Loading...
HomeMy WebLinkAboutResolution - 5589A-B - Base Contract-LG&E Natural Plains Energy Services Inc-Sale/Purchase, Natural Gas - 08/14/1997RESOLUTION NO.5589-A Item #33 August 14, 1997 BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock a Base Contract for short-term sale and purchase of natural gas, attached herewith, by and between the City of Lubbock and LG&E Natural Plains Energy Services, Inc., and any associated documents, which Contract shall be spread upon the minutes of the Council and as spread upon the minutes of this Council shall constitute and be a part of this Resolution as if fully copied herein in detail. Passed by the City Council this 1997. ATTEST: 14 th Kayt Darnell, City Secretary APPROVED AS TO CONTENT .9 - " A %_', (Aly Wadsworth, Production Superintendent APPROVED AS TO FORM: G. Vandiver, First Assistant City Attorney DG V:gs/ccdocs/LG &ENat.res July 22, 1997 day of August TMAYOR AUG. 6. 1997 9: 23AM L G & E NATURAL ,F'AX#214 6406935 BASF CONTRACT FOR SHORT-TERM SALE AND PURCHASE OF NATURAL GAS This Base Contract is entered into as of the following date, Juno 1, 1997 The parties to this Base Contract are the following: City of Lubboclt, Texas and P 0 Box 2000 3500 E Slaton Hwy Lubbock, Texas 79459 Lubbock, Texas 79404 Duna #: 075-152968 Contract #: Attn: Managing Director, Lubbock Power & Light Phone: (806) 767-2500 rax: (806) 741-1069 Federal Tax ID Number: 1.75-6000590-6 INVOTCRS AND PAYMENTS: AUn: Tommy Buchanan/Lubbock Power & Light c/ City of Lubbock Picone: (806)767-2505 Fax: (806)741-10 Wire Transfer or ACH Nos. (if applicable) This Base Contract incorporates y ref nce fotl,all os os Genet Term puhlished by die Gas Tndustay S ndards oard �I'ha pa •es her by agre to the (select only one from each box. but "Nore'�, relatin to sprue" ? _L NO. 080 RESOLUTION Item #33 August 14, P.2/25 NO.5589 A 1997 LG&E Natural Plaits Energy Services Inc. 2777 Stemmons Freeway, Suite 700 Dallas, Texas 75207 Duns #: 061034617 Contract #: _ Attn: Contract Administration Phone: (214) 640-6836 Fax; (214) 640-6980 Federal Tax ID Number: 73-1226067 Attn: Gas Accounting Phone: (214) 640-6800 rax: (214) 640-6939 Wire Transfer or ACH Nos. (if applicable) and Ctditionsfor Shtt-Tesnl SRIe v Purchase of Natural Gas Aorosonso re Terms and Conditions Section 1.2❑ rel Saco n G, uyorNye At a d Ail erIDelivery Point Tran, tuctinn Praceduretitre" 'faxes c11er P: s BefD a and t Doliva Point Section 2.4 ® Businc is Daysfter ret i t (de Au)t) ect9on .2 25U date of Month bllowin Confirm Deadline usiness Das after recei t P4Xment D e Month of derlivery Section 2.5 ❑ elIer Sect 117.2 Wirc Tr Confirming Party ©)#oyer Metho of Q Automat itlgllo a (ACH) ® T�C7&Ti scutal ?lain ergy S rvico$ nt :Check tic, Section 3.2 0 4over Anindard Performance Obl.❑ ho>; Ptyce Stand rd Nair.; The Jorinwrng Spor Pr1oe Ppbftea nn ppplt4. re beth o rthe tg,nt dlotety pr pRd<pg Section 13.5 Stnndardv and mw! hp,/ilted In er p $to prd 1, "1 orad. j CiLO ICEO LAW Tex$s Section 2.24 �AilyI Sot Price Publication: Gas j Special Provisions: 'Numb •r of sh ets ;,tindhcd: 31 i tN wrrntas whE-xlrul-, th partte,4 heretdh� ave dxecuteEl se Cor�dact i duplic rte. CILj TY OF LuawcK, TEXAS `�/ LGA&B A ti\ By: See Attached Title: Y SERVICES INC. By. Alvi ]o s W—t Title: VP M ng, Western Region DISCLAWER: Tie purposes of this Contract are to racilit9te in, avoid Tftridetstandings and make more deiinito the terms of contr9Rs of purchase and sale of na: imi gas This Contract is intended for Interruptible rmwaetions or Tian uwmetions of one month or less and may not be suitable for Tirm ftrtsactions of longer drat one month. Further, GISB does not mandate Ilio use of this Contract by 4ny parry. GISB DISCLAIMS AND EXCLUDES, AND ANY USER Or 'CHIS CONTRACT ACKNOWLEDGES AND AGREES TO GISBIS DISCLAIlVI3J'R OF, A14Y AND ALL WARRANTIES, CONDITIONS OR REPRESENTATIONS, F.7i;PMS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THIS CONTRACT OR ANY PART THEREOF, INCLUDING ANY AND ALL L (PLIED WARRANTIES OR CONDITIONS OF TITLE, NONWFRI1vGEvjE T, MERCTiAN7ABUZrY, OR FTINESS OR SUITABILITY FOR Arty PARTICULAR PURPOSE (WHEnjrLR OR NOT GYSY; Y{NOWS, II>;AS REASON TO KNOW, IIAS IIIL ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE), WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING. EACH USER OF THIS CONTRACT ALSO AGRET:.S THAT UNDER NO CIRCUMSTANCES WILL GISB BE LIABLE FOR ANY DIRECT, SPECIAL, INCIDENTAL, L7MIMPLARY, PUN11TWE OR CONSEQUENTIAL DAMAGES ARMING OL'T OF ANY i1SF 111F TFxtc rrIV" a M Copyright Q 1996 Gas Industry Standards Board, Inc. GISB Standard 6.3.1 All Rights Reserved May 13, 1996 M AUG. 6. 1997 9:24AM L G & E NATURAL FAX#214 6406925 N0.080 P.4i25 GENERAL TERMS AND CONDITIONS BASE CONTRACT FOR SHORT-TERM SALE AND PURCHASE OF NATURAL GAS SECTION 1. PURPOSE AND PROCEDURES 1. 1. These General Terms and Conditions are intended to facilitate purchase and sale transactions of Gas on a Firm or intcrrtiptihle hasis. "Buyer" rel'ers to the party receiving Gas and "Seller" refers to the party delivering Gas. The parties have selected either the "Oral" version or th "Written" version of transaction procedures as indicated on the Base Contract, Oral Transaction Procedure: 1.2 The parties will use the following Transactioton tion procedure. Any Gas purchasa and sale transaction may be affeetuated in an EDI transmission or telephone converhe offer and acceptance constituting the agreement of the parties. The parties shall be legally bound from the time, theytr nsaction terms and may each rely thereon. Any such transaction shall be considered a "writing" and to hall, been twithstanding the foregoing sentence, the parties agree that Confirming Party shall, and the other party may, cephonic transaction by sending the other party a Transaction Confirmation by facsimile. EDI ut fly agreeable el means, Confi ' nfirming letterhead, or the like, as its signature on an T �insact n Co on as t e ident ficatio then atfoh o or . in . arty. Written Transaction Proce urea 1.2 The parties will use the foll I owingTrApsac don Cc nfjrma ion pro educe. Shoul I Ole parties c zee to in agreement regarding a Gas purchase and sale trap action for a partictllar Delivery Peri d, the onfirn 'ng Pa •ty shall , and t t othei party may, record that agreement on a Transaction Confirmation aid com unicko such Trans, tion -C 3infirnittion by facsim le, ED or mutually agreeable electronic means, to the otlre pdrty y the lose of the Bu mess ay foil wing t e date pf agr . ement. ')'jle» ties acknowledge that their agreement will not be inding unit! a exah nge o non -c file in Tran action onf ation r the assage of the Confirm Deadline without obJectton f om tri receivtn as r3vided i Sectio 1.3. I I 1.3. If a sending patty's Tr insactio Conftmation is materially different com t receiving party' stA2tdi io in Section 1.2., such receiving party shall n rii t e son to patty via faes ile b the Confinn eAd' e, tn4sfa prwiously sena a Transaction C niitm:i ion to a sending part .The faihrre of a rete ing patty t so no y the the Conlirm Deadline constitutes the r ceiving party's agreement to a term of t e [ran ction des ribed i the Confirmation. if there are anymaterial ifferen es between Orr ely sen Trans, tion nfirm 'ons go erning a sa Vransactiun Contirmation shall a bind ng unti or unl ss such diffem Ices are resole inclu ing the use of try el, ihz differences in the Transaction Conf nation .Thee fire a omen betwee the p [les shill be th a pro inions Contract and any effective T saetion Confi ation. In the event f a con let am ng the terms f (i) a tensa Base Contract, and (iii) these G�neral T ,rms an Condi ions, t e terms of the curner is shall covern n the p 'ority SECTION 2 2. r "Base Contract" shall mi wLa-col :act executed by t14 parties that incotporates.tlt�Ge�m ; specifies the agreed selections of provisions contained herein; and that s4 forth other information required herein. 2.2. "British thermal unit" or "Btu" shall have the meaning ascribed to it by the Receiving Transporter. 2.3. "Business Day" shall mean any day except Saturday, Sunday or Federal Reserve Bank holidays. of the agreement referred such receiving party has ending party in writing by inding patty's Transaction 5 transaction, than neither once that clearly resolves 5ntained in both the Base ion Confumation, (ii) the ted in this sentence. by reference; that 2.4. "Confirm Deadline" shall mean 5,00 P.M. to the receiving parry's time zone on the second Business Day following the Day a Transacuon Confirmation is received, or if applicable, on the Business Day agreed to by the parties in the Base Contract; provided, if the Transaction Confirmation is time stamped after 5:00 p.m, in the receiving party's time zone, it sball be deemed received at the opening of the next Business Day. 2.5. "Confirming Parry" shall mean the party designated in the Base Contract to prepare and forward Transaction Confistrrations to the other Party. 2.6. "Contract" shall mean the legally -binding relationship established by (i) the Base Contract and (ii) the provisions contained in any effective Transaction Confirmation. 2.7. "Contract Price" shall mean the amount expressed in U.S. Dollars per MMBtu, as evidenced by the Contact Price on the Transaction Confinnation. R. 