Loading...
HomeMy WebLinkAbout06029 ORD - 01/04/1961:JKH:12 -30 -60 r AN ORDINANCE REJECTING ALL BIDS AND PROPOSED CONTRACTS FOR A GAS SUPPLY FOR A TERM OF TWENTY (20) YEARS; ACCEPTING A CONTRACT BID BY HOUSTON NATURAL GAS CORPORATION TO SUPPLY THE NATURAL GAS REQUIREMENTS OF THE CITY OF CORPUS CHRISTI, TEXAS AND ITS GAS DISTRIBUTION SYSTEM FOR A TERM OF FIVE (51 YEARS; AND AUTHORIZING AND DIRECTING THE CITY MANAGER AND THE DIRECTOR OF FINANCE TO EXECUTE SUCH CONTRACT FOR AND ON BEHALF OF THE CITY WITH HOUSTON NATURAL GAS CORPORATION FOR A TERM OF FIVE (5) YEARS, A COPY OF WHICH CONTRACT IS ATTACHED TO THIS ORDINANCE AND MADE A PART HEREOF; AND DECLARING AN EMERGENCY. WHEREAS, IT IS NECESSARY THAT THE CITY OF CORPUS CHRISTI, TEXAS, OBTAIN A SUPPLY OF NATURAL GAS FOR ITS USE AND FOR ITS NATURAL GAS DISTRI- BUTION SYSTEM; AND WHEREAS, ALL BIDS RECEIVED BY THE CITY PURSUANT TO ITS INVITATION AND ADVERTISEMENT FOR BIDS FOR SUCH NATURAL GAS SUPPLY HAVE BEEN REVIEWED; AND WHEREAS, THE CITY COUNCIL HAS DETERMINED TO REJECT ALL BIDS AND PROPOSED CONTRACTS FOR TERMS OF TWENTY (20) YEARS AND CONSIDER BIDS FOR TERMS OF FIVE (5) YEARS; AND WHEREAS, THE CONTRACT BID BY HOUSTON NATURAL GAS CORPORATION TO SUPPLY NATURAL GAS TO THE CITY AND ITS GAS DISTRIBUTION SYSTEM FOR A TERM OF FIVE (5) YEARS HAS BEEN DETERMINED TO BE THE BID MOST ADVANTAGEOUS TO THE CITY• NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI, TEXAS: SECTION 1. ALL BIDS RECEIVED BY THE CITY TO SUPPLY SUCH NATURAL GAS REQUIREMENTS FOR TERMS OF TWENTY (20) YEARS ARE HEREBY REJECTED. SECTION 2. THAT THE CONTRACT BID BY HOUSTON NATURAL GAS CORPORA- TION, A COPY OF WHICH CONTRACT IS ATTACHED HERETO AND MADE A PART HEREOF, TO SUPPLY THE NATURAL GAS REQUIREMENTS OF THE CITY OF CORPUS CHRISTI, TEXAS, AND ITS GAS DISTRIBUTION SYSTEM FOR A TERM OF FIVE (5) YEARS 15 HEREBY ACCEPTED. SECTION 3. THAT THE CITY MANAGER AND THE DIRECTOR OF FINANCE ARE HEREBY AUTHORIZED AND DIRECTED, FOR AND ON BEHALF OF THE CITY OF CORPUS CHRISTI, TEXAS, TO EXECUTE SAID CONTRACT WITH HOUSTON NATURAL GAS CORPORATION P-t 3 • FOR THE PURCHASE OF NATURAL GAS REQUIRED BY THE CITY AND ITS GAS DISTRIBUTION SYSTEM FOR A TERM OF FIVE (5) YEARS FROM AND AFTER MARCH 1, 1961, AT THE PRICES AND UPON THE TERMS AND PROVISIONS CONTAINED IN SAID CONTRACT, UPON APPROVAL OF SAID CONTRACT BY THE CITY ATTORNEY, AND THE CITY SECRETARY IS HEREBY AUTHORIZED AND DIRECTED TO ATTEST TO SAID CONTRACT AND AFFIX THE CORPORATE SEAL OF THE CITY. AS STATED IN SECTION Z OF THIS ORDINANCE, A COPY OF SAID CONTRACT IS ATTACHED HERETO AND MADE A PART OF THIS ORDINANCE FOR ALL PURPOSES. SECTION 4. THE FACT THAT THE PRESENT GAS SUPPLY CONTRACT OF THE CITY OF CORPUS CHRISTI EXPIRES MARCH 1, 1961, AND THAT THE BEST INTERESTS OF THE CITY REQUIRE IMMEDIATE:ACTION TO SECURE AN ADEQUATE SUPPLY OF GAS AFTER THAT DATE CREATES A PUBLIC EMERGENCY AND AN IMPERATIVE PUBLIC NECESSITY REQUIRING THE SUSPENSION OF THE CHARTER RULE THAT NO ORDINANCE OR RESOLUTION SHALL BE PASSED FINALLY ON THE DATE OF ITS INTRODUCTION AND THAT SUCH ORDINANCE OR RESOLUTION SHALL BE READ AT THREE SEVERAL MEETINGS OF THE CITY COUNCIL, AND THE MAYOR, HAVING DECLARED SUCH EMERGENCY AND NECESSITY TO EXIST, HAVING REQUESTED THE SUSPENSION OF SAID CHARTER RULE AND THAT THIS ORDINANCE BE PASSED FINALLY ON THE DATE OF ITS INTRODUCTION AND THAT THIS ORDINANCE TAKE EFFECT AND BE IN FULL FORCE AND EFFECT FR�O /M/ AND AFTER S PASSAGE, IT IS ACCORDINGLY PASSED AND APPROVED, THIS AY O 1961. ATTEST \� MAYOR /lam ' q TFIE CITY 4CORPUS 41STI, TEXAS CITY SECRETARh /� (� G APPROVED AS LEGAL FORM THIS 'JLDAY OF , 196j: CITY ATTORNE ' I N D E X ARTICLE I. AGREEMENT TO SELL AND PURCHASE II. POINTS OF DELIVERY III. MEASUREMENT IV. METERING EQUIPMENT V. QUALITY VI. ODORIZATION OF GAS VII. STATEMENTS CONCERNING AMOUNT OF GAS AND SCHEDULE OF RATES VIII. TAXES IX. LIABILITY OF PARTIES X. GOVERNMENT REGULATIONS AND FORCE MAJEURE XI. DEFAULTS AND REMEDIES XII. TERM AND EFFECTIVE DATE XIII. ASSIGNABILITY OF CONTRACT XIV. GIVING OF NOTICE HEREUNDER XV. MISCELLANEOUS SIGNATURE PAGE ACKNOWLEDGEMENT PAGE • PAGE 1 2 5 7 10 12 12 13 14 15 16 1$ 1$' 19' 19 20. 21, • THE STATE OF TEXAS ) COUNTY OF NUECES }) • THIS AGREEMENT, made and entered into by and between HOUSTON NATURAL GAS CORPORATION, a corporation organized and existing under and by virtue of the laws of the State of Texas, with its principal office in Houston, Harris County, Texas, hereinafter designated Sel- ler, and CITY OF CORPUS CHRISTI, Nueces County, Texas, a municipal corporation, hereinafter designated Buyer, W I T N E S S E T H: WHEREAS, Seller is engaged in the purchase and sale of natural gas in the State of Texas; and WHEREAS, Buyer is the owner and operator of a natural gas distribution system located within and without certain areas of the City of Corpus Christi, Texas, and Buyer desires to purchase and Seller desires to sell to Buyer the natural gas requirements of Buyer's distribution system during the period and upon the terms and conditions set forth in this contract, NOW, THEREFORE, in consideration-of the,mutual covenants herein contained, the parties hereto have agreed as follows: ARTICLE I. AGREEMENT TO SELL AND PURCHASE Subject to. the terms, conditions and limitations hereinafter provided, Seller hereby agrees to sell and deliver to Buyer, and Buyer agrees to purchase and receive from Seller, at the points of delivery hereinafter designated, the quantities of natural gas which may be required by Buyer for its distribution system, includ- ing all gas required for resale to ultimate consumers and all gas required for use on properties of the City, including public build- ings, airport properties, sewer disposal plants and parks, it being the intention of the parties hereto that Seller shall deliver and Buyer will buy all quantities of gas needed by Buyer for its own use or for resale, both within and without the city limits of the City of