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HomeMy WebLinkAboutOrd 163b-2004 GTUA-Potable Water Contract; McKinney.pdfORD 163B-2004 AN ORDINANCE by the City Council of the City of Anna authorizing the execution and delivery of a "Potable Water Supply Contract" with the Greater Texoma Utility Authority, and resolving other matters incident and related to the execution and delivery of such Contract including specifying the term, consideration, and obligations of the parties to such Contract, and resolving provisions incident and related to the subject and purpose of this ordinance. WHEREAS, negotiations have been conducted between the Authority and the City of Anna, Texas (the City"), with respect to the execution of a potable water supply and facilities contract (the "Contract," the form of which is attached hereto as Exhibit A), whereby the Authority would provide a potable water supply and transmission facilities to the City; WHEREAS, said Contract has been prepared and submitted to this governing body for approval, and it has been determined by the City Council that the Contract is in the best interest of the City and should be approved; now, therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ANNA, TEXAS: SECTION 1: That the "Potable Water Supply Contract" by and between the Greater Texoma Utility Authority and the City, attached hereto as Exhibit A and incorporated herein for all purposes is hereby approved for and on behalf of the City. The Mayor is hereby authorized and directed to execute such contract for and on behalf of the City and as its act and deed, and such Contract may be countersigned by the City Secretary on behalf of the City. Section 2: This ordinance shall take effect and be in force from and after its passage. 45527383.1\10304552 1-7 PASSED AND APPROVED, this � day of 2004. (City Seal) or City of Anna, Texas ecretary City of Anna, Texas 45527383.1\10304552 CITY OF ANNA POTABLE WATER SUPPLY CONTRACT THE STATE OF TEXAS § THE COUNTY OF COLLIN § THIS CONTRACT (the "Contract") made and entered into as of this the , 3 th day of , 2004 (the "Contract Date"), by and between the Greater Texoma Utility Authority ("GTUA"), a conservation and reclamation district created under Article XVI, Section 59, of the Texas Constitution, and the City of Anna, Texas (the "City'. WITNESSETH: WHEREAS, GTUA and the City, pursuant to V.T.C.A., Chapter 791, Government Code, the Interlocal Cooperation Act, have previously entered that certain Contract for Water Supply and Sewer Service, dated as of December 10, 1996, as amended from time to time and as amended by that Amended and Restated Contract for Water Supply and Sewer Service (the "GTUA/Anna Facilities Contract"); and the GTUA/Anna Facilities Contract remains in full force and effect; and the terms, provisions, representations, warranties, covenants, duties, and obligations set forth in such contract shall in no manner be affected, reduced, modified, or supplanted by the terms, provisions, representations, warranties, covenants, duties, and obligations set forth in this Contract, except as may be explicitly stated in this Contract as having such force and effect; WHEREAS, GTUA has previously served as the coordinating entity to secure Texas Water Development Board ("TWDB") loans on behalf of participating Texas cities, being Anna, Howe, Melissa, and Van Alstyne (the "Participating Cities"), for the construction of a water transmission main to deliver surface water to said Participating Cities, all of whom are located in either Collin County or Grayson County; WHEREAS, said TWDB loans have been approved subject to execution of a water supply contract and other similar contingencies; WHEREAS, said TWDB loans may provide insufficient funds to finance the acquisition and construction of the System or other facilities found to be necessary to the operations and purposes of the System and this Contract, and in such case, a Supplemental Loan or Loans may be sought by GTUA or another person working in connection with GTUA, for the benefit of the Participating Cities, to provide sufficient financing for the acquisition and construction of such facilities; WHEREAS, GTUA has been working with the Participating Cities to secure a water supply contract; WHEREAS, the North Texas Municipal Water District ("NTMWD") has agreed to provide a surface supply of water to GTUA for the Participating Cities, initially flowing said water from NTMWD transmission and delivery facilities through the City of McKinney, Texas, distribution system to GTUA and ultimately from NTMWD transmission and delivery facilities planned for future construction directly to a GTUA/Participating Cities Delivery Point; 45478358.8/10304552 WATER SUPPLY CONTRACT WHEREAS, GTUA and NTMWD have developed a contract (the "GTUA/NTMWD Contract") for the delivery and purchase of said water, a copy of which is attached hereto as "Exhibit A" and made a part hereof as if incorporated fully herein; WHEREAS, the City of McKinney is willing, subject to available capacity, to transport potable water for the City through its water distribution system; WHEREAS, GTUA and the City of McKinney have developed a contract (the "GTUA/McKinney Contract") for the delivery of said water through the City of McKinney's water distribution system, a copy of which is attached hereto as `Exhibit B" and made a part hereof as if incorporated fully herein; WHEREAS, it is necessary for GTUA and each Participating City to enter into a contract providing for: delivery of said water; payment for a proportionate share of the cost of said water by each Participating City; management and construction of required delivery, metering and transmission facilities including, but not limited to the management and operation of said metering and transmission facilities and payment for a proportionate share of the operating and maintenance costs; WHEREAS, GTUA and the City are authorized to enter into this Contract pursuant to the Texas Government Code, Chapter 791, the Interlocal Cooperation Act, and other applicable laws, and agree with one another that the City shall not obtain the goods and services provided by this Contract from any party other than a contracting parry hereto, except as provided herein and in the GTUA/Anna Facilities Contract; and, WHEREAS, the City is desirous of obtaining an adequate and dependable water supply; NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained: (i) Subject to and conditioned upon NTMWD's and the City of McKinney's performance of their respective contractual obligations to GTUA, GTUA agrees to famish and the City agrees to pay for water from GTUA and for the costs of transmission of such water (including but not limited to the costs of transmission arising under the GTUA/McKinney Contract) upon the terms and conditions and for the consideration hereinafter set forth; (ii) The City agrees to pay to GTUA its proportionate share of the cost of water and the costs of transmission of such water (including but not limited to the costs of transmission arising under the GTUA/McKinney Contract) and the costs to operate and maintain said water transmission, metering, and delivery facilities, to wit: Section 1. DEFINITION OF TERMS. The following terms and expressions as used in this Contract, unless the context clearly shows otherwise, shall have the following meanings: (A) "Annual Payment" means the amount of money to be paid to GTUA by the City during each Annual Payment Period. (B) "Annual Payment Period" means GTUA's fiscal year, which currently begins on October I of each calendar year and ends on September 30 of the next following calendar year, but which may be any twelve (12) consecutive month period fixed by GTUA. 45478358.8110304552 Page 2 WATER SUPPLY CONTRACT (C) "City" means the City of Anna, Texas, a party to this Contract in all respects. (D) "Engineer" means the Consulting Engineer with whom GTUA enters into a contract to design the improvements contemplated by the TWDB Loan, the TWDB State Participation Loan, and other financing sources (such as Supplemental Loans). (E) "GTUA" means the Greater Texoma Utility Authority, a conservation and reclamation district created under Article XVI, Section 59, of the Texas Constitution, and a party to this Contract in all respects (F) "MGD" is an abbreviation for "million gallons of water per day" and means a quantity of water during a period of time expressed for convenience in terms of an average annual daily quantity during an Annual Payment Period. (G) "NTMWD" means the North Texas Municipal Water District, as defined in the preamble to this Contract. (H) "Participating Cities" means the cities which execute and approve contracts representing participation in the objectives contemplated and described in this Contract, to wit: Anna, Texas, Howe, Texas, Melissa, Texas, and Van Alstyne, Texas. (1) "Supplemental Loan(s)" means each and every other loan of funds, received from time to time from TWDB or any other source, used to finance the acquisition and construction of any part of the System or other facilities found to be necessary to the operations and purposes of the System and this Contract, the repayment of which is the ultimate responsibility of the Participating Cities, whether such Supplemental Loan(s) is/are incurred for the benefit of the Participating Cities by GTUA, NTMWD, or any other person. (J) "System" means collectively the existing system and the future improvements of GTUA for water storage, treatment, transportation, distribution, and supply, as contemplated by this Contract. (K) "TWDB Loan" means the Texas Water Development Board loan approved by the TWDB on March 19, 2003, the repayment of which is the ultimate responsibility of the Participating Cities. (L) "TWDB State Participation Loan" means the state participation portion of the loan approved March 19, 2003, the repayment of which is the ultimate responsibility of the Participating Cities. (M) "Water Year" means the period of August 1 of each calendar year through July 31 of the next following calendar year or such other twelve (12) month period designated by GTUA to the City. FOR ADDITIONAL DEFINITIONS, see attached GTUA/NTMWD Contract definitions and GTUA/McKinney Contract definitions. 45478358.8/10304552 Page 3 WATER SUPPLY CONTRACT Section 2. OUANTTIY. GTUA agrees to sell and to deliver treated water it receives from NTMWD under the attached GTUA/NTMWD Contract to the City at a Point of Delivery (as described in Section 5. hereof) to be approved in the facility construction documents yet to be designed, subject to approval of the City, and the City agrees to take at said Point of Delivery water required for use by the City during the term of this Contract, including treated water for the City's own use and for distribution to all retail customers served by the City's water distribution system, whether inside or outside its boundaries. The quantity of water sold to the City shall be measured at the City Point of Delivery as described hereinafter. Contracts, between the City and any other person or entity, existing prior to the Contract Date for the sale of water to or from the City shall not be affected by this Contract. It is specifically provided, however, that after the Contract Date, the City shall not enter into, renew, or amend with regard to volume of water to be supplied, any agreement to supply any such treated water for use outside its boundaries or the area of its statutory extraterritorial jurisdiction, including an agreement to supply any such treated water to another Participating City, unless each such agreement is approved by the Board of Directors of GTUA (which approval shall not be unreasonably withheld). Similarly, the City shall not become a party to any contract for the purchase or sale of treated water with another Participating City, or any other person or entity, which would violate or be inconsistent with the provisions of this Contract. Any agreement relating to the City s purchase of water, to be made between the City and such supplying person or entity, shall not be entered into prior to receiving the written consent of GTUA to such agreement, which consent shall not be unreasonably withheld. It is recognized that the City intends to utilize its well (groundwater) system to meet a portion of its potable water needs. That use is considered compatible and consistent with this Contract. The acquisition of, or use of, water from such sources shall never obviate or reduce the obligations, duties and responsibilities of the City to make the payments specified in this Contract. GTUA plans to furnish the City with a minimum flow of 162,500 gallons of water per day (0.1625 MGD). The City's minimum take -or -pay amount may be reduced, with GTUA's and the City's consent and for an agreed-upon period of time, by the amount of water that any other Participating City agrees to take that is in excess of such other Participating City's minimum take -or -pay amount. GTUA agrees to continue to monitor the needs of the area and from time to time will consult with the City on future needs. Additional water may be obtained from GTUA in a manner consistent with GTUA policies and contractual obligations in effect at the time to meet the needs of the City and other Participating Cities. It is further provided that in the event NTMWD or GTUA is unable to provide the volume of water to the City equal to the established minimum take -or -pay amount, GTUA will use its best efforts to negotiate a reduced minimum take -or -pay amount with NTMWD. GTUA, through NTMWD, will use its best efforts to furnish and remain in position to furnish treated water sufficient for all reasonable treated water requirements of the City (except those furnished by ground water or other sources existing at the time of this Contract) subject to the limitations of NTMWD and the City of McKinney for the period of time that the City of McKinney has agreed to transmit water through its distribution system pursuant to t"e GTUA/McKinney Contract. The obligation of GTUA to provide water to the City shall be limited to the amount of treated water available to it from the NTMWD and/or the City of McKinney Distribution System during normal operation which will not impair the NTMWD obligation to its cities or the City of McKinney's obligation to its customers. Maximum rates of delivery shall be appended hereto if necessary, consistent with the capabilities and abilities of NTMWD System facilities and the City of McKinney facilities, and it is understood that the NTMWD Board of Directors from time to time may adjust the maximum rate of delivery on an equitable and uniform basis to all NTMWD Customer Cities. If treated water from the System 45478358.8/10304552 Page 4 WATER SUPPLY CONTRACT must be rationed, such rationing shall, within the limits permitted by law, be done by GTUA proportionately based upon each Participating City's annual minimum. Section 3. OTHER CONTRACTS. GTUA reserves the right to supply treated water from the System ("excess water") to other persons, as determined by GTUA's Board of Directors and as approved by the Participating Cities, so long as doing so does not result in GTUA's failure to provide the minimum flow of water to the Participating Cities as described in Section 8(A) of this Contract. Any sale of such excess water by GTUA shall be made pursuant to a contract to be entered between GTUA and the person purchasing an amount of excess water, with such terms of sale and all other essential terms being set forth in such contract. Excess water to be sold may be transmitted through the facilities of one or more of the Participating Cities by agreement with GTUA, and each Participating City providing use of its facilities for such transmission shall be fairly compensated for such use. The net revenues of any sale of excess water (net revenues being the proceeds of sale of the excess water less any and all costs to GTUA of processing, pumping, handling, and transmitting such excess water, including any charges paid by GTUA to any Participating City for using such Participating City's transmission facilities to deliver the excess water to the purchaser) shall be deposited to a debt service fund created to pay indebtedness incurred by GTUA to finance the System, and such moneys on deposit in such debt service fund on the business day which is not less than fifteen (15) days prior to the date that the next debt service payment on the indebtedness incurred to finance the System is due shall reduce, upon a pro -rata basis determined in accordance with the established pro -rata distribution of the System debt service liability among the Participating Cities, the amount of the System monthly amortization payments due to be paid by the respective Participating Cities under their respective Facilities Contracts. Section 4.UO ALIT . The water to be delivered by GTUA to the City shall be as provided for in the GTUA/NTMWD Contract. Section 5. POINT(S) OF DELIVERY. The initial point of delivery for the Participating Cities' transmission pipeline shall be at a point approved by NTMWD, the City of McKinney, and GTUA and as further specified in the construction documents for the GTUA/Participating Cities Delivery System and Pipeline. The City of McKinney has agreed under the GTUA/McKinney Contract to provide for delivery of NTMWD water through the City of McKinney system to GTUA and the Participating Cities. The points of delivery through the systems are hereby designated as follows: (A) NTMWD Point of Delivery. NTMWD shall deliver the required quantity of water for the City's use to the City of McKinney system at the Gerrish Street metering station and/or the FM 720 metering station and/or the Highway 380 metering station. NTMWD shall have no responsibility for the handling or delivery of any quantity of water past this initial point of delivery. All duties and risk of loss or damage 'beyond this point of delivery shall rest with the City and/or GTUA and shall be governed by the terms of any separate agreements between those parties. (B) GTUA/Participating Cities Initial Point of Delivery. Said Point of Delivery is generally described as being located near or at a ground storage water tank of the City at a location identified in and subject to final engineering plans and shall be the point at which the City distribution facilities connect to the GTUA/Participating Cities storage/distribution facilities. A GTUA Master Meter, described in Section 6 below, shall be installed at or near the point of connection of the GTUA transmission 45478358.8/10304552 Page 5 WATER SUPPLY CONTRACT facilities to the City storage/distribution facilities and shall be read by the parties hereto, and said meter readings shall be the basis for calculation of all charges for water sold to the City as set forth herein. Provided, that the City may