'Contract Quantity" shall mean the quantity of Gas to be delivered and taken as set forth in the Transaction Confirmation. Copyright ® 1996 Gas Industry Standards Board, Inc. GISB Standard 6.3.1 All rights reserved. Mav 13, 1996 AUG. 6. 1997 9:25AM L G & E NATURAL FAX#214 6406935 N0.080 P. 5.'25 2.9. "Cover Standard", if applicable, shall mean that if there is an unexcused failure to take or deliver any quantity of Gas pursuant to this Contract, then die non -defaulting party shall use commercially reasonable efforts to obtain Gas or alternate fuels, or sell Gas: at a price reasonable for the delivery or production area, as applicable, consistent with: the amount of notice provided by the defaulting party; the immediacy of the Buyer's Gas consumption needs or Seller's Gss sales requirements, as applicable; the quantities involved; and die anticipated length of failure by the defaulting party. 2.10. "Day" shall mean a period of 24 consecutive hours, coextensive with a "day" as defined by die Receiving Transporter in a particular transaction. 2.11. "Delivery Period" shall be the period during which deliveries are to be made as set forth in the Transaction Confirmation. 2.12. "Delivery Point(s)" shall mean such points) as are mutually agreed upon between Seller and Buyer as set forth in die Transaction. Confirmation. 2.13. "EDI" shall mean an electronic data interchonga pu communication of TYansaction Confirmations under this Contrac 2.1 4. "FFP" shall mean elle purchase, sale or exchange of a gas futures contracts. EFP shall incorporate the meaning and rn 2.15. "Finn" shall mean that either parry may interrupt its z reasons of Force Majeure: provided, however, that daring Force any imbalance Charges w; set forth-' ec 3�.- tad to its i deliveries and/or receipts is confq�ncd by e TraI an agreement entered into by the parties, specifically relating to the the "physical" side of an exchange for physical transaction involving without liability only to the extent that such performance is prevented for interruptions, the party involdng Force Majeure may be responsible 1'or h after tomin is m q and until the change in 2.16. "Gas" shall mean any xture c' f hydro arbons Rnd no ombu tible go ies in a aseousstate co sisting rirno4 of methane. 2.17. "Imbalance Charges" s all trig . n any s, pen des, cops or ch nes (i cash o in kind assess d by a anspoi ter for failure to satisfy the Transporter's balance and/or norr inatlon vquiren ients. 23S. "Interruptible" shall an tharx-itherpzrty may inteur its pedormanw. at any time fo any Mason, w ether a not caused by tut event of Force Majeure, wide no liability, xcept ch urt rrrlptin patty ay be re onsib Par, y lmb once Cl arges set fo h in Section 4.3. rotated to its intemiption after the nominal 1•is'pj a to d Trws otter an until the ange ae veries a d/or 'eipts is ' tifirm by Transporter. 2.19. "MMT3tu" shall mean rte mi1)i n Briti, lr th�tztiBl Utrits which is oqult crit to qe delc�itherm 2.20. "Month" shall mean th period be ' ng a first Day of the calen mon . and ending el�r p ' to the commencement of the first Day of the next calendar honth. 2.21. "Payment Date" shall can a date. sel ted by he pan! sin IN Base ntrac on or ofore ich pa Dent is ue Seller for Gas received by Buyer in the previous Month, 2 22 "Receiving TransporteIr" shall mean he Tr spotter receiving Gas at a D livery otnt, absen such icceiving Transporter, the Transporter delivering Gas at a golivery roint, 2.23, "Scheduled Gas" shall Inean the quand,y of Gal cow ed by'jtanspo ter(s) fo r movement, traaspartaijon or nyanaeemont. 2.24 "Spot Price" as refetre in Sec on 3.2 . hall men the p 'ce listeld in tho } ublloa ion specified by the p 'es in Base Contract, under die listing applicable to the ge<igrapl 'c 1 on cloy tin ximity to the slivery Points for the relevan Day; rovided if there is no single price published for such location for h Da but th is blished a rang of pric th the S t Pripe hall the av ge of such high and low prices. If no price or range of prices ted for such pay, Ih n the S DOE Price shall be g: (i) the price (determined a5 stated above) for the first Day for which a price or range of price LLqxih islled that next precedes the relevant Day; and Cd) the price (determined as nmed above) for the first Day for which a price or range of prices is published that next follows the relevant Day. 2.25. "Transaction Confirmation" shall mean die document, substantially in the form of Exhibit A. setting forth the terms of it purchase and sale transaction formed pursuant to Section 1. for a particular Delivery Period. 2.26. " mnsporter(s)" shall mean all Gas gathering or pipeline companies, or local distribution companies, acting in the capacity of a transporter, transporting Gas for Seller or Buyer upstream or downstream, respectively, of the Delivery Point pursuant to a particular Transaction Confirmation. Copyright © 1996 Gas Industry Standards Board, Inc, GISB Standard 6,3.1 All rights reserved. M#iy 13, 1996 HUG. 6. 199- 9:26A111 L r, E NATURAL rA>(#214 '8406935 110.080 P.6i25 SECTION 3 PERFORMANCE OBLIGATION 3.1, Seller agrees to sell and deliver, and Buyer agreos to receive and purchase, the Corinct Quantity for a particular transaction in accordance with the terms of the Contract. Sales and purchases will be on a Firth or Interruptible basis, as specified in the Transaction Confirmation. The parties have selected the "Cover Standard" version or the "Spot Price Standard" version as indicated on the Base Contract. Cover Standard: 3.2 In addition to any liability for Imbalance Charges, which shall not be recovered twice by the following remedy, the exclusive and sale remedy of the parties in the event of a breach of a Firm obligation shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by Seiler to Buyer in an amount a ual to the positive difference, if any, between the purchase price paid by Buyer utilizing the Cover Standard for replacement Gas or lite tive fuels and the Contract Price, adjusted for commercially reasonable differences in transportation costs to or from the Delivery Po nt( , multiplied by the difference between the Contract Quantity and the quantity actually delivered by Seller for such Day(s); or (ii) in he a ant of a breach by Buyer on any Day(s), payment by Buyer to Seller in the amount equal to the positive difference, if any, between t ealt ctffePrice and the price received by Seller utilizing the Cover Standard l'or the resale of such Gas, adjusted for commercially re on a rences in transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity d ie u tity actually taken by Buyer for such Day(s); or (iii) in the event that Buyer has used commercially reasonable efforts to replac th .Gas r eller has used commercially reasonable efforts to sell the Gas to a third party, and no such replacement or sale is available, i t xclusive and sole remedy of the non -breaching patty shall be any unfavorahle difference herween the Contract Price and the Spot Price, adjusted for such trans ortation to the applicable Delivery Point, multiplied by the difference be��en ion nd rile quantity fly b el an ceived by Buyer for such �veted Day(s), Spot Price Standard: 3.2 In addition to any liat ility fo Imbali nee Cli rges, which sl all not )e recovered twice by a fol witig r medy, the exclusive and sole remedy of the parties in tl a even of a b each o a Firm obligaoion slia I be re ovary f the f llowin : (i) in the event of a breach by Seller on any Day(s), payment I y Selle to Bu er in a amount equal o the d fforone botw n tbo ontrae Qtl$pti and the actual quantity delivered by Seller and receive by Bu er for . uch Da (s), m 1tiPlied y til ositiv differe Ce, if y, obt fined a subtracting die Contract Price from the Spot Price; (ii) in the vent o a bre ch by uyer on ny D (s), aymen by Buyer to eller i an amount equal to tate difference between the Contrac Quenti y and t le actu ty delivere by Se I r ved by uyer ar such Day(s), multiplied by die positi vc difforence, if any, obtained by ubtractng file applicable Spot Price rom ti Contract Price. t: xt :Lr 1 U t til K 15!✓ S 'fit J Fi ' PR")TIN ED HERdE6IN, INFO EVENT P TY BE LTABLE UNDER OR INCIDENTAL AL, THIS CONTRACT, ONSEQ� SPbCIAL OR PT INCL_ IDAMAMS. \G �L AND CT �A \ ), OR OTHLRWISiw SECTION 4. TAITION9 N 4.1. Seller shall have die sole respo sibility or trap porting a Gas o the elivery oint(s) for liverit g such s at a pressure sufficient to effect such delivery but not to �ivery ceed ie m mttpt q crating . ss of the cc¢ ' g'Ih ns ottCc, Buyers ll hav the sole responsibility for transporting the Gas ft the De P int(s). 4.2. The parties shall word nate th u nomi ation dvides giving �sufficie t time meet ie d lines o the a -.ted Tmnsporter(s). Each party shall give the other parry o e1y )i od fficient meet he require nts >; in die transaction, of the quantitic5 of Gas to he delivered and purchased each Day. Shc uld eit er parry become aware that actual deliveries at the Delivery Point(s) are mcetter or lesser than the Scheduled Gas, such party shall promptly notr . the other party. 