20-1418ORDINANCE NO.20-1418
AN ORDNANCE OF THE CITY OF DENTON, A TEXAS HOME-RULE MUNICIPAL
CORPORATION, APPROVING A BILL OF SALE AND ASSUMPTION AGREEMENT WITH
DENTON POWER, LLC, A MICHIGAN LIMITED LIABILITY COMPANY, IN THE
AMOUNT OF $2,750,000 PLUS AN ADJUSTMENT FOR AUGUST 2020 ENERGY
DELIVERIES NOT TO EXCEED $150,000, FOR THE PURCHASE OF DENTON POWER’S
LANDFILL GAS ELECTRIC GENERATION FACILITY AND ITS ASSETS, THE
ASSUMPTION OF CONTRACTS RELATED TO THE SAME, AND SATISFACTION OF THE
CITY’S REMAINING OBLIGATIONS UNDER THE CONTRACTS BEING ASSUMED;
PROVIDING FOR THE EXPENDITURE OF FUNDS; AND, PROVIDING AN EFFECTrvE
DATE
WHEREAS, Denton Power, LLC, a Michigan limited liability -company (“Denton Power”),
owns and operates a landfill gas electric generation facility (“Facility”) located at the City’s ECO-
W.E.R.C.S. Resource Recovery Facility; and
WHEREAS, Denton Power has agreed to sell, and the City of Denton, a Texas home-rule
municipal corporation (“City”), has agreed to purchase, the Facility and it assets and to assume the
contracts related to the same, for $2,750,000 plus an adjustment for August 2020 energy deliveries
from the Facility under the contracts being assumed not to exceed $150,000; and
WHEREAS, the City anticipates achieving the goal of having 100 percent of its electricity
generated from renewable resources in 2021; and
WHEREAS, although the City is under contract to purchase the 1.6 megawatts generated
by the Facility, this electricity (i) is not needed by the City to achieve its goal of have 100 percent
of its electricity generated by renewable resources, and (ii) is the highest priced electricity
generated from renewable resources currently under contract with the City; and
WHEREAS, the City, by purchasing the Facility and its assets and assuming the contracts
related to the same, will be foregoing paying more than $5,300,000 under the contracts being
assumed resulting in a net benefit to the City’s electric utility; and
WHEREAS, the City Council finds it is in the best interest of the citizens that the City execute
the Bill of Sale and Assumption Agreement;
NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. The findings and recitations contained in the preamble of this Ordinance are
incorporated herein by reference.
SECTION 2. The City Manager, or his design a, is authorized to (a) execute the Bill of
Sale and Assumption Agreement, attached as Exhibit “A”, (b) take any other actions deemed
necessary by the City Manager to fulfill the tellus and conditions of the agreement, and (c) in
accordance with the agreement, expend from the Electric Utility Fund (i) $2,750,000 to purchase the
Facility and its assets and assume the related contracts, and (ii) an amount not to exceed $150,000 for
August 2020 energy deliveries under the contracts.
SECTION 3
approval.
1-his Ordinance shall become effective immediately upon its passage and
s e c o n d = h : yI nn4= c : t:T: s Jl: fa nYc \\r ::][II= fL J 1 ld app rHyl I
following vote [ L - 9 ] :
Aye
V,
V'’
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Nay Abstain Absent
Mayor Chris Watts:
Gerard Hudspeth, District 1 :
Keely G. Briggs, District 2:
Jesse Davis. District 3 :
John Ryan, District 4:
Deb Armintor, At Large Place 5 :
Paul Meltzer, At Large Place 6:
PASSED AND APPROVED this the Z,SRb day
CHRIS WATTS, MAYOR
ATTEST:
ROSA RIOS, CITY SECRETARY
. //&n ., za:7/
APPROVED AS TO LEGAL FORM:
AARON LEAL, CITY ATTORNEY
PAGE 2
EXHIBIT “A“
BILL OF SALE AND ASSUMPTION AGREEMENT
This bill of sale and assumption agreement (this “Agreement”) is by and between the
City of Denton, a Texas home-rule municipal corporation (“Buyer”), and Denton Power, LLC, a
Michigan limited liability company (“Seller”). Buyer and Seller may each be referred to in this
Agreement as a “Party” or collectively as the “Parties.”