request GTUA to establish one or more additional City Points of Delivery. GTUA's agreement to establish any such additional City Point(s) of Delivery shall be subject to and based upon an engineering analysis of the impact on the System of adding such additional City Point(s) of Delivery, which analysis shall include but not be limited to making the determination that the System's ability to fulfill existing delivery commitments to all Participating Cities, at the time an additional City Point of Delivery is established, will not be impaired. All costs of establishing an additional City Point of Delivery shall be at the City's expense (unless GTUA concludes, based upon an engineering analysis, that the additional City Point of Delivery provides a benefit not only to the City; and in such case, all such benefiting entities shall bear the costs of the additional Point of Delivery in proportion to the benefit received therefrom.) Section 6. MEASURING EOUIPMENT. GTUA shall furnish and install at the GTUA/Participating Cities Point of Delivery the necessary rate of flow equipment of a standard type approved by NTMWD and GTUA for measuring properly the quantity of water delivered under the GTUA/NTMWD Contract, and such Master Meter and other equipment so installed shall become the property of NTMWD. Additionally, GTUA shall furnish and install at the City Point of Delivery the necessary rate of flow equipment of a standard type approved by NTMWD and GTUA for measuring properly the quantity of water delivered under this Contract. GTUA and the City shall have access to such metering equipment at all reasonable times, but the reading, calibration, and adjustment thereof shall be done only by the employees or agents of GTUA or NTMWD, should NTMWD assume said responsibilities. For the purpose of this Contract, the original record or reading of the meter shall be the journal or other record book of GTUA and/or NTMWD in their respective offices in which the records of the employees or agents of GTUA or NTMWD who take the reading may be transcribed. Upon written request of the City, NTMWD will provide a copy of such journal or record book, or permit it to have access to the same in the office of GTUA or NTMWD during reasonable business hours. Not more than once in any six month time period, GTUA shall test its meter if requested in writing by the City to do so, in the presence of a representative of the City, and the parties shall jointly observe any adjustments which are made to the meter in case any adjustments shall be necessary, and if the check meter hereinafter provided for has been installed, the same shall also be calibrated by the City in the presence of a representative of GTUA and the parties shall jointly observe any adjustment if necessary. If the City shall request in writing GTUA to calibrate its meter, then GTUA shall give the City notice of the time when any such calibration is to be made and if a representative of the City is not present at the time set, GTUA may proceed with calibration and adjustment in the absence of any representative of the City. If either party at any time observes a variation between the delivery meter and the check meter or meters, if any such check meter or meters shall be installed, such party will promptly notify the other party, and the parties hereto shall then cooperate to procure an immediate calibration test and joint observation of any adjustment and the same meter or meters shall then be adjusted to accuracy. Each party shall give the other party forty-eight (48) hours notice of the time of all tests of meters so that the other party may conveniently have a representative present. 45478358.8/10304552 Page 6 WATER SUPPLY CONTRACT If upon any test, the percentage of inaccuracy of any metering equipment is found to be in excess of two percent (2%), registration thereof shall be corrected for a period extending back to the time when such inaccuracy began, if such time is ascertainable, and if such time is not ascertainable, then for a period extending back one-half (1/2) of the time elapsed since the last date of calibration, but in no event further back than a period of six (6) months. If for any reason any meters are out of repair so that the amount of water delivered cannot be ascertained or computed from the reading thereof, the water delivered through the period such meters are out of service or out of repair shall be estimated and agreed upon by the parties hereto upon the basis of the best data available. For such purpose, the best data available shall be deemed to be the registration of any check meter or meters if the same have been installed and are accurately registering. Otherwise, the amount of water delivered during such period may be estimated (i) by correcting the error if the percentage of the error is ascertainable by calibration tests or mathematical calculation, or (ii) estimating the quantity of delivery by deliveries during the preceding periods under similar conditions when the meter or meters were registering accurately. The City may, at its option and its own expense, install and operate a check meter to check each meter installed by GTUA. The measurement of water for the purpose of this Contract shall be solely by GTUA's meters, except in the cases hereinabove specifically provided to the contrary. All such check meters shall be of standard make and shall be subject at all reasonable times to inspection and examination by any employee or agent of GTUA, but the reading, calibration and adjustment thereof shall be made only by the City except during any period when a check meter may be used under the provisions hereof for measuring the amount of water delivered, in which case the reading, calibration, and adjustment thereof shall be made by GTUA with like effect as if such check meter or meters had been furnished or installed by GTUA. Section 7. UNIT OF MEASUREMENT. The unit of measurement for treated water delivered under this Contract shall be 1,000 gallons of water, U.S. Standard Liquid Measure. Section 8. PRICE AND TERMS. Payments by the City. The services to be performed under this Contract by GTUA consist of the delivery of water in accordance with the provisions of this Contract and the operation and maintenance of said facilities. The services to be performed by the City of McKinney are set forth in the GTUA/McKinney Contract, with regard to the use of the City of McKinney system for the transmission of water from NTMWD and the maintenance and operation of such transmission facilities by the City of McKinney. GTUA has entered the GTUA/McKinney Contract for the benefit of the Participating Cities to achieve the transmission of potable water to such Participating Cities as contemplated and described in this Contract. Accordingly, all costs and charges incurred by GTUA under the GTUA/McKinney Contract shall be recharged to the Participating Cities, based upon each Participating City's proportionate share of water taken and/or paid for under the terms of this Contract. In return for the above consideration, the City agrees to compensate GTUA by payment of certain minimum annual sums of money, for each of which said sums GTUA agrees, if required by the City, to deliver all, or so much thereof as the City may desire, of a certain corresponding volume of water as follows: (A) For the First Annual Payment Period beginning with the next first day of October after the first delivery of water to the City, the City will take or pay for the amount of water established in Section 2 of this Contract at a rate of five cents (5¢) above the rate established for the Member Cities of NTMWD, but in no event less than 45478358.8/10304552 Page 7 WATER SUPPLY CONTRACT fifty cents (50¢) per thousand gallons. The minimum amount of water the City will be required to purchase at the above rate, or such other rate, as may be from time to time determined by GTUA, in consultation with NTMWD, shall be calculated annually for each ensuing year and such amount shall be determined in the same manner as said amount is determined for the NTMWD Member Cities. The annual minimum to be purchased during any ensuing year shall not be less than the highest total amount withdrawn from NTMWD's system by GTUA for the City during any previous year or the amount of water established in Section 2 of this Contract, whichever is greater (whether such amount is withdrawn directly from NTMWD facilities or through the City of McKinney Distribution System). hi the event that NTMWD and/or the City of McKinney provides service through GTUA for only a portion of the first or last fiscal year of this Contract, the annual minimum charge shall be prorated on the basis of the actual number of days for which service was provided divided by 365. Payment to GTUA to provide GTUA sufficient moneys to pay for the services provided under the GTUA/McKinney Contract shall be the City's proportionate share of all charges under said GTUA/McKinney Contract, such proportionate share being based upon the amount of water taken or paid for by the City relative to those amounts of water taken and/or paid for by the other Participating Cities. Payment for billed water shall be a combination of the water measured by the GTUA meter installed at the City Point of Delivery and a share of any lost and unaccounted for water. The amount of lost and unaccounted for water shall be determined by subtracting the total of all Participating Cities' individual Points of Delivery Meters from the total water delivered to the GTUA/Participating Cities System as measured by the GTUA Point of Delivery Master Meter. Said lost and unaccounted-for share shall be calculated by multiplying the amount of lost and unaccounted-for water times a ratio calculated as the water measured by the City Point of Delivery Meter to the total of all Participating Cities Individual Point of Delivery Meters. (B) The quantities and rates set out in Section 2 and Section 8 hereof may be reviewed at the end of the first full Annual Payment Period of service after the first delivery of water to the City and each year thereafter, and the minimum amount of water to be purchased, rate per 1,000 gallons and the maximum rate of delivery shall be re- determined by the Board of Directors of GTUA and NTMWD at that time in the same manner as applied to NTMWD Member Cities. Payment of the minimum annual service charge listed above shall be made each year by the City to GTUA in twelve equal monthly installments, each of which shall be due and payable on or before the 1st day of the month following the service. Payment for water delivered in any year in excess of the volume allowed for the minimum annual payment effective for that year, shall be made by the City to GTUA at the rates specified herein when in accordance with the following method: When the City exceeds the annual minimum amount during any water year, excess water will be billed in the first month following the month in which the 100 percent level was reached for the prior month's excess water and this procedure would continue to the end of the Annual Payment Period with the City making payment for all excess not previously paid for on or before the 2nd day of the month following the end of such year. 45478358.8/10304552 Page 8 WATER SUPPLY CONTRACT Liability for making payments as herein set forth shall commence on the date of the execution of this Contract. In the event that the City shall fail to make any such monthly payment or annual payment within the time herein in this Section specified, interest on such amount shall accrue at the rate of ten percent (10%) per annum from the date such payment becomes due until paid in full with the interest as herein specified. In the event such payment is not made within thirty (30) days from the date such payment becomes due, GTUA may at its option, after thirty (30) days' written notice to the City, discontinue delivery of water to the City until the amount due GTUA is paid in full with interest as herein specified. It is further provided that in the event the City shall fail to make any such monthly payment or annual payment within the time herein in this Section specified, GTUA or its successor or assigns shall have the right to petition the District Court in Grayson County for a writ of mandamus to compel compliance with this Contract. (C) The City shall also make Annual Payments to GTUA for the following: (1) a charge per thousand gallons of water which shall be for purposes of operating and maintaining the delivery and transmission facilities, including insurance, maintenance, electric service, and system management and administration; said charge shall not exceed five (5) cents per thousand gallons of water without the express consent of the City. (2) a charge per thousand gallons of water which shall be for purposes of establishing and maintaining a maintenance and repair reserve fund for major maintenance and repairs; said charge shall be established at two and one-half (2 1/2) cents per thousand gallons of water and may be reduced by GTUA when said reserve funds are determined, in GTUA's sole discretion, to be adequate for the major maintenance and repair needs of the System; provided, that the funds so reserved shall never be or become available or used to pay any indebtedness incurred to finance the System, in whole or in part, including any future improvements, extensions, or appurtenances thereto. (3) processing, pumping, and handling charges GTUA incurs on the City's behalf or for its benefit in order to deliver water under this Contract (notwithstanding those charges incurred by GTUA under the GTUAJMcKinney Contract, the City's proportionate share of which the City has agreed to pay to GTUA in monthly installments as aforestated). Section 9. TERM OF CONTRACT. This Contract shall continue in force and effect as long as the attached GTUA/NTMWD Contract is effective. Upon the expiration of this Contract, another contract satisfying the requirement of Section 9 of the attached GTUA/NTMWD Contract shall be entered by the parties, if any or all of the TWDB Loan, the TWDB State Participation Loan, or Supplemental Loan(s) is (or are, as the case may be) unpaid. Section 10. MODIFICATION. This Contract may be changed or modified only with the consent of the governing bodies of both GTUA and the City. No such changes or modifications may be made which will affect adversely the prompt delivery of treated water by GTUA to the City or the payment when due of all moneys required to be paid by the City under the terms of this Contract. Section 11. FORCE MAJEURE. If by reason of force majeure any party hereto shall be rendered unable wholly or in part to carry out its obligations under this Contract, other than the 45478358.8/10304552 Page 9 WATER SUPPLY CONTRACT obligation of the City to make the payments required under Section 8 of this Contract, then if such party shall give notice and full particulars of such force majeure in writing to the other party after occurrence of the event or cause relied on, the obligation of the party giving such notice, so far as it is affected by such force majeure, shall be suspended during the continuance of the inability then claimed, but for no longer period, and any such party shall endeavor to remove or overcome such inability with all reasonable dispatch. The term "Force Majeure" as employed herein shall mean acts of God, strikes, lockouts, or other industrial disturbances, acts of public enemy, orders of any kind of the Government of the United States or the State of Texas, or any civil or military authority, insurrection, riots, epidemics, landslides, lightning, earthquake, fires, hurricanes, storms, floods, washouts, droughts, arrests, restraint of government and people, civil disturbances, explosions, breakage or accidents to machinery, pipelines or canals, partial or entire failure of water supply, or on account of any other causes not reasonably within the control of the party claiming such inability. Section 12. INSURANCE. GTUA covenants that it will at all times keep insured such of its plants, structures, buildings, stations, machinery, equipment, apparatus, distribution pipelines and equipment, as are usually insured by corporations operating like properties, with a responsible insurance company or companies, against risks, accidents or casualties against which and to the extent insurance is usually tamed by corporations operating like properties, and will also at all times maintain worker's compensation insurance and insurance against public liability and property damages to the extent permitted by law, in a reasonable amount with a responsible insurance company or companies; provided, however, that any time while any contractor engaged in construction work shall be fully responsible therefor, or GTUA has assumed such responsibility, GTUA shall not be required to cavy such insurance. Section 13. REGULATORY BODIES AND LAWS. This Contract is subject to all applicable Federal and State Laws and any applicable permits, ordinances, rules, orders, and regulations of any local, state or federal governmental authority having or asserting jurisdiction, but nothing contained herein shall be construed as a waiver of any right to question or contest any such law, ordinance, order, rule, or regulation in any forum, having jurisdiction. Section 14. NOTICES. Unless otherwise provided herein, any notice, communication, request, reply, or advice (herein severally and collectively, for convenience, called "Notice" herein provided or permitted to be given, made, or accepted by any party to any other parry must be in writing and may be given or be served by depositing the same in the United States mail postpaid and registered or certified and addressed to the party to be notified, with return receipt requested, or by delivering the same to an officer of such party, or by prepaid telegram when appropriate, addressed to the party to be notified. Notice deposited in the mail in the manner hereinabove described shall be conclusively deemed to be effective, unless otherwise stated herein, from and after the expiration of three (3) days after it is so deposited. Notice given in any other manner shall be effective only if and when received by the party to be notified. For the purposes of notice, the addresses of the parties shall, until changed as hereinafter provided, be as follows: If to GTUA, to: Greater Texoma Utility Authority 5100 Airport Drive Denison, Texas 75020 If to the City, as follows: 45478358.8/10304552 Page 10 WATER SUPPLY CONTRACT City of Anna P.O. Box 776 Anna, Texas 75409-0776 The parties hereto shall have the right from time to time and at any time to change their respective addresses, and each shall have the right to specify as its address any other address by at least fifteen (15) days written notice to the other parties hereto. Section 15. SEVERABILITY. The parties hereto specifically agree that in case any one or more of the sections, subsections, provisions, clauses, or words of this Contract or the application of such sections, subsections, provisions, clauses, or words to any situation or circumstance should be, or should be held to be, for any reason, invalid or unconstitutional, under the laws or. constitutions of the State of Texas, or the United States of America, or in contravention of any such laws or constitutions, such invalidity, unconstitutionality, or contravention shall not affect any other sections, subsections, provisions, clauses, or words of this Contract or the application of such sections, subsections, provisions, clauses, or words to any other situation or circumstance, and it is intended that this Contract shall be severable and shall be construed and applied as if any such invalid or unconstitutional section, subsection, provision, clause, or word had not been included herein, and the rights and obligations of the parties hereto shall be construed and remain in force accordingly. Section 16. VENUE. All amounts due under this Contract, including, but not limited to, payments due under this Contract or damages for the breach of this Contract, shall be paid and be due in Grayson County, Texas, which is the County in which the principal administrative offices of GTUA are located. It is specifically agreed among the parties to this Contract that Grayson County, Texas, is the principal place of performance of this Contract. Section 17. OTHER CONDITIONS AND PROVISIONS. (A) Operation and Maintenance of System. GTUA will continuously operate and maintain the System in an efficient manner and in accordance with good business and engineering practices, and at reasonable cost and expense. GTUA assumes no responsibility for the operation or maintenance of any portion of the City of McKinney's system or the City's system. (B) Title to Water: Indemnification. Title to all water supplied to the City shall be in NTMWD up to the NTMWD Point of Delivery as set forth in Section 5(A) herein, at which point title shall pass to GTUA and subsequently to the City. NTMWD, GTUA, and the City shall save and hold each other harmless from all claims, demands, and causes of action which may be asserted by anyone on account of the transportation and delivery of said water while title remains in such party, said indemnification to include all costs and attorneys fees associatcd with the defense of said claims. 