Loading...
HomeMy WebLinkAbout1977 TEXAS MUNICIPAL POWER AGENCY 600 ARLINGTON DOWNS TOWLR 2225 E, RANDOL MILL ROAD ARLINGTON TEXAS 76011 1&171 461 4400 Decembr.r 9, 1977 Mr. Ernie Tulloa Utilities Administration City of Denton 215 E. McKinney Denton, TX 76201 Mr. Bob Corder City of Garland P. 0. Box 189 Garland, TX 75040 Mr. Bill Reuthinger City of Greenville P. 0. Box 1049 Greenville, TX 75401 Mr. Gailord White City of Bryan P. 0. Box 1000 Brysn, TX 77801 Gentlemen: Enclosed are executed originals of the following lone Star contracts: 1. CONTINGENT SETTLEMENT AGREEMENT 2. AGREEMENT OF TERMINATION AND GENERAL RELEASE Please include these with your executed originals of the "GAS SALES CONTRACT" and "TRANSFER OF GAS AGREEMENT". Sincer0 y, Thomas C. Murrell Director, Generation Planning cc: P. R. Cunningham A. H. Eubanks, III George Flint w/enclosures TEXAS MUNICIPAL POWER AGENCY 600 ARLINGTON DOWNS TOWER 2225 E. RANDOL MILL ROAD ARLINGTON. TEXAS 76011 1817# 4614,400 December 9, 1977 Mr. Ernie Tullos Utilities Administration City of Denton 215 E. McKinney Denton, TX 16201 Mr. Bob Corder City of Garland P. 0. Box 169 Garland, TX 75040 Mr. Bill Reuthinger City of Greenville P. 0. Box 1049 Greenville, TX 75401 Mr. Gailord White City of Bryan P. 0. box 1000 Bryan, TX 71501 Gentlemen: Enclosed are executed originals of the following Lone star contracts: 1. CO^:TINGENT SETTLEMENT AGREEMENT 2. AGREE?SENT OF TERM114ATION AND GENERAL RELEASE Please include these with your executed originals of the "GAS SALES CONTRACT" and "TRANSFER OF CA-) AGRECMENT". Sincerely, Thomas C. Murrell f Director, Generation Planning cc: P. R. Cunningham A. It. Eubanks, III George Flint w/enclosures TKMNSFER OF GAS AGREE`MW THIS AGREE?LENT, rude and entered into by and )etveen the CITY OF BRYIUN, the CITY OF DENTON, the CITY OF GA2LAND, and the CITY OF GREENVILLE, each of which is a municipal corporation, hereinafter collectively referred to as "Cities," and LOVE STAR GAS CO:tPX4Y, hereinafter referred to as "Lone Star," W I T N E S S£ T H: WHEREAS, Lone Star Gas Comp any and the Cities of firyan, Denton, Garland, and Greenville made and cn*-ared into the following "Gas Sales Contracts" a) Under date of 41N` 1977, for the sale and purchase of natural gas for use as fuel for the City of Bryan's electric generation plants, and b) Under dote of 1~.41941dwa- ~ 1977, for tine sale and Furch;i.ge of natural gas for use as fuel for t}ie City of Denton's electric generation plants, and c) Under date of _hjjg &4- 7 , 1977, fo!- the sale and purchase of natural gas for use as fuel for the City of Garland's electric generation plants, and d) Under date of k ' jlQ- 7 1977, for the sale and purchase of natural gas for use as fuel for the City of Greenville's electric generation plants, and I • r WHE.UAS, Lone Star and Cities, desire to ant into a "Transfer of Gas Agreement" a.i hereinafter provided; NOW, THERX FORE, in consideration of the premises and th~! sun of One Dollar ($1.00) cash in hand paid to each party by the other party hereto, the receipt and sufficiency of which is hereby acknowledged, and of the r..utual covenants and agreements herein contained, Cities and Lone Star do hereby contract and agree with each other as follows: ARTICLE I SUBJECT ALA 'R It is agreed that from tine to tine one or more individual. Cities may el.-.,:t to take and receive a quantity of gas that is less than the daily or annual maxiau-: quantities provided in the respective "Gas Sales Contract" or "Contracts" or is less than the quantity that may be allocated under Lone Star's rurtailr.an; -pro;rin, or may elect instead to receive an equal quantity of bas at any other one or -ore I individual Cities' plants, which 5;ia11 be hereinafter referred to as "trans vr of gas" subject to the following conditions: a. Cities shall notify Lone Star a reasonabic a-iount of tine in advance of its desire to make such a transfer of gas and shall designate the quantity of gas and the City or Cities transferred from and to, and the period of timr during which such transfer shall take place, and b. Lone Star shall agree to such a transfer of gas except when Lone Star deterninea that to do so would interfere with Lone Star's curtailment I program or with Lone Star's ability to provide adequate service to customers accorded an equal or higher priority than Cities by Lone Star, and -2- c. Any individual City shall never by virtue of this agreement have the right to take and receive in excess of the daily or hourly maximum quantities provided for any GIty by the Cas Sales Contract in effect for such plant. and d. All quaatitie, of gas transferred from any individual Cities' plants as provided herein s`.iall apply toward maximum and mi tmum quantities of the Gas Sales Contract in effect for the plant from which such transfer of gas was made, and e. Cities may terminate such a transfer of gas at any time by giving reasonable advance notice to Lone Star of its desire to do so and Lone Star may likewise terminate a transfer of -as by giving Cities reasonable advance notice if Lone Star has determined that to continue a transfer would interfere with Lone Star's curtailment pro-ran or with Lone Star's ability to proaide service to customers accurdad in equal or higher priority t' n Cities by Lone Star. ~ ARTICLE iI TETI Subject to the other terms and provisions hereof, this agreement shall be effective from 12:01 a.m. on the 1st day of April, 1977, and shall thereafter continue and remain in full force and effect for a period and tern. ,,nding until the termination of any three of the aforesaid Gas Sales Contracts. ARTICLE III PAYM EN T 1. All quantities of gas transferred from a City, as provided for herein, shall be deemed to have been purchased by the City to which such transfer of gas was made except that the quantities transferred shall -3- Y~ not apply toward the maximum and minimum quantities of the Gas Sales Contract for the City to which the transfer is mace. Price of gas, rendering of sta':aments and bills, and payments sh311 be according to the terms and conditions of the Gas Sales Contact in effect for the City to which such transfer of gas was made, and 2. Lone Star shall furnish to Texas Xunicipal Power Agency, on a monthly basis, a report of all gas sold under the provision of this transfer of Gas Agreement. ARTICLE IV I \OTIC~S The notifications provided for herein may be by telepinone, but will bz confirmed by written notice no later than the following business dsy, "rhich notice shall specify t:ie quantities of gas to be trans'ferre, and the peri,,: of time during which Such transfer is to be made. ARTICLE V AGENT FOR CITIES Cities hereby appoint Texas Municipal Power Agency their agent for the purpn:e of receiving and giving notices. statements, and carrying oa normal operating and dispatching communication hereunder. Lone Star is hereby authorized by Citiaa to so deal with such agent with the sane reliance is if it were dealing with Cities and Cities shall be, bound by all the acts Tt its agent; provided that Cities, collectively, may by written nctice actually delivered to Lone Star designate a different agent, provided, however, that such different agent is acceptable to Lone Star. IN WITNESS WHEREOF, this agreement has been executed in sextup/licate originals by Lone Star and Cities on the `2t4 day of V'/91J4itlV, Q,~~ 1977. 4 ATTEST: LONE STAR GAS COMPANY By: "LONE STAR" ATTEST: CITY OF BRYAN C~~,6 ~ By. iu4l" City S retary ATTEST: CITY OF DENTON By: City a etary .T ATTEST: CITY OF GARLAND By: City Secretary ATTEST: CITY 0 CREENVILLE r ~?/_>71/ By:~Llscl. City Secretary "CITIES" -S- GAS SALTS CONTRACT THIS AGREEMENT, made and fanteeed into by and between LONE STAR GAS COMPANY, hereinafter referred to as "Seller," and the CITY OF DENTON, TEXAS, a municiral corporation, hereinafter referred to as "Buyer," W I T N E S S E T Y: WHEREAS, Buyer Trans and operates electric generating stations known and designated as its Mulberry Diesel Plant and Spencer Generating Station, both located in Denson County, Texas, which electric generating stations and all enlargements of additions thereto, during the term hereof, are hereinafter sometimes collectively referred to as "Buyer's 'Plants"'; and WHEREAS, Buyer desires to be assured of an adequate supply of natural gas to meet the fuel requiremcots for the operation of said Plants, and Seller desites to sell such gas co Buyer; `:^W, THEREFORE, in consideration of the premises and the sum of One Dollar ($1.00) cash in hand paid to each party by the other pasty hereto, the receipt and sufficiency of which is acknowledged, and of the mutual covenants and agreements hereist contained, Seller and Puyer do hereby contract and agree with each other as follows: ARTICLE 1 SUBJECT MATTER: Subject to the terms and provisions hereinafter set out and to the extent of and in accordance with tha terms, conditions and limitations hereinafter stipulated, Sell_r agrees to sell and deliver to Buyer and Buyer agrees to purchase and receive from Seller, at the points of delivery herein provided for, natural gas for the fuel requirements of Buyer's Plants during the term hereof other than the fuel requirements of Buyer's Plants to be satisfied with fuel that Buyer has the right to purchase in accordance with the provisions of Article X11 hereof, hereinafter called "Buyer's Fuel Requirements," up to but not in excess I of the Maximum Peak Day and Maximum Annual Fuel Requirements provided for in Article II hereof. ARTICLE II gVANTITY (1) The quantity of gas, computed on the basis of a heating value of one thousand (1,000) British Thermal Units per cubic foot, which Seller is obli- gated to sell and deliver to Buyer and which Buyer is obligated to purchase and receive from Seller hereunder, but subject to that certain Transfer of Gas Agreement between the parties executed as of the date of this Gas Sales Contract, during each Calendar Year (in