Seller owns and operates a landfill gas to energy facility located at Buyer’s ECO-
W.E.R.C.S. Resource Recovery Facility located at 1527 S. Mayhill Rd., Denton, Texas (the
“Business”).
Seller has agreed to sell, and Buyer has agreed to purchase, the assets (“Purchased
Assets”) and the contracts listed on Schedule 2 (“Assumed Contracts”), all of which are related
to the Business.
Therefore, the Parties, subject to the provisions set forth in this Agreement and as of the
later of (i) the date this Agreement is executed by Buyer and (ii) 12:01 am central prevailing time
on September 1, 2020 (the “Effective Date”), agree as follows:
1. Sale of the Purchased Assets; Assumption of the Assumed Contracts. Seller sells,
conveys, assigns, and transfers to Buyer the assets set forth on Schedule 1 (the “Purchased
Assets”) free and clear of any and all liens and encumbrances, and the contracts set forth on
Schedule 2 (the “Assumed Contracts”), and Buyer accepts the sale, conveyance, assignment,
and transfer of the Purchased Assets and the Assumed Contracts from Seller.
2. No Other Assumption of Liabilities. Except for the Assumed Contracts, Buyer
does not assume any obligation or liability of Seller, and Seller, as applicable, will continue to be
liable for any and all liabilities of Seller. Buyer does not assume any liability under the Assumed
Contracts arising before the Effective Date. Seller will not be responsible for any liability that
arises from Buyer’s use of Purchased Assets and/or Assumed Contracts after the Effective Date.
3.Purchase Price; Payment; Taxes and Allocation of Purchase Price.
a. Purchase Price. The purchase price is Two Million Seven Hundred Fifty
Thousand and no/100 Dollars ($2,750.000.00) (the “Purchase Price”), plus the net amount due
under the Assumed Contracts to Seller for the month of August, 2020 (i.e. the revenue under the
PPA minus the royalty under the GPA). The Parties agree to estimate the net amount due under
the Assumed Contracts for the month of August, 2020, and Buyer shall pay such estimated net
amount to Seller as of September 1, 2020. Seller shall notify Buyer of the actual amount that
would have been paid through the month of August, 2020, and to the extent such actual amount
differs from the estimated amount, the Party owing money to the other shall make a payment to
the other within thirty (30) days after the Effective Date.
b. Payment. Buyer shall pay the Purchase Price by ACH transfer
contemporaneously with the execution of this Agreement.
c. Taxes and Allocation of Purchase Price. Buyer and Seller acknowledge
and agree that for federal and applicable state and local income tax purposes, the purchase and
Bill of Sale and Assumption Agreement (City of Denton/Denton Power)Page 1 of 13
sale of the Assets and Contracts pursuant to this Agreement will be treated as a sale by Seller,
and a purchase by Buyer, of the assets of Seller. Within 90 days after the Effective Date, the
Parties shall discuss in good faith and attempt to allocate the Purchase Price. If the Parties agree,
the Purchase Price (and all other amounts required to be treated as part of the purchase price for
federal income Tax purposes) will be allocated among the assets for all Tax and accounting
purposes, including without limitation for purposes of Sections 741 and 751 of the Code, in
accordance with an allocation schedule. Neither Buyer nor Seller shall take any position on any
Tax Return or otherwise that is inconsistent with such treatment or such purchase price allocation
unless expressly required pursuant to applicable law. In the event that the Parties are unable to
agree to a Purchase Price allocation, then the Parties shall be free to allocate the Purchase Price
separately .
4. Representations and Warranties. Seller represents and warrants to Buyer that all
of the representations and warranties of Seller set forth on Schedule 3 are true and correct in all
respects as of the date of this Agreement. Buyer represents and warrants to Seller that all of the
representations and warranties of Buyer set forth on Schedule 3 are true and correct in all
respects as of the date of this Agreement.
5. Proration of Expenses and Revenues Seller shall be responsible for all expenses
and entitled to all revenue for periods prior to the Effective Date and Buyer shall be responsible
for all expenses and entitled to all revenue for periods on and after the Effective Date.