45478358.8/10304552 Page 11 WATER SUPPLY CONTRACT (C) Operating Expenses of the City. The City represents and covenants that all payments to be made by it under this Contract shall constitute reasonable and necessary "operating expenses" of its system, as defined in Chapter 1502 of the Texas Government Code, as amended, and that all such payments will be made from the revenues of its system. The City represents and has determined that the treated water supply to be obtained from the System, including the Projects and other System facilities, is absolutely necessary and essential to the present and future operation of its water system and is the only available and adequate source of supply of treated water. Therefore and accordingly, all payments required by this Contract to be made by the City shall constitute reasonable and necessary operating expenses of its respective system as described above, with the effect that the obligation to make such payments from revenues of such systems shall have priority over any obligation to make any payments from such revenues (whether of principal, interest, or otherwise) with respect to all bonds or other obligations heretofore or hereafter issued by the City. (D) The City's Rates for Waterworks System. The City agrees throughout the term of this Contract to continuously operate and maintain its waterworks system, and to fix and collect such rates and charges for water services to be supplied by its waterworks system as aforesaid as will produce revenues in an amount equal to at least (i) all of its payments under this Contract and (ii) all other amounts required to be paid from said revenues by the provisions of the ordinances or resolutions authorizing its revenue bonds or other obligations now or hereafter outstanding and file appropriate financial reports related to the City system including annual audits. It is further provided that in the event the City shall fail to fix and collect such rates and charges as will produce revenues in an amount equal to at least all of its payments to be made under this Contract, GTUA or its successor or assigns shall have the right to petition the District Court in Grayson County for a writ of mandamus to compel compliance with this Contract. (E) No Third Party Beneficiaries. This Contract has been entered into by and between the parties below and the rights, benefits, duties and obligations assumed hereunder are solely for the benefit of the parties hereto. No right or benefits are conferred upon any person or entity not a party hereto. It being the express intent of the parties that no rights or benefits be created or conferred upon anyone not a signatory to this Contract. Section 18. WATER CONSERVATION. The City agrees to adopt and enforce any and all ordinances generally related to water conservation as may be adopted or recommended by the Board of Directors of GTUA or NTMWD or required by the Texas Commission on Environmental Quality and the Texas Water Development Board. 45478358.8!10304552 Page 12 WATER SUPPLY CONTRACT Section 19. GTUA'S ATTORNEYS' FEES. In the event GTUA prevails in any suit filed to enforce the City's obligations under this Contract, GTUA shall be entitled to recover from the City its attorneys' fees incurred in connection with the prosecution of said suit. 45478358.8/10304552 Page 13 WATER SUPPLY CONTRACT IN WITNESS WHEREOF, the parties hereto acting under authority of their respective governing bodies have caused this Contract to be duly executed in several counterparts, each of which shall constitute an original, all as of the day and year first above written, which is the date of this Contract. TEXOMA UTILITY AUTHORITY Denison, By: j Wk�l Preside t, Board of Directors Attest: GREATER TEXOMA UTILITY AUTHORITY Denison, Texas By: - ' t X4 Secretary, of Directors Accepted and agreed to: J ✓'' ayor j City of Anna, Texas Attest: r...- `City AffEinistrator City of Anna, Texas 45478358.7/10304552 S-1 WATER SUPPLY CONTRACT EXHIBIT A GTUA/NTMWD CONTRACT 45478358.8/10304552 Exhibit A WATER SUPPLY CONTRACT NORTH TEXAS MUNICIPAL WATER DISTRICT GREATER TEXOMA UTILITY AUTHORITY POTABLE WATER SUPPLY CONTRACT THE STATE OF TEXAS § THE COUNTY OF COLLIN § THIS (the "Contract") made and entered into as of this the day of 2004, by and between the North Texas Municipal Water District ("NTMWD' and the Greater Texoma Utility Authority ("GTUA" or "Customer"), each a conservation and reclamation district created under Article 16, Section 59, of the Texas Constitution: WITNESSETH: WHEREAS, NTMWD and Customer are authorized to enter into this Contract pursuant to Texas Government Code, Chapter 791, the Interlocal Cooperation Act, and other applicable laws; and WHEREAS, Customer is contracting on behalf of the City of Anna, City of Howe, City of Melissa and City of Van Alstyne ("GTUA Alliance Cities"); and WHEREAS, Customer is desirous of obtaining an adequate and dependable water supply to provide potable water service to the GTUA Alliance Cities; and WHEREAS, NTMWD has transmission facilities under construction that will provide adequate water capacity for GTUA Alliance Cities and the City of McKinney; and WHEREAS, the City of McKinney has transmission facilities near a desirable point of connection to the proposed GTUA transmission facilities to provide potable water service to GTUA Alliance Cities; and WHEREAS, NTMWD has long range plans to construct transmission facilities near the GTUA Alliance Cities' proposed point of delivery to provide potable water service directly to GTUA Alliance Cities; and WHEREAS, the City of McKinney has worked with the GTUA Alliance Cities to assess average day and maximum daily requirements until N.TMWD's future transmission facilities are constructed to provide potable water service directly to GTUA Alliance Cities; and WHEREAS, the City of McKinney, based on joint projections and system modeling, has indicated that sufficient capacity is available to meet the needs of the GTUA Alliance Cities until NTMWD's future transmission facilities are constructed and is willing to transport potable water for Customer through its water distribution system; and WHEREAS, it is necessary, convenient, and advisable for Customer to purchase potable water from NTMWD on an interim basis, transported through the City' of McKinney's distribution system, and to secure a more permanent source from NTMWD when available. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, NTMWD agrees to furnish and Customer agrees to pay for water from NTMWD upon the terms and conditions and for the consideration hereinafter set forth, to wit: Section 1. DEFINITION OF TERMS. The following terms and expressions as used in this Contract, unless the context clearly shows otherwise, shall have the following meanings: (A) "Annual Payment" means the amount of money to be paid to NTMWD by Customer during each Annual Payment Period. (B) "Annual Payment Period" means NTMWD's fiscal year, which currently begins on October 1 of each calendar year and ends on September 30 of the next following calendar year, but which may be any twelve (12) consecutive month period fixed by NTMWD. (C) "Customer" means the Greater Texoma Utility Authority, the Contracting Party on behalf of the City of Anna, City of Howe, City of Melissa and City of Van Alstyne. (D) "NTMWD" means the North Texas Municipal Water District as defined in the preamble to this Contract. (E) "Member City" means the Cities of Allen, Farmersville, Forney, Frisco, Garland, McKinney, Mesquite, Plano, Princeton, Richardson, Rockwall, Royse City and Wylie. (F) "MGD" is an abbreviation for "million gallons of water per day" and means a quantity of water during a period of time expressed for convenience in terms of an average annual daily quantity during an Annual Payment Period. (G) "System" means collectively the existing system and the future improvements of NTMWD for water storage, treatment, transportation, distribution, and supply, including all dams, reservoirs, and other properties or interests therein wherever located. Said terms do not include any of NTMWD's facilities which provide wastewater treatment or disposal services, or solid waste disposal services, of any kind. Said terms do not include any facilities acquired or constructed by NTMWD with the proceeds from the issuance of "Special Facilities Bonds", which are payable from any source, Contract, or revenues whatsoever, other than revenues from the System. (H) "Water Year" means the period of August 1 of each calendar year through July 31 of the next following calendar year or such other twelve (12) month period designated by NTMWD to all Members and Customers. Pa, -e 2 Section 2. QUANTITY. NTMWD agrees to sell and to deliver treated water under this Contract to Customer at the NTMWD Point of Delivery as described in Section 5(A) hereof, and Customer agrees to take at said Point of Delivery water required for use by Customer during the term of this Contract, including treated water for Customer's own use and for distribution to all customers served by Customer's water distribution system, whether inside or outside its boundaries. The quantity of water sold to Customer shall be measured as described in Section 5(B) herein. It is specifically provided, however, that after the Contract Date, Customer shall not enter into, renew, or amend with regard to volume of water to be supplied, any agreement to supply any such treated water for use outside the boundaries of the GTUA Alliance Cities identified in above or as may be hereinafter approved by NTMWD or the area of said Cities statutory extraterritorial jurisdiction unless each such agreement is approved by the Board of Directors of NTMWD (which approval shall not be unreasonably withheld unless the projected additional volume affects NTMWD's ability to provide service to others or conflicts with law or NTMWD Policy). Customer shall not become a party to any contract for the sale of treated water, which would violate or be inconsistent with the provisions of this Contract. Should Customer develop plans to seek water supplies from an entity other than NTMWD, Customer agrees to give NTMWD sixty (60) days written notice of such intention and to give NTMWD an opportunity to address such needs or concerns. The acquisition of, or use of, water from other sources shall never obviate or reduce the obligations, duties and responsibilities of Customer to make payments specified in this Contract. NTMWD will use its best efforts to furnish and remain in position to furnish treated water sufficient for all reasonable treated water requirements of Customer, provided however that its obligation shall be limited to the amount of treated water available to it from the System during normal operation which will not impair its obligations to its cities. The current maximum rate of delivery shall not exceed 8,000 gallons per minute, which is consistent with the capabilities and abilities of NTMWD System facilities and the McKinney facilities and it is understood that the Board of Directors from time to time may adjust the maximum rate of delivery on an equitable and uniform basis to all Customer Cities. If treated water from the System must be rationed, such rationing shall, within the limits permitted by law, be done by NTMWD proportionately based upon each Customer City's annual minimum. Section 3. OTHER CONTRACTS. NTMWD reserves the right to supply treated water from the System to Additional or Other Contracting Parties as determined by NTMWD's Board of Directors. Section 4. QUALITY. The water to be delivered by NTMWD and received by Customer shall be treated water from the System. Customer has satisfied itself that such water will be suitable for its needs, but NTMWD is obligated to treat such water so as to meet the standards of all State and Federal agencies having jurisdiction over water quality. NTMWD and Customer shall cooperate, each within its legal powers, in preventing, to the extent practicable, the pollution and contamination of the reservoirs and watersheds from which System water is obtained. Section 5. POINT(S) OF DELIVERY. Currently Customer does not have pipeline facilities located within NTMWD's service area to provide for delivery of potable water directly from NTMWD. The City of McKinney has agreed to provide for delivery of NTMWD water through the McKinney system to Customer until such time as future Page 3 NTMWD transmission facilities are constructed. The points of delivery through the system are hereby designated as follows: (A) NTMWD Point of Delivery. NTMWD shall deliver the required quantity of water for Customer's use to the McKinney system at the Gerrish Street metering station and/or the FM 720 metering station. NTMWD shall have no responsibility for the handling or delivery of any quantity of water past this initial point of delivery. All duties and risk of loss or damage beyond these points of delivery shall rest with Customer and/or McKinney and shall be governed by the terms of any separate agreements between those parties. (B) Customer Point of Delivery. The Customer Point of Delivery is generally described as being located near the intersection of State Highway 5 and FM 543, subject to final engineering analysis, engineering design, and approval of both GTUA and NTMWD. A meter, described in Section 6 below, shall be installed at the point of connection of Customer owned transmission mains to the approved water source or approved point of delivery of said water which is anticipated to be near the above reference point of delivery. Said meter shall be installed in a manner approved by all contracting parties and, shall be read by the parties, and said meter readings shall be the basis for calculation of all charges for water sold to Customer as set forth in Section 8 herein. (C) Future Point of Delivery. At sometime in the future NTMWD's transmission system may be extended to provide potable water service directly to Customer. At such time as said facilities are in operation, Customer may, at its sole expense and upon obtaining approval of NTMWD, construct a pipeline and related facilities, including a meter station, to that NTMWD facility, at a point to be designated by NTMWD. At that time, a standard Customer Service Contract shall be developed to provide for this point to be the point of delivery and this Contract shall become null and void. No obligation is created or imposed upon NTMWD hereunder to construct any projected facilities and the time for any proposed construction shall be at NTMWD's sole discretion. Section 6. MEASURING EQUIPMENT. Customer shall furnish and install at its own expense at the Customer Point of Delivery the necessary rate of flow equipment of a standard type approved by NTMWD for measuring properly the quantity of water delivered under this agreement and such meter and other equipment so installed shall become the property of NTMWD. Customer shall have access to such metering equipment at all reasonable times, but the reading, calibration, and adjustment thereof shall be done only by the employees or agents of NTMWD. For the purpose of this agreement, the original record or reading of the meter shall be the journal or other record book of NTMWD in its office in which the records of the employees or agents of NTMWD who take the reading may be transcribed. Upon written request of Customer, NTMWD will provide a copy of such journal or record book, or permit it to have access to the same in the office of NTMWD during reasonable business hours. Not more than once in any six month time period, NTMWD shall test its meter if requested in writing by Customer to do so, in the presence of a representative of Customer, and the parties shall jointly observe any adjustments which are made to the Page 4 meter in case any adjustments shall be necessary, and if the check meter hereinafter provided for has been installed, the same shall also be calibrated by Customer in the presence of a representative of NTMWD and the parties shall jointly observe any adjustment if necessary. If Customer shall request in writing NTMWD to calibrate its meter, then NTMWD shall give Customer notice of the time when any such calibration is to be made and if a representative of Customer is not present at the time set, NTMWD may proceed with calibration and adjustment in the absence of any representative of Customer. If either party at any