the ease of 1977, Calendar Year means in this agreement that portion of the year subsequent to the effective date of the agreement) of the term hereof, -'call be a volume of gas equal to that amount of Buyer's Fuel Requirements specified by this agreement for its Plants, up to but not in excess of Buyer's Maximum Peak Day Fuel Requirements and Maximum Annual Fuel Requirements for each of said years, as set forth in the following Exhibit "A": -2- ~sYl ~S1 EXHIBIT "A" Maximum Peak Day Maximum Annual Fuel Requirements Fuel Requirements Calendar Year _(Million Cubic Feet) (Million Cubic Feet) 1977 50 4,660 (for 9 months only) 1978 50 6,500 1979 50 6,900 1980 50 7,100 1981 50 7,100 1982 50 6,000 1983 50 5,000 1984 50 4,200 (2) Without limiting the obligation of Buyer to take and pay for Buyer's Fuel Requirements for its Plants, up to but not in excess of the Maximum Annual Fuel Requirements set forth in Exhibit "A" during each Calendar Year of the term hereof beginning with the Calendar Year 194, Buyer agrees to take and pay for, or pay for whether taken or not, during the Calendar Years 1977 and 1978, a Minimum Volume of gas which is equal to seventy-five percent (75X) of Buyer's Estimated Annual Fuel Requirements for each such Calendar Year, as set forth in the following Exhibit "B", and during the Calendar Year 1979 and each Calendar Year thereafter, during the term hereof, a Minimum Volume of gas which is equal to seventy-five percent (75X) of the amount of Buyer's Estimated Annual -3- Fuel )tequirement; for such Calendar Year, determh,.ed In accordance with the provisions of slid Exhibit "B", all to be compu-,d on the basis of a heating value of one thousam' (1,00')) British Thermal Units per cubic foot: EXHIBIT "B" Estimated Annual Fuel Requirements Calendar Year (Million Cubic Feet) 1977 49660 (for 9 months only) 1978 6,500 1979 6,900 (a) On or before October 1, 1977, Buyer will submit to Seller written ootice setting forth the Preliminary Estimated Annual Fuel Requirements of Buyer for the Calendar Year 1980 and the Estimated Annual Fuel Requirements of Buyer for the Calendar Year 1979; and, on or before October 1, 1978, Buyer will submit to Seiler written notice setting forth the Pre- liminary Estimated Annual Feel Requirements of Buyer for the Calendar Year 1981, and the Estimated Annual Fuel Require- ments of Buyer for the Calendar Year 1980, provided, however, that the Estimated Annual Fuel Requirements for the Calendar Year 1980 shall not be less than seventy-five percent (75X) nor greater than one hundred twenty-five percent (125X) of the Preliminary Estimated Annual Fuel Requirements for that Calendar Year. (b) Buyer shall submit to Seller similar written notice on or before October 1 of each Calendar Year from 1979 through. 1931 giving the Preliminary Estimated Annum Fuel Requirements of Buyer for the Calendar Year which begins two (2) years and three (3) months in the future from said October 1; and, on or before October 1 of each Calendar Year from 19%9 through 1982 Buyer shall submit to Seller written notice of the Estimated Annual Fuel Requirements of Buyer for the Calendar Year which begins one (1) year and three (3) months in the future from said October 1. For any Calendar Year the Estimated Annual Fuel Requirements shall not be less than seventy-five percent (75X) nor greater than one hundred twenty-five percent (125X) of the Preliminary Estimated Annual Fuel Requirements for that Calendar Year. -4- 1 f (3) In no Calendar Year shall the Estimated Annual Fuel Requirements of Buyer as provided for in Exhibit "B" of Paragraph (2) of this Article exceed the Maximum Annual Fuel Requirements for such year as set forth in Exhibit "A" of Paragraph (1) of this Article. Seller's obligation to deliver gas hereunder shall not, in any Calendar Year, exceed Buyer's Estimated Annual Fuel Requirements set forth or determined as provided for in said Exhibit "B", and such obligation shall not exceed, in any hour of any day, one twentieth (1/20) of the Maximum Peak Day Fuel Requirements for the Calendar Year which includes such day. The figures shown in the "Maximum Peak Day Fuel Requirements" column in Exhibit "A" are based on present forecasts of future generation needs. In the event that Buyer, by written notice to Seller as provided for in Exhibit "B", establishes its Estimated Annual Fuel Requirements for any Calendar Year at less than the Maximum Annual Fuel Requirements for that year as set forth in Exhibit "A", then the Maximum Peak Day Fuel Requirements for such Calendar Year shall be reduced in the same proportion chat the Estimated Annual Fuel Requirements so established for such Calendar Year bears to said Maximum Annual Fuel Requirements for said Calendar Year. For all Calendar Years, other than 1977 and 1978, Buyer shall not establish the Estimated Annual Fuel Requirements for any Calendar Year of the term hereof at an amount that is (1) greater than one hundred twenty-five percent (125%) of the Estimated Annual Fuel Requirements for the immediately preceding Calendar Year, or (2) less than fifty percent (50Y) of the highest Estimated Annual Fuel Requirements previously established by Buyer for any Calendar Year subsequent to the Calendar Year. 1977; however, the preceding portion of this sentence notwithstanding, Buyer may establish the Estimated -5- Ar_nual Fuel Requirements for any Calendar Year at an amount that is fifteen percent (15X) or a lesser percentage lower than the Estimated Annual Fuel. Requirements for the immediately preceding Calendar Year. (4) Buyer agrees that all of the gas purchased hereunder will be used or consumed in and for the operation of its Plants, and that no part of such -as will be resold or used for any other purposeq, except as otherwise provided in that certain Transfer of Ca-7 Agreement executed as of the same date as this agreement between Seller and certain members of the To-xas Municipal Power Agency of which Buyer is a member. Nothing contained in this agreement shall be con- strued as obligating Buyer not to purchase fuel for use in Buyer's Plants from any other person, firm or corporation whatsoever when such fuel is in excess of Buyer's Fuel Requirements as defined in Article I. Nothing contained in this contract shall prevent Seller from selling and Buyer from buying hereunder any additional quantities of gas in excess of Buyer's Fuel Requirements which Seller has available and desires to sell and which Buyer desires to purchase on such terms and conditions as may then be mutually agreed upon. (5) If, during any Calendar Year of the term hereof, Buyer should fail to purchase the Minimum Volume of gas required by this agreement to be purchased during such year, Buyer shall pay Seller for the amount of the defi- ciency below said Minimum Volume for that Calendar Year. Seller shall notify Buyer within fifteen (15) days following the end of such Calendar Year that Buyer failed to purchase the Minimum Volume of gas so required, accompanying such notice with an itemized statement of the amount due Seller by reason of such deficiency. The amount of such payment due shall be computed by multiplying l -6- twenty percent (20%) of the weighted aversge of the monthly prices paid by Buyer to Seller fo- gas purchased under this contract during such Calendar Year by the difference between the amount of gas purchased and received by Buyer hereunder during'that Calendar Year, adjusted as provided in Paragraph (6) of Article XII, and said Minimum Volume for that Calendar Year. Such payments shall be made to Seller as liquidated damages for Buyer's failure to take such Minimum Volume of gas, such being agreed upon as reasonable under the circumstances as a part of this contract, and net as a penalty. Such payment shall 1-:! made in the followl-ag manner: During each Billing Month of the succeeding Calendar Year, commencing with the Billing Month ending on January 31 thereof, Seller's bills to Buyer, for gas delivered during such months, shall be increased by adding to su.h bills an amount equal to one-twelfth (1/12) of the total amount due Seller by reason of Buyer's failure to purchase, during the preceding Calendar Year, the Minimum Volume of gas required to be purchased hereunder, AF~TICI£ IIi QUALITY: Seller shall deliver to Beyer gas which is of merchantable quality and reasonably free from water and other objectionable fluids and from sand and other objectionable solids and which contains not more than twenty (20) grains of total sulphur, nor more than one (1) grain of hydrogen sulphide, per one hundred (100) cubic feet of gas, and which has a heat content of not less than nine hundred (900) British Thermal Units (BTU) per cubic foot under the condi- tions of measurement set forth in Article V. Se.ler will notify Buyer as soon as possible in advance of any change in the source of gas supply which would effect a substantial change in the BTU content of the gas delivered to buyer. -7- 3 ARTICLE IV DELIVERY AND GONN2f (10 FACILITIES: (1) The it,'.nts of delivery of gas to be sold and delivered by Seller to Buyer hereunder sh:ll be at tle outlet side of Seller's regulating and meter- ing stations which shall bc: installed, if not already installed, by Seller at locations, mutually acce;itable to Buyer and Seller, on the sites of Buyer's Plants. Seller agrees that it will construct, operate and maintain such regu- lating and metering stations, as well as the necessary tap or lateral lines from its main pipeline system to said regulating and metering stations; provided, however, that if any s}stem fortification is required in order for Seller to provide service to any enlargements or additions to Buyer's electric generating plants, then Buyer will be required to pay the full cost associated with such fortification. Buyer agrees that it will furnish to Seller without charge suitable space at its plant sites for Seller's tap and lateral pipelines, regu- lating