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10-C LCWSD Wholesale Treated Water Contract DRAFT F:ALICE\RESWORK\CURRNENTI LCWSD Water Purchase Contract 2006 Res April 19, 2006 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS, TERMINATING THE EXISTING WATER PURCHASE CONTRACT BETWEEN THE CITY OF PARIS AND LAMAR COUNTY WATER SUPPL Y DISTRICT; APPROVING, ACCEPTING, AND AUTHORIZING THE EXECUTION OF A NEW WHOLESALE TREATED WATER CONTRACT BETWEEN THE CITY OF PARIS AND THE LAMAR COUNTYW ATERSUPPL YDISTRICT; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City of Paris has been since July 17, 1967, furnishing water to Lamar County Water Supply District (LCWSD) under the terms of a Water Purchase Contract; and, WHEREAS, the City Council of the City of Paris did heretofore, on the 15th day of April, 1985, in Resolution No. 85-028 approved a Water Purchase Contract between the City of Paris and Lamar County Water Supply District which modified and amended the July 17, 1967 contract; and WHEREAS, the City Council of the City of Paris, did heretofore authorize the negotiation of a cost of service Water Purchase Contract between the City of Paris and Lamar County Water Supply District; and, WHEREAS, it is deemed to be in the best interest of the citizens of Paris that said existing Water Purchase Contract be terminated and declared null and void, and a new Wholesale Treated Water Contract in the form of Exhibit A attached hereto and made a part hereof, be in all things approved; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS: Section 1. That the findings set out in the preamble to this resolution are hereby in all things approved. Section 2. That the existing Water Purchase Contract between the City of Paris and Lamar County Water Supply District dated July 17, 1967 and modified in April of 1985, be and the same is hereby terminated and declared null and void. Section 3. That the new Wholesale Treated Water Contract with the Lamar County Water Supply District for water service and establishing the consideration for the same prescribed in Exhibit A attached hereto, be, and the same is hereby approved and accepted. r'" Section 4. That the Mayor of the City of Paris be, and he is hereby authorized and directed on behalf of the City of Paris to execute the new Wholesale Treated Water Contract attached hereto as Exhibit A. Section 5. That this resolution shall be effective from and after its date of passage. PASSED AND APPROVED this 8th day of May, 2006. Curtis Fendley, Mayor ATTEST: Janice Ellis, City Clerk APPROVED AS TO FORM: John D. Lestock, Assistant City Attorney r- . WHOLESALE TREATED WATER CONTRACT THESTATEOFTEXAS ~ ~ COUNTY OF LAMAR ~ This Wholesale Treated Water Contract ("Agreement") is made and entered into by and between the City of Paris ("Paris"), a municipal corporation, and Lamar County Water Supply District ("LCWSD"), a Conservation and Reclamation District and political subdivision of the state of Texas, for the sale and purchase of Treated Water. This Agreement sets out the terms and conditions under which Paris will deliver Treated Water to LCWSD on a wholesale basis, and LCWSD will pay Paris for providing it with such Treated Water. RECIT ALS WHEREAS, Paris owns and operates a water supply and treatment system capable of providing to LCWSD, based on its current water usage pattern, 395,820 gallons per hour (gph) of Treated Water, produced at the city's Water Treatment Plant during Phase 1 of this Agreement; and WHEREAS, following the construction of improvements to its system necessary to commence Phase 2 of this Agreement, Paris would be capable of providing to LCWSD, based on its current water usage pattern, 499,980 gph of Treated Water, produced at the City's Water Treatment Plant; and WHEREAS, LCWSD owns and operates a distribution system and furnishes water service to customers both within and outside of its boundaries and certificated service area; and WHEREAS, LCWSD previously contracted with Paris for a wholesale supply of water, pursuant to a water purchase contract executed on July 17, 1967 and subsequently amended and modified on December 13, 1977, April 1, 1985, and March 14, 1988 (the "1967 Water Purchase Contract"); and WHEREAS, LCWSD needs to increase its supply of Treated Water in excess of the quantity specified in the 1967 Water Purchase Contract in order to meet its present and future needs; and WHEREAS, the Parties desire to tenninate the 1967 Water Purchase Contract, and replace that contract with this Agreement; and WHEREAS, it is deemed to be in the best