6. Indemnity. A. Seller shall indemnify, defend and hold Buyer and its governing
officials, officers, employees or agents harmless from and against any and all losses, costs,
liabilities, damages, expenses, liabilities, obligations, claims, demands, causes of action, suits,
settlements and judgments of every kind, nature or description, including the costs and expenses
associated therewith and reasonable attorneys’ fees (collectively, the “Losses”) arising out of: (i)
the breach of any representation or warranty of Seller set forth in this Agreement; (ii) the breach
of any of the covenants or agreements by Seller contained in this Agreement or the transactions
contemplated hereby; and (iii) the ownership of the Purchased Assets and Assumed Contracts
prior to the Effective Date, and the conduct of the Business prior to the Effective Date, including,
but not limited to, any liability, judgment or damages against Seller, its officers, directors,
employees or agents, as a result of litigation involving Seller prior to the Effective Date.
B. Buyer shall, to the extent allowed by law, indemnify and hold Seller and its
officers, employees or agents harmless Seller from and against any and all Losses arising out of:
(i) the breach of any representation or warranty of Buyer contained in or arising out of this
Agreement or the transactions contemplated hereby; (ii) the non-performance, partial or total, of
any covenant made by Buyer pursuant to this Agreement or the transactions contemplated
hereby; and (iii) the ownership of the Purchased Assets and Assumed Contracts after the
Effective Date.
C. Notwithstanding the provisions set forth above, except with respect to a breach or
misrepresentation of Seller’s representations and warranties numbered 3 - 8 in Schedule 3, the
maximum amount of indemnifiable Losses that may be recovered by Buyer under this
Agreement shall not exceed Five Hundred Thousand and no/100 dollars ($500,000). With
respect to a breach of Seller’s representations and warranties numbered 1 and 2 of Schedule 3
Bill of Sale and Assumption Agreement (City of Denton/Denton Power) Page 2 of 13
(the “Fundamental Representations”), the maximum liability of Seller shall not exceed fifty
percent (50%) of the Purchase Price. Seller shall not be liable for any damages unless and until
the aggregate amount of Losses exceeds Twenty-Five Thousand and no/100 Dollars ($25,000)
(the “Threshold”), in which case Buyer shall be entitled to indemnification for all such Losses
from the first dollar of Losses (i.e., without regard to the Threshold).
7. Survival. Except as otherwise provided in this Agreement, the representations and
promises, including the indemnities, of the Parties contained in this Agreement will survive (and
not be affected in any respect by) the Effective Date for the applicable statute of limitations as
well as any investigation conducted by any Party and any information which any Party may
receive
8. Further Actions. At any time and from time to time after the date of this
Agreement: (1) Seller shall execute and deliver or cause to be executed and delivered to Buyer
such other instruments and take such other action, all as Buyer may reasonably request, in order
to carry out the intent and purpose of this Agreement; and (2) Buyer shall execute and deliver or
cause to be executed and delivered to Seller such other instruments and take such other action,
all as Seller may reasonably request, in order to carry out the intent and purpose of this
Agreement.
9.Governing Law; Venue; Waiver of Jury Trial.
A. This Agreement and the transactions contemplated hereby will be construed in
accordance with and governed by the internal laws (without reference to choice or conflict of
laws principles) of the State of Texas.
B. Any suit, action, or other proceeding brought against any of the Parties to this
Agreement or any dispute arising out of this Agreement or the transactions contemplated hereby
must be brought either in the courts sitting in Denton County, Texas, or in the United States
District Court, Eastern District of Texas and by its execution and delivery of this Agreement,
each Party accepts the jurisdiction of such courts and waives any objections based on personal
jurisdiction or venue.
C. Each Party, after consulting with their attorney, knowingly, voluntarily and
intentionally (and without duress or coercion) waive any right any of them may have to a trial by
jury in any litigation based upon or arising out of this Agreement or any of the other agreements
between, among or involving one or more of the Parties or based on any course of conduct,
dealing, statements (whether oral or written) or actions of any Party. No Party shall seek to
consolidate, by counterclaim or otherwise, any such action in which a jury trial has been waived
with any other action in which a jury trial cannot be or has not been waived. These provisions
shall not be deemed to have been modified in any respect or relinquished by any Party except by
a written instrument executed by all of the Parties hereto.