time observes a variation between the delivery meter and the check meter or meters, if any such check meter or meters shall be installed, such party will promptly notify the other party, and the parties hereto shall then cooperate to procure an immediate calibration test and joint observation of any adjustment and the same meter or meters shall then be adjusted to accuracy. Each party shall give the other party forty- eight (48) hours notice of the time of all tests of meters so that the other party may conveniently have a representative present. If upon any test, the percentage of inaccuracy of any metering equipment is found to be in excess of two percent (2%), registration thereof shall be corrected for a period extending back to the time when such inaccuracy began, if such time is ascertainable, and if such time is not ascertainable, then for a period extending back one-half (1/2) of the time elapsed since the last date of calibration, but in no event further back than a period of six (6) months. If for any reason any meters are out of repair so that the amount of water delivered cannot be ascertained or computed from the reading thereof, the water delivered through the period such meters are out of service or out of repair shall be estimated and agreed upon by the parties hereto upon the basis of the best data available. For such purpose, the best data available shall be deemed to be the registration of any check meter or meters if the same have been installed and are accurately registering. Otherwise, the amount of water delivered during such period may be estimated (i) by correcting the error if the percentage of the error is ascertainable by calibration tests or mathematical calculation, or (ii) estimating the quantity of delivery by deliveries during the preceding periods under similar conditions when the meter or meters were registering accurately. Customer may, at its option and its own expense, install and operate a check meter to check each meter installed by NTMWD. The measurement of water for the purpose of this agreement shall be solely by NTMWD's meters, except in the cases hereinabove specifically provided to the contrary. All such check meters shall be of standard make and shall be subject at all reasonable times to inspection and examination by any employee or agent of NTMWD, but the reading, calibration and adjustment thereof shall be made only by Customer except during any period when a check meter may be used under the provisions hereof for measuring the amount of water delivered, in which case the reading, calibration, and adjustment thereof shall be made by NTMWD with like effect as if such check meter or meters had been furnished or installed by NTMWD. Section 7. UNIT OF MEASUREMENT. The unit of measurement for treated water delivered under this Contract shall be 1,000 gallons of water, U.S. Standard Liquid Measure, Page 5 Section 8. PRICE AND TERMS. The service to be performed under this Contract by NTMWD consists of the delivery of water in accordance with the provision of this Contract. In return for the above consideration, Customer agrees to compensate NTMWD by payment of certain minimum annual sums of money, for each of which said sums NTMWD agrees, if required by Customer, to deliver all, or so much thereof as Customer may desire, of a certain corresponding volume of water as follows: (A) For the First Annual Payment Period beginning with the next first day of October after the first delivery of water to Customer, Customer will take or pay for 237,250,000 gallons of water (650,000 gallons per day) at a rate of five cents (5¢) above the rate established for the Member Cities of NTMWD, but in no event less than fifty cents (50¢) per thousand gallons. Any water delivered in excess of the amount allowed for the annual minimum will be purchased at a rate of five cents (5¢) per thousand gallons above the amount charged NTMWD Member Cities for excess water. The minimum amount of water Customer will be required to purchase at the above rate, or such other rate, as may be from time to time determined by NTMWD, shall be calculated annually for each ensuing year and such amount shall be determined in the same manner as said amount is determined for the Member Cities. The annual minimum to be purchase during any ensuing year shall not be less than the highest total amount withdrawn from NTMWD's system by Customer during any previous year or 237,250,000 gallons, whichever is greater. In the event that NTMWD provides service for only a portion of the first or last fiscal year of the Contract, the annual minimum charge shall be prorated on the basis of the actual number of days for which service was provided divided by 365. (B) The quantities and rates set out in Section 2 and Section 8 hereof may be reviewed at the end of the first full Annual Payment Period of service after the first delivery of water to Customer and each year thereafter, and the minimum amount of water to be purchased, rate per 1,000 gallons and the maximum rate of delivery shall be re -determined by the Board of Directors of NTMWD at that time in the same manner as applied to NTMWD Member Cities. Payment of the minimum annual service charge listed above shall be made each year by Customer to NTMWD in twelve equal monthly installments, each of which shall be due and payable on or before the 10th day of the month following the service. Payment for water delivered in any year in excess of the volume allowed for the minimum annual payment effective for that year, shall be made by Customer to NTMWD at the rates specified herein when in accordance with the following method: When Customer exceeds the annual minimum amount during any water year, excess water will be billed in the first month following the month in which the 100 percent level was reached for the prior month's excess water and this procedure would continue to the end of the Annual Payment Period with Customer making payment for all excess not previously paid for on or before the 10th day of the month following the end of such year. Page 6 Liability for making payments as herein set forth shall commence on the date water service is initiated. In the event that Customer shall fail to make any such monthly payment or annual payment within the time herein in this section specified, interest on such amount shall accrue at the rate of ten percent (10%) per annum from the date such payment becomes due until paid in full with the interest as herein specified. In the event such payment is not made within thirty (30) days from the date such payment becomes due, NTMWD may at its option discontinue delivery of water to Customer until the amount due NTMWD is paid in full with interest as herein specified. Section 9. TERM OF CONTRACT. This Contract shall continue in force and effect throughout the useful life of the Customer facilities to be funded by the Texas Water Development Board or upon the completion of any future extension of NTMWD's transmission system to allow potable water service directly to Customer whichever shall occur earlier. Upon completion of said facilities, a standard Customer City Contract shall be developed and this Contract shall become null and void. Section 10. MODIFICATION. This Contract may be changed or modified only with the consent of the governing bodies of both NTMWD and Customer. No such changes or modifications may be made which will affect adversely the prompt payment when due of all moneys required to be paid by Customer under the terms of this Contract. Section 11. FORCE MAJEURE. If by reason of force majeure any party hereto shall be rendered unable wholly or in part to carry out its obligations under this Contract, other than the obligation of Customer to make the payments required under Section 8 of this Contract, then if such party shall give notice and full particulars of such force majeure in writing to the other party within a reasonable time after occurrence of the event or cause relied on, the obligation of the party giving such notice, so far as it is affected by such force majeure, shall be suspended during the continuance of the inability then claimed, but for no longer period, and any such party shall endeavor to remove or overcome such inability with all reasonable dispatch. The term "Force Majeure" as employed herein shall mean acts of God, strikes, lockouts, or other industrial disturbances, acts of public enemy, orders of any kind of the Government of the United States or the State of Texas, or any civil or military authority, insurrection, riots, epidemics, landslides, lightning, earthquake, fires, hurricanes, storms, floods, washouts, droughts, arrests, restraint of government and people, civil disturbances, explosions, breakage or accidents to machinery, pipelines or canals, partial or entire failure of water supply, or on account of any other causes not reasonably within the control of the party claiming such inability. Section 12. INSURANCE. NTMWD agrees to carry and arrange for fire, casualty, public liability, and/or other insurance, including self insurance, on die System for purposes and in amounts which, as determined by NTMWD, ordinarily would be carried by a privately owned utility company owning and operating such facilities, except that NTMWD shall not be required to provide liability insurance except to insure itself against risk of loss due to claims for which it can, in the opinion of NTMWD's legal counsel, be liable under the Texas Tort Claims Act or any similar law or judicial decision. Such insurance will provide, to the extent feasible and practicable, for the restoration of damaged or destroyed properties and equipment, to minimize the interruption of the services of such facilities. All premiums for such insurance shall constitute an Operation and Maintenance Expense of the System. The insurance coverage Page 7 does not extend to any facility owned by Customer. Section 13. REGULATORY BODIES AND LAWS, This Contract is subject to all applicable Federal and State Laws and any applicable permits, ordinances, rules, orders, and regulations of any local, state or federal governmental authority having or asserting jurisdiction, but nothing contained herein shall be construed as a waiver of any right to question or contest any such law, ordinance, order, rule, or regulation in any forum, having jurisdiction. Section 14. NOTICES. Unless otherwise provided herein, any notice, communication, request, reply, or advice (herein severally and collectively, for convenience, called "Notice" herein provided or permitted to be given, made, or accepted by any party to any other party must be in writing and may be given or be served by depositing the 'same in the United States mail postpaid and registered or certified and addressed to the party to be notified, with return receipt requested, or by delivering the same to an officer of such party, or by prepaid telegram when appropriate, addressed to the party to be notified. Notice deposited in the mail in the manner hereinabove described shall be conclusively deemed to be effective, unless otherwise stated herein, from and after the expiration of three (3) days after it is so deposited. Notice given in any other manner shall be effective only if and when received by the party to be notified. For the purposes of notice, the addresses of the parties shall, until changed as hereinafter provided, be as follows: If to NTMWD, to: Executive Director North Texas Municipal Water District P.O. Box 2408 Wylie, Texas 75098 If to Customer, as follows: General Manager Greater Texoma Utility Authority 5100 Airport Drive Denison, Texas 75020 The parties hereto shall have the right from time to time and at any time to change their respective addresses and each shall have the right to specify as its address any other address by at least fifteen (15) days written notice to the other parties hereto. Section 15. SEVERABILITY. The parties hereto specifically agree that in case any one or more of the sections, subsections, provisions, clauses, or words of this Contract or the application of such sections, subsections, provisions, clauses, or words to any situation or circumstance should be, or should be held to be, for any reason, invalid or unconstitutional, under the laws or constitutions of the State of Texas or the United States of America, or in contravention of any such laws or constitutions, such invalidity, unconstitutionality, or contravention shall not affect any other sections, subsections, provisions, clauses, or words of this Contract or the application of such sections, subsections, provisions, clauses, or words to any other situation or circumstance, and it is Page 9 intended that this Contract shall be severable and shall be construed and applied as if any such invalid or unconstitutional' section, subsection, provision, clause, or word had not been included herein, and the rights and obligations of the parties hereto shall be construed and remain in force accordingly. Section 16. VENUE. All amounts due under this Contract, including, but not limited to, payments due under this Contract or damages for the breach of this Contract, shall be paid and be due in Collin County, Texas, which is the County in which the principal administrative offices of NTMWD are located. It is specifically agreed among the parties to this Contract that Collin County, Texas, is a principal place of performance of this Contract. Section 17. OTHER CONDITIONS AND PROVISIONS. (A) Operation and Maintenance of System. NTMWD will continuously operate and maintain the System in an efficient manner and in accordance with good business and engineering practices, and at reasonable cost and expense. NTMWD assumes no responsibility for the operation or maintenance of any portion of the McKinney or Customer system. (B) Title to Water: Indemnification. Title to all water supplied to Customer shall be in NTMWD up to the NTMWD Point of Delivery as set forth in Section 5(A) herein, at which point title shall pass to Customer, except that NTMWD reserves the right of re -use of treated effluent resulting from the use of water by NTMWD, its customers or Customer, to the extent authorized by the State of Texas. NTMWD and Customer shall save and hold each other harmless from all claims, demands, and causes of action which may be asserted by anyone on account of the transportation and delivery of said water while title remains in such party, said indemnification to include all costs and attorneys fees associated with the defense of said claims. Customer expressly agrees to indemnify and hold harmless NTMWD from all said claims, demands, and causes of action which may be asserted by any customer, or other person to whom Customer supplies water, or otherwise arising from McKinney's delivery, or failure to deliver, water to Customer; any breach of any agreement between McKinney and Customer; or from any party's negligence or breach of duty related to performance of any duty at common law or any law, regulation, or statute of the State of Texas or United States of America, or otherwise arising by virtue of any contract between those parties. (C) Operating Expenses of Customer. Customer represents and covenants that all payments to be made by it under this Contract shall constitute reasonable and necessary "operating expenses" of its system, as defined in Section 1502.056, Texas Government Code, and that all such payments will be made from the revenues of its system. Customer represents and has determined that the treated water supply to be obtained from the System, including the Projects and other System facilities, is absolutely necessary and essential to the present and future operation of its water system and is the only available and adequate source of supply of treated water. Accordingly, all payments required by this Contract to be made by Customer shall constitute reasonable and necessary operating expense of its respective system as described above, with the effect that the obligation to make such payments from revenues of such systems shall have priority over any obligation to make any payments Page 9 from such revenues (whether of principal, interest, or otherwise) with respect to all bonds or other obligations heretofore or hereafter issued by Customer. (D) Customer's Rate for Waterworks System. Customer agrees throughout the term of this Contract to continuously operate and maintain its waterworks system, and to fix and collect such rates and charges for water services to be supplied by its waterworks system as aforesaid as will produce revenues in an amount equal to at least (i) all of its payments under this Contract and (ii) all other amounts required to be paid from said revenues by the provisions of the ordinances or resolutions authorizing its revenue bonds or other obligations now or hereafter outstanding and file appropriate financial reports related to the Customer system including annual audits. (E) No Third Party Beneficiaries. This contract has been entered into by and between the parties below and the rights, benefits, duties and obligations assumed hereunder are solely for the benefit of the parties hereto. No right or benefits are conferred upon any person or entity not a party hereto. It being the express intent of the parties that no rights or benefits be created or conferred upon anyone not a signatory to this agreement. Section 18. WATER CONSERVATION. Customer agrees to adopt and enforce any and all ordinances generally related to water conservation as may be adopted or recommended by the Board of Directors of NTMWD or required by the Texas Commission on Environmental Quality and/or may be adopted or recommended by the Board of Directors of NTMWD. Page 10 IN WITNESS WHEREOF, the parties hereto acting under authority of their respective governing bodies have caused this Contract to be duly executed in several counterparts, each of which shall constitute an original, all as of the day and year first above written, which is the date of this Contract. BORTj�^TEXAS MUNI,�PWATER DISTRICT MARVIN FULLER, PRESIDENT ATTEST: 3 YT ylutwy (SEAL) GREATER T MA TI,LI /Y7THORITY By: fn (//,V� PRESIVEM,, BOARD OF DIRECTORS ATTEST: SECRETARY, BOARD OF DI CTORS (SEAL) Page 11 EXHIBIT B GTUAIMCKINNEY CONTRACT 45478358.8/10304552 Exhibit B WATER SUPPLY CONTRACT Greater Texoma Utility Authority — City of McKinney POTABLE WATER PASS THROUGH & PUMPING AGREEMENT THE STATE OF TEXAS THE COUNTY OF COLLIN THIS AGREEMENT (the "Agreement") made and entered into as of this the h day of November, 2004; by and between the Greater. Texoma Utility Authority ("GTUA'), a conservation and reclamation district created under Article XVI, Section 59, of the Texas Constitution, the City of Anna, Texas ("Anna"), a Texas municipal corporation, the City of Howe, Texas ("Howe"), a Texas municipal corporation, the City of Melissa, Texas ("Melissa's, a Texas municipal