interests of both Paris and LCWSD that said Parties enter into a mutually satisfactory agreement by means of which LCWSD may obtain from Paris a larger supply of Treated Water; and Paris/LCWSD Wholesale Treated Water Contract WHEREAS, the Interlocal Cooperation Act, Chapter 791 of the Texas Govemment Code, authorizes Paris and LCWSD to enter into this Agreement; and WHEREAS, Paris and LCWSD concur that the tenns, conditions and considerations stated herein are fair, just and reasonable and will mutually benefit the Parties and serve the public interest; and NOW, THEREFORE, in consideration of the mutual promIses, covenants and considerations set forth herein, the Parties agree as follows: ARTICLE I - DEFINITIONS The following terms shall have the meanings set out below: 1.1. "Agreement" means this Wholesale Treated Water Contract and any subsequent amendments agreed to in writing by the Parties. 1.2. "Approvals" means any and all pem1its, appropriations, clearances, licenses, authorizations, consents, decrees, waivers, privileges, filings, exemptions, easements or approvals of any Person or any federal, state, city, county, local, or regional authorities, departments, bodies, commissions, corporations, branches, agencies, courts, tribunals, judicial authorities, legislative bodies, administrative bodies or regulatory bodies. 1.3. "Capacity Charge" means the fixed annual payment amount to be paid in twelve equal installments for each year, calculated based on the Phase 1 Maximum Hour Capacity Demand as a percentage of the Initial Rated Plant Capacity of the Water Treatment Plant, as shown in Exhibit 1, plus corresponding adj ustments for the commencement of Phase 2. 1.4. "Cost of Service Study" means that study performed annually pursuant to Article 3.2 of this Agreement. 1.5. "Day" means that period of time beginning at 12:00 midnight and continuing through 11 :59 PM. 1.6. "Demand Charge" means the fixed annual payment amount to be paid in twelve equal installments for each year, calculated based on the Demand Rate applied to the Maximum Day Metered Demand. A separate demand charge will be calculated for Treated Water delivered through the Water Distribution System, for water delivered through the FM 79 Point of Delivery and for Treated Water produced by the City for LCWSD from the Water Treatment Plant. For Treated Water delivered through the Water Distribution System the Demand Charge assessed will consist of the Demand Charge for Treated Water delivered through the Water Distribution System plus the Demand Charge for Treated Water produced by the City for LCWSD from the Water Treatment Plant. For Treated Water not delivered through the Water Distribution System, only the demand charge for Treated Water produced by the City for LCWSD from the Water Treatment Plant will be assessed. For Treated Water delivered to the FM 79 Point of Delivery, the 2 Paris/LCWSD Wholesale Treated Water Contract Demand Charge will include a pro-rated portion of the Distribution System Demand Charge plus the Demand Charge for Treated Water produced by the City for LCWSD from the Water Treatment Plant. 1.7. "Demand Rate" means the dollar amount per million gallons per day (mgd) applied to LCWSD's Maximum Day Metered Demand to calculate the Demand Charge. A separate Demand Rate will be developed in the Cost of Service Study for Treated Water delivered through the Water Distribution System, for Treated Water delivered through the FM 79 Point of Delivery and for Treated Water produced by the City for LCWSD from the Water Treatment Plant. 1.8. "Distribution Maximum Day Metered Demand" means the measured daily maximum usage at Points of Delivery on the Water Distribution System as determined through Meter readings. 1.9. "Effective Date" means the date that this Agreement has been signed by both Parties. 1.10. "Excess Demand Charge" means the charge assessed against LCWSD for exceeding the Maximum Hour Capacity Demand as provided in Article 2.4 of this Agreement during the Rate Year. 1.11. "Fiscal Year" means the City of Paris' fiscal year, which currently is the period from October I until September 30 of the following calendar year. 1.12. "Individual Maximum Diversion Rate" means the highest rate of flow of Treated Water Paris agrees to deliver to LCWSD at each individual Point of Delivery expressed in gallons per hour, as identified in Articles 2.3 and 4.4 of this Agreement. 1.13. "Initial Rates" means the rates set for the period beginning on the effective date of this Agreement and in effect until rates are set following the execution of the first Cost of Service Study under this Agreement. 