITION
• Design treatment capacity of 810 m3/day (daily average flow basis)
• A third sequencing batch reactor basin with dimensions to match existing basins (14
metres long x 4.57 metres wide and 5.6 metres deep with a top operating water level of
5 metres)
• Two new positive displacement blowers each with capacity to match existing blowers
(130 SCFM and 7.5 psig)
• A third continuous backwash filter with a minimum surface area of 4.65 m2 (50 sq.ft)
• An inlet automatic fine screen system.
• Two parallel concrete grit removal channels
• A lined earthen sludge storage lagoon with approximate dimensions 12 x 15 metres
16
•
SCHEDULE "D"
CERTIFICATE OF APPROVAL FOR THE FACILITY
[to be provided once issued by the Ministry]
•
SCHEDULE "E"
FORM OF IRREVOCABLE LETTER OF CREDIT
[see attached]
ID
THETORONTO-DOMINION BANK
Jackson Square
100 King Sr. W.
PO Box 57148
Hamilton, Ontario L8P 4W9
Telephone No.
521-6519
February 7, 1997
4111ir er Majesty the Queen in Right
f Ontario as Represented by
The Minister of the Environment and Energy
135 St. Clair Avenue
Toronto, Ontario
M4V 1P5
Re: Letter of Credit
We hereby authorize you to draw on The Toronto -Dominion Bank,
Jackson Square, 100 King St. West, Hamilton, Ontario for account of
Philip Utilities Management Corporation, an aggregate amount of
THREE HUNDRED AND SIXTY-THREE THOUSAND, SIX HUNDRED DOLLARS AND
00/100 ($363,600.00) of lawful money of Canada available by written
demand for payment.
Pursuant to the request of our customer, Philip Utilities
Management Corporation, we hereby establish and give you an
Irrevocable Letter of Credit in your favour which may be drawn on
by you at any time and from time to time upon written demand for
payment made upon us by you, which demand we shall honour without
enquiring whether you have a right as between yourself and our said
customer to make such demands, and without recognizing any claim of
our said customer.
This Irrevocable Letter of Credit will continue up to the 7th
day of February, 1998 and will be automatically renewed for one
year on the same terms and conditions including this one for
renewal unless we give you at least 60 days written notice that it
will not be so renewed and you may call for payment on the full
amount outstanding under this Letter of Credit at any time prior to
that date should this Irrevocable Letter of Credit not be renewed.
Partial drawings are permitted.
Any payment made hereunder shall be in favour of the Minister
of Finance of Ontario.
The amount secured by this Irrevocable Letter of Credit may be
reduced from time to time by written notice to the Bank from you.
continued
- 2 -
THE MINISTER OF THE ENVIRONMENT AND ENERGY
Any notice under the previous paragraph or any demand
hereunder may be made by you or by the Assistant Deputy Minister,
111PRegional Operations Division; the Assistant Deputy Minister,
Corporate Resources Division; or such other Director as you from
time to time authorize in writing.
Your claim under this Letter of Credit must be in writing
addressed to The Toronto -Dominion Bank, Jackson Square, 100 King
St. West, Hamilton, Ontario, quoting our Irrevocable Letter of
Credit #9-315420 dated the 7th day of February, 1997.
We herby agree with you that demands made in compliance with
the terms of this credit shall be duly honoured upon presentation
at this Bank.
This Irrevocable Letter of Credit is issued subject to the
Uniform Customs and Practice for Documentary Credits, 1993 Revision
ICC Publication No. 500.
THE TORONTO -DOMINION BANK
1,2
Ruth St. Aubin
Non Negotiable
Securities Officer
THE TORONTO -DOMINION BANK
Rabena Bacchus
Manager Business Bank
•
SCHEDULE "F"
RESERVE FUND PROGRAM
[see attached]
1 -- -
1
EQUIPMENT MAINTENANCE PROGRAM BUDGET _ j YEAR
i }-
_
HORSESHOE VALLEY W WTP -
19
20 TOTAL$$
9 10 11
7 8 1
12 13 14 • 15 16
17
18
EQUIP. NO. DESO.
TYPE
MODEL NO. 1 2 3 4 6 j 6
I
-
$ 1,000 $ 20,000
1
000 $ 1,000
$ 1,000
$ 1,000 ' $ 1,000
$ 1,000 j $ 1 000
1,000 j
$ 1,000
$ 1,000 $ two
..
..