and metering stations and appurtenant equipment, and that it will install and maintain the necessary service lines to connect with Seller's lines at the outlet side of Seller's regulating and metering stations. Buyer shall authorize no person other than an agent of Seller, or a person otherwise lawfully author- ized, to tamper with, inspect or remove same, and Seller shall have free ingress to and egress from Buyer's premises for the construction, maintenance, repair and replacement of its property located thereon, or for any purpose connected with the supplying of gas hereunder. (2) Gas is deliverable by Seller to Buv;er hereunder at the outlet side of Seller's regulating and metering stations where Buyer's service lino 3- MuI WIM Mal connects with Seller's supply line. Seller shall maintain at each of said delivery points such reasonably steady pressure as may be designated by Buyer at each point of delivery but not in excess of a maximum of seventy-five (75) pounds per square inch gauge pressure. (3) The dnlivery and acceptance of ga3 hereunder shall begin as herein set out, and the title to and ownership of the gas delivered hereunder shall pass to and absolutely vest in Buyer at the points of delivery herein provided for. (4) Each of the parties hereto agrees to promptly notify the other party of expected changes in operating conditions which will affect the delivery and receipt of gas hereunder, and the reasons for such expected changes. ARTICLE V MEASUREMENT: (1) For the purpose of this contract the unit of measurement of gas shall be one thousand (1,000) cubic feet at a pressure base of for 'n and sixty-five one hundredths (14.65) pounds per square inch absolute and at a temperature bass of sixty degrees (60°) Fahrenheit. Meter measurements shall be computed by Seller into such units in accordance itith Boyle's Law for volume variations due to pressure and corrected for deviation, using daily averages of recorded specific gravity (determined to three decinal places) and flawing temperature and using a value for atmospheric pressure of fourteen and four- tenths (14.4) pounds per square inch absolute. (2) The gas delivered hereunder s„~11 be measured by means of meters of standard type, which shall be installed, operated and maintained by Seller -9- and placed at the aforementioned points of delivery or in as close proximity thereto as practicable. Meters, and other measurement instruments and equip- ment, shall be inspected and adjusted for accuracy mrrthly by Seller at Seller's expense. (3) Buyer shall have access to said metering equipment at all times, but the reading, calibration and adjustment thereof and the changing of charts shall be done only by the employees or agents of Seller. Charts and records from such metering equipment shall remain the property of Seller and shall be kept on file by Seller for a period of not less than four (4) years. However, upon request of Buyer, Seller shall submit to Buyer charts and records from its metering equipment, together with calculations therefrom, for Buyer's inspection and verification, subject to return by Buyer within ten (10) days after receipt thereof. (4) Buyer may, at its option and expense, install and operate meters, instruments and equipment to check Seller's meters, instruments and equipment, but the measurement of gas for the purpose of this agreement shall be by Seller's meters only, except as hereinafter specifically provided. The meters, instru- ments and equipment installed by Buyer shall be subject ct all reasonable times to inspection or examination of Seller, but the reading, calibration and adjust- ment thereof shall be done only by Buyer. (S) Each party shall give to the other party notice of the time of all tests of meters sufficiently in advance of such tests so that the other party may conveniently have its representatives present, provided, however, that if either party has given such notice to the otter party and such other party is -10- UNION not present at the time specified, then the party giving the notice may proceed with the test as though the other party were present. Upon written request from either party, the party making the test will furnish the other party a copy of any test report requested. (6) Meter measurements computed by Seller shall be deemed to be correct except where the meter is found to be inaccurate by as much as two percent (2%), fast or slow, or to have failed to register, in either of which cases Seller shall repair or replace the meter. The quantity of gas delivered while the meter was inaccurate or failed to register shall be determined by the readings of Buyer's check meter, if installed and in good operating condition, or by correcting the error if the percentage of error is ascertainable by cal- ibration or mathematical calculation. If not so ascertainable, then it shall be determined by estimating the quantity on a basis of deliveries under similar conditions when the meter was registering accurately. No adjustment or correc- tion shall be made for a period longer than thirty (30) days. (7) The daily average heating value of the gas delivered here•,nder, expressed in British Thermal Units per cubic foot and computed on the basis of a pressure of fourteen and sixty-five one-hundredths (14.65) pounds per square 1 inch absolute and a temperature of sixty degrees (60°) Fahrenheit, sl.all be determined at Seller's expense by the use of recording calorimeters of standard type, which shall be installed and operated by Seller. Each calorimeter shall be tested for accuracy by Seller at regular monthly intervals and should any test show it to be inoperative or recording in error as much as ten (10) British Thermal Units, plus or minus, proper correction of recorded values shall be made -11- for the period during which the recorder was inoperative or recording in error, and if this period cannot be ascertained, correction shall be made to the values recorded during the latter half of the period elapsed since tho last previous test. The degree of saturation by water vapor of the gas to be delivered here- under shall be determined monthly by Seller, using standard instruments and methods, and the results thereof shall be properly taken into account in deter- mining the heating value of the gas delivered. (8) Upon written reque!A from Buyer, Seller will furnish Buyer a detailed report within ten (10) days of any test conducted or computation made by Seller pursuant to this Article. ARTICLE VI PRICE: (1) The price payable by Buyer for the gas to be delivered hereunder shall be determined for each Billing 'Month, as that term is defined in Article IX hereof, by increasing or decreasing, as the case may be, the Base Price in effect during such month, as set forth in Paragraph (2) of this Article, by an amount equal to the amount by which the We€ghted Average Price, as defined in Paragraph (3) and Paragraph (4) of this Article, for such Billing uonth exceeds or is less than thirteen cents (131) per one thousand (1,000) cubic feet of gas; provided, however, that all of the prices payable by Buyer for the gas to be delivered by Seller to Buyer hereunder are subject to adjustment for variations in the British Thermal Unit heat content of the gas in the manner and to the extent set out in Article VII hereof. I -12- (2) The Base Price of gas to be delivered hereunder shall be as follows: (a) During the period beginnirg April 1, 1977, and ending December 31, 1979, the Base .'rice per one thousand (1,000) cubic feet of gas shall be as follows: From April 1, 1977 through December 31, 1977 - 29.501 From January 1, 1979 through December 31, 1978 - 30.251 From January 1, 1979 through December 31, 1979 - 31,252 (b) oui.jlect to the provisions of Paragraph (2)(c) below, the Base Price per one thousand (1,000) cubic feet of gas during the period beginning January 1, 1980, and ending December 31, 1984, shall be as follows: From January 1, 1980 through December 31, 1980 - 32.001 From January 1, 1981 through December 31, 1981 - 33.00: From January 1, 1982 through December 31, 1982 - 35.251 From January 1, 1983 through December 31, 1983 - 41.751 From January 1, 1984 through December 31, 1984 - 42.251 (c) For each Calendar Year subsequent to 1979, an Adjusted Base Price shall be determined by multiplying that portion of the Base Price shown above in Paragraph (2)(b) for the immediately preceding Calendar Year, which is in excess of thirteen cents (131), by the ratio that the Whole- sale Price Index for All Commodities, as published by the Bureau of Labor Statistics of the United States Department of Labor, for the immediately preceding Calendar Year bears to such Index for the second preceding Calendar Year, and 2dding the result thereof bark to thirteen cents (231). Whenever the Adjusted Base Price so determined !.s greater than the Base Price shown in Paragraph (2)(b) move, the Adjusted Base Price shall constitute the Base Price in effect for that Calendar Year. (3) For the purpose of this agreement, the term "Weighted Average Price" of gas purchased by Seller shall mean the weighted average price per one thousand (1,000) cubic feet of all gas purchased by Seller during any month, computed to the nearest one-hundredth of one cent, and shall be determined by dividing the total dollar amount paid or accrued on Seller's books for all gas purchased by Seller during such month by the total number of thousands of cubic -13- feet of gas purchased by Seller during such month, adjusted to the same pressure base as gas sold hereunder, and shall include, in addition to the cost of the gas itself, all Class A Taxes, as hereinafter defined in Article VIII hereof; provided, that if any portion of the cost of gas accrued on Seller's books dur- ing any month is not paid by Seller to the party or parties entitlA thereto because of the fact that such accrual is canceled, or if any portion of the cost of gas or of