1.14. "Initial Rated Plant Capacity" means the maximum hourly production capacity of the Water Treatment Plant of 1,333,333 gallons per hour on the Effective Date as determined on the basis of applicable state criteria. 1.15. "Maximum Hour Capacity Demand" means the maximum hourly Treated Water to be produced for LCWSD by the Water Treatment Plant as provided in Article 2.4 of this Agreement. 1.16. "Maximum Day Metered Demand" means the measured daily maximum usage as detennined through Meter readings, adjusted for lost and unaccounted for water as provided in Article 2.3 of this Agreement. 3 Paris/LCWSD Wholesale Treated Water Contract 1.17. "Meter(s)" means the metering facility or devices installed or to be installed at the Points of Delivery to measure the amount of Treated Water delivered to LCWSD by Paris as provided in this Agreement. 1.18. "Month" means a calendar month. 1.19. "Operations Fee" means an additional 10% of the cost of service as provided in Exhibit 1, which represents a general fee charged by Paris for providing wholesale Treated Water service to LCWSD. 1.20. "Party" means either Paris or LCWSD, and "Parties" means Paris and LCWSD collectively. 1.21. "Phase 1" means the period commencing on the Effective Date and continuing until the commencement of Phase 2. 1.22. "Phase 2" means the period commencing the sooner of (1) three years following written notice from LCWSD to Paris requesting expansion of Paris' water supply and treatment system sufficient to allow the City to provide LCWSD 8,333 gpm or 499,980 gph of Treated Water measured at the City's Water Treatment Plant or (2) completion of such expansion, and continuing for the term of this Agreement. 1.23. "Points of Delivery" means the locations where Paris will provide Treated Water to LCWSD as identified in Article 2.3 of this Agreement. 1.24. "Rate Year" means each twelve-month period beginning June 1 and ending May 31 of the following calendar year in which rates determined in the most recent Cost of Service study will be in effect. 1.25. "Rated Plant Capacity" means the maximum hourly production capacity of the Water Treatment Plant as determined based on applicable state criteria. 1.26. "Regulatory Requirements" means all applicable requirements and prOVIsIOns of federal, state, and county constitutions, laws, statutes, rules, regulations and ordinances enacted or issued from time to time, including, without limitation, all applicable sections of the Texas Water Code and the rules and regulations of the Texas Commission on Environmental Quality, and the Texas Administrative Code, and all judicial and administrative orders, judgments, and decrees of any govemmental authority having jurisdiction conceming the matters contained herein issued from time to time. 1.27. "Return Flow" means Treated Water supplied to LCWSD by Paris that is beneficially used but not consumed and that is subsequently retumed to any watercourse. 1.28. "TCEQ" means the Texas Commission on Environmental Quality and its successor agenCIes. 4 Paris/LCWSD Wholcsale Treatcd Watcr Contract f'- 1.29. "Test Year" means the twelve-month period ending September 30 of the prior calendar year that will serve as the basis for the Cost of Service Study. 1.30. "Total Maximum Diversion Rate" means the highest rate of flow of Treated Water Paris agrees to produce for LCWSD at the Water Treatment Plant expressed in gallons per hour, as identified in Articles 2.2, 2.3 and 4.4 of this Agreement. 1.31. "Treated Water" means water treated to the level required by the standards of the TCEQ or other state agency of appropriate jurisdiction. Provided however, LCWSD may request that Paris modify the operation of its treatment system to assist LCWSD in meeting TCEQ regulations, including disinfection byproduct requirements, throughout its system. If Paris agrees to such modifications, LCWSD shall directly bear all costs of such modification for so long as such modifications are implemented. 