10. Assignment. No Party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written approval of each other Party.
11. Notices. All notices and other communications under this Agreement must be in
writing and given by first class mail, return receipt requested, nationally recognized overnight
Bill of Sale and Assumption Agreement (City of Denton/Denton Power)Page 3 of 13
delivery service, such as Federal Express, or personal delivery against receipt to the Party to
whom it is given, in each case, at the Party’s address set forth in this section 11 or such other
address as the Party may hereafter specify by notice to the other Parties given in accordance with
this section. Any such notice or other communication will be deemed to have been given as of
the date the applicable delivery receipt for such communication is executed as received or in the
case of mail, three days after it is mailed.
If to Seller:
Denton Power, LLC
414 South Main Street, Suite 600
Ann Arbor, MI 48104
Attn: Kevin Dobson
Email: kevin.dobson@dteenergy.com
With a copy to :
DTE Energy Resources, LLC
414 South Main Street, Suite 600
Ann Arbor, MI 48104
Attn: Assistant General Counsel
Email: DTEER CONTRACT NOTICES@dteenergy.com
If to Buyer:
Executive Manager of Utilities
City of Denton
215 E. McKinney St.
Denton, Texas 76201
With a copy to:
City Attorney’s Office
City of Denton
215 E. McKinney St.
Denton, Texas 76201
12. Miscellaneous
A. This Agreement contains the entire agreement between the Parties with respect to
the subject matter hereof and all prior negotiations, writings, and understandings relating to the
subject matter of this Agreement are merged in and are superseded and canceled by, this
Agreement.
B. This Agreement may not be modified or amended except by a writing signed by
the Parties.
Bill of Sale and Assumption Agreement (City of Denton/Denton Power)Page 4 of 13
C. This Agreement is not intended to confer upon any person or entity not a Party (or
their successors and permitted assigns) any rights or remedies hereunder.
D. This Agreement may be signed in any number of counterparts, each of which will
be an original with the same effect as if the signatures were upon the same instrument, and it
may be signed electronically.
E. The captions in this Agreement are included for convenience of reference only
and will be ignored in the construction or interpretation hereof.
F. If any date provided for in this Agreement falls on a day which is not a business
day, the date provided for will be deemed to refer to the next business day.
G. Any provision in this Agreement that is held to be invalid, illegal, or
unenforceable in any respect by a court of competent jurisdiction will be ineffective only to the
extent of such invalidity, illegality, or unenforceability without affecting in any way the
remaining provisions hereof; provided, however, that the Parties will attempt in good faith to
reform this Agreement in a manner consistent with the intent of any such ineffective provision
for the purpose of carrying out such intent.
H. The Schedules to this Agreement are a material part of this Agreement and are
incorporated by reference herein.
1. This Agreement will be binding upon, and will inure to the benefit of, the Parties
and their respective successors, permitted assigns and legal representatives.
J. No waiver or consent, express or implied, by either Party of or to any breach or
default by any Party in the performance by such Party of its obligations hereunder shall be
deemed or construed to be a consent or waiver to or of any other breach or default in the
performance by such Party of the same or any other obligations of such Party hereunder. Failure
on the part of a Party to complain of any act of any Party or to declare any Party in default,
irrespective of how long such failure continues, shall not constitute a waiver by such Party of its
rights hereunder until the applicable statute of limitations period has run. Any waiver by a Party
shall be valid only if set forth in an instrument in writing signed by such Party.
K. Neither Party shall have the right to assign its rights or obligations under this
Agreement without the prior written consent of the other Party which shall not be unreasonably
withheld, conditioned or delayed.
L. The provisions of this Agreement shall not give rise to any right of recourse
against any director, officer, shareholder, employee, member, manager, partner, agent or attorney
of any Party.
Each of the undersigned has caused this bill of sale and assumption agreement to be duly
executed and delivered as of the Effective Date.