corporation, the City of Van Alstyne ("Van Alstyne"), a Texas municipal corporation and the City of McKinney, Texas ("McKinney), a Texas municipal corporation. WITNESSETH: WHEREAS, GTUA has previously served as the coordinating entity to secure Texas Water Development Board ("TWDB") loans on behalf of participating Texas cities including, but not limited to Anna, Howe, Melissa, and Van Alstyne (the "Participating Cities"), for the construction of a water transmission main to deliver surface water to said Participating Cities, all of whom are located in either Collin County or Grayson County, Texas; WHEREAS, said TWDB loans have been approved subject to execution of a water supply agreement and other similar contingencies; WHEREAS, the North Texas Municipal Water District ("NTMWD") has agreed to provide a surface supply of water to GTUA for sale to the Participating Cities, by transporting said water from NTMWD's transmission and delivery facilities to various points of delivery in McKinney's water distribution system until such time as NTMWD constructs an appropriate transmission line in closer proximity to a point where GTUA can access the water from a NTMWD transmission line directly; WHEREAS, it has been determined that the most efficient mechanism for GTUA to receive said transported water from NTMWD is through a cooperative arrangement with McKinney through which McKinney will receive and flow said water to a point of connection to GTUA facilities; WHEREAS, GTUA and NTMWD have entered into an agreement (the "GTUA/NTMWD Agreement') for the delivery and purchase of said water, a copy of which is attached hereto as "Exhibit A" and made a part hereof as if incorporated fully herein; POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 WHEREAS, GTUA and McKinney have analyzed various options and system capabilities, including the construction by GTUA of a new transmission line funded by NTMWD, TWDB, or other GTUA sources which will become an extension of the McKinney water transmission system; WHEREAS, McKinney agrees, subject to available capacity of water from NTMWD, under its agreement with McKinney, and the payment of the direct and indirect operational, maintenance, and necessary capital costs incurred by McKinney (and as enumerated in this agreement) by virtue of the transportation of GTUA's purchased water, to transport potable water for GTUA for ultimate delivery to the Participating Cities through its water distribution system including receiving said water from NTMWD and pumping said water to a point of delivery to GTUA; WHEREAS, GTUA, Participating Cities and McKinney are authorized to enter into this Agreement pursuant to the Texas Government Code, Chapter 791, the Interlocal Cooperation Act, and other applicable laws; WHEREAS, McKinney is desirous of assisting GTUA and the Participating Cities in obtaining an adequate and dependable water supply; NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained: (i) Subject to and conditioned upon GTUA's and Participating Cities' continuous performance under this Agreement, McKinney agrees to receive, and pump the hereinafter described volumes of water to GTUA's designated point of delivery as specified herein; and GTUA and the Participating Cities, jointly and severally, agree to pay for the delivery and transmission water by McKinney and for all direct and indirect costs of transmission of such water (including but not limited to the costs of transmission arising under the NTMWD/McKinney Agreement) regardless of any default by NTMWD or GTUA under the GTUA/NTMWD Agreement, upon the terms and conditions and for the consideration hereinafter set forth; (ii) GTUA and the participating Cities, jointly and severally, agree to pay to McKinney the amounts provided for in Section 7 hereinafter, but specifically including the direct and indirect costs of transmission of such water to GTUA. Section 1. DEFINITION OF TERMS. The following terms and expressions as used in this Agreement, unless the context clearly shows otherwise, shall have the following meanings: a. "Anna" means the City of Anna, Texas. b. "City Engineer" shall mean the City Engineer of McKinney, or the Designee or representative of the City Engineer of McKinney. C. `Eligible Oversize Costs" shall mean that portion of the cost of the New Transmission Line exceeding the standard waterline size requirements of McKinney (however, excluding those portions of the New Transmission Line POTABLE WATER PASS THROUGH & PUMPING AGREEMENT . November 23, 2004 2 which exceed the standard waterline size requirements but which are required solely to serve GTUA and the Participating Cities) and only for those components of costs for which McKinney reimburses developers under its ordinances and policies (and particularly excluding easement acquisition costs). d. "Eligible Base Size / Pro -rata Reimbursable Costs" shall mean the costs recoverable from third -party developers under the McKinney Subdivision Ordinance. e. "Engineer" shall mean the Consulting Engineer with whom GTUA enters into an agreement to design the improvements contemplated by the TWDB Loan, the TWDB State Participation Loan, and other financing sources. f. "GTUA' means the Greater Texoma Utility Authority, a conservation and reclamation district created under Article XVI, Section 59, of the Texas Constitution. g. "Howe" means the City of Howe, Texas. h. "McKinney" means the City of McKinney, Texas. i. "Melissa" means the City of Melissa, Texas. j. "MGD" is an abbreviation for "million gallons of water per day" and means a quantity of water during a period of time expressed for convenience in terms of an average annual daily quantity during an Annual Payment Period. k. "New Transmission Line" means that variable -sized water transmission pipeline with diameters ranging from 36" to 20", installed at its cost by GTUA to the McKinney water transmission system; however specifically excluding any portion of the line (as depicted on McKinney's Water Master Plan as a future, developer - constructed transmission line) designed and constructed by third -party developers. 1. "NTMWD" means the North Texas Municipal Water District, as defined in the preamble to this Agreement. In. "NTMWD loan" means any financing obtained from North Texas Municipal Water District to construct the New Transmission Line on the McKinney water system. n. "Participating Cities" shall mean the cities which execute and approve agreements representing participation in the objectives contemplated and described in this Agreement, including, but not limited to, the Cities of Anna, Texas, Howe, Texas, Melissa, Texas, Van Alstyne, Texas, and other Texas cities. POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 3 o. "System" means collectively the existing system and the future improvements of GTUA for water storage, treatment, transportation, distribution, and supply, as contemplated by this Agreement and as more fully detailed by the TWDB loan application and/or subsequent engineering plans approved by the parties hereto. P. "TWDB Loan" shall mean the Texas Water Development Board loan approved by the TWDB on March 19, 2003 and extended by the TWDB on January 21, 2004. q. "TWDB State Participation Loan" shall mean the state participation portion of the loan approved March 19, 2003 and extended by the TWD13 on January 21, 2004. r. "Van Alstyne" means the City of Van Alstyne, Texas. S. "Water Year" means the period of August 1 of each calendar year through July 31 of the next following calendar year or such other twelve (12) month period designated by City. Section 2. QUANTITY. McKinney agrees to use its water transmission and distribution system to transmit water received from NTMWD to the GTUA point(s) of delivery subject to the following conditions: a. The maximum volume of water delivered per day shall not exceed the amounts depicted in Column 1 entitled "Projected Average Surface Water Demand of Participating Cities" on Exhibit B, attached hereto for all purposes. The rates for the volumes depicted on Exhibit B, Column 1 shall be as shown in the water rate line (entitled "Column Water Rate") of Column 1. In addition to the maximum volumes described on Exhibit B, Column 1, and in such volumes (which volumes include those depicted in Column 1) depicted on Column 2 and at the rates shown on Exhibit B, rate line (entitled "Column Water Rate) of Column 2, GTUA may, at the sole discretion of McKinney, receive additional amounts purchased by GTUA from NTMWD, IF such volumes are available for delivery based on McKinney's day-to-day demand for water. If additional amounts are desired by GTUA above those amounts shown on Exhibit B, Column 2, GTUA shall make a written request for such additional amounts forty-eight (48) hours prior to any requested delivery. If McKinney provides volumes in any amounts exceeding Exhibit B, Column 1, McKinney may unilaterally reduce any such additional amounts in its sole discretion upon delivery of twelve (12) hours notice by fax, email, or phone to GTUA. Except during those periods Where McKinney has determined that available volumes do not exist due to McKinney's day-to-day demand as described in this Section 2, McKinney shall not reduce available volumes to GTUA below the volumes shown on Column 2 of Exhibit B, during any year. For subsequent years, the applicable volumes to be shown on Column 1, Exhibit B shall be added to Column 1 after calculating the average daily volumes received over the preceding 12 months; however in no event shall such Projected Average Surface Water Demand volume for a subsequent year POTABLE WATER PASS THROUGH & PUMPING AGREEMENT. - November 23, 2004 4 exceed the corresponding amount shown on Exhibit B, Column 2. GTUA and Participating Cities shall enact and enforce a Drought Contingency Plan which shall apply concurrently with any plan adopted by McKinney. GTUA and Participating Cities shall provide McKinney with written notice of any implementation of such Drought Contingency Plan in any year of this Agreement. b. Participating Cities shall be permitted to maintain existing well capacity as depicted on Exhibit C, attached hereto and incorporated for all purposes, plus additional wells begun subsequent to the execution of this Agreement but prior to the initial flow of water through the System, throughout the term hereof to provide for a portion of the Participating Cities' needs and to reduce spikes in peak day usage. GTUA and Participating Cities shall have the right to construct additional wells if McKinney elects not to -provide GTUA and Participating Cities with volumes in excess of the amounts provided for in Column 1, Exhibit B or if GTUA and Participating Cities' demand exceeds the capacity of the McKinney transmission system to deliver water in volumes exceeding Exhibit B, Column 3. C. All water transported and delivered to GTUA hereunder shall not impair the capacity or ability of McKinney to provide for the requirements of its existing and future citizens and the projected utility infrastructure needs arising from development during the term of this Agreement. Extensions of the term of this Agreement shall be analyzed, in addition to other factors, on the effect that the continuation of this Agreement has on McKinney's capacity and ability to serve its citizens and customers. d. McKinney shall designate Point(s) of Delivery during the term of this Agreement. The initial Point of Delivery shall be as shown on Exhibit D attached hereto and as such Point(s) of Delivery is further described in Section 4 hereinafter. The parties agree to discuss alternative points of delivery which are mutually beneficial to all parties and which would not impair any rights hereunder. e. McKinney shall review and approve the final design, final location, and construction agreement for the construction of the New Transmission Line to be located generally as shown on Exhibit D attached hereto. All costs of McKinney's review shall be home by GTUA and Participating Cities. All costs of construction, including any easement acquisition, SCADA equipment, and any other associated equipment, shall be borne by GTUA and Participating Cities. McKinney agrees to assist in condemnation, at its sole discretion, but in no event until GTUA and Participating Cities advance the reaso 4 -b -w, costs of acquisition and continue the funding thereof to completion. f. McKinney shall designate the location and McKinney's engineer shall approve the specifications for GTUA's metering station for monitoring water volumes as more fully described in Section 5 hereinafter. McKinney and GTUA shall have mutual access to the metering station throughout the term of this Agreement. All costs of installation and maintenance of the metering equipment shall be borne by POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 5 GTUA and Participating Cities. McKinney shall designate the appropriate person(s) for recording the flows at the metering station. g. GTUA shall install a rate of flow controller, to specifications acceptable to McKinney's City Engineer, limiting the maximum daily flow to the volume provided for in Column 2, Exhibit B at the approved metering station described in Section 2(f) above. Section 3. QUALITY. McKinney does not warrant the water quality of the water to be delivered by McKinney. McKinney agrees to deliver water to GTUA in the same manner as any other wholesale customer. Section 4. POINT(S) OF DELIVERY. The initial point of delivery to GTUA shall be the western terminus of the New Transmission Line at a point approved by McKinney and GTUA which initial point of delivery location shall be a required agreement term in the construction documents for the GTUA/Participating Cities Delivery System and Pipeline. McKinney agrees to provide for delivery of GTUA- purchased water through McKinney's system to GTUA. The relevant points of delivery through the systems are hereby designated as follows: a. NTMWD Point(s) of Delivery. McKinney shall receive from NTMWD its required quantity of water for the City's use and the GTUA/Participating Cities' use at either the Highway 380 (McK POD #3) metering station or any of the existing McKinney points of delivery from NTMWD. b. GTUA/Participating Cities Initial Point of Delivery (hereinafter referred to as the GTUA POD). Said GTUA POD is generally described as being located near or at a GTUA (0.5 million gallon) ground storage water tank proposed to be constructed by GTUA at a location approved by McKinney's City Engineer. It is agreed that GTUA's Engineer shall keep McKinney's Engineer informed of the design process and the prospective locations for the proposed GTUA ground storage tank; it is anticipated that GTUA and McKinney may cooperate in the selection of a consolidated tank site appropriate for City of McKinney future delivery point # 4. It is further provided that GTUA, in concert with McKinney's Engineer may install additional connections to the McKinney transmission and distribution system if needed to maintain the agreed volume to GTUA; however only if McKinney can concurrently maintain the water system capacity necessary for McKinney's customers and growth. Any increased costs for pumping and any related costs for operation of the GTUA ground storage water tank shall be added to the amounts described in Section 7. Section 5. MEASURING EOUIPMENT. GTUA shall furnish and install, at its sole expense, at the GTUA POD the necessary rate of flow equipment of a standard type approved by McKinney (and NTMWD if required by its agreement with McKinney) for measuring properly the quantity of water delivered under the GTUA/NTMWD Agreement, and such Master Meter and other equipment so POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 6 installed shall become the property of NTMWD. Additionally, GTUA, at its sole expense, shall furnish and install at the GTUA POD the necessary rate of flow equipment of a standard type approved by McKinney (and NTMWD if required by its agreement with McKinney) for properly regulating / limiting the average hourly rate of flow as required by this Agreement. GTUA and the City shall have access to such metering equipment at all reasonable times, but the reading, calibration, and adjustment thereof shall be done only by the employees or agents of McKinney (or McKinney and NTMWD if required by McKinney's or GTUA's agreement with NTMWD). NTMWD shall perform the official meter reading for purposes of water billing, although McKinney shall have the right to perform a verification reading. For the purpose of this Agreement, the original record or reading of the meter shall be the journal or other record book of McKinney in its office in which the records of the appropriate employees or agents of McKinney are kept or the record book or journal of NTMWD. Upon written request of the GTUA, McKinney will provide a copy of such journal or record book, or permit GTUA to have access to the same in the office of McKinney during reasonable business hours. Not more than once in any six month time period, GTUA/NTMWD shall test its meter if requested in writing by McKinney to do so, in the presence of a representative of McKinney, and the parties shall jointly observe any adjustments which are made to the meter in case any adjustments shall be necessary, and if the check meter hereinafter provided for has been installed, the same shall also be calibrated by NTMWD in the presence of a representative of GTUA and McKinney, and the parties shall jointly observe any adjustment if necessary. If McKinney shall request of GTUA in writing that it be present during the calibration of the meter, then GTUA shall give McKinney notice of the time when any such calibration is to be made and if a representative of McKinney is not present at the time set, GTUA/NTMWD may proceed with calibration and adjustment in the absence of any representative of McKinney. If either party at any time observes a variation between the delivery meter and the check meter or meters, if any such check meter or meters shall be installed, such party will promptly notify the other party, and the parties hereto shall then cooperate to procure an immediate calibration test and joint observation of any adjustment and the same meter or meters shall then be adjusted to accuracy. Each party shall give the other party forty-eight (48) hours notice of the time of all tests of meters so that the other party may conveniently have a representative present. If upon any test, the percentage of inaccuracy of any metering equipment is found to be in excess of two percent (2%), registration thereof shall be corrected for a period extending back to the time when such inaccuracy began, if such time is ascertainable, and if such time is not ascertainable, then for a period extending back one-half (1/2) of the time elapsed since the last date of calibration, but in no event