any Class A Tax which has been paid by Seller is refunded to Seller, or if Seiler is required by the terms of any gas purchase contract, or cf any agreed settlement of a disputed claim, or by a determination or judgment of a regulatory body or court having or asserting jurisdiction, to make retroactive payments with respect to gas previously purchased by Seller, then appropriate adjustments to compensate therefor sh,_l1 be made i, the price payable for gas delivered by Seller to Buyer hereunder as soon as practicable after the time of such cancellation, refund or retroactive payment, provided, that the period during which such adjustments are to be made shall be dete-mined by Seller subject only to the condition that the same shall be made within a reasonable period of time taking into consideration the total amount of any such can.ella- tion, refund or retroactive payment, but no adjustments as provided for herein shall be made after this contract has terminated except with respect to items canceled, refunded or paid prior to the date of such termination, nor shall any adjustments as provided for herein be made with respect to any gas purchased by Seller prior to the first delivery of gas to Buyer hereunder, It is recognized that some of the gas delivered by Seller to Buyer hereunder during any month may be gas owned in place and produced by Seller or may be gas previously purchased -14- ~st.. or produced by Seller which is taken from one of its underground storage reser- voirs, but such gas shall not be considered in determining the Weighted Average Price of gas purchased by Seller during such month; provided, however, that gas placed in storage by Seller for later delivery to Buyer or other customers of Seller shall be accounted for as gas purchased during the month in which it was actually purchased. It is also recognized tLat some of the gas delivered by Seller to Buyer hereunder during any month will probably be gas purchased by Seller from an affiliate or subsidiary company, and in computing the Weighted Average Price of gas purchased by Seller during any month all gas purchased by Seller from an affiliate or subsidiary company shall be considered to have been purchased at the price or prices being paid by Seller for gas purchased under substantially similar contractual terms and provisions from other suppliers in the same field, or, if Seller is not purchasing gas from any other suppliers in such field under substantially similar contractual terms and provisions, then in Seller's same supply area; provided, that if during such month Seller does not purchase gas from any other suppliers in either the same field or the same supply area in which Seller is purchasing gas from Sel er's affiliate or subsid- iary company, then the gas purchased by Seller from its affiliate or subsidiary in such field shall be considered to have been purchased at th< highest price which had been offered to Seller's affiliate or subsidiary by any other pur- chaser or prospective purchaser for such gas under contractual terms and condi- tions substantially similar to those customarily included in Seller's gas purchase contracts, but if no offer for the purchase of such gas had been received by Seller's affiliate or su>sidiary company from any other purchaser or prospective purchaser, then the gas purchased by Seiler from such affiliate or subsidiary company in such field shall be considered to have been purchased at the price or prices being paid by Seller for gas purchased under substantially similar con- tractual terms and provisions from other suppliers in the field nearest to that in which Seller is purchasing such gas from said affiliate or subsidiary company. Nothing contained in this contract shall prevent Seller from entering into any amendment, modification, renewal, extension or replacement of any existing or future gas purchase contract or contracts between Seller and its gas suppliers. (4) Beginning April 1, 1977, there shall be added into the Weighted Average Price as otherwise determined, an additional charge, per one thousand (1,000) cubic feet equal to Buyer's proportionate share of Seller's costs, that have not been included in the Weighted Average Price as otherwise determined, for the latest available fiscal month of acquiring, compressing, purifying and transporting gds to Seller's transmission system, including such costs as an allocated portion of unrecovered advance payments and prepayments, and finance and interest charges thereon, divided by the quantity of gas sold by Seller and purchased by Buyer hereunder; provided, however, in no event shall this charge be greater tLin ten cents (1U) per one thousand (1,000) cubic feet of gas during the period from the first day of the month in which this agreement becomes effective through December 31, 1579, and fifteen cents (151) per one thousand (1,000) cubic feet of gas during the period from January 1, 1980, through December 31, 1984. Some of the gas delivered hereunder by Seller may be synthetic gas, manufactured gas, including products from coal gasification, and sewer gas, or liquefied natural gas, hereinafter called "supplemental gas." Seller shall notify Buyer on or before January 15 of each Calendar Year of the term hereof as to whether the amount of suc'% supplemental gas exceeds five percent (5%) of the -16- total amount of gas sold system-wide by Seller during the last six months of the immediately preceding Calendar Year. Should Seller so inform Buyer that such supplemental gas exceeds five percent (5%) of the total amount of gas sold system-wide by Seller during the last six months of the immediately preceding Calendar Year, Buyer shall notify Seller on or before April 1 of the same Calendar 'Year that Buyer intends to (i) cancel this contract effective at the end of the Calendar Year, as Buyer shall have the right to do; or (ii) not cancel this contract, provided that should Buyer so elect to not cancel this contract, the aforementioned limitations of ten cents (10¢) and fifteen cents (150) per one thousand (1,000) cubic feet of gas on the amount to be charged for such acquisi- tion cisty shall no longer be effective. (5) Effective with the first day of the month in which this agreement becomes effective, and for each Calendar Year thereafter through the term hereof, Buyer shall pay to Seller, on a monthly basis in addition to the price as other- wise determined herein, ten cents (10j) per one thousand (1,000) cubic feet of gas, for each one thousand (1,000) cubic feet of gas furnished and delivered by Seller in excess of the effective Maximum Peak Day/Peak Hour Fuel Requirements, except that Seller shall not have any obligation to deliver for sale to Buyer any such excess quantity of gas. ARTICLE VII ADJUSTMENT FOR HEATING VALUE: If the weighted average heating value of the gas delivered by Seller to Buyer during any month is less than one thousand (1,000) Bri.tish Thermal Units per cubic foot, the price payable by Buyer per one thousand (1,000) cubic feet of gas computed as provided in Article VI hereof shall 'oe decreased one- tenth of one percent (0.1%) for each British Thermal Unit b(4uw one thousand I -17- I 0 -llri (1,000) British Thermal Units per cubic foot; and if the weighted average heat- ing valua of the gas so delivered during any month is more than one thousand (1,000) British Thermal Units per cubic foot, the price payable by Guyer per one thousand (1,000) cubic feet of gas computed as provided in Article VI hereof shall be increased one-tenth of one percent (0.1%) for each British Thermal Unit above one thousand (1,000) British Thermal Units per cubic foot for such gas so delivered during such %ionth. ARTICLE VIII REIMBURSEMENT FOR TAXES AND RENTALS: (1) The term "tax" or "taxes," as used in this contract, shall mean any kind or character of tax (other than ad valorem, capital stock, general property, income or excess profits taxes), license, fea, rental or charge, including specifically, without limitation by enumeration, any production, se.,2rance, gathering, transportation, processing, compression, dedication, use, sales, delivery or gross receipts tax, now or hereafter lawfully levied, as- sessed or made by any governmental authority on the gas itself or on the act, right or privilege of production, severance, gathering, transportation, process- ing, compression, dedication, use, sale or delivery of gas which is measured by gross receipts or by the volume, value or sales price to Seller or Buyer of the gas in quests,.., but shall not include any value attributable to the liquid hydrocarbons in saiQ gas; provided, however, that the term "tax" or "taxes" shall not be deemed to include any general franchise tax imposed on corporations on account of their coryorate existence or on their right to do business within the :;Cate as a foreign corporation. -18- ' (2) The terms "Class A Taxes," "Class B Taxes," and "Class C Taxes," as used in this contract, shall have the following meanings, to wit: (a) The term "Class A Taxes" shall be construed to mean all taxes, as herein defined, whicli Seller pays for the account of or by way of reimbursement to its gas sup- pliers with respect to all gas purchased by Seller. (b) The term "Class B Taxes" shall be construed to mean all taxes, as herein defined, which are or may be levied upon and/or paid by Seller with respect to the gas sold by Seller to Buyer hereunder, exclusive of any Class A Taxes or Class C Taxes. (c) The term "Class C Tax.es" shall hc; construed to mean any license, fee, rental or charge which is or may be levied or imposed on Seller by any governmental authority for the use of its public streets, alleys and thoroughfares in the conduct of Seller's business, with respect to the gas sold by Seller to Buyer hereunder and/or the gross receipts received by Seller from the sale of gas to Buyer hereunder, or any sales or delivery tax •;hich is or may be levied or