Bill of Sale and Assumption Agreement (City of Denton/Denton Power)Page 5 of 13
BUYER:
icipal corporation
, 2020
Attest :
Approved as to form:
Bill of Sale and Assumption Agreement (City of Denton/Denton Power)Page 6 of 13
SELLER:
Denton Power. LLC. a Michigan limited liability company
Mark C:oPc[Plo
By :
Signature
Mark Cousino
Printed Name
President
Title
Signed on the 20th day ol August 2020
Adobe SIgIr Trillsaction Ntlnl!)or: CBJCHBC;bABA;\iiKqt<zf4LyBSkwiU
Bill of Sale and Assumption Agrcenrcnt (City of Denton/Denton Power)Page 7 of 13
Schedule 1
Purchased Assets
“Purchased Assets” means the following assets of Seller used in the operation of the Business,
and all books and records (including equipment maintenance records) related to each (whether in
hard copy or electronic form):
• Engine container which includes engine, generator and glycol cooler
Engine block serial number - GZJ 00402
Generator barrel serial number - 9WZ00833
Radiator serial number- 16749
• Switchgear room and all associated switchgear and equipment
480VAC Generator breaker serial number is – AM4 ll 13786
4160VAC Utility breaker serial number is – 9650
• All Connex storage boxes
Oil storage connex with 3 roll up doors serial number is – HDTP89-428486
Fork lift storage connex with one door in the back serial number is – WIKU5000992
Work shop connex with 1 roll up door in the middle serial number is – IDTY5826650
• Office trailer
No serial number - it is a 44’ x 10’ trailer light gray in color
•Special tools
Oil storage tanks pumps & hoses; includes (1) new 500 gallon virgin oil tank, (1) 300
gallon glycol tank, & (2) 300 gallon used oil tanks
Ultramat 23 gas analyzer (Siemens unit @ fuel skid)
Valve adjustment tool kit p/n 147-5482
Valve recession tool p/n 155-1536
600 lb. electric chain host
Cat ET software annual subscription
Dell Laptop computer for Cat ET (in engine room)
Cat ET COM-3 adapter and patch cables
(2) Exhaust Spreader Bar for Lifting exhaust manifold (machine shop built)
Breaker Lift (in the MCC room)
Nitrogen bottle & regulator
Cylinder Compression Tester #193-5859
Woodward DSLC hand held communicator
Wrench for valve adjustment # 147-2059
Spark Plug Socket p/n4C-460 1
Spark Plug Thread chaser (2)
Turning Tool p/n 238-9586
Dial Indicator # 147-2056
Torque wrench for valve adjustment #147-2060
Bill of Sale and Assumption Agreement (City of Denton/Denton Power)Page 8 of 13
Adapter tool for removing spark plug adapter p/n IU-5715
Oil sample pump
Wire Removal Tool p/n 151-6320
Oil Filter wrench
Consumables Quantity
20
150
150
5
Spark plugs
Engine oil
Engine coolant
Generator Bearing Lube p/n 253230
•Spare parts
Pilot thermocouple (flare spare part)
Flame thermocouple (flare spare part)
Flame (UV) sensor (flare spare part)
Propane solenoid valve (flare spare part)
FILTER Oil, 275-2604
TRANSFORMER, 438-5682
TRANSFORMER, 5 12-6201
SENSOR Detonation, 574-8679
REGULATOR Oil Temperature, 61-4953
REGULATOR Oil Temperature, 61-4955
Piston Pack, 10R-5992
Cylinder Head, 20R-3552
Bill of Sale and Assumption Agreement (City of Denton/Denton Power)Page 9 of 13
Schedule 2
Assumed Contracts and Permits
“Assumed Contracts and Permits” mean the following contracts of Seller used in the operation
of the Business of Seller:
Power Purchase Agreement dated September 9, 2008 by and between Denton Power, LLC
(“Seller”), a Michigan limited liability company, and Denton Municipal Electric, also known as
the City of Denton (“Buyer”), a Texas home-rule municipal corporation.
Standard Form Market Participant Agreement between Denton Power, LLC and Electric
Reliability Council of Texas, Inc. dated April 1, 2015.
Amended and Restated Landfill and Digester Gas Rights and Collection Facility Lease by and
between City of Denton, a Texas home-rule municipal corporation (“Lessor”) and Denton
Power, LLC, a Michigan limited liability company (“Lessee”) dated April 15, 2008.
Interconnection Agreement by and between Denton Municipal Electric (DME) and Denton
Power, LLC (Producer) for Generation Interconnection to Denton Municipal Electric’s
Distribution System at the City of Denton Landfill dated September 9, 2008.
Air Permit (Registration No. 84247) issued by the Texas Commission for Environmental Quality
related to the operation of the Business; provided, however, that Buyer shall promptly fill out
and submit the Texas Commission on Environmental Quality Form No. 10400 (this is necessary
to notify of change of ownership and effect the transfer)
Bill of Sale and Assumption Agreement (City of Denton/Denton Power)Page 10 of 13