Corpus Christi, including sufficient quantities to meet -1- the full requirements and obligations of the Buyer to furnish, at all times during the life of this contract, natural gas to all users of such gas connected with Buyer's distribution system for domestic, commercial and industrial purposes. If the City should obtain production of gas from a well or wells on certain lands owned by the City and hereinafter described, it is understood that Seller shall arrange to take such gas from the City under conditions which permit maximum flexibility in deli- veries which will not impair the City's said well or wells or the horizons from which producing. The amounts payable by Buyer under this agreement shall be credited with all gas furnished -by the City from any such production at a rate per MCF which is three cents (3¢) less than the price payable by the Buyer per MCF under this agreement from time to time. It is understood that Seller and Buyer shall cooperate in arranging for the most economical use by Seller of any such gas production which Buyer elects to have taken by Seller. The lands as to which this paragraph applies shall be those lands located within the City limits and owned by the City and the following described lands presently owned by the City but located outside the City limits in Nueces County, Texas, to -wit: Stevens Water Plant Site, near Calallen, approx. 223 acres. Cunningham Water Plant Site, near Calallen, approx. 70 acres. Westside Sewer Plant Site, Saratoga & Greenwood, approx. 100 acres. Holly Road Water Reservoir, approx. 25 acres. C. C. International Air- port, approx. 1825 acres. Lots 9 & 10, Sec. 21, Flour Bluff Fm. Tracts,'approx. 40 acres. ARTICLE II. POINTS OF DELIVERY (1) The point of delivery for all gas delivered here- under shall be at the downstream side of Seller's last valve, flange or fitting downstream from the point of measurement at each delivery point. (2) (a) Seller has heretofore established, at its own cost and expense, the delivery points described below and is now operating suitable meters, regulators and other necessary equip- ment for the sale, measurement and delivery of natural gas to Buyer in accordance with this agreement at the following locations: Moa (1) Shell Road East of Cantwell Lane (2) Old Brownsville Road at Kosar Road Buyer shall have the right to furnish the gas supply to any of Buyer's-property located within or without the City regard- less of whether or not the area within which such property is located is covered under any franchise to any other gas distribution system. (b) In addition, Seller has heretofore established, at its own cost and expense, and is now operating suitable meters, regu- lators and other necessary equipment for the sale, measurement and delivery of natural gas to Buyer at the following locations: (1) Gollihar Road at Weber Road (2)' 1900 Block Navigation Boulevard (3) Highway 44 at Lexington Boulevard (4) Near east property line of Corpus Christi Inter- national Airport (5) Oso Sanitary Sewer Plant on Ennis Joslin Road. (c) At the time of execution of this contract by Buyer, Buyer shall notify Seller in writing whether Buyer elects to con- tinue the five locations described under paragraph (b) above as delivery points -under this contract. If Buyer elects to continue such points as delivery points hereunder, then, at any time or from time to time after March 1, 1964 upon one year's written notice to Buyer, Seller shall have the continuing right to termi- nate any one or more of such delivery'points above described as delivery points under this contract; provided, however, that if Buyer by written notice to Seller within such one year period should designate such delivery point or points as constituting one or both of the additional delivery points under paragraph (3)(b) hereof, such delivery point or points shall continue as delivery points under this contract. (3) Such existing meter stations and points of delivery shall constitute the place of measurement and points of delivery under this contract subject to the provisions of paragraph (2) above and the provisions hereinafter set forth: -3- (a) In the event any metering and /or regulating facilities of Seller shall be required to be moved to a new location to faci- litate any public works program of any governmental agency other than the City of Corpus Christi (whether or not Seller is entitled to any reimbursement), Seller shall move such facilities to such new location as is agreeable to Seller and Buyer without cost to Buyer, unless Buyer's participation in such public works program requires Buyer to stand the expense of land acquisitions and of facility removal and relocation. In the event the City of Corpus Christi requests in writing that any metering and /or regulating facilities or point of delivery be moved to a new location, Seller shall be reimbursed for the cost of removal and relocation and shall be furnished by Buyer with an equivalent site upon which to relocate such facilities at the expense of Buyer, but subject to the control and operation of Seller under the terms of this contract during the term of this contract. (b) Subject to the provisions of paragraph (2) above, for the purpose of enabling Seller to discharge its obligation to Buyer, when and if Buyer's gas requirements should increase, Sel- ler will construct at the cost and expense of Seller (and Seller will operate and have free use of the land furnished by Buyer, occupied by the station or stations) two additional metering stations and delivery points, adjacent to its transmission lines, at such points as may be mutually agreed upon by Buyer and Sel- ler. Seller shall have at least one hundred and twenty (120) days to construct the facilities at such new point of delivery after the location of such new point of delivery has been agreed upon. It is understood that the establishment of the new deli- very points to be