imposed on and/or paid by Seller, with respect to the gas sold by Seller to Buyer hereunder and/or the gross receipts received by Seller from the sale of gas to Buyer hereunder. (3) All Class A Taxes shall to included, in addition to the cost of the gas itself, in computing the Weighted Average Price of all gas purchased by Seller, in accordance with the provisions of Article VI he.eof. Prior to the January 1978 Billing Month, Buyer agrees to reimburse Seller with respect to Class B Taxes and Class C Taxes, as herein defined, to the extent that the amount of Class B Taxes and Class C Taxes which are or may be levied upon and/or paid by Seller increases, with respect to the gas sold by Seller to Buyer here- under, subsequent to July 1, 1958, Beginning with the January 1978 Billing Month, Buyer agrees to reimburse Seller, with respect to Class B Taxes and Class C TaxeF, e3 herein defined, for the full amount of Class B Taxes and Class C Taxes which are or may be levied upon and/or paid by Seller, with respect to the gas sold by Seller to Buyer hereunder. -19- I • I -%r (4) It is understood and agreed that the amount of reimbursement for any new or additional Class B Taxes and/or Class C Taxes, or any increase in Class B Taxes and/or Class C Taxes, shall be determined by applying the rate, or the increase the rate, of any such tax measured by gross receipts, units of volume, value or sales price to Seller', gross receipts hereunder or to the volume, value or sales price, respectively, of the gas delivered hereunder; provided, that in the event such increase cannot be directly related to the gas delivered hereunder or the gross receipts received by Seller, as hereinabove provided, the amount of reimbursement to Seller shall be the same proportion to the volume of gas sold hereunder as the total amount of such increase is to the total volume of gas sold by Seller. (S) It is understood and agreed that in the event any tax, charge or rental for which Seller has been reimbursed or paid by Buye- hereunder is subse- quently declared unlawful, Seller, upon recovery of the amount of such unlawful tax, charge or rental, shall refund to Buyer the entire amount of such reimburse- ment or payment made by Buyer to Seller which is so recovered by Seller; pro- vided, however, that Seller shall not be required to make a refund to Buyer with respect to any amount so recovered two years after this contract has terminated. (6) Any amounts due from Buyer to Seller as reimbursement for taxes, charges or rentals, in accordance with the provisions of this Article, shall be paid by Buyer to Seller at the time and in the manner that bills for gas deliv- ered hereunder are payable, as provided in Article IX hereof. ARTICLE IX PAY; LENT : (1) For the purpose of billing and accounting for gas delivered hereunder, the day shall begin at twelve o'clock (12:00) midnight and extend to the next twelve o'clock (12:00) midnight, and the month (herein sometimes called the "Billing Month") shall begin at twelve o'clock (12:00) midnight on the last day of the calendar month and extend to twelve o'clock (12:00) midnight on the last day of the following calendar month; provided, however, that in Seller's determination of the Weighted Average Price for the Billing Month, or for any I month, Seller will use its normal fiscal month calculations, and nothing herein shall be construed so as to require Seller to change such procedure. (2) Each party shall read all meters daily at eight o'clock (8:00) a.m. as nearly as practicable, and Seller shall report to Buyer the results of such meter readings. (3) On or before the tenth (10th) working day of each calendar month, Seller shall render to Buyer at its office in Denton, Texas, statements of the amount of gas delivered hereunder by Seller to Buyer at each point of delivery during the preceding Billing Month, and shall also render a bill for the gas so delivered. Within fifteen (15) days after receipt of such bill, but in no event later than the twenty-fifth (2500 day of each calendar month, Buyer shall make payment to Seller at Seller's office in Denton, Texas, for all gas delivered hereunder to Buyer during the preceding Billing Month. (4) If Buyer should fail to pay any amount owing to Seller when same is due, interest thereon shall accrue at the rate of six percent (6y) per annum from the date when such amount is due until same is paid. If such failure to pay continues for sixty (60) days, Seller may, in the absence of any bona fide dispute as to the amount or the time when same was due, suspend deliveries of pas hereunder, and the exercise of such right shall be in addition to any and all other remedies available to Seller. -21- (5) Each party shall have, during the term of this contract and the two (2) year period immediately following its termination, the right at reason- able hours to examine the books, records and charts of the other party to the extent necessary to verify the accuracy of any statement, payment, calculation or determination made pursuant to the provisions of any Article hereof. If any such examination shall reveal, or if either party shall discover any error or inaccuracy in its own or the other party's statements, payments, calculations or determinations, then proper adjustments and correction shall be made as promptly as practicable thereafter; provided, however, that no adjustment or correction shall be made with respect to any error or inaccuracy •.rhich occurred more than two (2) years prior to the discovery thereof. ARTICLE X TERN: (1) Subject to the other terms and provisions hereof, this contract shall be effective from twelve o'clock (12:00) midnight on March 31, 1977, and shall thereafter continue and remain in full force and effect for a period and term extending to twelve o'clock (12:00) midnight on December 31, 1984. (2) Prior to October 1, 1980, Buyer shall submit to Seller a descrip- tion of the gas supply services, if any, Buyer may desire for the five-year period beginning January 1, 1985, through December 31, 1989. Upon receipt of such description, Seller will proceed to evaluate the nature and extent of services, if any, and if it desires to provide any services for Buyer during such period, Seller shall submit a proposal to Buyer on such services prior to March 31, 1981, Prior to December 31, 1981, the parties will proceed to forma- lize the terms and conditions under which such services, if any, will be provided. -22- 4005.~~ ARTICLE XI FORCE MAJEURE: (1) In the event of either party hereto being rendered unable wholly, or in part by force majeure to carry out its obligations under this agreement, other than to make payments due hereunder, it is agreed that on such party giv- ing notice and full particulars of such force majeure in writing to the other party as soon as possible after the occurrence of the cause relied on, then the obligations of the party giving such notice, so far as they are affected by such force majeure, shall be suspended from the inception and during the continuance of any inability uo caused but for no longer period, and such cause shall be as far as possible remedied with all reasonable dispatch. The term "force majeure" as employed herein shall mean acts of God, strikes, lockouts or other industrial disturbances, acts of the public enemy, wars, blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, storms, floods, washouts, arrests and restraints of the governments and people, civil disturbances, explo- sions, breakage or accident to machinery or lines of pipe, the necessity for making repairs to or alterations of machinery, equipment or lines of pipe, breakage of transmi.sion lines, failure of electric equipment due to sleet, ice or other unavoidable causes, accidents to or failures of electric substations, transformers or switching devices, shortage of water, freezing of gas wells or lines of pipe, partial or entire failure of wells and/or sources of gas supply and any other cases, whether of the kind herein enumerated or otherwise not within the control of the party claiming suspension and which by the exercise of due diligence such party is unable to prevent or overcome. -23- It is understood and agreed that the settlement of strikes or lockouts shall be entirely within the discretion of the party having the dif- ficulty, and that the above requirement that any force majeure shall be remedied with all reasonable dispatch shall not require the settlement of strikes or lockouts by acceding to the demands of opposing party when such course is in- advisable in the discretion of the party having the difficulty. ARTICLE XII CURTAHMENT OF DELIVERIES: (1) Seller does not guarantee a continuous, uninterrupted supply of gas to Buyer hereunder, and Seller reserves the right, subject to the limita- tions hereinafter set forth in Paragraphs (2) and (3) of this Article, to cur- tail or discontinue the supply of gas hereunder, if in the judgment of Seller a continuance of the supply of gas to Buyer under this contract would jeopardize or threaten adequate service to Seller's domestic, commercial or industrial cus- tomers who are accorded by Seller a highet priority of service; provided, how- ever, such judgment shall not be arbitrarily or capriciously exercised. How- ever, Buyer does understand that the prices provided herein are reduced from the prices of such higher priority service due to Seller's right to curtail. (2) Buyer and Seller recognize the fact that each is engaged in rendering a service which is essential to the public health and safety and bosh consider the continuity of Buyer's fuel supply essential to the public welfare; that each serves domestic, commercial and industrial customers and that, in many cases, use of gas by Seller's domestic, commercial and industrial customers is dependent on Buyer's ability to render continuous electric service; therefore, -24- Buyer agrees that it will provide a reasonable