$ 1,000 II $ 1,000 1$ 1,000 $ 1,000 $ 1,000 � $ 1,000 I $ 1,000 $ 1 000 i$^7
iI
$
Level sensor
UtS level transmitter "-_
controls cyst.
I
$
$ 1.000---
-$
$ 2,000 I
$ 1.Of0 -
2,000
$ 15,000
-$
-. - $ 1,000
1-$ 2,000 I $ 1,00 -' $ 2000 $ 1,000
2,000 1
__
Stepscreen
raw sewage screen_
- __ _-
-_
_--
- --r--- - 1
'
-_- _
-•
_S
---
$ 5,000
$ 2 p
- -
-i -
- =- - $ 5,000
I
5,000
i
,000
_--aerbloweri
_-
blow
- r
4mP
$ 5,000 ..
-"_ � i
_
_-.-
aeration blower 1
I ___
-_-
5,00 0 I
$
$ 20,000
_- _ -. "I $ 5,000
$ 5,000
_._-._
70_01_____
-
aerblower2
aerafon blower 2
blow
4rnP __ - --
_._
000
000
_ -e_-I-
II -5.000
5,_0_00
5.00
$ 0
$ 5
I$
-.. _-._
4mp I $
I
--� ---
- ---
aerblower3
aeration blower 3
blow
5,000
I $__5,00-0 I $ 20,000
-
- _-- $ 5,000
T
$ 5.000
-_ $
4
-
aeration blower 4
--
- _____ -- �T--
i
-
-- _
_-
15,000
aerblower
I
_.__ -"-_
_---_
$ 5,000
.- �$
- $ 5 000
- - -- II
I $ 5,000 1
___
$
aerblower 5
aeration blower 5
-
_ I
_ _
- - ----
� $ 3,000 '
$ 3,000 1 000
5.
3.000
$ 3000 .
-
$ 3 000 ___-
- $
_
1
pump
dp3067
INIM1
sludpumpt
sludge pump
_---__L3,000
I $ 3,000 $ 3,000 j $ 3,000
$$ 15,000
_ -- $ 3,000 -
$ 3,000
�"
sludpumpt
sludge pump 2
pump
dp3067 __
$ 3.000 $ 15,000
$ 3000 $� $ 3,000
efpumpt
effluent pump 1
pump
$ 3,000
_- __
3,000 $ 3,000
_
$ 3,000
$
$ 15,000
-- $ 3,000_ $ 3,000 I $
efpump2
effluent pump 2
Pump
MOO -
j _
$ 4,000 $ 4,000
$ 24,000
1 4.000
$ 4,000
$ 4,000 _ $ 4,000 -_
$
efpump3
effluent pump 3
VFDpump
I I
$ 4,000 $ 4,000
!_
24,000
$ 4,000 $ 4,000
$ 4,000 $ 4.000 $
-----
efpump4
effluent pump 4
VFDpump
Mill $ 1,000 • $ 1,000 $ 1,000
MIN
IIII
IIII
ill
$= $ 1,000' $ 1,000 $ 1,000 $ 1,000
aircomp
air compressor 1
comp
motor $ 1,000
IIIIIIIIIIII 111111111111=111.111•1111111111101111111111111111111111111•11
, „ „ $ 1,SG0 $ 1,500 $ 15,000
111=310
IIIIIIIIINIMIIIII$ 1.500 '
to r r $ 1,500 $ 1,500 = $ 1,500 $ _
NMI
aircomp
air compressor 2
comp
MEI
'• 200 $ 200 01133,11:111E001130113103111133 $ 200 $ 200 $ zoo $ zoo mai $ 4,000
SBR trr
meter
$ 200 r +. $ 200 rr $
IIMMENNINI
oxy1100 $
D.O. Meter t
D.O. meter
$ 4,000
$
$ 4,000 $ 4,000 _ $ 4,000 $ 4,000 $ 20,00111.111111111111111111111011111.11111111 0
Diffusers
sanitare fine bubble
diffuser
22611 e9 diffuser
$ 2,500
$ 2,500 $ 2,500 $ 7,500
$
.