1.32. "Volume Charge" means the charge calculated by applying the Volume Rate to the number of gallons of Treated Water provided to LCWSD by Paris as measured by the Meter(s) and billed on a monthly basis. A separate volume charge will be assessed for Treated Water delivered through the Water Distribution System, for Treated Water delivered through the FM 79 Point of Delivery and for Treated Water produced by the City for LCWSD from the Water Treatment Plant. For Treated Water delivered through the Water Distribution System the volume charge assessed will consist of the volume charge for Treated Water delivered through the Water Distribution System plus the volume charge for Treated Water produced by the City for LCWSD from the Water Treatment Plant. For Treated Water not delivered through the Water Distribution System, only the volume charge for Treated Water produced by the City for LCWSD from the Water Treatment Plant will be assessed. For Treated Water delivered through the FM 79 Point of Delivery, the Volume Charge will include a pro-rated portion of the Distribution System Volume Charge as shown on Exhibit 1 plus the Volume Charge for the Water Treatment Plant. 1.33. "Volume Rate" means the dollar amount per 100 cubic feet applied to LCWSD's metered usage of Treated Water in order to calculate the Volume Charge. A separate volume rate will be developed in the Cost of Service Study for Treated Water delivered through the Water Distribution System, for Treated Water delivered through the FM 79 Point of Delivery and for Treated Water produced by the City for LCWSD from the Water Treatment Plant. 1.34. "Water Distribution System" means all facilities, structures, improvements, property, rights, permits, licenses, and other property of any nature whatsoever, now or hereafter owned by Paris, in connection with the storage, transportation, and delivery of Treated Water. 1.35. "Water Rate Study" means that study prepared by R.W. Beck, Inc. on or about May 12, 2005 and which sets forth the cost allocation methodologies used to calculate the Initial Rates under this Agreement. The Water Rate Study is Exhibit 2 to this Agreement. 5 Paris/LCWSD Wholesale Treated Water Contract r" 1.36. "Water Treatment Plant" means all facilities structures, improvements, property, rights, permits, licenses, and other property of any nature whatsoever, now or hereafter owned by Paris, in connection with the production of Treated Water. 1.37. "Wholesale Customer Class" means the class of customers or purchasers to whom, under the tenns of a specific agreement, Paris sells and provides Treated Water for re- sale. Currently, LCWSD is Paris' only wholesale customer. ARTICLE II - SUPPLY OF WATER BY PARIS TO LCWSD 2.1 AGREEMENT. Subject to the limitations and conditions described in this Agreement, Paris agrees to sell to LCWSD, and LCWSD agrees to purchase from Paris at the Points of Delivery specified herein Treated Water in the quantities set forth in this Agreement. The Parties agree that any and all other water supply agreements between themselves, including but not limited to the July 17, 1967 Water Purchase Contract and all addenda, amendments or modifications thereto, are hereby tenninated, and that, as of the Effective Date, this Agreement is the only agreement in effect regarding the sale of Treated Water from Paris to LCWSD. 2.2 QUANTITY AND DIVERSION RATE. Subject to Article 4.4, Paris agrees to produce Treated Water at the Water Treatment Plant for LCWSD as needed by LCWSD up to the Total Maximum Diversion Rate of 6,597 gallons per minute or 395,820 gallons per hour during Phase 1 and 8,333 gallons per minute or 499,980 gallons per hour during Phase 2. 2.3 POINTS OF DELIVERY AND MAXIMUM DIVERSION RATES. Paris will deliver Treated Water at the nomlal operating pressure prevailing in the Paris water system to the following Points of Delivery and, subject to Article 4.4, at rates up to the following Individual and Total Maximum Diversions Rates specified below: a. Point of Delivery No. 3A shall be through an existing 10 inch meter located at the City's Water Treatment Plant. b. Point of Delivery No. 3B shall be through an existing 8 inch meter located at the City's Water Treatment Plant. c. Point of Delivery No.1 shall be through an existing 8 inch meter located at the intersection ofF.M. 79 and CR 31300. d. Point of Delivery No. 4 shall be through an existing 6 inch meter located adjacent to U.S. 82 E approximately 100 feet west of 42 N.E. e. Point of Delivery No. 7 shall be through an existing 4-inch meter located adjacent to U.S. 82 W approximately 1,900 feet east of the intersection of U.S. 82 Wand F.M. 1510. 6 Paris/LCWSD Wholcsale Treatcd Watcr Contract r'o f. Point of Delivery No. 6 shall be located at the site of a currently unused meter located 25- feet SSE from the center line of C.R. 21500, approximately 100-feet ENE from the center line ofF.M. 137 g. Point of Delivery No. 5 shall be located at the site of a currently unused meter located 790- feet south of the center line of the outside portion of the Loop 53-feet east of the center line ofF.M. 1497. h. Point of Delivery No. 8 shall be located at the site of a currently unused meter located 67-feet NW of the center line ofF.M. 195 and 45-feet SW of the center line of Aspen Drive. 