operated by Seller as provided for herein shall be for the purpose of serving the expanded requirements of Buyer's distribution system and not for the purpose of serving single large customers. -4- ARTICLE III. MEASUREMENT Seller shall deliver gas to Buyer at a reasonably constant pressure selected by and satisfactory to Buyer, but in no event to exceed a maximum pressure of 150 p.s.i.g, during the first contract year ending March 1, 1962, 140 p.s.i.g. during the second contract year ending March 1, 1963, 135 p.s.i.g. during the third contract year ending March 1, 1964 and 125 p.s.i.g. during the remaining term of this agreement. Notwithstanding the foregoing limitations, Sel- ler shall make gas available to Buyer at such additional pressure in excess of Seller's maximum obligation as stated above, as Sel- ler's system may have available for delivery at the respective points of delivery from time to time. The gas delivered hereunder shall be measured at such pressure as may exist by virtue of Sel- ler's operating conditions, but for the purpose of making payment therefor by Buyer to Seller the volume of natural gas delivered shall be as follows: (1) Sales Unit: The contract sales unit of the gas delivered by Seller shall be one thousand (1,60o) cubio feet of gas referred to herein as "MCP", and the unit Of volume for the purpose of measurement of the quan- tity to be billed at the prices provided in this agreement shall be one (1) cubic foot of gas at a temperature base of sixty degrees Fahrenheit (600F.) and a pressure base of fourteen and sixty -five one - hundredths (14.65) pounds per square inch absolute with cor- rections for deviation from Boyle's Law. Seller shall also deter- mine and report to Buyer monthly as a part of the accounting for gas delivered hereunder the total quantity of gas delivered by Seller to Buyer using as the unit of volume for the purpose of measurement one (1) cubic foot of gas at a temperature base of sixty degrees Fahrenheit (600F.) and a pressure base of fifteen and two - tenths (15.2) pounds per square inch absolute with cor- rection for deviation from Boyle's Law. Buyer shall have the right to be represented at and to participate in all tests of any equipment used and to inspect at any time during business hours any and all equipment of Seller used for the determination of the volume and quality of gas delivered hereunder. -5- (2) ,Determination of Volume; For orifice meter measurement, the installation specifica- tions, coeffi6ients, factors and calculations, including deviation of the gas from Boyle's Law (specific gravity method) shall be in accordance with Gas Measurement Committee Report No. 3 on "Orifice Metering of Natural Gas" dated April, 1955, of the American Gas Association, or any subsequent revision thereof. For positive displacement meter measurements, the installa- tion specifications, methods of testing, factors and calculations used shall be in accordance with American Meter Company's Handbook E -4. Recognizing that the atmospheric pressure may vary somewhat from time to time and that the average atmospheric pressure is ap- proximately 14.7 pounds per square inch, it is agreed that, for the purposes of measurement and computation, the atmospheric pressure shall be assumed to be 14.7 pounds per square inch, regardless of the actual atmospheric pressure at which the gas is delivered and measured. The arithmetical average of the hourly temperature recorded during each day, the factor for speoifie.gravity according to the latest test therefor and the corrections for deviation from Boyle's Law applicable during each day shall be used to make proper compu- tations of volumes hereunder. Chart integration and volume compu- tations shall be made by Seller as accurately as possible and within the accuracy prescribed by the manufacturer of the computing equipment used. The temperature of the gas shall be determined by means of a recording thermometer of standard manufacture and so installed that it may properly record the temperature of the gas flowing through the meter or meters. At Buyer's option the specific gravity of the gas shall be determined by a recording gravitometer of approved type or by monthly tests made with an Acme or other approved type gas balance. If Buyer elects to determine gravity by a recording gravitometer, Seller shall purchase, install and maintain said gravitometer at Seller's expense. Seller's obligation to purchase and install a gravitometer shall ex- tend to only one delivery point to be selected by Buyer or a mutu- ally-agreed upon point on Seller's pipe line. However, should Buyer elect to use a gravitometer or gravitometers at another point or points of delivery, Seller shall purchase and install same at Buyer's expense and Seller shall be obligated to maintain and operate free of charge to Buyer all such recording gravitometers. When a record- ing gravitometer is used the arithmetical average of the gravities recorded during period of flow only shall be used for computation purposes for each chart period. In determining the volume of gas delivered through the ori- fice during the chart period, the orifice chart integrator shall be used in reading the meter chart. (3) At the written request of the Buyer for measurement on, any pressure base other than 14.65 p.s.i.a., the price payable here- under will be adjusted to correspond to such requested pressure base and the amounts payable by the Buyer hereunder will be billed by Seller at such requested pressure base and corresponding adjusted price. It is distinctly understood that the billing by Seller to Buyer at such requested pressure base and corresponding adjusted price shall in no way reduce or increase the total amount payable by Buyer to Seller under the provisions of this agreement. ARTICLE IV. METERING EQUIPMENT (1) Sales Measuring Station: Seller shall install and maintain in accurate repair at the point or