4.3 The parties shall use commercially reasonable et%rts to avoid unpositi.on of any Imbalance Charges. If Buyer or Seller receives an invoice h om, a Transporter that includes Imbalance Charges, die parties shall determine the validity as well as the cause of such Imbalance Charges, I ('the Imbalance Charges were incurred as a result of Buyer's actions or inactions (which shall include, but shall not be limited to, Buyer's failure to accept quantities of Gas equal to the Scheduled Gas), then Buyer shall pay for such Imbalance Charges, or reimburse Seller for such Imbalance Charges paid by Seiler to the Transporter. If the Imbalance Charges were incurred as a result of Seller's actions or inactions (which shall include, but shall not be limited to, Seller's failure to deliver quantities of Gas equal to the Scheduled Gas), then Seller shall pay for such Imbalance Charges, or reimburse Buyer for such Imbalance Charges paid by Buyer to lite Transporter. SECTION S. QUALITY AND MEASUREMENT All Qas delivered by Seller shall meet the quality and heat content requirements of the Receiving Transporter. The unit of quantity measurement for purposes of this Contract shall be one MMBtu dry. Measurement of Gas quantities hereunder shall be in accordance with the established procedures of the Receiving Transporter Copyright 0 1996 Gas industry Standards Board, Inc. GTSB Standard 6.3.; All rights reserved. May 13: 1996 AUG. 6.1997 9:27AM SECTION G. TAXES L G & E NATURAL F"AX#214 6406935 N0.0t30 P.7/25 The parties have selected either the "Buyer Pays At and After Delivery Point" version or the "Seller Pays Before and At Delivery Point" version as indicated on the Base Contract. Buyer Pays At and After Delivery point: Sellor shall pay or cause to be paid all taxes. fees, levies, penalties, liconsos or charges imposed by any government authority ("Taxes") on or with respect to the Gas prior to the Delivery Point(s), Buyer A 11 pay or cause to be paid all Taxes on or with respect to the Gas at the Delivery Point(s) and all Taxes after Elie Delivery Point(s). If a p y is required to remit or pay Taxes that aro Old other party's responsibility hereunder, the party responsible for such Taxes shall promptly im urse the other party for such Taxes. Any party entitled to an exemption 1'ront any such Taxes or charges shall furnish the other party an nee sary document4on thereof. Seller Pays Before And At Delivery Point: Seller shall pay or cause to be paid all taxes, fees, levies, pe altos, s, icees or charges imposed by any government authority ("Taxes") on or with respect to he Gas prior to Elie Delivery Point(s) and a1 T, es Delivery Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to the Gas atter the Delivery Point(s). If a isred to remit or pay Taxes which are the other party's responsibility hereunder, the party responsible for such Taxes shall promptly reim the other party for such Taxes. Any party entitled to an exemption from nny such Taxes or chargesto r the I r party a y neve. ary doe ration oreof. SSU 1100 7. BML NG9 FAY 7,1. Seller shall invoice B jyer for Gas d+ supporting documentation accepable in industry date, billing will he prepared Wed on tic quay. Following Month's billing or ass on then after as 7.2. Buyer shall remit Elie ai nount di ic in the Payment Date or 10 days after re xipt of he invc Business Day following that date, If Bu et fails equal to the lower of (i) the then effecpvp primo annum from the date due until th - date ofd payme, of any such statement or any part1thereoliBuyer i amount due, Buyer must pro ng ng docs 7.3. In the event any payme its are cue Buy( 7.4. A patty shall have the 'ght, at is own other party only to the extent ri asonably neves, Contract. This examination rig t shall I not be Contract. All invoices and billin s shall be concl documentation, within two yearA after Or Mon[ owing payment within 30 days of odce a d subs ivered and r ivedi tha pr ceding Month and Pot{ any o er app 'cable charges, providing iractic to supp rt the cunt harged, If the mal qu uty delivered s not known by the billing ty of chedule I Gats. The in Diced q andry 1 the be adj ted to the. actual quantity on the etual livery t -otma on is a ]able. Tlan tc specifi d in the o Co aej, n immediately vailabl funds, n or before the later of the :t by ovided that ' the P is not Busine s Day, payment is due on Elle next tnmit the fall amount puynb by it ell due, interest n.th rtpat portion shall accrue at a rate ed under• 'Mane tes" by Th gt of interttable a ritual, plus two percent per or {ii the a vrfu[ ' est rate. Buyer, in goo faith, disputes the amount ill p4y o Seount it eo odes be co ; provi ad, ho ever, if Buyer disputes the tlentati n acindus praeti to su ort the ount aid or isputed. Korey der, pa Trent t Buyer h44 bd ode in accord neo wi Sectio 7,2, above. rpense upon 2asonab a notic and at easona le tin , to o Kline th books and records of the try to erify t e accu y of ny std ant, harge, aymen or co putation made under the +ailabl with r sped prop Nary in ormari n not ireetly elevant to transactions under this avcly resume final d accurate unt ss obfeo led to i wntin , with a equate explanation and/or of G delive y. All �atroacti e adjutments jmder S ction shall paid in full by the parry mtia n of suc inaectiracv. / 71 SECTION S. TITLE, 9 WARRANTY AND INDEMNITY 8.1. Unless otherwise specifically agreed, title to the Gas shall pass from Seller to Buyer at the Delivery Point(s). SeUer shall have responsibility for and assume any liability with respect to the Gas prior to its delivery to Buyer nt the specified Delivery Point(s). Buyer shall have responsibility for and assume any liability with respect to said Gas after its delivery to Buyer at the Delivery Point(s). 8.2. Seller warrants that it will have the right to convey and will transfer good and merchantable title to all Gas sold hereunder and delivered by it to Buyer. free and clear of all liens, encumbrances, and claims. 8.3. Seller agrees to indemnify Buyer and save it harmless from all losses, liabilities or claims including attorneys' fees and costs of court ("Claims"), from any and all persons, arising from or out of claims of title, personal injury or property damago from said Gas or other charges thereon which attach before title passes to Buyer. Buyer agrees to indemnify Seller and. save it harmless from all Claims, from any and all persons, arising from or out of claims regarding payment, personal injury or property damage from said Gas or other charges thereon which attach after t1Ele passes to Buyer. 3.4, Notwithstanding the other provisions of this Section 8., as between Seiler and Buyer, Seller will be liable for all Claims to the extent that such arise from the failure of Gas delivered by Seller to meet the quality requirements of Section 5. Copyright D 1996 Gas industry Standards Board, Inc. GISB Standard 6.3,1 All rights reserved May 13, 1996 AUG. 6.1997 9:27AiI L G & E NATURAL FAY0214 6406935 NO.0i30 P.6i25 SECTION 9. NOTICES 9,1. All Transaction Conftrmation,5, invoices, payments and other communications made pursuant to the Base 12-ontract ("Notices") shall be made to the addresses specified in writing by the respective parties from time to time. 9.2. All Notices required hereunder may be sent by facsimile or mutually acceptable electronic means, a nationally recognized overnight courier service, first class mail or hand delivered. 9.3. Notice shall be given when received on a Business Day by the addressee. In the absence of proof of the actual receipt date, the following presumptions will apply, Notices sent by faeaitnile shall be deemed to have been received upon the sending party's receipt of its facsimile maclune's confumauon of successful transmission, if the day on which such facsimile is received is not a Business Day or is after five p.m. on a Business Day, then such facsimile shall be deemed to have been received on the next following Business Day. Notice by overnight mail or courier shall be deemed to have been received on the nexA Business Day after it was sent or such earlier time as is confitmed by the receiving parry. Notice via first class mail shall be considered delved two Business Days after trailing. SECTION 10. FINANCIAL RESPON I I 10.1. When reasonable grounds for insecurity of pay an or performance, Adequate assurance shall mean sufficient s ur ry in assurance, including, but not limited to, a standby ir•revocab ti a2 demanding party or a performance b grantee by a creditwoi general arrangement for the be it or dito • , default n the commence, authorize, or acqui sae incot mencel eat of a proc of creditors or have such pet tion fior roceed ig co enc evidenced); or (v) be unable t pay itbts s Choy fall dud; than deliveries or payment, or fermi late the,Contr: t will} ut prio notic may immediately suspend deli encs to Buyer herounc er in it a ever .acond day following the date tach pa menE is due, 10.2. Each party rosorvos titself all rights, set•o s, counterclai► Contract. I i SECTION 11. FO 11.1. Except with regard to a partys obligltiorl to ake p party shall be liable to the othef for far ure to I =form a Film "Force Majeure" as employed) horoin moans any raise not defined in Section 11.2. 