further back than a period of six (6) months. If for any reason any meters are out of repair so that the amount of water delivered cannot be ascertained or computed from the reading thereof, the water delivered through the period such meters are out of service or out of repair shall be estimated and agreed upon by the parties hereto upon the basis of the best data available. For such purpose, the best data available shall be deemed to be the registration of any check meter or POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 meters if the same have been installed and are accurately registering. Otherwise, the amount of water delivered during such period may be estimated (i) by correcting the error if the percentage of the error is ascertainable by calibration tests or mathematical calculation, or (ii) estimating the quantity of delivery by deliveries during the preceding periods under similar conditions when the meter or meters were registering accurately. GTUA or McKinney may, at its option and its own expense, install and operate a check meter to check each meter installed by GTUA. The measurement of water for the purpose of this agreement shall be solely by the McKinney meters, except in the cases hereinabove specifically provided to the contrary. All such check meters shall be of standard make and shall be subject at all reasonable times to inspection and examination by any employee or agent of GTUA, but the reading, calibration and adjustment thereof shall be. made only by McKinney except during any period when a check meter may be used under the provisions hereof for measuring the amount of water delivered, in which case the reading, calibration, and adjustment thereof shall be made by McKinney with like effect as if such check meter or meters had been furnished or installed by McKinney. Section 6. UNIT OF MEASUREMENT. The unit of measurement for treated water delivered under this Agreement shall be 1,000 gallons of water, U.S. Standard Liquid Measure. Section 7. RATES AND TERMS. Payments by GTUA to McKinney shall be for the following components of Base Cost for the services: a. Direct and Indirect Costs of Pumping and Transmission. GTUA shall pay McKinney an amount per thousand gallons of water flowing through the McKinney Transmission and Distribution System calculated as follows: the cost for pumping water (per thousand gallons) multiplied times the number of thousand gallons metered per month. The cost per thousand gallons pumped shall be determined and adjusted annually by McKinney by dividing the total of system -wide electrical service costs for water pumping by the total volume of gallons of water pumped system -wide on an annual basis. McKinney may use fiscal or calendar year for making this annual adjustment. It is specifically agreed that GTUA shall pay NTMWD directly for all water purchases, and GTUA and Participating Cities shall hold harmless McKinney for any amounts purchased by GTUA for which NTMWD attributes to McKinney. Unless the parties mutually agree otherwise, the initial rate charged shall be calculated on September 1, 2006 based on the prior 12 months of charges for the expenses described herein. b. Allowance for Water Loss. The initial cost shall be 2.5% times that rate charged by NTMWD to McKinney (McKinney rate)/1000 gallons, subject to McKinney's right to make future adjustments which adjustments shall not be made less than five (5) years after any previous adjustment. Any adjustment shall be based on a system -wide study after consultation with GTUA on the scope and design of the study; however in no event shall the cost be less than 2.5%. POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 C. Overhead and Risk Return. The initial cost shall be $0.08/1000 gallons and shall be adjusted annually on September 1 based on the Consumer Price Index -All Urban Consumers -Dallas -Fort Worth (All Items) [Series ID: CUURA316SA0, CUUSA316SA0] as the index for the adjustment calculation. d. Capital Recovery Expense. GTUA shall pay a charge for the capacity reserved by McKinney for GTUA within the System which shall equal $3,204.44 per month, per MGD average daily rate of flow through the GTUA POD within the billing month, (as identified as "Projected Average Surface Water Demand') shown on Exhibit B, Column 1, for the initial year and as such is adjusted in subsequent years under Paragraph 2(a), minus the amounts owing to GTUA for the eligible oversize costs of the New Transmission Line as described in Section 10 (a). e. McKinney Franchise Fee. GTUA shall pay the fee charged to all water customers (as adjusted from time -to -time by McKinney) served by McKinney. The initial charge shall be 4% of all amounts paid under paragraphs a -d of this Section 7. Section 8. MAXIMUM. During the primary term hereof, McKinney and GTUA may agree to the delivery by McKinney of additional volumes of water, in excess of those described in Column 2, Exhibit B. The rate for any amounts delivered under this Section 8 shall be as depicted on Columns 3 and 4, Exhibit B. Section 9. INDEMNIFICATION OF MCKINNEY BY GTUA. GTUA and Participating Cities agrees to indemnify McKinney for all claims of third -parties arising out of the obligations and performance of this Agreement by the parties, including any judgments, attorney's fees or costs. Notwithstanding the foregoing, the indemnification hereunder shall not apply to suit or claims brought by third -party customers under Section 10 (f). Section 10. OTHER CONDITIONS AND PROVISIONS. a. Connection to the McKinney System and the GTUA Pumping Station. McKinney may acquire the New Transmission Line between the point(s) of connection to the McKinney system and the GTUA pumping station upon the termination of this agreement. Such acquisition shall be based on the prior approval of the design and installation of said line(s) by the McKinney City Engineer. McKinney shall have the right to utilize the New Transmission Line as if it were part of the McKinney water transmission system under the same terms of this Agreement until all related GTUA debt for the subject line is retired. The foregoing provision and the hereinafter pro -rata reimbursement provision shall survive the termination or expiration of this Agreement. Unless the lien holders for such line approve transfer of ownership, ownership cannot be transferred to McKinney. GTUA shall use best efforts to execute debt instruments which will allow for the transfer sequence described in this Paragraph. At the time that all GTUA debt is retired on the New Transmission Line, GTUA shall transfer the New POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 Transmission Line to McKinney at no charge, free and clear of all liens and encumbrances. The "debt" shall be the actual cost of the New Transmission Line plus accrued interest charged to GTUA for that component portion of the debt incurred for its construction. As consideration for such transfer, McKinney shall collect pro rata utility fees from third -party developers connecting to the New Transmission Line in such amounts as are allowed by then existing McKinney ordinances, and in accordance with state law, for at least the term of this Agreement. McKinney shall remit such pro rata amounts to GTUA upon McKinney's receipt from developers, and such payments to GTUA shall terminate upon the termination of this Agreement or upon transfer of line ownership to McKinney hereunder. GTUA shall apply such payments to debt amortization of said line. In addition to the pro rata payments aforementioned and as additional consideration f6r the transfer of the New Transmission Line to McKinney, McKinney shall pay to GTUA the eligible oversize costs of the New Transmission Line. Such eligible oversize costs shall be deducted in equal monthly amounts (during the initial ninety-six (96) months of the Agreement) from the Capital Recovery Expense component of the rates charged to GTUA in Section 7. Notwithstanding the foregoing, the amounts credited for eligible oversize costs shall not exceed the amounts owing for the Capital Recovery Expense component. If the amount of the credit would have exceeded the Capital Recovery Expense Component, the term of the deducted credits shall be extended accordingly. If McKinney pays an aggregate amount of developer pro rata payments and eligible oversize costs equal to the debt on the New Transmission Line prior to the term of this Agreement, GTUA shall obtain a partial release of the New Transmission Line from any debt instrument and shall transfer title to the line to McKinney. b. Use of New Transmission Line by McKinney. It is agreed that McKinney may make connections to the New Transmission Line to the McKinney system between the GTUA metering station and the point of connection to the McKinney system for purpose of serving McKinney customers subject to mutual coordination of said connection point, it being the intent to accommodate McKinney service needs without negatively impacting the line capacity to a volume less than required by this Agreement. C. Maintenance of New Transmission Line. The line referenced in (b) above shall be maintained by McKinney. Direct maintenance costs incurred by McKinney shall be billed to GTUA / Participating Cities at the invoiced amounts, and said costs shall be paid in the same time frame as the pumping costs provided for in this agreement. Direct costs shall also include a factor for McKinney's internal costs which shall be computed in accordance with similar costs charged to departments within McKinney as described by McKinney finance policies; however in no event shall the internal costs exceed 25%. d. Other Aereements by GTUA. GTUA reserves the right to supply treated water from the System to additional or other parties as determined by GTUA's Board of POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 10 Directors and as approved by the initial Participating Cities, so long as doing so does not result in an increase in the maximum daily demand as provided for herein. e. Remedies for NTMWD's Failure to Commence Construction of Delivery Point. McKinney shall have the unilateral right to terminate this Agreement if by January 1, 2012 NTMWD has failed to initiate, in McKinney's sole determination, sufficient plans for design, funding, and construction of the NTMWD-GTUA delivery point contemplated by this Agreement. Upon such determination by McKinney and after 180 days written notice to GTUA, this Agreement shall terminate; however, GTUA shall have the continuing obligation to transfer the New Transmission Line under Section 10 (a). f. Adjustment of Price Based on Challenge to Customer Rates. GTUA agrees to a unilateral adjustment in the rates for delivery under Section 7 if any McKinney customer successfully challenges the rates charged in this Agreement. A successful challenge shall be one where the rates charged to GTUA are found to be discriminatory or unfair. Any ordered reduction or adjustment to the rates of other customers which results in less net revenue to McKinney shall entitle McKinney to increase the rates hereunder to an amount which will yield the same revenues contemplated by this Agreement. The date of adjustment shall be sixty (60) days after written notice is sent to GTUA. g. Shared Legal Expenses for Challenge to Customer Rates. GTUA and McKinney shall equally share in any attorney's fees and expenses in defending any contest, challenge or lawsuit, whether through an administrative agency of the State of Texas or in a court of law. McKinney shall have the sole control over the engagement and direction of legal counsel for any lawsuit wherein McKinney is a party. Section 11. PAYMENT AND REMEDIES FOR BREACH BY PARTY. McKinney shall use the same meter reading (volume of water) as NTMWD uses to determine water purchase volume. McKinney shall bill GTUA at the end of each month for the cost provided for in Section 7 above. GTUA-shall remit payment to McKinney within 15 days of receipt of said billing. Liability for making payments, as herein set forth shall commence on the date of initial water flow from McKinney to GTUA. In the event that GTUA shall fail to make any such monthly payment within the time herein specified in this Section, interest on such ameimt shalt a=v-- at rbP rate of ten percent (10%) per annum from the date such payment becomes due until paid in full with the interest as herein specified. In the event such payment is not made within thirty (30) days from the date such payment becomes due or in the event GTUA shall default in the performance of any other provision of this Agreement, City may at its option, after thirty (30) days' written notice to GTUA, discontinue delivery of water to GTUA until the amount due City is paid in full with interest as herein specified or the default is cured, or terminate this Agreement upon 30 days additional written notice and right to cure any default, POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 11 whether monetary or otherwise. It is further provided that in the event that GTUA shall fail to make any such monthly payment or annual payment within the time herein in this Section specified, City shall have the right to petition the District Court in Collin County for a writ of mandamus to compel compliance with this Agreement. GTUA may terminate this Agreement if McKinney fails to commence delivery in accordance with Section 10. Section 12. TERM OF AGREEMENT. So long, as no default shall exist, McKinney shall exercise its best efforts to complete the design and necessary utility infrastructure to effectuate this Agreement, which if completed shall have a primary term commencing on December 31, 2006 (or sooner if McKinney completes the necessary utility infrastructure) and continue in force and effect until September 30„ 2016 (or ten [10] years after the commencement date whichever is sooner), unless: McKinney agrees to extend said agreement on a year to year basis if 1) McKinney determines it has available capacity for any requested extension term, 2) the increased volumes requested are not more than 2.5 MGD over the previous year's volumes, and 3) GTUA agrees to a price for water delivery which is 150% more than the previous year's Base Cost; however in no event shall the agreement be extended without the mutual agreement to the then existing timeline for the pending the completion of a new NTMWD transmission facility designed to provide service to GTUA; however in no event shall this Agreement be extended more than three (3) consecutive one-year extensions. NTMWD completes construction of an adequate transmission facility designed to serve GTUA prior to the scheduled termination of this agreement. In such event, this agreement will be immediately terminated upon the connection of the NTMWD transmission line to the GTUA Point of Delivery and upon final payment for any costs incurred by GTUA to McKinney under this agreement. Section. 13. MODIFICATION. This Agreement may be changed or modified only with the consent of the governing bodies of both GTUA and the McKinney, except that temporary delivery of additional water volumes may be coordinated and approved by the respective staffs of each entity; however only to the extent authorized by the McKinney City Charter, the budget of McKinney, and the limits of this Agreement. Section 14. FORCE MAJEURE. If by reason of force majeure any party hereto shall be rendered unable wholly or in part to carry out its obligations under this Agreement, other than the obligation of GTUA and Participating Cities to make the payments required under Section 7 of this Agreement, then if such party shall give notice and full particulars of such force majeure in writing to the other party after occurrence of the event or cause relied on, the obligation of the party giving such notice, so far as it is affected by such force majeure, shall be suspended during the continuance of the inability then claimed, but for no longer period, and any such party shall endeavor to remove or overcome such inability with all POTABLE WATER PASS THROUGH & PUMPING AGREEMENT . November 23, 2004 12 reasonable dispatch. The term "Force Majeure" as employed herein shall mean acts of God, strikes, lockouts, or other industrial disturbances, acts of public enemy, orders of any kind of the Government of the United States or the State of Texas, or any civil or military authority, insurrection, riots, epidemics, landslides, lightning, earthquake, fires, hurricanes, storms, floods, washouts, droughts, arrests, restraint of government and people, civil disturbances, explosions, breakage or accidents to machinery, pipelines or canals, partial or entire failure of water supply, or on account of any other causes not reasonably within the control of the party claiming such inability. Section 15. INSURANCE. GTUA agrees to carry and arrange for fire, casualty, public liability, and/or other insurance, including self insurance, on the System, and with McKinney as an additional insured, for purposes and in amounts not less than $1,000,000 on its property and utility systems which, as determined by McKinney, ordinarily would be carried by a public utility district owning and operating such facilities, except that GTUA shall not be required to provide liability insurance except to insure itself and McKinney against risk of loss due to claims for which it can, in the opinion of McKinney's legal counsel, be liable under the Texas Tort Claims Act or any similar law or judicial decision. Such insurance will provide, to the extent feasible and practicable, for the restoration of damaged or destroyed properties and equipment, to minimize the interruption of the services of such facilities. All premiums for such insurance shall constitute an operation and maintenance expense of the System. The insurance coverage does not extend to any facility owned by McKinney; however the coverage shall insure McKinney against all claims arising out of this Agreement. Section 16. REGULATORY BODIES AND LAWS. This Agreement is subject to all applicable Federal and State Laws and any applicable permits, ordinances, rules, orders, and regulations of any local, state or federal governmental authority having or asserting jurisdiction, but nothing contained herein shall be construed as a waiver of any right to question or contest any such law, ordinance, order, rule, or regulation in any forum, having jurisdiction. Section 17. NOTICES. Unless otherwise provided herein, any notice, communication, request, reply, or advice (herein severally and collectively, for convenience, called "Notice" herein provided or permitted to be given, made, or accepted by any party to any other party must be in writing and may be given or be served by depositing the same in the United States mail postpaid and registered or certified and addressed to the party to be notified, with return receipt requcsied, of