points of delivery herein provided, meters of ample size and type for the accurate measurement of the gas delivered by Sel- ler hereunder, and shall cause said meter or meters to be read and /or have charts changed regularly. (2) Check Measuring Equipment: Buyer may install, maintain and operate, at its own expense, such check measuring equipment as desired, provided that such equip- ment shall be so installed as not to interfere with the operation of Seller's measuring equipment at or near the point or points of delivery. -7- (3) Right to be Present: Seller and Buyer shall have the right to have representa- tives present at the time of any installing, reading, cleaning, changing, repairing, inspecting, testing, calibrating or adjusting done in connection with the other's measurement equipment used in measuring or checking the measurement of deliveries of gas under the gas sales contract. Each party shall give the other party two (2) days' written notice prior to the date of all such actions, or work to be done, so that the other party may conveniently have its repre- sentative or representatives present; provided, however, that if either party has given such notice to the other party and no repre- sentative of the other party is present at the time specified, then the party giving the notice may proceed with the work as though a representative of the other party were present. The above notifi- cation requirement shall also apply to tests and calibrations re- ferred to under the next following paragraph 4 of this Article IV. The records from such measuring equipment shall remain the property of their owner but upon request each will submit to the other its records and charts together with calculations therefrom for inspec- tion and verification subject to return within ten (10) days after receipt thereof. (4) Calibration and Tests of Meters: The respective meters, meter readings and meter charts shall be at all reasonable times accessible to inspection and examination by Buyer. At least once every thirty (30) days, Seller shall cali- brate its orifice meters, calorimeters, gravitometers and thermo- meters, and at least once each twelve (12) months, Seller shall calibrate its positive displacement meters. Buyer shall have the right to require the meters to be calibrated at any time, but cali- brations made at Buyer's request shall be at the expense of Buyer unless the percentage of inaccuracy is found to be more than two (2) per cent, in which case the calibration shall be made at the expense of Seller. Readings, calibrations and adjustments of Sel- ler's meters and changing of charts shall be done only by Seller, but all data with respect thereto shall at all reasonable times be In available to Buyer. If, upon any test, the percentage of inaccuracy shall be more than two per cent (2 %), registrations thereof shall be corrected at the rate of such inaccuracy for any period which is def- initely known or agreed upon, then for a period extending back one- half (1/2) of the time elapsed since the last date of calibration. Following any test, metering equipment found inaccurate shall im- mediately be restored by Seller to a condition as near as possible to 100% accuracy. (5)' Correction of Metering Errors - Failure of Meters: If for any reason any meter of Seller is out of- service or out of repair, so that the amount of gas delivered cannot be ascer- tained or computed from the reading thereof, the amount of gas de- livered during the period such meter was 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, using the first of the following methods which is feasible: (a) By using the registrations of Buyer's check meters, if installed as hereinafter provided for an accurate registering; (b) By correcting the error, if.the percentage of error is ascertainable by calibration, test or. mathematical calculations; (e) By estimating the quantity of the delivery upon the basis of deliveries during period under similar operating condi- tions when the meter was registering accurately. (d) In the event that the parties hereto cannot agree, as above provided, upon the amount of gas delivered during the time when a meter is out of service or out of order, then and in such an event the matter shall be arbitrated. The Buyer shall promptly appoint a representative and the Seller shall likewise appoint a representative. The two representatives thus appointed shall choose a third disinterested, competent arbitrator, who shall as soon as possible convene the Board of Arbitration and, after hear- ing such evidence and arguments as the Board may deem advisable, shall promptly render a written decision which shall be binding upon the parties. In the event that the arbitrator appointed by the Buyer and the one appointed by the Seller cannot agree upon -9- a third disinterested, competent arbitrator, then and in such an event, the parties shall immediately jointly apply to any United States District Judge of the Southern District of Texas to appoint a third arbitrator as above provided, and thereafter the matter shall proceed as above stated. (6) Preservation of Metering Records: Seller and Buyer shall each preserve for a period of at least two (2) years all test data, charts, and other similar re- cords. ARTICLE V. QUALITY (1) Heating Value: The gas to be delivered under this contract shall be natural gas from Seller's present or future sources of supply, provided, however, that helium, natural gasoline, butane, propane, and any other hydrocarbons except methane may be removed prior to delivery of such gas to Buyer, the gas to have a total heating value of one thousand (1,000) British thermal units per cubic foot of gas at a temperature of sixty degrees Fahrenheit (600F,) and at an absolute pressure equivalent to thirty (30) inches of mercury at thirty -two degrees Fahrenheit (320F.) when saturates- with water vapor. If the weighted average by volume of the