1 le to the Gas arse, either party may demand adequate assurance of to ortn and for the term reasonably specified by the party demanding credit, a prepayment, a security interest in an asset acceptable to the ty entity. Intl t: s1ia11 li make an assignment or any ayment tion t the oth (Iii) e a petition or otherwise -.ding cause ander ny ban ruptcy or sitni ar law for the protection I again t it; (i ) oche wise b come ankrul t or insolvent (however he oth r paty shall h ►ve the ight t eithor withhold and/or suspend in add tion to any an ,all o r rem digs av ilable hereunder. Seller Buyer as not paid a amount due 3611er hereunder on or before tho to q* extett such or of tb¢ party he ei) tided to arising from the rga under Section 4, neither by once Mgieure. The team irr4T g suspension, as further 11.2. Force Majeure shall Include but not be Jim ted to be folli iwing: (i) phy, ical ev •tits stl h as a is jd'urbances, d, landslides, lightning, earthquakes, fres, storms or torm warningi, such as hu► 'canes, which result n evac ation f the ffearoa, floods, washouts, explosions, breakage or accidc t or rte essiry f repai s tom chiner or equipment r lines of pipe; (ii) w athaced events affecting an entire geographic region, sue as to temp aturos which •ause f eezing or fail a of ells or lines f piii) interruption of firm ►ranxportatinn and/or storage h cans rters: ' is of of ers Suchas stri esrl ckou, or othc 'a) riots, sabotage, insurrections or wars; and (v) goveirimo�rtial actions such a neces icy for compliance wit any court order, law, statute, ordinance, or regulation promulgated by a governmental authority havin tirisd ction. Seller and Buyer shall mako reasonable efforts to avoid the adverse impacts of a Force Majeure and to resolve the event or occurrence once it has occurred in order to resume performance. 11.3. Neither parry shall be entitled to the benefit of the provisions of Force Majeure to the extent por!'ormAnce is affected by any or all of the following circumstances: (i) the curtailment of interruptible or secondary firm transportation unless primary, in -path, firm transportation is also curtailed; (ii) the party claiming excuse failed to remedy the condition and to resume the performarice of such eovanants or obligations with reasonable dispatch; or (iii) eeonornie hardship The party claiming Force Majeure shall not be excused from its responsibility for Imbalance Charges, 11.4. Notwithstanding anydiing to the contrary herein, the parties agree that Elie settlement of strikes, lockouts or other industrial disturbances shall be entirely within the sole discretion of the parry experiencing such disturbance, 11.5. The party whose performance is prevented by Force Mg eure must provide notice to the other parry. Initial notice may be given orally; however, written notification with reasonably full particulars of the event or occurraneo is required as soon as reasonably possible. Upon providing written notification of Force Majeure to the other party, the affected parry will be relieved of its obligation to make or accept delivery of Gas as applicable to the extent and for the duration of Force Majeure, and neither party shall be deemed to have failed in such obligations to the other during such occurrence or event. Copyright O 1996 Gas industry Standards Board, Inc t31S13 Standard 6.3.1 All rights reserved. May 13. 1996 AUG. 6.1997 9:28AM SECTION 12. TERM L G & E NATUPAL FAX#214 6406935 N0.080 F.9/25 This Contract may be terminated on 30 clays' written notice, but shall remain in effect until the expiration of the latest Delivery Period of any Transaction Confirmation(s). The rights of either party pursuant to Section 7,4., the obligations to make payment hereunder, and the ohlig1tion of cithcr party to indemnify the other, pursuant hereto shall survive the termination of the Base Contract or any Transaction Con. (irmaitinn. SECTION 13. MISCELLANEOUS 13.1. This Contract shall be binding upon and inure to the benefit of the successors, assigns, personal representatives, and heirs of the respective parties hereto, and the covenants, conditions, rights and obligations of this Contract shall run for the full term of this Contract. No assignment of this Contract, in whole or in part, will be maAdprior written consent of the non -assigning party, which consent will not be unreasonably withheld or delayed; provided, eithernsfer its interest to any parent or affiliate by assignment, merger or otherwise without the prior approval of the other party. Upand assumption, the transferor shalt not be relieved of or discharged from any obligations hereunder. 13.2. If any provision in this Contract is determinedd, void or unenforceable by any court having jurisdiction, such determination shall not invalidate, void, or malce unenforeearovision, agreement or covenant of this Contract. 13.3. No waiver of any breach of this Contract shall be hver of any other or subsequent breach. 13.4. This Contract sets forth rd ndin s between es respectin ea jb*1C to, and any prior contracts, understandings and representati ns, wh hero or tten, re ating such tr n ctr ns are erged ntouper ded by this Contract and any effective Transaction Confi ations), 1luCortin et may a ame ded onl by a ting a ecuted byarties13.5. The interpretation an perfornnance f tilts onlract shall b gove ed by t e lawn of the 'tatified y the parties in the Base Contract, excluding, however, a iy conflict of la s rule htch would a ply the aw of other j'tuisdiet on. 13.6. This Contract and all I rovisio is herei i will b subjec. to all plicab a and v id "a tes, rq s, orders and , guladons of any Federal, State, or local governmental uthori having juris ction c ver the parties, then acilitie., or GAS supe y, this. Contract or Transaction Confinnation or any provisions ereof. 1I 13.7. There is no third party benefre a►y to this Contract. 13.8. Each parry to this Con ract represents t it has full an ompl a authority to fner into erform this Contract. Each person who executes this Contract on behiff ter parry represents and rrants at it has fu anda mplate uthority to do so turd that such party will be bound thereb . ('—� ILL Copyright 0 1996 Gas Industry Standards Board, Inc. GISB Standard 6.3.1 All rights reserved, May 13, 1996 , AUG. 5.1997 9:29AM L G & E NATURAL FAX4214 6405995 NO.080 P.10/25 r• TRANSACTION CONFIRMATION FOR IMMEDIATE DELIVERY Date: Transaction Confirmation #: EXHIBIT A This Transaction Confirmation is subject to the Base Contra etween Seller and Buyer dated The terms of this Transaction Confirmation are binding unless disputed in wr' in within 2 Business Days of receipt unless otherwise specified in the Base Contract, SELLER: YER; LG&E Natural Plains Energy Services Inc. y of Lubbock, Texas 2777 Stemmons Freeway, Suite 700 Box 2000 3500 E Slaton Hwy ))bbock, Dallas, Texas 75207 Texas 79459 Lubbock, Texas 79,W4 Attn: Mr. Ron Shuffield Attn• Dave Horstman /� hone: $Q6) -2I70 Phone; (214) 640-6830 / ax: (806) 767- 164 Fax. (214) 640-6931 ase Contract o. Base Contract No. ransp rter: Transporter: Power -Tex Pi eline ransp rter C ntraet umbel Transporter Contract Number, Contract price: $ a&AE to of (See Spe •int Ca dition Below Delivery Period: Begin June 1, 1997 SeterilharJQJ1997 Performance Obligation )firm (fixed Quantity): d Coniract i Quantity*. I (Select � One) le fr#tl(VarlA Quantity): rater Pti1a ' M144Btus/day I MMBtusld�tp-Minitttu p to 10,000 MBtus/day ❑ EI=P i MMBtus/d'cy Maximum 130,0 )0 MM to total volume subject to Se tion 4.. at election f requirrd ovet the Deliver Period. Bti i er or Selle Delivery Point(s); Power -Tex Pipe ine into Energ s for 1P&L P ant N . 2 Or a pooling point is used, lit a specific ge grapbi and p peline ocatio: ): Special G"Oriditlori3: Contract Price: or 24- o o is - For 1 gas t on, th n prie shallFrhe)'asDa' - Da' y Mid Dint f r the flow date at Northern Natu d 1 ,plus $0.2 per MBtu. uyer' ceived by 9:00 a.m. Central Standard Time. For 2 -Hour Notice. For all gas taken, the price shall be the Gas Daily - Daily MidPoint for the flow date at Northern Natural Gas (Mid 10), plus $0.31 par MMBtu. Buyer's nomination must be received by 11:00 a.m. Central Standard Time. Seller: LG& Natural P sins Orgy Services Inc. Buyer: City of Lubbock, Texas By: Alvin Jonas By: See Attached Title: VP Marketing, We e n Region � Title: Date: 8.5.97 Date: Copyright fi 1996 Gas industry Standards Board, Inc. GISB Standard Ali rights reserved. May rd 1996 68-64-z AUG. 6. `99731 9 OFWL UVMW&% eVnL FAX#214 6406935 ! D-66676721440.080 P. 12/25 P . 10 ADDENDUM to tht base Contract for Short -Term Sale and Purchase of Natural Gas between L.G&E Natural Plains Energy Services Inc. attd City of Lubbock, Texas dated Jane 1, 1997 1. Section 2.25 shall be deleted in its entirety and replaced with the following: "Transaction Confumation" shall mean the document, substantially in the form of Exhibit A, Exhibit B. or Exhibit C, setting forth the terms of a purchase and sale transaction formed pursuant to Section 1 for a particuiar Delivery Period. 