1. Additional Points of Delivery, including Points of Delivery from the City's water plant or low-pressure transmission facilities between the City's water treatment plant and groundwater storage facility located between Loop 286 and Center Street, may be established provided that the creation and operation of such additional Points of Delivery may not impair Paris' current and planned operation of its water system, or its ability to meet its obligation to its current or projected customers. LCWSD shall notify Paris in writing if LCWSD desires to establish an additional Point of Delivery. Paris agrees to cooperate with LCWSD by providing infonnation needed for LCWSD to develop plans for the design and operation of an additional Point of Delivery. Where appropriate, such plans shall include adequate storage to buffer impacts on Paris' system. Design plans and specifications and an operations plan prepared and sealed by a registered professional engineer for each additional Point of Delivery must be submitted to and approved by Paris before construction may commence. Paris shall have the right of inspection to ensure that facilities are constructed and operated pursuant to approved plans. LCWSD shall bear all costs associated with establishing each additional Point of Delivery. The costs associated with taking water at any additional Point of Delivery shall be calculated based upon the pricing structure in effect for current Points of Delivery. Further, costs associated with the City's distribution system shall only be assessed against each Additional Point of Delivery in proportion to its use of the distribution system, if any. At the current time, the low pressure facilities between the plant and the groundwater storage facilities located between Loop 286 and Center Street are not distribution facilities. J. Individual Maximum Diversion Rates shall not exceed the rates specified in Table I: 7 Paris/LCWSD Wholesale Treated Water Contract Table I Points of Delivery Individual Maximum Diversion Rate (2ph) Phase 1 Phase 2 I I 04,400 TBD 3A & 3B* 240,000 (combined) TBD 4 54,900 TBD 5 TBD TBD 6 TBD TBD 7 58,800 TBD 8 TBD TBD * Points of Dclivery 3A & 38 arc the only Points of Delivcry that are not locatcd on Paris' Distribution System at the currcnt time. The Parties acknowledgc that LCWSD may, in the futurc, elect to takc all the water authorized by this Agrcement through Points of Dclivery 3A, 38, and additional points of delivery constructed pursuant to '\l 2.3(i) at the City's water treatment plant or low-prcssurc transmission facilities. If this occurs, LCWSD may, subject to thc requircmcnts of 2.3(i), including the requircmcnt to construct adequate storage to buffcr impacts on Paris' system, takc from Paris' systcm, including such storage constructcd before the Point of Delivcry, up to, but not more than, 395,820 gph in Phasc I and 499,980 gph in Phasc 2. For purposes of determining the Total Maximum Diversion Rate, metered water deliveries at Points of Delivery Nos. 4, 5, 6, 7 and 8 located on the Water Distribution System shall incorporate an adjustment for the lesser of 10% or the actual percentage of water lost and unaccounted for in the Water Distribution System as determined in Paris' most recent study of lost and unaccounted for water. Metered water deliveries at Point of Delivery No.1 located on the Water Distribution System shall incorporate an adjustment of 9% for lost and unaccounted for water. Individual Maximum Diversion Rates at Points of Delivery Nos. 3A and 38 located on the Water Treatment System and future Points of Delivery on the low-pressure transmission facilities described in 2.3.i do not incorporate adjustments for water lost and unaccounted in the Water Treatment System. Individual Maximum Diversion rates for Points of Delivery 6, 7, and 8 during Phase 1 and all Points of Delivery during Phase 2 will be established by a written agreement between Paris and LCWSD acting through their City Manager and General Manager respectively. In the future, the Individual Maximum Diversion Rates or initial Points of Delivery may be changed or new Points of Delivery may be added by written agreement between Paris and LCWSD acting through their City Manager and General Manager respectively. Individual Maximum Diversion Rates for future Points of Delivery located on the Water Distribution System