heating value con- tent of all gas delivered hereunder during any calendar month or billing period shall not fall below one thousand (1,000) BTUs per cubic foot of gas, there shall be no BTU adjustment. In the event such weighted average by volume heating value content shall fall below one thousand (1,000) BTUs for the month or billing period, then, and in such event, the metered volume of gas delivered here- under for payment purposes shall be decreased one -tenth of one per cent (0,10) for each BTU below one thousand (1,000) BTUs per cubic foot. Buyer shall not be obligated to take gas with a heating value of less than 950 BTUs per cubic foot. At Buyer's option the BTU content of the gas shall be deter- mined by a recording calorimeter of approved type or by tests as re- quested by Buyer with a Sargent Gas Calorimeter or other approved type gas calorimeter, or by such other method as shall be agreed upon by the parties. If Buyer elects to determine the BTU content -10- by a recording calorimeter, Seller shall purchase, install and maintain said calorimeter at Seller's expense. Seller's obliga- tion to purchase and install a calorimeter shall extend to only one delivery point to be selected by Buyer or a mutually agreed upon point on Seller's pipe line. However, should Buyer elect to use a recording calorimeter or calorimeters at another point or points of delivery, Seller shall purchase and install same at Buyer's expense and Seller shall be obligated to maintain and operate free of charge to Buyer all such calorimeters. When a recording calorimeter is used the arithmetic average of the re- cordings during period of flow only shall be used for computing purposes for each chart period. At Buyer's request, Seller shall furnish a statement reflecting the weighted average by volume of the BTU content of the gas delivered during each calendar month or during each billing period. (2) Freedom From Objectionable Matter: The natural gas to be delivered by Seller to Buyer here- under shall conform to the following requirements and specifica- tions: (a) Such gas shall'be commercially free from dust or other solid or liquid matters which might interfere with its merchantability or cause injury to or interference with proper operation of the lines, regulators, meters, or other appliances through which it flows or in which it is used. (b) Such gas shall not contain more than one (1) grain of hydrogen sulphide per one hundred (100) cubic feet of gas volume when tested in accordance with the following procedure: A strip of white filter paper previously moistened with fresh five per cent (5 %) lead acetate solution shall be exposed to the gas for one and one -half (1 -1/2) minutes in a previously purged apparatus through which the test gas is flowing at a rate of approximately five (5) cubic feet per hour; the gas shall not directly impinge upon the test strip during the test. At the end of the stated time the test paper thus exposed shall be compared with a second test strip similarly prepared but not exposed to -11- the test gas. If the exposed strip is not noticeably darker than the comparison strip the gas under test shall be considered accept- able. I£ the exposed strip is definitely darker than the compari- son strip the-gas shall be tested quantitatively for hydrogen sul- phide by the Tutweiler Method; and (a) Such gas shall not contain more than twenty (20) grains of total sulphur per one hundred (100) cubic feet of gas volume, nor more than three per cent (3 %) by volume of carbon dioxide, nitrogen and other inert gases. When a gas analysis shows such limits stated in this Section (2) are exceeded, Seller shall immediately determine the source and discontinue the delivery of such gas to.Buyer. ARTICLE VI. ODORIZATION OF GAS It is distinctly understood that there shall be no obliga- tion upon Seller to odorize the gas to be delivered hereunder, but any odorization of gas that may be required by law or the Charter or Ordinances of the City of Corpus Chrisit prior to sale for domes- tic, commercial and industrial use shall be performed by Buyer, and Buyer shall indemnify and save harmless the Seller against all claims for damages arising from or growing out of any failure-to properly odorize such gas as required bylaw or the Charter or Ordinances of the City of Corpus Christi. ARTICLE VII. STATEMENTS CONCERNING AMOUNT OF GAS AND SCHEDULE (1) On or before the tenth (10th) day of each calendar month Seller shall render a statement to Buyer showing the quan- tity of gas delivered to Buyer during the preceding calendar month or billing period, which billing period shall be approximately thirty (30) days, and the amount payable therefor by Buyer. Such statement shall show the number of MCF delivered using the contract pressure base of 14.65 pounds per square inch absolute, and also the number of MCP delivered using a pressure base of 15.2 pounds per square inch absolute. (2) For all gas delivered during the preceding calendar month or billing period during the term hereof (measured at a pres- sure base of 14.65 p.s.i.a.), and adjusted for BTU content as herein -12- otherwise provided, Buyer shall pay Seller on or before the twenty - fifth (25th) of each calendar month by its check and at the office of Seller in Corpus Christi, Nueces County, Texas, based upon the following schedule of gas prices; Unit Price. per MCF During First Contract Year (3/1/61 through 2/28/62) 20¢ During Second Contract Year (3/1/62 through 2/28/63) 20¢ During Third Contract Year (3/1/63 through 2/29/64) 20¢ During Fourth Contract Year (3/1/64 through 2/28/65) 23¢ During Fifth Contract Year (3/1/65 through 2/28/66) 24.5¢ The unit prices stated in the foregoing price schedule are exclusive of and do not include any adjustment required by reason of changes in taxes under the provisions of Article VIII of this contract. It is agreed that Buyer shall have the option to terminate