quantity of standby fuel and equipment to meet its fuel requirements during periods when the gas supply hereunder may be curtailed or interrupted, and Seller agrees to exercise due diligence in making reasonable advance preparations to enable it to provide reasonably continuous service to Buyer. As soon as reasonably possible after Seller has knowledge of a pending curtailment of service to Buyer, Seller will notify Buyer of such curtailment. (3) Seller may, in accordance with the provisions of Paragraph (1) of this Article, interrupt or curtail the supply of gas to Buyer hereunder at any time by as much as twenty-five percent (25%) of Buyer's Fuel Requirements at such time without at the same time curtailing the supply of gas to other cus- tomers of Seller in Seller's curtailment zone in which Buyer's Plant or Plants are located who are accorded by Seller a priority of service equal to or higher than that provided by Rate 3-N of Seller's Schedule of Industrial Rates; pro- vided, that no modification of said Schedule of Industrial Rates shall cause the service priority of Buyer to be raised or lowered in relation to that of other industrial customers of Seller; and provided further, that if it should be necessary at any time for Seller to curtail the supply of gas to Buyer hereunder in excess of twenty-five percent (25Y,) of Buyer's Fuel Requirements, at such time, Seller agrees that the supply of gas to other industrial customers of I Seller in the curtailment zone in which Buyer's Plant or Plants aro located who are accorded by Seller a priority of service equal to but not higher than Seller's said Rate 3-N shall be curtailed by a percentage of the r^quirements of such customers at such time not less than twenty-five (25) percentage points less -25- s' than the percentage by which the supply of gas to Buyer is curtailed. With respect to curtailment of See vice to such other industrial customers, Seller shall only be obligated to make a good faith effort to effect such curtailment by following its usual practices with respect to notifications and instructions to such other customers regarding such curtailment. The refusal or inability of Seller to supply gas to Buyer in excess of Seller's obligation to deliver to Buyer the maximum hourly, daily or annual requirements set forth or provided for in this contract nhall nut constitute a curtailment of the supply of gas to Buyer hereunder as provided for in this Article. (4) If during any Calendar Ye,,r or Years of the term hereof Seller curtails or discontinues, for any reason, the supply of gas to Buyer hereunder to the extent that Seller does not supply ninety percent (90%) or more of the fuel requirements of Buyer's Plants during any such Calendar Year, up to but not in excess of Buyer's Estimated Annual Fuel Requirements for any such year, then Buyer may elect to cancel this contract by giving notice of intention to cancel as hereinafter provided in this paragraph. In the event Buyer should have and exercise the right to cancel this contract, written notice of such election to cancel shall be given to Seller by Buyer wi'.hln six (6) months after the end of the Calendar Year during which such curtailment occurred, and such cancellation shall become effective at the end of two (2) years from and after the date of such notice. (S) Before the second billing period subsequent to aay curtailment of gas deliveries by Seller, Buyer shall notify Seller in writing regarding the amount of gas which was actually curtailed for any reason, including force -26- majeure, and the details of the computation of such amount, provided that all notices for curtailments of gas occurring in any Calendar Year must be sent within ten (10) days after the end of such Calendar Year. Buyer's determination of the amount of such curtailment shall become final and binding on both parties unless protested in writing by Seller within twenty (20) days after receipt by Seller of such notification. Should Seller so protest Buyer's determination, Buyer shall submit to Seller sufficient information as requested by Seller to substantiate such a determination. i (6) In case of interruption or curtailment of service, as provided for in this Article, including curtailment by reason of force majeure as tned in Article XI hereof, the amount by which Buyer's total fuel requirements, up to but not in excess of its Fstimated Annual Fuel Requirements, are curtailed during any Calendar Year, shall, for the purpose of determining whether Buyer has complied with its minimum purchase obligation pursuant to Article Ii hereof, I be added to the amount of gas actually purcbased and received by Buyer during I such Calendar Year. (7) Buyer and Seller recognize the fact that •;requires six I hundred thousand cubic feet of gas each day for plant protection gas, and Buyer I and Seller agree that daring periods of curt.,ilment Buyer shall be allowed to I take six hundred thousand cubic feet per day for plant protection gas, provided, however, that Buyer shall not be allowed to take such gas during periods of time in which it is necessary for Seller to curtail the supply of gas to other indus- trial customers of Seller in the same curtailment zone in which Buyer's Plants are located who are accorded by Seller a priority of service equal to that provided in Railroad Commission of Texas Gas Utilities Docket No. 496 for ser- vice to "(2). Large commercial (100 MCF or more on a peak day) and industrial -27- requirements for pilot lights and plant protection gas" under category "B. Industrial Rate 1." (8) In the event that Buyer purchases or commits itself to purchase, from a third party supplier, fuel for the operation of its Plants to meet defi- ciencies reasonably projected or anticipated by Buyer, acting in good faith, in excess of deficiencies which could be met with a reasonable quantity of standby fuel as provided in Paragraph (2) of this Article, and based on curtailment estimates, provided no more than one (1) year in advance, which shall be furnished by Seller, acting in good faith, upon the request of Buyer; Buyer may, at its option, notify Seller prior to the first deliveries by such a third party sup- plier, of the BTU equivalent of the annual quantity of such fuel it purchases or is committed to purchase and for each year or part year thereof that Buyer has previously submitted Estimated Annual Fuel Requirements to Seller, such Estimated Annual Fuel Requirements shall be reduced by the volume equivalent of the annual quantity of such fuel Buyer purchases or is committed to purchase. Buyer shall thereafter take the volume equivalent of the annual quantity of such fuel it has so purchased or committed itself to purchase into consideration in submitting its Estimated Annual Fuel Requirements. ARTICLE XI11 REGULATORY BODIES: I (1) This agreement and all operations hereunder are subject to the applicable federal and state laws and the applicable ordinances, orders, rules and regulations of any local, state or federal governmental authority having or asserting jurisdiction; but nothing contained herein shall be construed as a -28- waiver of any right to question or contest any such law, ordinance, order, rule or regulation in any forum having jurisdiction in the premises. (2) In the event either Buyer or Seller shall be required by a judg- ment or order of any governmental authority having or asserting jurisdiction to either pay or charge prices for gas sold by Seller to Buyer hereunder which are higher or lower than the prices Stipulated or provided for herein with respect to gas sold by Seller to Buyer hereunder, the party adversely affected shall have the option of cancelling this contract by giving the other party written notice of its intention to do so within six (b) months after the date of such judgment or order, wtAch cancellation shall become effective at the end of one (1) year from and after the date of such notice. ARTICLE XIV TERMINATION PRIVILEGES: (1) If either party hereto shall fail to perform any of the covenants or obligations imposed upon it under and by virtue of this agreement (except where such failure shall be excused under any of the provisions of this agree- ment), then in such event the other party may, at its option, terminate this agreement by proceeding as follows: The party not in default shall cause a written notice to be served on the party in default, stating specifically the cause for terminating this agreement and declaring it to be the intention of the party giving the notice to terminate the same; whereupon, the party in default shi.ll have thirty (30) days after the service of the aforesaid notice in which to remedy or remove the cause or causes of default stated in the notice of termination, and if within said period of thirty (30) days the party in default does so remedy and remove said cause or causes, then such notice shall be nulli- fied and this agreement shall continue in full force and effect. In case the -29- party in default does not so remedy and remove tie cause or causes of default within said period of thirty (30) days, then this agreement shall terminate (become null and void) upon the expiration of said period. (2) If the average price per one thousand (1,000) cubic feet paid by Buyer under this agreement for gas over any period of six (6) months exceeds by more than ten percent (101%) the average of the monthly price, as determined from Platt's Oilgram, over the same period of six (6) months, of that quantity of Gulf Coast Cargos No. 2 fuel oil that has a heating value of one million (1,000,000) British Thermal Units, then Buyer, in its sole oiscretion, may elect to termi- nate this agreement by giving Seller six (6) months' written notice of the termination. (3) Neither Buyer nor Seiler shall have any right to any damages against the other for termination of this contract or termination of gas service under any provision contained herein, and