2. For the purposes of this agreement, any transactions negotiated between the parties will be on wl interruptible basis only. 3. The second sentence of Section 10.1 shall be deleted in its entirety. The following sha)I be added to ISecrian IU. FFNAN'CLtL RESp0NSrBZUT1"' as Section 10.3 to the Contract. In the cw•cnt a Party terminates this Contract under Section 10.1 ("Non -Defaulting parry-), the Non. Defaulting Party shall designate an early termination date ("Early Terminattion Date"). Such Bally Tertnim:tion Date sha11 be designated within three (3) Business Days after the event of default under Section 10.1 and the Non -Defaulting patty shall provide immediate notice of such date to the Defaulting Pavy. L:pon the Early Termination Date, the Non -Defaulting Party shall have the right to liquidate any and all Transaction Confirmations under this Contract (including any portion of a Transaction Confirmation not yet fully delivered) then outstanding by: (i) Closing out each 'T'ransaction Confirmation being liquidated at its Market Value (as defined below) so that each such Transaction Confirmation is canceled and a settlement payment in an amount equal to the difference between such Market Value and the Contract Value (as defined below) of such Transaction Confirmation shall be due to the Buyer under the Transaction Confirmation if such Market Value exceeds the Contract Value and to the Seller if the opposite is rite case; (ii) Discounting each amount then due under clause (i) above to net present value in a commercially reasonable manner at the time of liquidation (to take account of the period between the date of liquidation and the date on which such amount would have otherwise been due pursuant to the relevant Transaction Confirmation); and (iii) Setting off or aggregating, as appropriate, any or all settlernant payments (discounted as appropriate) and (at the election of the Non -Defaulting party) any of all other amounts owing between the parties under this Contract so that al I such amounts are aggregate and/or netted to a single liquidated amount payable by one patty to the other. The net amount due under any such liquidation shall be paid by the close of business on rho third Business Day following the Fatly Termination Date. For purposes of this Section 10,1 "Contract Value" means the amount of the Gas remaining to be delivered or purchased pursuant to a Transaction Confirmation multiplied by the price per unit of gas stated in the applicable Transaction Confirmation, and "Market Value" means the amount of Gas remaining to be delivered or purchased pursuant to a Transaction Confirmation multiplied by the market price per unit determined by the Non -Defaulting Party in a commercially reasonable manner for the delivery or production area, as applicable. The rate of interest used in calculating net present value pursuant to (i) of this Section 10.1 shall be determined by the Non -Defaulting Party in a commercially re9sonable manner_ The parties agree that a Transaction Confirmation under this Section 10.1 shall constitute a "forward contract" within the meaning of the U.S. Bankruptcy Code and any other applicable insolvency laws. The Non -Defaulting Party's rights under Section 10 and to those costa under Section 3 accrued prior to the termination date are the sole and exclusive remedy of the Non -Defaulting Party. The Nor, -Defaulting Party shall give notice that a liquidation pursuant to this Section 10 has occurred t. the Defaulting parry no later than the third Business Day following such liquidation. provided that failure `= r:. c y.all not atfibm the validity or enforceability of liquidation nor give rise to any claim by 'c=-�= �1=7 : _ — :he Noo-Defaulting Party. UG. 6. 199 3 2 9: 30AVI o FL G �& E� NATURAL FAX#214 6406935 Y D- e e 6? 6 7 2 i cNO.080 ADDENDUM - PAGE 2 to the Base Contract for Short -Term Sale and Purehsse of Natural Gas between LG&E Nahrxl plains Enemy Services Inc. and City of Lubbock, Texas dated .Tune 1, 1997 P. 13/25- The 3/25 The following shall be added to "Section 13. MISCpLL.41VE0T1S" as Section 13.9 to the Contract: `F2ch of the panics hereto (i) consents to the recording of the telephone conversations of their re trading and marketing respective g g personnel in connection with this Contract. and (ii) agrees that any such electronic =Ordings may be used ro determine billings or gas confirmation." { AUG. 6. 1997 9:29AM L G & E NATURAL FAX#214 5405935 N0.080 P.11i25 DATED this 14th day of August , 1997. ATTEST; 14 nyth Darnell, City retary APPROVED AS TO CONTENT; Robert Musengale, 011 Director of Electric Utilities APPROVED AS TO FORM: n D al (03, Vandiver, First Assistant City Attorney CITY OF LUBBOCK, TEXAS 14 OPERATOR: BY: Alvin Jojs,ice President Marketing Western RESOLUTION N05589 -B Item 433 August 14, 1997 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock a Gas Transportation Agreement, attached herewith, by and between the City of Lubbock and Energas Company, and any associated documents, which Agreement shall be spread upon the minutes of the Council and as spread upon the minutes of this Council shall constitute and be a part of this Resolution as if fully copied herein in detail. Passed by the City Council this 14th day of August 1997. NDY SITT N, MAYOR ATTEST: ay a Darnell, City Secretary APPROVED AS TO CONTENT )aey jadsworth, Production Superintendent APPROVED AS TO FORM: ald G. Vandiver, First Assistant City Attorney DG V:gs/ccdocs/G asTra n. res July 22, 1997 RESOLUTION NO. 5589-B Item #33 August 14, 1997 GAS TRANSPORTATION AGREEMENT THIS GAS TRANSPORTATION AGREEMENT is made and entered into as of the day of , 1997, by and between ENERGAS COMPANY, a division of Atmos Energy Corporation, a Texas corporation ("Energas"), and THE CITY OF LUBBOCK, TEXAS, a municipality ("Customer"), also referred to as the "parties". W I T N E S S E T H: WHEREAS, Energas owns and operates a pipeline system located in the State of Texas; and WHEREAS, Energas and Customer desire to enter into an agreement providing for the transportation of gas by Energas for Customer to the Delivery Point(s), as hereinafter defined, in accordance with the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Agreement to Transport. Subject to the terms and conditions of this Agreement, including the General Terms and Conditions attached hereto and made a part hereof for all purposes, Energas agrees to transport, on an interruptible basis, for and on behalf of Customer, and Customer agrees to deliver, or cause to be delivered, to Energas for transportation purposes, all of the gas that Customer purchases and uses to meet all of Customer's gas requirements at its power plant located in the Municipal Hill Addition to the City of Lubbock, Lubbock County, Texas; provided, however, that Energas shall have no obligation to transport gas for Customer in excess of 10,000 MMBtu per day. 2. Receipt and Delivery Point(s). (a) The point(s) at which gas is to be delivered by Customer to Energas for transportation under this Agreement shall be at a mutually agreed upon point of interconnection between the pipeline system of Energas and the pipeline system of Customer or Customer's designee located in Lubbock County, Texas, in the City of Lubbock, Texas, or at such other point or points as the parties hereto may mutually agree in writing (the "Receipt Points)"). (b) The point(s) at which gas is to be redelivered by Energas to or on behalf of Customer shall be at Customer's facilities referred to in Paragraph 1 above and located at the No. 2 Power Plant of Lubbock Power & Light in Section 80, Block A, in Lubbock County, Texas, in the City of Lubbock, Texas, or at such other point or point(s) as the parties hereto may mutually agree in writing (the "Delivery Point(s)"). 3. Price. (a) The price to be paid by customer to Energas shall be Forty -Three Cents ($0.43) per MMBtu of gas transported and delivered hereunder as calculated when the gas is measured at the Delivery Point(s) at a pressure base of 14.65 psia. (b) In addition to the price to be paid for gas transported hereunder, Customer agrees to pay to Energas an amount equal to any and all taxes and charges of any nature imposed on Energas for gas transported by Energas hereunder or as a result of such transportation, including, but not limited to, sales taxes, gross receipts taxes, franchise fees, and other similar taxes and charges. 4. Billing and Payment. (a) On or before the tenth (10th) day of each calendar month after the month in which deliveries of gas hereunder have commenced, Energas shall render to Customer an invoice that shows the total volume and BTU content of gas delivered and redelivered hereunder during the preceding Billing Month and the monies due therefor, including any amounts due for taxes and charges paid by Energas for which Customer is obligated under this Agreement to reimburse Energas. Customer shall pay such invoice within ten (10) days after the date of receipt by Customer and shall send such payment to the address of Energas noted on the invoice. (b) In the event Customer fails to pay the full amount due Energas when the same becomes due, interest thereon shall accrue from the date that such payment became due until it is paid in full at the lesser of (i) a rate of fifteen percent (15%) per annum or (ii) the highest lawful rate permitted by applicable law. If such failure to pay continues for ten ( 10 ) days, Energas may, in addition to any and all other remedies available to Energas, suspend further deliveries of gas hereunder. -2- (c) All invoices and payments are subject to correction by either party for any errors contained therein until twelve (12) months after the date Energas received payment on an incorrect invoice or received an incorrect payment. 5. Term. This Agreement shall become effective as of May 1, 1997, and shall continue in full force and effect until May 1, 1998, (the "Primary Term") and shall continue thereafter on a year-to-year basis unless terminated by either party upon written notice thirty ( 30 ) days prior to the end of the Primary Term or any subsequent renewal term. Such termination shall become effective at the end of the then current term. 6. Assignment. This Agreement may not be assigned by Customer without the prior written consent of Energas. In the event Customer assigns this Agreement without Energas' consent, such assignment shall be null and void and Energas may, in its sole discretion, immediately terminate this Agreement without notice to Customer. 