this contract at the end of the fourth contract year by delivery to. Seller of written notice of its exercise of such option at least one (1) year prior to the end.of such fourth contract year. This option to cancel and terminate this contract shall apply only to Buyer, and if Buyer fails to exercise such option, this contract shall continue in full force and effect until March 1, 1966 at 8 A. M. ARTICLE VIII. TAXES It is understood by the parties hereto that the price fixed herein includes all present taxes of every nature assessed as of June 1, 1960, and entering into the cost of gas of Seller, as well as all present taxes entering into the cost of providing gas service under this agreement, up to the point of delivery to the Buyer, and in the event there is any change in the amount of such taxes or any new or subsequently applicable taxes allocable to each one thousand (1,000) cubic feet of gas of the quantity, quality and measurement provided herein, Seller shall make an adjustment in its billing under this agreement reflecting the effect of such change in taxes, if any. The word "taxes" as used in this paragraph does not include income, excess profits, ad valorem, franchise, or State of Texas gross receipts taxes, for the reason that the latter shall at all -13- times be wholly the responsibility of Seller. The amount of such taxes for which payment is due hereunder shall'be billed by Seller to Buyer each month in like manner as provided in Article VII hereof for statements concerning amount of gas. If the amount of such taxes for which payment is due hereunder is not ascertainable as a practical matter until a later period, such billing under this Article VIII shall be made to Buyer as of the earliest billing period next following the calculation of such taxes. ARTICLE IX. LIABILITY OF PARTIES Seller shall not be responsible for the condition, mainte- nance, repair or upkeep of Buyer's service lines, appliances, equip- ment, or any utilization of gas after it has passed the delivery point as hereinabove provided for, and neither shall Buyer be re- sponsible for the condition of Seller's lines or other appliances used in the delivery of such gas to Buyer. Seller shall not be responsible for personal injuries or for damages resulting from explosion or fire or from the use of gas delivered hereunder aris- ing from any cause after such gas has passed the delivery point as hereinabove provided for. Buyer shall not be responsible for per- sonal injuries or damages resulting from explosion or fire or from the conveyance of such gas up to the delivery point as above pro- vided for arising from any cause. Seller agrees to indemnify and save harmless the Buyer against any liability for personal injuries to employees or agents of Seller, and Buyer agrees to indemnify and save harmless the Seiler against any liability for personal injur- ies to the employees or agents of Buyer when the cause of such per- sonal injuries exists on the side of the delivery point for which the indemnifier is responsible as provided in this Article. Nothing herein shall be construed as relieving Seller of any responsibility or liability for any damages resulting from Seller's failure to comply with the provisions of this contract relating to pressure and quality. -14- • ARTICLE X. GOVERNMENT REGULATIONS AND FORCE MAJEURE The term "force majeure" shall mean acts of God, strikes, lockouts, or other industrial disturbances, acts of the public enemy, wars, blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, storms, floods, washouts, arrests and restraints of the government, either federal or state, civil or mili- tary; civil disturbances, explosions, breakage or accident to machi- nery or lines of pipe and any other causes, whether of the kind herein enumerated or otherwise, not reasonably within the control of the party claiming suspension, and which by the exercise of due diligence such party is unable, wholly or in part, to prevent or overcome. The settlement of strikes or lockouts shall be entirely within the good faith discretion of the party having the difficulty, and the requirement that any force majeure shall be remedied with all reasonable dispatch shall not require the settlement of strikes or lockouts by acceding to the demands of the opposing party when such course is inadvisable in the good faith discretion of the party having the difficulty. This contract shall be subject to all existing and future rules, regulations, orders, laws or proclamations of governmental authorities (both federal and state, including both civil and mili- tary) having jurisdiction over the parties hereto or the subject matter hereof. In the event that either party is rendered unable, wholly or in part, by force majeure or other causes specified in this con- tract to carry out its obligations under this contract other than the obligation to make payments of amounts due hereunder, and such party gives notice and reasonably full particulars of such force majeure in writing or by telegraph to the other party within a reasonable time after the occurrence of the cause relied on, then the obligations of the party giving such notice, so far as they are affected by such force majeure or other causes specified in the contract shall be suspended during the continuance of any in- ability so caused, but for no longer period, and such cause shall so far as possible be remedied with all reasonable dispatch. -15- Either party may partially or entirely interrupt its performance hereunder for the purpose of making necessary inspections, altera- tions and repairs, but only for such time as may be reasonable or unavoidable; aha the party requiring such relief shall give to the other party reasonable notice of its intention to suspend its per- formance hereunder, except in cases of emergency where such notice is impracticable, and shall endeavor to arrange such interruptions so as to inconvenience