should Buyer obtain from any court, administrative or regulatory authority an order directing Seller to continue gas service after Seller's termination of this contract or Seller's termination of gas service, uut~@c any provision contained herein, such service shall be at a price mutually agreeable between Buyer and Sr_,ller. (4) Any termination or cancellation of this contract under niy provi•- sion contained herein shall be without prejudice to the right of the party not in default to collect any amounts due it ezd without waiver of any other penalty to which the party not in default may be entitled for violation of this contract. ARTICLE XV GENERAL: (1) Warranty: Seller hereby warrants the title to the gas to be sold hereunder, Seller's right to sell tha same, and that same is free from all liens and adverse claims, -30- . (2) Ri h -_Way: Buyer hereby grants to Seller the right to lay and maintain pipelines and to install metering stations and other necessary equip- ment on Buyer's plant sites, as provided for in Article IV hereof, only for the purpose of supplying gas hereunder, and such lines and other equipment placed by Seller on said plant sites shall remain the personal property of Seller, and, subject to the terms of this contract, may be removed by Seller at any time. (3) Indemnity: As between the parties hereto, Seller shall be in control and in possession of the gas deliverable hereunder and responsible for any damages or injuries caused thereby until the same shall have been delivered to Buyer at the points of delivery, except injuries and damages which shall be occasioned solely and proximately by the negligence of Buyer. After such deliv- ery of gas, Buyer shall be deemed to be in exclusive control and possession thereof and responsible for any injuries or dai,,;ges caused thereby, except injuries and damages which shall be occasioned solely and proximately by the negligence of Seller. (4) Waiver of Breach: 1'he waiver by ei -er party of any breach of any of the provisions of this agreement shall not constitute a continuing waiver of other breaches of the same or other provisions of this agreement. (5) Notices: All notices provided for herein shall be in writing and shall be deemed to be delivered to Seller when addressed to Lone Star Gas Company, Attention: Industrial Gas Sales Department, 3U1 South Harwood Street, Dallas, Texas 75201, and deposited in the United States mail, postage prepaid, and shall be deemed to be delivered to Buyer when addressed to City Manager, City of Denton, Denton, Texas 76201, and deposited in the United States mail, postage prepaid; provided that either party may, by notice to the other, change its address used for the purpose of receiving notices, -31- w (6) Captions or Headings: The captions or headings preceding the various parts of this agreement are inserted and included solely for convenience and shall never be considered .)r given any effect in construing this contract or any part of this contract, or in connection with the intent, duties, obligations or liabilities of the respective parties hereto. (7) Assignment: This contract shall be binding upon the parties hereto and their respective successors and assigns. All or any part of the rights or obligations of either party hereto may be at any time assigned, but any such assignment, unless accepted in writing by the other party hereto, shall not relieve the assignor of its obligations hereunder, in the event the assignee shall fail to perform the same in accordance with the terms hereof. ARTICLE XVI REPLACEMENT OF PRIOR CONTRACT: This contract, effective as of twelve o'clock (12:00) midnight March 31, 1977, shall replace and supersede that certain Gas Sales Contract between Seller and Buyer, dated October 31, 1966, relating to Buyer's Plants, together with any amendments or supplements to said contract. IN WITNESS WHEREOF, this agreement has been executed in duplicate originals by the parties hereto on the 7 ~ day of ~(4y eo, ir,-, 1977, effective as of twelve o'clock (12:00) ridnight on March 31, 1977. ATTEST: LONE STAR GAS COMPANY • f l j Yi(~~ By f Secretary Vice Pres dent "Seller" ATTEST: CITY OF DENTON, TEXAS BY y City Secretary Mayor "Buyer" -32- r r 1 . AGREEMENT Or TERMINATION AND GENERAL RELEASE i This Agreement, made and entered into as of the 7t1~ day of 1 1t~t1~hL 1977, by and between the Texas Municipal Poser Pool, composed of the Cities of Bryan, Denton, Garland and Greenville, Texas, and Brazos Electric Power Cooperative, Inc. (referred to in the Sales Agreement which is the subject matter of this Agreement as "Brazos Electric Power Co-operative"), hereinafter referred to collectively as "the Pool" and Delhi Gas Pipeline Corporation, hereinafter referred to as "Delhi"; WITNESSETH: WHEREAS, the Pool and Delhi entered that certain Gas Sales Agreement dated June b, 1973 ("Sales Agreement") covering the pur- chase and sale of certain gas located in Denton and Wise Counties, Texa-; and WHEREAS, the Pool and Delhi interpret the Sales Agreement differently with respect to (1) which producer agreements are covered by the Sales Agreement, (2) which wells qualify for con- nection to the system, (3) the manner and place where system line pressure is to be determined, (4) the manner of determining the price to be paid by the Pool for gas delivered under the Sales Agreement; and WHEREAS, the Pool i1d Delhi desire to settle their differences by terminating the Sales Agreement and each releasing the other from all claims; . NOW, THEREFORE, the Pool and Delhi, each in consideration of the covenants and agreements of the other, agree as follows: 1. Each of the four Cities agrees to pay Delhi for all gas which has been delivered by Delhi to the Pool and for which Delhi has not received any payments at the price of $2.45625 per one million British Thermal Units (I-DIBTU), such payment to be made within twenty days after receipt of a statement from Delhi. 2. Delhi agrees to indemnify the Pool and hold the Pool harmless from all claims asserted against it by parties claiming that the prices chargrd for liquids removed from gas purchased by the Pool from Delhi were not in accordance with the regulations of the Federal Energy Administration; provided, however, the Pool hereby expressly denies and waives any claim whatsoever for any cost of service credit to the Pool. The Pool holds Delhi harmless and indemnifies Delhi against any and all claims asserted against Delhi by any party claiming, directly or indirectly, a benefit from any rights or privileges of the Pool under the Sales Agreement, whether arising before or after the date of termination of said Sales Agreement. 3. Except as specified in Paragraphs (1) and (2) above, the Pool and Delhi each hereby releases the other from all sums of money, accounts, actions, suits, proceedings, claims and demands which the Pool or Delhi has against the other for or by reason of or in respect of eny act, cause, matter or thing directly or indirectly related to any and all gas gathering and processing systems in Denton and Wise Counties, Texas operated by Delhi and gas produced therefrom and each forever releases and discharges the other from i -2- RM any claims, ditties, debts, responsibilities, liabilities, in law or in equity, which may have existed by reason of the execution of the Sales Agreement and fro: any claims, responsibilities or liabilities to the other arising or which might or could arise by reason o" the execution of the Sales Agreement or growing out of or in any wise connnected with directly or indirectly, the Sales Agreement. 4. This Agreement is and shall be binding upon and shall inure to the benefit of the Pool and Delhi and their respective represen- tatives, customers, successors and assigns. IN WITNESS WHEREOF, the parties hereto have executed this Agreement in multiple originals as of the date first above written. DELHI GAS PIPELINE CORPORATION ATTEST: BY: ssistant Se- retary Exec t've Vice Presi nt CITY OF BRYAN /C ATTEST: $Y: yor CITY OF DENTON ATTEST: BY: Mayor CITY OF GARLAND A9`TEST : BY Mayor -3- terra CITY OF GREENVIL'E 'ATTEST: ~i I . htayor BRAZOS ELECTRIC POWER COOPERATIVE, INC. . ATTES BY: - cutive Vice President and 'General Manager i AGREEMENT OF TERMINATION AND GENERAL RELEASE This Agreement, made and entered into as of the day of `~tit►f1;a~v?~_, 1977, by and between the Texas Municipal Power Pool, composed of the Cities of Bryan, Denton, Garland and Greenville, Texas, and Brazos Electric Power Cooperative, Inc. (referred to in the Sales Agreement which is the subject matter of this Agreement as "Brazos Electric Power Co-operative"), hereinafter referred to collectively as "the Pool" and Delhi Gas Pipeline Corporation, hereinafter referred to as "Delhi"; WITNESSETH: WHEREAS, the Pool and Delhi entered that certain Gas Sales Agreement dated June 6, 1973 ("Sales Agreement") covering the pur- chase and sale of certain gas located in Denton and Wise Counties, Texas; and WHEREAS, the Pool and Delhi interpret the Sales Agreement differently with respect to (1) which producer agreements are covered by the Sales Agreement, (2) which wells qualify for con- nection to the system, (3) the manner and place where system line pressure is to be determined, (A) the manner of determining the price to be paid by the Pool for gas delivered under the Sales Agreement; and WHEREAS, the Pool and Delhi desire to settle their differences by terminating the Sales Agreement and each releasing the other from all claims; NOW, THEREFORE, the Pool and Delhi, each in consideration of the covenants and aijreements of the other, agree as follows: 1. Each of the four Cities agrees to pay Delhi for all gas which has been delivered by Delhi to the Pool and for which Delhi has not received any payments at the price of $2.45825 per one million British Thermal Units (I.91BTU), such payment Lo be made within twenty days after receipt of a statement from Delhi. 