__�
Decant SYs. t
Decant arm
11.111111111111111111111111111111111011111
$
1.11.1111111111111
moujimmEn $ 200 200$ 200 $ 200 $ 200$ 4,000
SBR 2
$ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $
$ 200 � r $ 200. $ 200 $ 200
MUM 111.1111110
D.O. meter 2
D.O. meter
meter
oxy1100
MINIM$
$ 4.000 $ 4,000 $ 4,000
$ 4.000 $ 20,000
Diffusers
sanitare fine bubble
diffuser
2261 t e9 diffuser
4.000 1
j
$ 7,500
I $ 2,500
$ 2,500 $ 2,500
$
Decant Sys.2
_ Decant arm
_
_ I
_
$ -
__
11111111111111.1111111.111111111111111
200 $ 200 $ 200 $ 200 $ 200 L$ 200
$ 200 ; $ 4,000
SBR3
$ '00
$ 20O $$ 200
$ 200
$ 200 $ 200 I $ 200 $ 200 $ 200 $
D.O. meter 3
D.O. meter
meter
oxy1100 $ 200 $ 200 $ 200
-'f"-
i
$ 4,000 I $ 20,000
-
$ 4,000
I
$ 4,000 $ 4,000 $ 4,000
$
Diffusers
sanitare fine bubble
diffuser
22611e9 diffuser
$ 2,500
$ 7,500
- I
$ 2,500
I
$ 2,500 ®
$
SYs_ 3
Decant arm
-
$ 4,000 $ 16,000
Decant -._
-
$ 4,000 I , $ 4,000
_
PLC503
$ 4,000
1
$
Pan
control panel
panel
-
r $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
$ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
$ 1,000
$ 1,000-�� $ 20,000
flow $ 1,000 $ 1,000 $ 1,000
$ 1,000.1 $ 1,000
$ 1,000
$ 1,000
$ 1,000 I i
Filter 1
ter 1
filter 1
filter
centra
$ 1,0001 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000' $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
$ 1,000
$-l,000 1 $ 20,000
Fitter2
filters
filter
$ 1,000 $ 1,000 $ 1,000 $ 1,000
1 11.1111111111111.1111111.111111.1011111.1
500 $ 503
$ 500 I 5,000
$ 500 $ 500 $ 500 � $ 500 $
$
Chempumpt
chemical pump 1
chem pup
$ 500
( _111.111111111111111.11.10111111111.1111111111
$ 100 $ 100 $ $ 100
j $ 100
$ 100 2,000
$$11+00• $-100_ $ 100 $ 100 $ 100 $ 100 $ 100 $ $ 100 E! $ 100
$
_Safety kit
first aid kit
safety
$ 100 $ 100 $ 100
$ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $� $ 1,500 • $ 1,500 $ 1,500 $ 1,500 $ 1,503
, $ 1,500
$ 1,500 $_ 30,000
$ 1,500 1 $ 1,500 5� $ 1,500 $ 1,500 $ 1,500
Suilding
stmeturallelectncal
$ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 j $ 1,500 $ $ 1,500 $ 1.50®$ 1.500 $ 1,500
$ 1.500
$ 1,500 $ 30,000
$
Grounds
grounds maintenance
$ 1,500 $ 1,500 $ 1,500 $ 1,500
$ 4,500
!
27,000
I 4,500 I $ 4.500 $ 4,500 $ 4.500
. $
Comp 1
computer
--
$ 4,500 _ $
- 1 1
I
I
100
$ 100
$ 3000 13,600.
1
$ 100 $ 100
$ 100 $ 3,000 $ 100 $ 100
$ 100 I $ 100 $ 3,000
$ 100
$ 100 $
$
-
air
safety
3 000
$ 100 $ 100 I $ 100 $ 100 $ $ 100
1 1
-
Safetyairpac
safety pac
I I
200 $ 200 $ 200 $ 200 $ 200 $ 200
$ 200
$ 200
$ 200
$ 200
$ 200 $ 200 $ 200
$ 200 $ 4000
safety
$ 200 $ _2007 $ 200 $ 200 $ 200 I $ 200 i $ j
Gas detector
__
I-$ b 5,000 $ 5,000 $ 5,000 $ 5,000
�I
$ 5,000
$ 5,000 $ 5,000
$ 5,000 $ 5,000 j $ 5,000
$ 5,000 $ 5,000
$ 5,000
$ 5,000
$ 5,000. $ 100,090,
Misc
Miscellaneous Repa rs
$ 5,000 5,000 $ 5,000 $ 5,000 $ 5,000
I
S 18,000 $ 20,000 j $ 45,400
$ 42,000 ! $ 13,000
$ 40,000
$ 20,000
$54,900 $ 625,100
_-__
TOTAL BUDGET
_
$13,000 j $ 15,000 $ 33,500 C $ 42,000
8 29,900 1 5 40,000 S 16,000
I
"
$ 42,000�S 30,50050,500 31,900
$�
,
$ 21,090 $ 57,000
T