by delivering the same to an officer of such party, or by prepaid telegram when appropriate, addressed to the party to be notified. Notice deposited in the mail in the manner hereinabove described shall be conclusively deemed to be effective, unless otherwise stated herein, from and after the expiration of three (3) days after it is so deposited. Notice given in any other manner shall be effective only if and when received by the party to be notified. For the purposes of notice, the addresses of the parties shall, until changed as hereinafter provided, be as follows: POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 13 If to GTUA, to: Greater Texoma Utility Authority 5100 Airport Drive Denison, Texas 75020 If to the City, as follows: City of McKinney P.O. Box 512 McKinney, Texas 75069 The parties hereto shall have the right from time to time and at any time to change their respective addresses and each shall have the right to specify as its address any other address by at least fifteen (15). days written notice to the other parties hereto. Section 18. SEVERABILITY. The parties hereto specifically agree that in case any one or more of the sections, subsections, provisions, clauses, or words of this Agreement or the application of such sections, subsections, provisions, clauses, or words to any situation or circumstance should be, or should be held to be, for any reason, invalid or unconstitutional, under the laws or constitutions of the State of Texas, or the United States of America, or in contravention of any such laws or constitutions, such invalidity, unconstitutionality, or contravention shall not affect any other sections, subsections, provisions, clauses, or words of this Agreement or the application of such sections, subsections, provisions, clauses, or words to any other situation or circumstance, and it is intended that this Agreement shall be severable and shall be construed and applied as if any such invalid or unconstitutional section, subsection, provision, clause, or word had not been included herein, and the rights and obligations of the parties hereto shall be construed and remain in force accordingly; however only if the remaining sections are consistent and structurally dependent on one another. Section 19. VENUE. All amounts due under this Agreement, including, but not limited to, payments due under this Agreement or damages for the breach of this Agreement, shall be paid and be due in Collin County, Texas, which is the County in which the principal administrative offices of City are located. It is specifically agreed among the parties to this Agreement that Collin County, Texas, is the principal place of performance of this Agreement. POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 14 IN WITNESS WHEREOF, the parties hereto acting under authority of their respective governing bodies have caused this Agreement to be duly executed in several counterparts, each of which shall constitute an original, all as of the day and year first above written, which is the date of this Agreement. GREATER T OMA UTILITY AUTHORITY Denison, Tex �) / By: Preside , oard of Direc ors Attest: GREATER TEXOMA UTILITY AUTHORITY Denison, Texas B Secretary, Bb4d of Directory Accepted and agreed to: 0 LRENCE W. ROWN tManager City of McKinney, Texas Attest: BEVERLY OVINGTO Deputy City Secretary City of McKinney, Texas POTABLE WATER PASS THROUGH & PUMPING AGREEMENT - November 23, 2004 draft 15 edName: Mayor City of Anna, Texas Attest: Printed Name: Ba City Secretary City of Anna, Texas Mayor City of Melissa, Texas Attest: ed Name: Secretary of Melissa, Texas • Punted Name:_, Mayor City of Howe, Texas Printed Name: City Secretary City of Howe, Texas POTABLE WATER PASS THROUGH & PUMPING AGREEMENT November 23, 2004 16 Printed Name: W 1 l; e t7 a A j, e Mayor City of Van Alstyne, Texas 11 1 6 D. NL Printed Name: •TP.na 4 1j repo„ City Secretary City of Van Alstyne, Texas POTABLE WATER PASS THROUGH & PUMPING AGREEMENT November 23, 2004 17 1*12011 )III_\ GTUA/NTMWD AGREEMENT WATER TRANSMISSION / PUMPING AGREEMENT EXHIBIT A NORTH TEXAS MUNICIPAL WATER DISTRICT GREATER TEXOMA UTILITY AUTHORftY POTABLE WATER SUPPLY CONTRACT THE STATE OF TEXAS THE COUNTY OF COLLIN THIS CONTRACT (the "Contract") made and entered into as of this the I I day of2004, by and between the North Texas Municipal Water District ("ITMWD'V and the Greater Texoma Utility Authority ("GTUA" or "Customer"), each a conservation and reclamation district created under Article 16, Section 59, of the Texas Constitution: WITNESSETH: WHEREAS, NTMWD and Customer are authorized to enter into this Contract pursuant to Texas Government Code, Chapter 791, the Interlocal Cooperation Act, and other applicable laws; and WHEREAS, Customer is contracting on behalf of the City of Anna, City of Howe, City of Melissa and City of Van Alstyne ("GTUA Alliance Cities"); and WHEREAS, Customer is desirous of obtaining an adequate and dependable water supply to provide potable water service to the GTUA Alliance Cities; and WHEREAS, NTMWD has transmission facilities under construction that will provide adequate water capacity for GTUA Alliance Cities and the City of McKinney; and WHEREAS, the City of McKinney has transmission facilities near a desirable point of connection to the proposed GTUA transmission facilities to provide potable water service to GTUA Alliance Cities; and WHEREAS, NTMWD has long range plans to construct transmission facilities near the GTUA Alliance Cities' proposed point of delivery to provide potable water service directly to GTUA Alliance Cities; and WHEREAS, the City of McKinney has worked with the GTUA Alliance Cities to assess average day and maximum daily requirements until NTMWD's future transmission facilities are constructed to provide potable water service directly to GTUA Alliance Cities; and WHEREAS, the City of McKinney, based on joint projections and system modeling, has indicated that sufficient capacity is available to meet the needs of the GTUA Alliance Cities until NTMWD's future transmission facilities are constructed and is willing to transport potable water for Customer through its water distribution system; and WHEREAS, it is necessary, convenient, and advisable for Customer to purchase potable water from NTMWD on an interim basis, transported through the City of McKinney's distribution system, and to secure a more permanent -.source from NTMWD when available. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, NTMWD agrees to furnish and Customer agrees to pay for water from NTMWD upon the terms and conditions and for the consideration hereinafter set forth, to wit: Section 1. DEFINITION OF TERMS. The following terms and expressions as used in this Contract, unless the context clearly shows otherwise, shall have the following meanings: (A) "Annual Payment" means the amount of money to be paid to NTMWD by Customer during each Annual Payment Period. (B) "Annual Payment Period" means NTMWD's fiscal year, which currently begins on October 1 of each calendar year and ends on September 30 of the next following calendar year, but which may be any twelve (12) consecutive month period fixed by NTMWD. (C) "Customer" means the Greater Texoma Utility Authority, the Contracting Party on behalf of the City of Anna, City of Howe, City of Melissa and City of Van Alstyne. (D) "NTMWD" means the North Texas Municipal Water District as defined in the preamble to this Contract. (E) "Member City" means the Cities of Allen, Fannersville, Forney, Frisco, Garland, McKinney, Mesquite, Plano, Princeton, Richardson, Rockwall, Royse City and Wylie. (F) "MGD" is an abbreviation for "million gallons of water per day" and means a quantity of water during a period of time expressed for convenience in terms of an average annual daily quantity during an Annual Payment Period. (G) "System" means collectively the existing system and the future improvements of NTMWD for water storage, treatment, transportation, distribution, and supply, including all dams, reservoirs, and other properties or interests therein wherever located. Said terms do not include any of NTMWD's facilities which provide wastewater treatment or disposal services, or solid waste disposal services, of any kind. Said terms do not include any facilities acquired or constructed by NTMWD with the proceeds from the issuance of "Special Facilities Bonds", which are payable from any source, Contract, or revenues whatsoever, other than revenues from the System. (H) "Water Year" means the period of August 1 of each calendar year through July 31 of the next following calendar year or such other twelve (12) month period designated by NTMWD to all Members and Customers. Page 2 Section 2. QUANTITY. NTMWD agrees to sell and to deliver treated water under this Contract to Customer at the NTMWD Point of Delivery as described in Section 5(A) hereof; and Customer agrees to take at said Point of Delivery water required for use by Customer during the term of this Contract, including treated water for Customer's own use and for distribution to all customers served by Customer's water distribution system, whether inside or outside its boundaries. The quantity of water sold to Customer shall be measured as described in Section 5(B) herein. It is specifically provided, however, that after the Contract Date, Customer shall not enter into, renew, or amend with regard to volume of water to be supplied, any agreement to supply any such treated water for use outside the boundaries of the GTUA Alliance Cities identified in above or as may be hereinafter approved by NTMWD or the area of said Cities statutory extraterritorial jurisdiction unless each such agreement is approved by the Board of Directors of NTMWD (which approval shall not be unreasonably withheld unless the projected additional volume affects NTMWD's ability to provide service to others or conflicts with law or NTMWD Policy). Customer shall not become a party to any contract for the sale of treated water, which would violate or be inconsistent with the provisions of this Contract. Should Customer develop plans to seek water supplies from an entity other than NTMWD, Customer agrees to give NTMWD sixty (60) days written notice of such intention and to give NTMWD an opportunity to address such needs or concerns. The acquisition of, or use of, water from other sources shall never obviate or reduce the obligations, duties and responsibilities of Customer to make payments specified in this Contract. NTMWD will use its best efforts to furnish and remain in position to furnish treated water sufficient for all reasonable treated water requirements of Customer, provided however that its obligation shall be limited to the amount of treated water available to it from the System during normal operation which will not impair its obligations to its cities. The current maximum rate of delivery shall not exceed 8,000 gallons per minute, which is consistent with the capabilities and abilities of NTMWD System facilities and the McKinney facilities and it is understood that the Board of Directors from time to time may adjust the maximum rate of delivery on an equitable and uniform basis to all Customer Cities. If treated water from the System must be rationed, such rationing shall, within the limits permitted by law, be done by NTMWD proportionately based upon each Customer City's annual minimum. Section 3. OTHER CONTRACTS. NTMWD reserves the right to supply treated water from the System to Additional or Other Contracting Parties as determined by NTMWD's Board of Directors. Section 4. QUALITY. The water to be delivered by NTMWD and received by Customer shall be treated water from the System. Customer has satisfied itzelf that such water will be suitable for its needs, but NTMWD is obligated to treat such water so as to meet the standards of all State and Federal agencies having jurisdiction over water quality. NTMWD and Customer shall cooperate, each within its legal powers, in preventing, to the extent practicable, the pollution and contamination of the reservoirs and watersheds from which System water is obtained. Section 5. POINT(S) OF DELIVERY. Currently Customer does not have pipeline facilities located within NTMWD's service area to provide for delivery of potable water directly from NTMWD. The City of McKinney has agreed to provide for delivery of NTMWD water through the McKinney system to Customer until such time as future Page 3 NTMWD transmission facilities are constructed. The points of delivery through the system are hereby designated as follows: (A) NTMWD Point of Delivery. NTMWD shall deliver the required quantity of water for Customer's use to the McKinney system at the Gerrish Street metering station and/or the FM 720 metering station. NTMWD shall have no responsibility for the handling or delivery of any quantity of water past this initial point of delivery. All duties and risk of loss or damage beyond these points of delivery shall rest with Customer and/or McKinney and shall be governed by the terms of any separate agreements between those parties. (B) Customer Point of Delivery. The Customer Point of Delivery is generally described as being located near the intersection of State Highway 5 and FM 543, subject to final engineering analysis, "'engineering design, and approval of both GTUA and NTMWD. A meter, described in Section 6 below, shall be installed at the point of connection of Customer owned transmission mains to the approved water source or approved point of delivery of said water which is anticipated to be near the above reference point of delivery. Said meter shall be installed in a manner approved by all contracting parties and, shall be read by the parties, and said meter readings shall be the basis for calculation of all charges for water sold to Customer as set forth in Section 8 herein. (C) Future Point of Delivery. At sometime in the future NTMWD's transmission system may be extended to provide potable water service directly to Customer. At such time as said facilities are in operation, Customer may, at its sole expense and upon obtaining approval of NTMWD, construct a pipeline and related facilities, including a meter station, to that NTMWD facility, at a point to be designated by NTMWD. At that time, a standard Customer Service Contract shall be developed to provide for this point to be the point of delivery and this Contract shall become null and void. No obligation is created or imposed upon NTMWD hereunder to construct any projected facilities and the time for any proposed construction shall be at NTMWD's sole discretion. Section 6. MEASURING EQUIPMENT. Customer shall furnish and install at its own expense at the Customer Point of Delivery the necessary rate of flow equipment of a standard type approved by NTMWD for measuring properly the quantity of water delivered under this agreement and such meter and other equipment so installed shall become the property of NTMWD. Customer shall have access to such metering equipment at all reasonable times, but the reading, calibration, and adjustment thereof shall be done only by the employees or agents of NTMWD. For the purpose of this agreement, the original record or reading of the meter shall be the journal or other record book of NTMWD in its office in which the records of the employees or agents of NTMWD who take the reading may be transcribed. Upon written request of Customer, NTMWD will provide a copy of such journal or record book, or permit it to have access to the same in the office of NTMWD during reasonable business hours. Not more than once in any six month time period, NTMWD shall test its meter if requested in writing by Customer to do so, in the presence of a representative of Customer, and the parties shall jointly observe any adjustments which are made to the Page 4 meter in case any adjustments shall be necessary, and if the check meter hereinafter provided for has been installed, the same shall also be calibrated by Customer in the presence of a representative of NTMWD and the parties shall jointly observe any adjustment if necessary. If Customer shall request in writing NTMWD to calibrate its meter, then NTMWD shall give Customer notice of the time when any such calibration is to be made and if a representative of Customer is not present at the time set, NTMWD may proceed with calibration and adjustment in the absence of any representative of Customer. If either party at any time observes a variation between the delivery meter and the check meter or meters, if any such check meter or meters shall be installed, such party will promptly notify the other party, and the parties hereto shall then cooperate to procure an immediate .calibration test and joint observation of any adjustment and the same meter or meters shall then be adjusted to accuracy. Each party shall give the other party forty- eight (48) hours notice of the time of all tests of meters so that the other party may conveniently have a representative present. If upon any test, the percentage of inaccuracy of any metering equipment is found to be in excess of two percent (2%), registration thereof shall be corrected for a period extending back to the time when such inaccuracy began, if such time is ascertainable, and if such time is not ascertainable, then for a period extending back one-half (1/2) of the time elapsed since the last date of calibration, but in no event further back than a period of six (6) months. If for any reason any meters are out of repair so that the amount of water delivered cannot be ascertained or computed from the reading thereof, the water delivered through the period such meters are out of service or out of repair shall be estimated and agreed upon by the parties hereto upon the basis of the best data available. For such purpose, the best data available shall be deemed to be the registration of any check meter or meters if the same have been installed and are accurately registering. Otherwise, the amount of water delivered during such period may be estimated (i) by correcting the error if the percentage of the error is ascertainable by calibration tests or mathematical calculation, or (ii) estimating the quantity of delivery by deliveries during the preceding periods under similar conditions when the meter or meters were registering accurately. Customer may, at its option and its own expense, install and operate a check meter to check each meter installed by NTMWD. Thelneasurement of water for the purpose of this agreement shall be solely by NTMWD's meters, except in the cases hereinabove specifically provided to the contrary. All such check meters shall be of standard make and shall be subject at all reasonable times to inspection and examination by any employee or agent of NTMWD, but the reading, calibration and adjustment thereof shall be made only by Customer except during any period when a check meter may be