7. Notices. Any notice required to be given under this Agreement or any notice that either party hereto may desire to give the other party shall be in writing and shall be considered duly delivered when hand -delivered or when deposited in the United States mail, postage prepaid, registered or certified, and addressed as follows: If to Energas: ENERGAS COMPANY P.O. Box 650205 Dallas, Texas 75265-0205 Attention: Intrastate Gas Supply If to Customer: THE CITY OF LUBBOCK P. 0. Box 2000 Lubbock, Texas 79457 Attention: Purchasing Agent or such other address as Energas, Customer, or their respective successors or permitted assigns shall designate by written notice given in the manner described above. Routine communications, including monthly invoices, may be mailed by ordinary mail and are deemed delivered when hand -delivered or when deposited in the United States mail, postage prepaid, and addressed to the above -designated name and address. -3- 8. Attachments. The General Terms and Conditions attached hereto are expressly incorporated herein and made a part of this Agreement for all purposes, and all references herein and therein to "this Agreement" include the terms and provisions contained herein and in such General Terms and Conditions. IN WITNESS WHEREOF, the parties hereto have executed this Gas Transportation Agreement as of the date first above written. ENERGAS COMPANY, A Division Of Atmos En gy Co o t'on By: (yG� Sea— Gordon` J.o , .•, Vice PresideAt, c� Atmos Energy Corporation THE CITY OF LUBBOCK By: ZdAkz&,� /,a— Robert Masse ale Director of Electric Utilities By: on'Vdiver First Assistant City Attorngy ATTEST: By : Windy itton- Mayor of the City of Lubbock Kayth Darnell, City Secr -4- GENERAL TERMS AND CONDITIONS TO GAS TRANSPORTATION AGREEMENT DATED EFFECTIVE AS OF MAY 1, 1997, BETWEEN ENERGAS COMPANY, A Division Of Atmos Energy Corporation AND THE CITY OF LUBBOCK, TEXAS { ARTICLE I Definitions For purposes of this Agreement, unless the context hereof requires otherwise, the following definitions shall be applicable: Section 1.1. The term "gas" shall mean natural gas produced from gas wells (i.e., gas -well gas), gas produced in association with oil (i.e., casinghead gas) , and the residue gas resulting from the processing of both casinghead gas and gas -well gas. Section 1.2. The term "day" shall mean the twenty-four (24) hour period commencing at 8:00 a.m., Central Time, on one calendar day and ending at 8:00 a.m., Central Time, on the following calendar day. Section 1.3. The term "month" or "Billing Month" shall mean the period extending from 8:00 a.m., Central Time, on the first day of one calendar month to 8:00 a.m., Central Time, on the first day of the next succeeding calendar month, except that the first Billing Month shall commence on the date of the initial delivery of gas hereunder and shall end at 8:00 a.m., Central Time, on the first day of the next succeeding calendar month. Section 1.4. The term "Mcf" shall mean the volume of gas which occupies a space of one thousand (1,000) cubic feet at a temperature of 60° Fahrenheit and at an absolute pressure equal to the pressure set forth in Subparagraph 3(a) of this Agreement. Section 1.5. The term "BTU" shall mean British thermal unit and represents the quantity of heat required to raise the temperature of one (1) pound avoirdupois of pure water from 58.5° Fahrenheit to 59.5° Fahrenheit. Section 1.6. The term "MMBtu" shall mean one million (1,000,000) BTUs. Section 1.7. The term "heating value" shall mean the number of BTUs produced by the complete combustion, at a constant pressure, of the amount of gas that would occupy a volume of one (1) cubic foot at a temperature of 60° Fahrenheit if saturated with water vapor and at a constant pressure of 14.73 psia and under standard gravitational force (acceleration 980.665 cm per sec per sec) with air of the same temperature and pressure as the gas when the products of combustion are cooled to the initial temperature of the gas and air and when the water formed by combustion is condensed to the liquid state. Section 1.8. inch absolute. The term "psia" shall mean pounds per square ARTICLE II Pressure Section 2.1. Deliveries of gas by Customer at the Receipt Point(s) and redeliveries of gas by Energas at the Delivery Point(s) shall be made at pressures mutually agreeable by the parties hereto and sufficient to effect delivery into the facilities of the party receiving such gas at such points; provided, however, that neither party shall be required to install or operate any compression facilities in order to deliver the gas at any specific pressure. ARTICLE III Measurement of Gas Section 3.1. Unless otherwise specifically provided herein, the unit of volume for purposes of the measurement of gas delivered hereunder at the Receipt and Delivery Point(s) shall be one (1) Mc f . Section 3.2. The computation of the volumes of gas delivered hereunder shall be made in accordance with the American Gas Association Measurement Committee Report No. 3, including the Appendix thereto, as published in April, 1955 and amended or revised from time to time. Section 3.3. For purposes of the measurement of gas and calibration of meters, the average atmospheric (barometric) pressure at the Receipt and Delivery Point(s) shall be assumed to be the local pressure as determined by Energas for the area in which the Receipt or Delivery Point(s), as applicable, is located unless otherwise specified by Energas. Section 3.4. Customer shall, at no cost to Energas, permit Energas sufficient space on, and reasonable access to, a location or locations on Customer's property as may be necessary for the installation and operation of metering and pressure regulation equipment and facilities. Section 3.5. Each of the parties hereto acknowledges and agrees that the measuring facilities currently located at the Receipt Point(s) shall be used to measure the gas delivered by Customer to Energas hereunder and that the owner of such facilities (the "Owner"), or such other party as the Owner and Energas (in the event Energas is not the Owner) may mutually designate, shall -2- perform the reading, calibrating, and adjusting of, and the changing of charts on, the equipment in such facilities and shall perform all gas analyses relating to the gas delivered pursuant to this Agreement. Section 3.6. Energas shall, at Customer's sole cost and expense, install (if installation is necessary) and shall, at its sole cost and expense, maintain and operate, at each Delivery Point(s), such equipment as may be necessary to control and accurately measure the flow of gas redelivered by Energas hereunder. All such equipment installed by Energas shall be the property of Energas, and Customer hereby agrees to execute and deliver such bills of sale and other documents as Energas may deem necessary to convey title to such equipment and to evidence Energas' ownership therein. The type of meters to be used shall be determined at Energas' sole discretion, but, in any event, shall conform to industry and American Gas Association measurement standards. In the event orifice meters are used, such orifice meters shall utilize flange "taps" and shall be designed, installed, maintained, and operated, and shall compute volumes in accordance with, American Gas Association measurement standards. Customer shall have access to all such equipment at reasonable hours upon giving Energas at least twenty-four (24) hours prior written notice of its desire to obtain such access, but the reading, calibrating, and adjusting thereof, the changing of charts thereon, and all analyses relating to the gas redelivered hereunder, if made, shall be performed by Energas. Section 3.7. To the extent permitted by Owner, each of Energas and Customer may install, maintain, and operate check measuring instruments and telemeters in, and connected to, the Owner's measuring facilities located at the Receipt Point(s), and Energas hereby grants to Customer the right to install, maintain, and operate check measuring instruments and telemeters in, and connected to, Energas' equipment at the Delivery Point(s), for purposes of checking the Owner's and Energas' meters; provided, however, that all gas measurements required in this Agreement shall be determined by the Owner's and Energas' meters, and further provided that such check measuring and telemetering instruments and connections shall be installed so as not to interfere with the operation or future modification of the Owner's or Energas' meters or appurtenances. Customer hereby agrees to indemnify, defend, and hold harmless Energas from any and all damages and liabilities arising from the installation, operation, maintenance, or removal by or for Customer of such check measuring and telemetering instruments to the Owner's or Energas' equipment. Each party shall have access to the other party's check measuring and telemetering instruments at reasonable hours, upon twenty-four (24) hours prior written notice, and to the extent permitted by Owner when applicable, but the reading, calibrating, and adjusting thereof and the changing of charts thereon shall be performed by such other party. -3- Section 3.8. The accuracy of