2. Delhi agrees to indemnify the Pool and hold the Pool harmless from all claims asserted against it by parties claiming that the prices charged for liquids removed from gas purchased by the Pool from Delhi. were not in accordance with the regulations of the Federal Energy Administration; 1,rovided, however, the Pool hereby expressly denies and waives any claim whatsoever for any cost of service credit to the Pool. The Pool holds Delhi harmless and indemnifies Delhi against any and all claims asserted against Delhi by any party claiming, directly or indirectly, a benefit from any rights or privileges of the Pool under the Sales Agreement, whether arising before or after the date of termination of said Sales Agreement. 3. Except as specified in Paragraphs (1) and (2) above., the Pool and Delhi each hereby releases the other from all sums of money, accounts, actions, suits, proceedings, claims and demands which the Pool or Delhi has against the other for or by reason of or in respect of any act, ( ~e, matter or thing directly or indirectly re,ated to any and all gas gathering and processing systems in Denton and Wise Counties, Texas operate' by Delhi and gas producoi therefrom and each forever releases and discharges the other from -2- any claims, duties, debts, responsibilities, liabilities, in law or in equity, which may have existed by reason of the execution of the Sales Agreement and from any claims, responsibilities or liabilities to the other arising or which might or could arise by reason of the I execution of the Sales Agreement or growing out of or in any wise connnected with directly or indirectly, the Sales Agreement. 4. This Agreement is and shall be binding upon and shall inure to the benefit of the Pool and Delhi and their respective represen- tatives, customers, successors and assigns. IN WITNESS WHEREOF, the parties hereto have executed this Agreement in multiple originals as of the date first above written. DELHI GAS PIPELINE CORPORATION ATTEST: - ~ I 4A BY: ' ssistant Se rotary Exec t've Vice Presi nt J CITY OF BRYAN ATTEST: B Y : r yor CITY OF DENTON ATTEST: BY: Mayor CITY OF GARLAND ATTEST: e .r %l% 4LBY: 14. Mayor -3- CITY OF GREENVILLE ATTEST: BY: Mayor BRAZOS ELECTRIC POWER COOPERATIVE, INC. ATTES cutive Vice President and ~eneral Manager i CONTINGENT SETTLEMENT AGREEMENT WHEREAS, there exist three (3) lawsuits and various disputes between Lone Star Gas Company (Lone Star), and the Cities of bnnton, Garland, Bryan, and Greenville (the Cities); and WHEREAS, it is the intention of Lone Star and the Cities to settle all disputes and controversies between themselves by entering into new gas sales contracts for the Cities' electric generating plants and by entering into certain agreements desciiDed in'Item 1(f) and item 1(g) with Delhi Gas Pipeline Corporation (Delhi) and Brazos Electric Power Cooperative, Inc. (Brazos); and WHEREAS, it is the intention of Delhi to enter such an agreement with Lone Star and the intention of Delhi and Bra^os to enter such an agreement with the Cities; and WHEREAS, said parties desire that all such agreements shall be .contingent, and not final, until the Texas Railroad Commission grants an exception to certain provisions of its Order, as amended, in G.U.D. 600; NOW, THEREFORE, Lone Star, Delhi, Brazos, and the Cities agree as follows: 1. When, and only when, all of the subject contracts listed below have been executed by all of the parties thereto, each of said contracts shall become effective as of the date specified in the contract or as of the date of the contract, if a specific effective date is not specified in the contract, subject to being rescinded under the conditions specified in Paragraph 2 hereof. The subject contracts are as follows: (a) Modified gas sales contract between Lone Star and the City of Bryan, Texas. (b) Modified gas sales contract between Lone Star and the City of Denton, Texas. (c) Modified gas sales contract bc:twcen Lone Star and the City of Garland, Texas. (d) Modified gas sales contract between Lone Star and the City of Greenville, Texas. (e) Transfer of Gas Agreement between Lone Star and the Cities. (f) Agreement of Termination and General Release between Delhi, Brazos and the Cities. (g) Gas Exchange Agreement between Lone Star and Delhi. The gas purchased by the Cities from Delhi subsequent to April 1, 1977, the effective date of the modified gas sales contracts described in Items 1(a) through 1(d), shali not be included in Cities, Fuel Requirements under Article I of the gas sales contracts and shall be treated as in the past. 2. The cities shall apply for and obtain from the Texas Rail- road Commission, with the cooperation of Lone Star, Brazos and Delhi, an exception to any provision or provisions of said Order in G.U.D. 600 that is needed to keep the provisions of the above de- scribed contracts described in Items l(a) through 1(e) from violating the provisions of said Order in G.U.D. 600. If tha Cities are unable to obtain such an exception from the Texas Railroad Commission, then the Cities shall so notify in writing each of the other parties -2- to the above described contracts and all of the above desc"il)ed contracts and this agreement shall be rescinded and held for naught to all extents and degrees necessary to place the parties hereto in their origioa3. positions as if the above described contracts and this agreement had not been entered and all prior contracts and contract rights and all prior claims and disputes automatically shall be restored as if the above described contracts and this agreement had not been entered. In the event the above described contracts and this agreement are rescinded, the parties, as soon as reasonably possible, shall refund gas or cash, as the case may be, between themselves in order to make the necessary adjustments to place each party back in its original position. 3. Lone Star, in the event all of the subject contracts listed above have been executed by all of the parties, shall: (a) Within thirty days after all parties have executed this agreement, refund to the City of Denton, the City of Garland and the City of Greenville the amount of "take-or- pay" payments made by those Cities to Lone Star for gas not taken for the calendar years 1975 and 1976. (b) Continue to prosecute to completion and connection the pipeline to the City of Bryan Dansby Plant, as contem- plated under the terms and provisions of the interlocutory Settlement Agreement entered relative to Cause No. 21059 in the 8th Judicial District Co+irt of Brazos County, Texas, styled City of Bryan v. Enserch Corporation, at none Star's expense and, within thirty days after all parties have executed this agreement, refund to the City -3- i of Bryan the amount of the "surcharge" paid by the City of Bryan to Lone Star. (c) When the Texas Railroad Commission has granted the excep- tion to certain provisions of its Order in G.U.D. 600 as contemplated in Paragraph 2 Hereof, shall execute a joint and mutual release of all claims and disputes between Lone Star and the Cities growing out of or related to its now existing gas sales contracts and any gas exchange contracts with the Cities. 4. The Cities, in the event all of the subject contracts listed above have been executed by all of the parties, shall: (a) Iiithin thirty days after all parties have executed this agreement, pay to Lone Star the respective sums necessary to make the above described gas sales contracts and the prices provided therein effective April 1, 1977, after giving full credit, for the prices paid to Lone Star by the Cities under prior contracts during the period subsequent to April 1, 1977, excluding the amounts to be refunded pursuant to Paragraph 3 hereof. Provided, however, each City shall have the privilege, in the event tha monies payable by it to Lone Star under this Paragraph 4 exceeds the refund payable to it under Paragraph 3 hereof to spread such excess to be paid to Lone Star in equal monthly pay- ments over a period of months (including a partial month as a whole mouth) passing between April 1, 1977, and the date •-4- when all parties have executed this agreement, commencing with the month following the month in which all parties have signed this agreement. Provided further, however, the City of Garland shall have the additional privilege and option, exercisable at its discretion, in the event the monies payable by it to Lone Star under this Paragraph 4 exceeds the refund payable. to it under Paragraph 3 hereof, to spread such excess to be paid to Lone Star in equal monthly payments over a period of eight months, rather than the period specified in the preceding proviso, com- mencing with the month following the month in which all parties have signed this agreement. {b} When the Texas Railroad Commission has granted the excep- tion to certain provisions of its Order in G.U.D. 600 as contemplated in Paragraph 2 hereof, shall execute a joint and mutual release of all claims and disputes between the Cities and Lone Star growing out of or related to their now existing gas sales contracts and any gas exchange contracts with Lone Star, and shall dismiss the three lawsuits related to some of such contracts existing between three of the Cities and Lone Star with prejudice to refiiing of same. -5- IN WITNESS WHEREOF, this Agreement has been executed in multiple originals by the parties hereto on this _.C_tk day of 1t ~t~~'~:{~~►L , 1977. ATT ST: ~1 LONE STAR GAS COMPANY By/jam As i a t Corporate Secretary ViC(PresiaQnt "LONE STAR" ATTEST: CITY OF DENTON, TEXAS i City Secretary or ATTEST: CITY OF BRYAN, TLXAS City ecreta ATTEST: CITY OF City Secretary vlayor _ ATTEST: CITY OF GARLAND, ITEXAS b1, iyor "CITIES" _6 _ ATTEST: DELHI GAS PIPELINE CORPORATION . tw~,A 6A. l BY ASSiStimf Corpora Secretary Executive ice President tv. "DELHI" F ATTEST: BRAZOS ELECTRIC POWER COOPERATIVE, INC. 4.1 -J By Secretary General Manager "BRAZOS" -7_