will incorporate adjustments for the lesser of 10% or the actual percentage of water lost and unaccounted in the Water Distribution System. Individual Maximum Diversion Rates for future Points of Delivery located on the Water Treatment System will not incorporate adjustments for water lost and unaccounted in the Water Distribution System. The Total Maximum Diversion Rate of 6,597 gallons per minute or 395,820 gallons per hour in Phase 1, adjusted for water lost and unaccounted for and 8,333 gallons per minute or 499,980 gallons per hour in Phase 2, adjusted for water lost and unaccounted for, shall not be exceeded. LCWSD shall bear all costs of connecting to Paris' system at each Point of Delivery. LCWSD agrees that each new connection to Paris' facilities shall be approved by the City and that LCWSD's request for such approvals shall be accompanied by an engineering report and plans prepared by 8 Paris/LCWSD Wholesale Trcatcd Watcr Contract roo-- a Texas Registered Professional Engineer which detail the area to be served and includes the gallons per hour of water to be delivered to the requested Point of Delivery. ESTIMATED TREATED WATER REQUIREMENTS. 2.4 MAXIMUM HOUR CAPACITY DEMAND. Subject to Article 4.4, LCWSD's Maximum Hour Capacity Demand to be produced by the Water Treatment Plant is 395,820 gallons per hour (gph) in Phase land 499,980 gallons per hour (gph) in Phase 2. LCWSD shall provide Paris written notification requesting expansion of Paris' water supply and treatment system sufficient to allow the City to provide LCWSD 499,980 gph of Treated Water measured at the City's Water Treatment Plant three years prior to the commencement of Phase 2. If Paris elects to expand its water supply and treatment system for reasons other than the commencing of Phase 2, it shall notify LCWSD of its plans so LCWSD may consider any economy of scale in participating in such expansion and may request that such expansion include Phase 2. 2.5 NO MINIMUM PRESSURE GUARANTEED. Notwithstanding anything in this Agreement, Paris does not represent or guarantee to LCWSD that Treated Water provided to LCWSD under this Agreement will be provided at any specific minimum pressure at the Points of Delivery, and Paris is under no obligation with respect thereto. LCWSD understands and acknowledges that maintaining a certain pressure in its delivery system requires the use of storage or pumps on LCWSD's system. 2.6 LIMITATIONS ON TAKING TREATED WATER. LCWSD agrees that it shall not take Treated Water from any or all of the Points of Delivery at a combined instantaneous rate greater than the Total Maximum Diversion Rate identified in Articles 2.2, 2.3 and 4.4, as appropriate, without first obtaining the written consent of Paris. The rate at which LCWSD takes Treated Water from Paris shall be regulated by rate-of-flow controllers or alternative methods approved in writing by Paris, paid for and installed by LCWSD. If requested by Paris, LCWSD will convey the rate-of-flow controllers or approved alternative methods used to regulate the take of treated water to Paris without cost, and Paris shall be responsible for maintaining same. If it is necessary to replace a rate-of- flow controller or approved alternative method of regulating take, LCWSD will pay for such costs. If Lamar County ever takes Treated Water from any or all of the Points of Delivery at a combined instantaneous rate greater than the Total Maximum Diversion Rates identified in Articles 2.2 and 4.4, as appropriate, without first obtaining the written consent of Paris, Paris may install and operate such additional rate-of-flow controllers or other equipment needed to ensure compliance with the Total Maximum Diversion Rate. LCWSD shall directly bear the cost of such equipment and its installation. 2.7 ADDITIONAL WATER. To the extent that Treated Water is available in amounts greater than the Total Maximum Diversion Rate, Paris may, at its sole discretion, provide LCWSD with additional Treated Water subject to the water rate and Excess Demand Charge described in Articles 3.2 and 3.3 of this Agreement. Should Paris elect to provide LCWSD with Treated Water in excess of the Total Maximum Diversion Rate, Paris may terminate or reduce providing Treated Water at those excess diversion rates or amounts 9 Paris/LCWSD Wholesale Treated Water Contract by providing LCWSD with twenty-four hours written notice of such termination or reduction. LCWSD agrees that Paris will never be obligated during the term of this Agreement to make Treated Water available to LCWSD in excess of the Total Maximum Diversion Rate. The purchase of any additional supplies of Treated Water over the Total Maximum Diversion Rate does not guarantee that Paris will make Treated Water available on that basis at any time other than the time frame Paris elects to provide additional supplies of Treated Water to LCWSD. 