Energas' and Customer's measuring equipment shall be verified at reasonable intervals or when requested by either party (which requests shall be made no more frequently than once in any thirty -day period) by a test to be conducted by the party owning such equipment, using methods generally accepted in the gas industry. The party performing such test shall notify the other party sufficiently in advance of the test in order to permit such party to have a representative present at the test; provided, however, that such other party's election not to have a representative present shall not affect the validity of the test. All tests shall be made at the expense of the party performing the test; provided, however, that the party requesting a special test shall bear the expense thereof if any inaccuracy in the equipment is not greater than plus or minus two percent (2%). Section 3.9. If, upon testing, any measuring equipment is found to be inaccurate by plus or minus two percent (2%) or less, previous records of such equipment shall be considered accurate in computing deliveries hereunder. If, upon such testing, any such measuring equipment shall be found to be inaccurate by more than plus or minus two percent (2%), then any previous readings of such equipment shall be corrected to zero error for any part of the period since the last test during which such error is known to have existed or which may be agreed upon in actual practice by the operating representatives of the parties. In case the period of such error is not definitely known or agreed upon, such correction shall be for a period of one-half of the time elapsed since the date of the last such test but not exceeding a correction period of fifteen (15) days. Following any test any measurement equipment found to be inaccurate regardless of the percentage of inaccuracy shall be adjusted immediately to function correctly. Section 3.10. In the event a billing meter goes out of service or is determined to be registering inaccurately by more than plus or minus two percent (2%), the volume of gas delivered hereunder during such period shall be estimated as follows: (a) By using the registration of any approved check meter or meters existing and agreed upon as being accurately registering; or (b) In the event that no such approved check meter or meters shall exist, by recalculating, if the quantity or percentage of error is ascertainable by calibration, test, or mathematical calculation; or (c) In the event that neither of the methods described above are available, by relating the quantity of delivery to deliveries during periods under similar conditions when the billing meter was deemed to have been registering accurately. Section 3.11. Each party shall have the right to be present at the time of any installation, reading, cleaning, change, repair, inspection, test, calibration, or adjustment of the other party's, -4- and, subject to the approval of the Owner, the Owner's, measuring equipment that is used in the performance of any obligations arising under this Agreement. All records obtained from such measuring equipment shall be the property of the owner of such equipment. Each party agrees to preserve and retain all of its test data, meter charts, and other records relating to the gas transported hereunder for a period of at least three (3) years or such longer period as may be required by law. ARTICLE IV Gas Imbalances Section 4.1. Each of the parties hereto agrees to maintain the delivery and redelivery of gas hereunder in continuous balance or as near thereto as practicable on a MMBtu basis and further agrees that no adjustments of any kind, including, but not limited to, price adjustments, will be required or necessary because of any difference between the heating value of the gas redelivered by Energas and the gas delivered by Customer to Energas. Each of the parties further acknowledges that the gas transported hereunder will be delivered to Energas forty-eight (48) hours prior to the scheduled redelivery of such gas by Energas to Customer. Nothing in this Agreement is intended, or shall be deemed, to obligate Energas to redeliver any gas to the Delivery Point(s) if Customer has not previously delivered an equal volume of gas at the Receipt Point(s) in accordance with this Agreement. Section 4.2. Any imbalance that may occur from time to time in the quantities, on an Mcf basis, of gas delivered by the parties hereto shall be corrected as soon as practicable under normal operating conditions; provided, however, that any imbalance existing at the termination of this Agreement shall be corrected within thirty (30) days following such termination. ARTICLE V Maintenance of Equipment Section 5.1. Each party hereto agrees to maintain any equipment owned by it and used in the performance of its obligations herein in good, safe, and efficient operating condition and repair. -5- ARTICLE VI Ouality of Gas Section 6.1. All gas delivered by Customer at the Receipt Point(s) shall conform to the following specifications: (a) Dust, Gums, etc. The gas shall be commercially free of dust, gums, and other solid matter. (b) Oxygen. The gas shall not at any time have an oxygen content in excess of two-tenths of one percent (.2%) by volume. (c) Carbon Dioxide. The gas shall not at any time have a carbon dioxide in excess of one percent (1%) by volume. (d) Liquids. The gas shall hydrocarbons in liquid form at which the gas is delivered. be commercially free of water and the temperature and pressure at (e) Liquefiable Hydrocarbons. The gas shall not contain more than two-tenths (.2) gallons per Mcf of liquefiable hydrocarbons having a molecular weight equal to or greater than pentanes. (f) Hydrogen Sulfide. The gas shall not contain more than one-quarter (1/4) grain of hydrogen sulfide per one hundred (100) cubic feet. (g) Sulphur. The gas shall not contain more than five (5) grains of sulphur per one hundred (100) cubic feet. (h) Water Vapor. The gas shall not contain more than seven (7) pounds of water vapor per million cubic feet. (i) Heating Value. The gas shall have a gross heating value of not less than nine hundred fifty (950) BTUs per cubic foot and not more than one thousand one hundred (1100) BTUs per cubic foot. (j) Temperature. The gas shall not be delivered at a temperature in excess of one hundred degrees (1000) Fahrenheit. Section 6.2. All gas redelivered by Energas to the Delivery Point(s) shall be, and hereby is, deemed to be of equal quality with the gas delivered by Customer to Energas at the Receipt Point(s). Section 6.3. If any of the gas delivered by Customer hereunder shall fail to conform to the quality specifications set forth in Section 6.1 above, Energas, at its option, may, in addition to any and all other remedies otherwise available to Energas, take one or more of the following actions: (a) immediately terminate this Agreement; (b) refuse to accept further zz delivery of any gas hereunder until Customer shall remedy such quality nonconformity to Energas' satisfaction; or (c) make or cause to be made, at Customer's expense, such changes to the gas as may be necessary to bring such gas into conformity with the quality specifications set forth herein, the costs and expenses of making such changes to be reimbursed by Customer to Energas within fifteen (15) days after notice from Energas of the amount to be reimbursed. ARTICLE VII Heating Value Section 7.1. The gross heating value of the gas delivered at the Receipt Point(s), as determined in accordance with Section 1.7 above, shall be corrected from the conditions of testing and analysis to that of the actual condition of the gas as delivered, expressed in BTUs per cubic foot and reported at a pressure base of 14.65 psia at 60° Fahrenheit on a dry basis when the gas as delivered contains seven (7) pounds of water or less per one million cubic feet. ARTICLE VIII Right to Commingle; Curtailment Section 8.1. Customer agrees that, during the time that gas being transported hereunder is in the possession of Energas, Energas shall have the right to commingle such gas with other gas in its system and to redeliver molecules of gas different from those actually received from Customer at the Receipt Point(s). Section 8.2. Customer acknowledges and agrees that all gas to be transported under this Agreement is subject to curtailment when necessary to protect the health and safety of, or to maintain service to, Energas' higher priority customers, and that, in the event of such a curtailment, such curtailment shall not be the basis for any claim for damages sustained by Customer. In the event a curtailment becomes necessary, Energas shall perform such curtailment in accordance with Energas' applicable rules from time to time in effect and on file with the Texas Railroad Commission or any successor regulatory agency and will use its best efforts to curtail all customers of the same classification in the immediate vicinity proportionately. In the event a curtailment of delivery shall become necessary or advisable, Energas shall, as soon as possible prior to the actual curtailment, notify Customer by telephone, telegraph, or other means, of the nature, extent, and probable duration of such curtailment. -7- ARTICLE IX Ownership and Control Section 9.1. Customer warrants that it has the right to deliver for transportation all gas delivered hereunder to Energas at the