the other party as little as possible. Ser- vice interruptions on the part of either party which are sanctioned by the provisions of this paragraph are expressly included within the definition of "force majeure" for the purposes of this contract. Force majeure shall in no event be interpreted to mean or include the failure of Seller to commence delivery of the commencement date specified by lack of, or delay in installation of, delivery lines or other facilities, or any interruption of gas supply due to failure of Seller to have a sufficient gas supply under contract to meet all commitments of Seller to all persons in accordance with and in keeping with all regulations of any and all regulatory bodies. ARTICLE XI. DEFAULTS AND REMEDIES Any default in performance hereof by Seller shall entitle Buyer to the payment of monetary damages for all damages or loss, including cost of any outside supply obtained by Buyer to keep its system in operation, which Buyer may actually incur or suffer by reason of or as a result of such default by Seller, and Buyer may also enforce specific performance of this contract by Seller. Buyer shall be under no obligation to procure any outside supply of gas or contract for any standby service. Any default by Seller in the performance of its obligations under this contract which results. in Seller's failure or inability to deliver to Buyer substantially all of the quantities of gas (of substantially the quality specified) at the times and rates of delivery which Seller is obligated to de- liver, shall be deemed a "material default" by Seller, and in addi- tion to all other remedies which it may elect, Buyer may, at its option, terminate this contract by giving written notice to Seller stating specifically the cause or causes for terminating this -16- contract and declaring it to be the intention of Buyer to terminate the same; whereupon, Seller shall have sixty (60) days after the service of such notice in which to remedy or remove the cause or causes stated in the notice for termination of this contract, and if within said period of sixty (60)'days Seller does so remove or remedy said cause or causes, and fully indemnify Buyer for any and all consequences of such material default, then such notice shall be withdrawn and this contract shall continue in full force and effect. In case Seller does not so remedy or remove the cause or causes or does not indemnify Buyer for any and all consequences of such material default within said period of sixty (60) days, then Buyer may, if it so elects, declare said contract null and void from and after the expiration of said period. Any such cancella- tion of this contract by Buyer shall be without prejudice to the right of Buyer to collect or withhold any amounts then due it from Seller, but shall not constitute a waiver of any other remedy to, which Buyer might be entitled for breach of this contract by Sel- ler. If Buyer should default in performance of its obligations under this contract, Seller may, at its option, terminate this con- tract by giving written notice to Buyer stating specifically the cause or causes for terminating this contract and declaring it to be the intention of Seller to terminate the same; whereupon, Buyer shall have sixty (60) days after the service of such notice in which to remedy or remove the cause or causes stated in the notice for termination of this contract, and if within said period of sixty (60) days Buyer does so remove or remedy said cause or causes, and fully indemnify Seller for any and all consequences of such breach, then such notice shall be withdrawn and this contract shall continue in full force and effect. In case Buyer does not so remedy or remove the cause or causes or does not indemnify Seller for any and all consequences of such breach within the said per- iod of sixty (60) days, then Seller may, at its option, declare said contract null and void from and after the expiration of said period. Any such cancellation of said contract shall be without prejudice to the right of Seller to collect any amounts then due -17- it from Buyer, but shall constitute a waiver of any other remedy to which Seller might be entitled. In the event of default by Buyer in the performance of its obligations under this contract, and if Seller does not elect to terminate this contract, Seller shall be entitled to payment from Buyer of monetary damages for all damages or losses which Seller may actually incur or suffer by reason of or as a result of such default by Buyer, but Seller shall not be entitled to enforce spe- cific performance of this contract by Buyer. ARTICLE XII. TERM AND EFFECTIVE DATE Unless sooner terminated by Buyer under Article VII or by either party under Article XI hereof, this contract shall be for a term of five (5) contract years commencing on the date of approval by the City Council and execution by both parties, or on March 1, 1961, whichever date shall last occur, and ending on March 1, 1966 at 8 A. M. If such commencing date should be later than March 1, 1961, then the first contract year shall begin on such commencing date and end on March 1, 1962 at 8 A. M. Subject only to the provisions of force majeure (as con- tained in Article X hereof) and said termination provisions of Articles VII and XI, Seller is hereby obligated to supply the entire natural gas requirements pursuant to the provisions of this contract for the use of Buyer and for resale by Buyer through its gas distribution system within and without the City of Corpus Christi for the entire term of five (5) contract years, ending March 1, 1966 at 8 A. M. ARTICLE XIII. ASSIGNABILITY OF CONTRACT The provisions of this contract shall be binding upon and inure to the benefit of the successors, assigns and legal represen- tatives of the parties hereto, but neither Buyer or Seller shall have the right to assign this contract or any portion thereof or interest therein