2.8 METERING FACILITIES AND BACK FLOW PREVENTION DEVICES. a. LCWSD's Duty to Install. Paris shall fumish and install at LCWSD's cost at each Point of Delivery metering facilities and check valves that shall be satisfactory to Paris. Such metering facilities and check valves shall be installed for Points of Delivery I, 3A, 3B, 4 and 7 within ninety (90) days of the Effective Date. Such metering facilities and check valves shall be installed for Points of Delivery 5, 6 and 8 and any future Points of Delivery before water is delivered through that Point of Delivery. LCWSD will own, operate and maintain the check valves. Paris shall own the metering facilities and shall be responsible for maintaining same, subject to LCWSD's obligation to pay for calibration of metering equipment on an annual basis. If it is necessary to replace a metering facility, LCWSD will pay for such costs. LCWSD may, at its own cost, install a check meter at the Points of Delivery on its Treated Water distribution lines. b. Capabilities of Metering Facilities. The metering facilities shall measure and continuously record and total the amount of Treated Water delivered to LCWSD in order to detemline accurately the amount of Treated Water delivered on an hourly basis. Metering facilities shall include continuous flow chart-recording devices, and telemetry systems that report meter readings to the City of Paris water treatment plant located at Lake Crook Road, Paris, Texas. Each metering facility shall also include a pressure transducer to measure pressure on the City's side of the meter. c. Access to Metering Equipment. Paris shall at all times have free access to the metering equipment and all other facilities under this Agreement provided for the purpose of: (1) shutting off Treated Water for LCWSD's failure to pay as required under this Agreement; (2) reading the registrations of said meters; and (3) examining, shutting off and testing the same to ascertain whether they are in good condition and repair, and to make such repairs upon the same as may be necessary. 2.9 CALIBRATION OF METERS. a. Duty to Calibrate. Paris shall service and calibrate the metering facilities as necessary, but no less frequently than once every twelve months, commencing within 150 days from the effective date of this Agreement. The method of 10 Paris/LCWSD Wholesale Treated Water Contraet calibration shall be by replacement of the meter chamber with a factory calibrated or recalibrated chamber from the meter manufacturer or equivalent. Paris, at its cost, shall purchase for each meter in service on the Effective Date a spare meter chamber that will be used as the initial replacement. The cost of the annual calibration shall be divided equally between LCWSD and Paris. Paris will notify LCWSD at least seventy-two (72) hours in advance of any testing and/or calibration and LCWSD shall have the right to witness any such testing. b. Inaccuracy. In the event the percentage of accuracy for such metering equipment is found to be within a tolerance of plus or minus two (2) percent, such meter shall be deemed to have correctly measured the quantity of Treated Water taken hereunder. If, however, such tolerance is found to be in excess of plus or minus two (2) percent, then such meter shall be adjusted at once to register correctly and accurately and the registration thereof shall be corrected by the City's Director of Finance for a period extending back to the time when such inaccuracy began, if such time is ascertainable. If such time is not ascertainable, then registration thereof shall be corrected for a period extending back one-half of the time elapsed since the last date of calibration, but in no event further back than a period of six (6) months. c. Meter Out of Service - No Readings. If any meter fails to register for any period, the amount of Treated Water fumished during such period shall be deemed to be the average of the correct readings for the same or equivalent months in the preceding three years, or, if available and in lieu of said three year average, based on such other method that would more accurately reflect the actual consumption for the period in which the meter failure occurred as mutually agreed upon by the City and LCWSD. 