used under the provisions hereof for measuring the amount of water delivered, in which case the reading, calibration, and adjustment thereof shall be made by NTMWD with like effect as if such check meter or meters had been furnished or installed by NTMWD. Section 7. UNIT OF MEASUREMENT. The unit of measurement for treated water delivered under this Contract shall be 1,000 gallons of water, U.S. Standard Liquid Measure. Page 5 Section 8. PRICE AND TERMS. The service to be performed under this Contract by NTMWD consists of the delivery of water in accordance with the provision of this Contract. In return for the above consideration, Customer agrees to compensate NTMWD by payment of certain minimum annual sums of money, for each of which said sums NTMWD agrees, if required by Customer, to deliver all, or so much thereof as Customer may desire, of a certain corresponding volume of water as follows: (A) For the First Annual Payment Period beginning with the next first day of October after the first delivery of water to Customer, Customer will take or pay for 237,250,000 gallons of water (650,000 gallons per day) at a rate of five cents (5¢) above the rate established for the Member Cities of NTMWD, but in no event less than fifty cents (50¢) per thousand gallons. Any water delivered in excess of the amount allowed for the annual minimum will be purchased at a rate of five cents (5¢) per thousand gallons above the amount charged NTMWD Member Cities for excess water. The minimum amount of water Customer will be required to purchase at the above rate, or such other rate, as may be from time to time determined by NTMWD, shall be calculated annually for each ensuing year and such amount shall be determined in the same manner as said amount is determined for the Member Cities. The annual minimum to be purchase during any ensuing year shall not be less than the highest total amount withdrawn from NTMWD's system by Customer during any previous year or 237,250,000 gallons, whichever is greater. In the event that NTMWD provides service for only a portion of the first or last fiscal year of the Contract, the annual minimum charge shall be prorated on the basis of the actual number of days for which service was provided divided by 365. (B) The quantities and rates set out in Section 2 and Section 8 hereof may be reviewed at the end of the first full Annual Payment Period of service after the first delivery of water to Customer and each year thereafter, and the minimum amount of water to be purchased, rate per 1,000 gallons and the maximum rate of delivery shall be re -determined by the Board of Directors of NTMWD at that time in the same manner as applied to NTMWD Member Cities. Payment of the minimum annual service charge listed above shall be made each year by Customer to NTMWD in twelve equal monthly installments, each of which shall be due and payable on or before the 10th day of the month following the service. Payment for water delivered in any year in excess of the volume allowed for the minimum annual payment effective for that year, shall be made by Customer to NTMWD at the rates specified herein when in accordance with the following method: When Customer exceeds the annual minimum amount during any water year, excess water will be billed in the first month following the month in which the 100 percent level was reached for the prior month's excess water and this procedure would continue to the end of the Annual Payment Period with Customer making payment for all excess not previously paid for on or before the 10`h day of the month following the end of such year. Page 6 Liability for making payments as herein set forth shall commence on the date water service is initiated. In the event that Customer shall fail to make any such monthly payment or annual payment within the time herein in this section specified, interest on such amount shall accrue at the rate of ten percent (10%) per annum from the date such payment becomes due until paid in full with the interest as herein specified. In the event such payment is not made within thirty (30) days from the date such payment becomes due, NTMWD may at its option discontinue delivery of water to Customer until the amount due NTMWD is paid in full with interest as herein specified. Section 9. TERM OF CONTRACT. This Contract shall continue in force and effect throughout the useful life of the Customer facilities to be funded by the Texas Water Development Board or upon the completion of any future extension of NTMWD's transmission system to allow potable water service directly to Customer whichever shall occur earlier. Upon completion of said facilities, a standard Customer City Contract shall be developed and this Contract shall become null and void. Section 10. MODIFICATION. This Contract may be changed or modified only with the consent of the governing bodies of both NTMWD and Customer. No such changes or modifications may be made which will affect adversely the prompt payment when due of all moneys required to be paid by Customer under the terms of this Contract. Section 11. FORCE MAJEURE. If by reason of force majeure any party hereto shall be rendered unable wholly or in part to carry out its obligations under this Contract, other than the obligation of Customer to make the payments required under Section 8 of this Contract, then if such party shall give notice and full particulars of such force majeure in writing to the other party within a reasonable time after occurrence of the event or cause relied on, the obligation of the party giving such notice, so far as it is affected by such force majeure, shall be suspended during the continuance of the inability then claimed, but for no longer period, and any such party shall endeavor to remove or overcome such inability with all reasonable dispatch. The term "Force Majeure" as employed herein shall mean acts of God, strikes, lockouts, or other industrial disturbances, acts of public enemy, orders of any kind of the Government of the United States or the State of Texas, or any civil or military authority, insurrection, riots, epidemics, landslides, lightning, earthquake, fires, hurricAnes, storms, floods, washouts, droughts, arrests, restraint of government and people, civil disturbances, explosions, breakage or accidents to machinery, pipelines or canals, partial or entire failure of water supply, or on account of any other causes not reasonably within the control of the party claiming such inability. Section 12. INSURANCE. NTMWD agrees to carry and arrange for fire, casualty, public liability, and/or other insurance, including self insurance, on the System for purposes and in amounts which, as determined by NTMWD, ordinarily would be carried by a privately owned utility company owning and operating such facilities, except that NTMWD shall not be required to provide liability insurance except to insure itself against risk of loss due to claims for which it can, in the opinion of NTMWD's legal counsel, be liable under the Texas Tort Claims Act or any similar law or judicial decision. Such insurance will provide, to the extent feasible and practicable, for the restoration of damaged or destroyed properties and equipment, to minimize the interruption of the services of such facilities. All premiums for such insurance shall constitute an Operation and Maintenance Expense of the System. The insurance coverage Page 7 does not extend to any facility owned by Customer. Section 13. REGULATORY BODIES AND LAWS. This Contract is subject to all applicable Federal and State Laws and any applicable permits, ordinances, rules, orders, and regulations of any local, state or federal governmental authority having or asserting jurisdiction, but nothing contained herein shall be construed as a waiver of any right to question or contest any such law, ordinance, order, rule, or regulation in any forum, having jurisdiction. Section 14. NOTICES. Unless otherwise provided herein, any notice, communication, request, reply, or advice (herein severally and collectively, for convenience, called "Notice" herein provided or permitted to be given, made, or accepted by any party to any other party must be in writing and may be given or be served by depositing the same in the United States mail postpaid and registered or certified and addressed to the party to be notified, with return receipt requested, or by delivering the same to an officer of such party, or by prepaid telegram when appropriate, addressed to the party to be notified. Notice deposited in the mail in the manner hereinabove described shall be conclusively deemed to be effective, unless otherwise stated herein, from and after the expiration of three (3) days after it is so deposited. Notice given in any other manner shall be effective only if and when received by the party to be notified. For the purposes of notice, the addresses of the parties shall, until changed as hereinafter provided, be as follows: If to NTMWD, to: Executive Director North Texas Municipal Water District P.O. Box 2408 Wylie, Texas 75098 If to Customer, as follows: General Manager Greater Texoma Utility Authority 5100 Airport Drive Denison, Texas 75020 The parties hereto shall have the right from time to time and at any time to change their respective addresses and each shall have the right to specify as its address any other address by at least fifteen (15) days written notice to the other parties hereto. Section 15. SEVERABILITY. The parties hereto specifically agree that in case any one or more of the sections, subsections, provisions, clauses, or words of this Contract or the application of such sections, subsections, provisions, clauses, or words to any situation or circumstance should be, or should be held to be, for any reason, invalid or unconstitutional, under the laws or constitutions of the State of Texas or the United States of America, or in contravention of any such laws or constitutions, such invalidity, unconstitutionality, or contravention shall not affect any other sections, subsections, provisions, clauses, or words of this Contract or the application of such sections, subsections, provisions, clauses, or words to any other situation or circumstance, and it is Page 8 intended that this Contract shall be severable and shall be construed and applied as if any such invalid or unconstitutional section, subsection, provision, clause, or word had not been included herein, and the rights and obligations of the parties hereto shall be construed and remain in force accordingly. Section 16. VENUE. All amounts due under this Contract, including, but not limited to, payments due under this Contract or damages for the breach of this Contract, shall be paid and be due in Collin County, Texas, which is the County in which the principal administrative offices of NTMWD are located. It is specifically agreed among the parties to this Contract that Collin County, Texas, is a principal place of performance of this Contract. Section 17. OTHER CONDITIONS AND PROVISIONS. (A) Operation and Maintenance of System. NTMWD will continuously operate and maintain the System in an efficient manner and in accordance with good business and engineering practices, and at reasonable cost and expense. NTMWD assumes no responsibility for the operation or maintenance of any portion of the McKinney or Customer system. (B) Title to Water: Indemnification. Title to all water supplied to Customer shall be in NTMWD up to the NTMWD Point of Delivery as set forth in Section 5(A) herein, at which point title shall pass to Customer, except that NTMWD reserves the right of re -use of treated effluent resulting from the use of water by NTMWD, its customers or Customer, to the extent authorized by the State of Texas. NTMWD and Customer shall save and hold each other harmless from all claims, demands, and causes of action which may be asserted by anyone on account of the transportation and delivery of said water while title remains in such party, said indemnification to include all costs and attorneys fees associated with the defense of said claims. Customer expressly agrees to indemnify and hold harmless NTMWD from all said claims, demands, and causes of action which may be asserted by any customer, or other person to whom Customer supplies water, or otherwise arising from McKinney's delivery, or failure to deliver, water to Customer; any breach of any agreement between McKinney and Customer; or from any party's negligence or breach of duty related to performance of any duty at common law or any law, regulation, or statute of the State of Texas or United States of America, or otherwise arising by virtue of any contract between those parties. (C) Operating Expenses of Customer. Customer represents and covenants that all payments to be made by it under this Contract shall constitute reasonable and necessary "operating expenses" of its system, as defined in Section 1502.056, Texas Government Code, and that all such payments will be made from the revenues of its system. Customer represents and has determined that the treated water supply to be obtained from the System, including the Projects and other System facilities, is absolutely necessary and essential to the present and future operation of its water system and is the only available and adequate source of supply of treated water. Accordingly, all payments required by this Contract to be made by Customer shall constitute reasonable and necessary operating expense of its respective system as described above, with the effect that the obligation to make such payments from revenues of such systems shall have priority over any obligation to make any payments Page 9 from such revenues (whether of principal, interest, or otherwise) with respect to all bonds or other obligations heretofore or hereafter issued by Customer. (D) Customer's Rate for Waterworks System. Customer agrees throughout the term of this Contract to continuously operate and maintain its waterworks system, and to fix and collect such rates and charges for water services to be supplied by its waterworks system as aforesaid as will produce revenues in an amount equal to at least (i) all of its payments under this Contract and (ii) all other amounts required to be paid from said revenues by the provisions of the ordinances or resolutions authorizing its revenue bonds or other obligations now or hereafter outstanding and file appropriate financial reports related to the Customer system including annual audits. (E) No Third Party Beneficiaries. This contract has been entered into by and between the parties below and the rights, benefits, duties and obligations assumed hereunder are solely for the benefit of the parties hereto. No right or benefits are conferred upon any person or entity not a party hereto. It being the express intent of the parties that no rights or benefits be created or conferred upon anyone not a signatory to this agreement. Section 18. WATER CONSERVATION. Customer agrees to adopt and enforce any and all ordinances generally related to water conservation as may be adopted or recommended by the Board of Directors of NTMWD or required by the Texas Commission on Environmental Quality and/or may be adopted or recommended by the Board of Directors of NTMWD. Page 10 IN WITNESS WHEREOF, the parties hereto acting under authority of their respective governing bodies have caused this Contract to be duly executed in several counterparts, each of which shall constitute an original, all as of the day and year first above written, which is the date of this Contract. ATTEST: P J Y 1N , SEC A Y (SEAL) BORTj�'EXA ,�P�WATER DISTRICT MARVIN FULLER, 'PRESIDENT GREATER MA TtI (Y THORITY By: lV,ll� PRES BOARD OF DIRECTORS ATTEST: SECRETARY, BOARD OF DIRECTORS (SEAL)' Page 11 Exhibit B Column Water Rate 100% 100% 125% 150% (Volumes up to the amount in each column will be charged at this percentage of the calculated rate) All volumes are in millions of gallons per day. *Column 1 volumes for years 2-10 are to be calculated annually according to Section 2(a) of the Agreement, equivalent to the prior year actual average day consumption, but not to exceed the corresponding annual value in Column 2. Column 1 is the reserved capacity. Volumes over this amount may be supplied at McKinney's discretion. Capital recovery costs $3,204.44 per month times the amount in Column 1 as calculated annually. Column 2 is the rate of flow controller volume. 48 hours notice required to receive volumes in excess of Column 2 Column 2 is the maximum volume that is charged at 100% of the calculated rate. Amounts greater than Column 2 volume but less than Column 3 volume are charged at 125% of the total rate. Column 3 is the maximum volume that is charged at 125% of the calculated rate. Amounts greater than Column 3 volume but less than Column 4 are charged at 150% of the total rate. Amounts greater than Column 4 are charged at 175% of the total rate. Column 1 Column 2 Column 3 Colume 4 Projected Average Surface Water Demand of Maximum Sequence Actual Participating Daily Flow Maximum Maximum Year Year Cities Volume Volume Volume 1 2006-07 1.000 2.6650 3.1040 4.0000 2 2007-08 * 3.1040 4.0000 5.0000 3 2008-09 ' 4.0000 5.0000 6.0000 4 2009-10 * 5.0000 6.0000 7.0000 5 2010-11 * 6.0000 7.0000 7.9390 6 2011-12 7.0000 7.9390 8.9390 7 2012-13 7.9390 8.9390 9.9390 8 2013-14 7.9390 8.9390 9.9390 9 2014-15 ' 7.9390 8.9390 9.9390 10 2015-16 7.9390 8.9390 9.9390 Column Water Rate 100% 100% 125% 150% (Volumes up to the amount in each column will be charged at this percentage of the calculated rate) All volumes are in millions of gallons per day. *Column 1 volumes for years 2-10 are to be calculated annually according to Section 2(a) of the Agreement, equivalent to the prior year actual average day consumption, but not to exceed the corresponding annual value in Column 2. Column 1 is the reserved capacity. Volumes over this amount may be supplied at McKinney's discretion. Capital recovery costs $3,204.44 per month times the amount in Column 1 as calculated annually. Column 2 is the rate of flow controller volume. 48 hours notice required to receive volumes in excess of Column 2 Column 2 is the maximum volume that is charged at 100% of the calculated rate. Amounts greater than Column 2 volume but less than Column 3 volume are charged at 125% of the total rate. Column 3 is the maximum volume that is charged at 125% of the calculated rate. Amounts greater than Column 3 volume but less than Column 4 are charged at 150% of the total rate. Amounts greater than Column 4 are charged at 175% of the total rate. EXHIBIT C WELL CAPACITY Clty of Anna Well #1 150 GPM Well #2 160 GPM Well #3 300 GPM Well #4 150 GPM CitV of Howe Well #1 Inactive Well #2 250 GPM Well #3 425 GPM Well #4 200 GPM City of Melissa Well #1 175 GPM City of Van Alstyne Well #1 100 GPM Well #2 Inactive Well #3 180 GPM Well #4 260 GPM Well #5 320 GPM M7 N 2 r..