without the prior written consent of the other party hereto; provided, however, that either Seller or Buyer, or both, may assign its right, title and interest in, to and by vir- tue of this agreement, including any and all extensions, renewals, -18- amendments and supplements thereto, to a trustee or trustees, in- dividual or corporate, as security for bonds or other obligations or securities, and, if any such trustee be a corporation, without its being required by the parties hereto to qualify to do business in the State of Texas; provided further, that the party making such an assignment shall remain liable to observe and perform all of the conditions and covenants of this agreement. Seller shall forth- with furnish to Buyer a certified copy of any instrument of assign- ment by Seller to a wholly owned subsidiary. ARTICLE XIV. GIVING OF NOTICE HEREUNDER Any written notice to be given or served hereunder shall be deemed sufficiently given or served when deposited in the United States mail, with postage prepaid, addressed to Seller at its office in Corpus Christi, Texas, and to Buyer at its office in Corpus Christi, Texas. ARTICLE XV, MISCELLANEOUS (1) Seller shall furnish Buyer annually on or before July 1 of each year of the term hereof, beginning with the year 1961, the following information: (a) A certificate of gas reserves stating the quantity of Seller's gas reserves, of date not earlier than the preceding December 31, connected to and projected for consumption in Seller's system or portion of Seller's system supplying gas hereunder, Seller may satisfy this requirement by furnishing to Buyer the annual certificate of gas reserves prepared pursuant to and in accordance with Seller's Indenture of Mortgage dated November 15, 1955, as amended to date, between Houston Natural Gas Corporation and Maryland Trust Company as Trustee. Upon written request by Buyer to Seller to be given at least one year prior to the date on which same is to be furnished, such certificate shall be furnished by an independent gas consulting engineer to be mutually agreed upon by Buyer and Seller. If Buyer and Seller are unable to agree, then such engineer shall be selected by arbitration in the manner provided in Article IV of this contract. M.S r-Ij • (b) A tabulation by classes of customers of Seller's gas sales each year from Seller's system or portion of Seller's system delivering gas hereunder. (2) Any personal property of Seller placed upon real property owned by Buyer shall remain the property of Seller whether or not affixed to the realty of Buyer. (3) This contract constitutes the entire agreement be- tween the parties and no other representations, memoranda, agree- ments or other matter, oral or written, prior to the time hereof, shall vary, alter or interpret the terms hereof. The side head captions and the index in this instrument are for the convenience of the parties in identification of the provisions hereof and shall not constitute a part of the agreement nor.be considered interpretive thereof. In the consideration and interpretation of this agreement, the following shall apply: (a) This agreement is considered as having been prepared jointly by the parties hereunder and not by either party to the exclusion of the other. (b) Failure to exercise any right hereunder shall not be considered a waiver of such right or rights in the future. (c) Time is of the essence with regard to all obligations to be performed on or by a specified date, if any, herein contained. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed in duplicate originals this day of 1g60. ATTEST: HOUSTON NATURAL OAS CORPORATION By Secretary Jorin H. Wimberly, President "SELLER" ATTEST: CITY OF CORPUS CHRISTI, TEXAS By City ecre ary City Manager APPROVED: "BUYER" City orney -20- THE STATE OF TEXAS COUNTY OF HARRIS BEFORE ME, the undersigned authority, on this day person- ally appeared JOHN H. WIMBERLY, President ' of HOUSTON NA GAS CORPO A IO , a Texas -corpora on, known to me to be the person whose name is subscribed to the foregoing in- strument, and acknowledged to me that he executed the same for the purposes and consideration therein expressed, in the capacity therein set forth, and as the.act and deed of said corporation. GIVEN under my hand and seal of office this the day of , 1g60. RMARY PUBLIC In ME for Harris County, Texas. THE STATE OF TEXAS COUNTY OF NUECES BEFORE ME, the undersigned authority, on this day person- ally appeared , City Manager of the City of Corpus Christi, Texas, a municipal corporation, known to me to be the person and official whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same for the purposes and consideration therein expressed, in the capacity therein set forth, and as the act and deed of said City. GIVEN under my hand and seal of office this the day of , ig6o. NOTARY PUBLIC in- and for Nueces County, Texas. -21- r CORPUS CHRISTI TEXAS oAT OF � '19 / fp J TO THE MEMBERS OF THE CITY COUNCIL CORPUS CHRISTI, TEXAS FOR THE REASONS SET FORTH IN THE EMERGENCY CLAUSE OF THE FORE- GOING ORDINANCES A PUBLIC EMERGENCY AND IMPERATIVE NECESSITY EXIST FOR THE SUSPENSION OF THE CHARTER RULE OR REQUIREMENT THAT NO ORDINANCE OR RESOLU- TION SMALL BE PASSED FINALLY ON THE DATE IT IS INTRODUCEDO AND THAT SUCH ORDINANCE OR RESOLUTION SMALL BE READ AT THREE MEETINGS OF THE CITY COUNCIL'; 1, THEREFORES HEREBY REQUEST THAT YOU SUSPEND SAID CHARTER RULE OR REQUIRE- MENT AND PASS THIS, ORDINANCE FINALLY ON THE DATE IT BS INTRODUCEDS OR AT THE PRESENT MEETING OF THE CITY COUNCIL. • RE$PPCTFULLYp YO THE Cl 0 CORPUS CH IST1, TEXAS THE CHARTER RULE WAS SUSPENDED BY THE FOLLOWING VOTES ELLROY KIND JAMES L. BARNARD MRS. ,RAY AI RMEART JOSEPH B. DUNN PATRICK J. DUNNE R. A. HUMBLE AABE- LOXANO�.SR. - THE ABOVC ORDINANCE WAS PASSED BY THE FOLLOWING VOTES ELLRoY KING - JAMES L. BARNARD MRS. RAY AIRNEART / JOSEPH B. DUNN PATRICK J. DUNNE R. A. HUMBLE GABE LOEAMO, SR.