Receipt Point(s). In the event any claim of any character whatsoever is asserted with respect to any gas delivered to the Receipt Point(s) for transportation hereunder, including, but not limited to, any claim to such gas or for royalties, taxes, license fees, payments, or other charges thereon, Customer agrees to indemnify, defend, and hold harmless Energas from and against any and all liabilities, damages, suits, debts, losses, costs, and expenses (including attorneys' fees) arising out of or in connection with such claim. Section 9.2. Each of the parties hereto acknowledges and agrees that title to all gas transported hereunder shall, at all times, remain with Customer. Section 9.3. As between the parties hereto solely, Energas shall be deemed in exclusive control and possession of the gas after the delivery thereof at the Receipt Point(s) and prior to the redelivery thereof to or for the account of Customer at the Delivery Point(s) and shall be responsible for any damages, losses, or injuries caused by Energas' handling, receipt, or redelivery thereof (except to the extent such damages, losses, or injuries shall have been caused by the act or omission of Customer). At all other times, as between the parties hereto solely, Customer shall be deemed in exclusive control and possession of the gas and responsible for any damages, losses, or injuries caused by Customer's handling, delivery, or receipt thereof (except to the extent such damages, losses, or injuries shall have been caused by the act or omission of Energas). Each of the parties hereto agrees to indemnify, defend, and hold the other party harmless from and against any and all claims, liabilities, damages, losses, costs, and expenses (including attorneys' fees) incurred by the indemnified party arising from or relating to any damages, losses, or injuries for which the indemnifying party is responsible pursuant to the provisions of this Section. ARTICLE X Governmental Regulations Section 10.1. This Agreement is subject to (a) all applicable and valid statutes, ordinances, rules, regulations, and orders of any federal, state, or local governmental authority having jurisdiction over either of the parties, their facilities, or the -8- subject matter of this Agreement and (b) the provisions of applicable franchises, if any, under which Energas or Customer operates. Section 10.2. Customer hereby warrants and represents to Energas that none of the gas transported hereunder has been or will be resold, transported, or used in such a manner or under any circumstances that would cause the gas transported hereunder, Energas, or any facilities used or owned by Energas to become subject to the jurisdiction and regulations of the Federal Energy Regulatory Commission or any successor body. Customer recognizes and acknowledges that Energas entered into this Agreement in reliance upon such warranty and representation and that Energas would have been unwilling to enter into this Agreement in the absence of such warranty and representation. Consequently, Customer agrees that it will not voluntarily commit the gas transported hereunder to interstate commerce as that term is defined in the Natural Gas Act, 15 U.S.C.A. Section 717 et seq., but would do so only under compulsion of governmental authority, and Customer agrees that, in the event Energas becomes, or believes, in its sole judgment, that it may become, subject to the jurisdiction of the Federal Energy Regulatory Commission or any successor body as a result of the performance of its obligations hereunder, Energas may terminate this Agreement immediately and without any prior notice to Customer. ARTICLE XI Customer's Financial Responsibility Section 11.1. Energas may terminate this Agreement immediately upon the institution by or against Customer of any proceedings in bankruptcy or under any insolvency law. ARTICLE XII Force Majeure Section 12.1. In the event that either Energas or Customer is rendered unable, wholly or in part, by reason of an event of force majeure, to perform its obligations under this Agreement, other than to make any payment due hereunder, and such party has given 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 parties, insofar as they are affected by such force majeure, shall be suspended during the continuance of such inability, but for no longer period, and such cause shall, insofar as possible, be remedied with all reasonable dispatch; provided, however, that the above requirement that any -9- force majeure be remedied with all reasonable dispatch shall not require the settlement of strikes or lock -outs by acceding to the demand of the opposing party when such course is inadvisable in the discretion of the party having the difficulty. Section 12.2. The term "force majeure" as used in this Agreement shall mean any cause not reasonably within the control of the party claiming suspension and includes, but is not limited to, acts of God; strikes; lock -outs; wars; riots; orders or decrees of any lawfully constituted federal, state, or local body; fires; storms; floods; wash -outs; explosions; breakage or accident to machinery or lines of pipe; inability to obtain or a delay in obtaining rights-of-way, material, supplies, or labor permits; temporary or permanent failure of gas supply or transportation services; repair, maintenance, or replacement of facilities used in the performance of the obligations contained in this Agreement; or any other cause whether of the kind herein enumerated or otherwise. ARTICLE XIII Access to Records Section 13.1. Each party hereto shall have the right, at all reasonable times upon seventy-two (72) hours prior written notice, to examine the books and records of the other party to the extent necessary to verify the accuracy of any statement, charge, computation, or demand made under or pursuant to this Agreement. ARTICLE XIV Remedies Upon Material Default Section 14.1. If either party hereto shall fail to perform any material covenant or obligation upon it under this Agreement, then in such event the non -defaulting party may, at its option, terminate this Agreement upon acting in accordance with the procedures hereafter set forth in this Section. The non -defaulting party shall cause a written notice to be served on the defaulting party, which notice shall state specifically the cause of terminating this Agreement and shall declare it to be the intention of the non -defaulting party to terminate this Agreement if the default is not cured. The defaulting party shall have ten (10) days after receipt of the aforesaid notice in which to remedy or remove the cause or causes stated in the termination notice, and, if within such ten-day period, the defaulting party does so remedy or remove such cause or causes and fully indemnifies the non - defaulting party for any and all consequences of such breach, then such termination notice shall be withdrawn and this Agreement shall -10- continue in full force and effect. In the event that the defaulting party fails to remedy or remove the cause or causes or to indemnify fully the non -defaulting party for any and all consequences of such breach within such ten-day period, this Agreement shall be terminated and of no further force or effect from and after the expiration of such ten-day period. Section 14.2. Any termination of this Agreement pursuant to the provisions of this Article shall be (a) without prejudice to the rights of Energas to collect any amounts then due Energas for gas transported prior to the time of termination, (b) without prejudice to the rights of Customer to receive any transportation service for which it has paid but not received prior to the time of termination, and (c) without waiver of any other remedy to which the non -defaulting party may be entitled. Section 14.3. The procedures for termination of this Agreement set forth in Section 14.1 above are not applicable to immediate terminations hereof by Energas made in accordance with any other provisions of this Agreement. ARTICLE XV Miscellaneous Section 15.1. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, except to the extent that any law, rule, or regulation of the federal government of the United States of America may be applicable, in which case such federal law, rule, or regulation shall govern or control. Section 15.2. This Agreement may not be modified or amended except by the written agreement of the parties hereto. Section 15.3. No waiver by either party hereto of any default of the other party under this Agreement shall operate as, or be deemed to be, a waiver of any other or subsequent default, whether of a like or different nature. Section 15.4. Each provision of this Agreement is intended to be several. If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity of the remainder of this Agreement. -11- Section 15.5. This Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns and is intended solely for the benefit of Energas and Customer and their respective successors and permitted assigns and not for the benefit of any other person or entity not a party hereto. Section 15.6. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof. Section 15.7. The descriptive headings of the provisions of this Agreement are formulated and used for convenience only and shall not be deemed to affect the meaning or construction of any of such provisions. [END OF GENERAL TERMS AND CONDITIONS] -12-