2.10 SOLE SUPPLY INTENDED. LCWSD and Paris agree that Paris shall provide the sole source of Treated Water for the operation of the LCWSD system during the term of this Agreement and the Parties do not construe this Agreement to provide for supplemental, backup, peak load, or as-available service. If within the term of this Agreement LCWSD ceases to take Treated Water from Paris because other water supplies have been developed or acquired, LCWSD shall for the balance of this contract remain liable for Capacity Charges at the Maximum Hour Capacity Demand level in effect at such cessation. This obligation, once established, shall serve as liquidated damages and is intended to compensate Paris for the expenditures incurred on LCWSD's behalf for the cost of installation of treatment facilities. It is agreed by the Parties that such liquated damages are a reasonable substitute for compensatory damages that are difficult or impossible to calculate herein. This obligation is intended by the Parties not to be a penalty, but instead, a reasonable measure of damages. 2.11 LCWSD'S REGULATORY REQUIREMENTS. LCWSD acknowledges and agrees that this Agreement defines the extent of Paris' obligations to supply Treated Water to LCWSD and that, except as expressly provided by this Agreement, Paris is under no 11 Paris/LCWSD Wholesale Treated Water Contract obligation to provide LCWSD with a sufficient amount of Treated Water for LCWSD to meet its minimum production, storage, service pump, or pressure maintenance requirements, or any other requirements imposed on LCWSD by virtue of 30 Texas Administrative Code Chapters 290 or 291, or any other Regulatory Requirements. ARTICLE III - RATES, BILLING AND PAYMENT 3.1 CHARGES FOR WATER. LCWSD will pay to Paris the fees and charges for the Treated Water delivered by Paris that may include Late Fees, and rates to be applied for the Capacity Charge, Demand Charge, Volume Charge, and Excess Demand Charge. 3.2 WATER RATES. a. Initial Rates. Upon the Effective Date of this Agreement, the Volume Rate and the Demand Rate for water supplied from Paris' Water Treatment Plant (Points of Delivery 3A and 3B), the FM 79 connection (Point of Delivery 1) and Paris' Water Distribution System (Points of Delivery 4, 5, 6, 7 and 8), respectively, as well as the Capacity Charge, shall be as set out in Exhibit 1. b. Annual Cost of Service Study and Subsequent Annual Rates. The Volume Rate, Demand Rate, and Capacity Charge shall be recalculated in a cost of service study and set annually prior to the beginning of a new Rate Year. c. Cost and Rate Methodology. The initial rates and subsequent annual rates that LCWSD pays to Paris for Treated Water shall be calculated in accordance with the cost allocation methodologies described and contained within the Water Rate Study and the rate methodologies contained within Exhibit 1 except as provided in Article 3.2 (d) below. The cost and rate methodologies set forth in the Water Rate Study and Exhibit 1 are hereby specifically agreed to between LCWSD and Paris. Those methodologies include the following principles: 1. the "Cash Basis" methodology for rate settings; 2. the "Base/Extra Capacity" cost allocations methodology, as sanctioned by the American W ateI' Works Association; 3. the Cost of Service Study based on historical accumulated cost and Treated Water consumption and production data for the Test Year, adjusted for known and measurable changes; 4. Capacity Charge. Allocation for the Capacity Charge shall be based on the Phase 1 Maximum Hour Capacity Demand as a percentage of the Initial Rated Plant Capacity. The allocation percentage shall be applied to the capital cost requirements (e.g. debt service, cash capital outlays, etc.) of the Water Treatment System, as shown in Exhibit 1. 12 Paris/l "CWSD Wholesale Treated Water Contract For Phase 2, the Capacity Charge will additionally incorporate the direct assignment to LCWSD of the capital costs reflective of increasing the Maximum Hour Capacity Demand from 395,820 gallons per hour (gph) to 499,980 gallons per hour (gph). Capital costs incurred for increases in Rated Plant Capacity not associated with maintaining the Initial Rated Plant Capacity or not associated with the provision of Treated Water to LCWSD shall not be assigned to LCWSD. Unless mutually agreed upon by the Parties, the Maximum Hour Capacity Demand applied in the Capacity Charge determination will not exceed the Maximum Hour Capacity Demand as provided in Article 2.4 of this Agreement. 5. Water Treatment Plant Demand Charge. Allocation for the Demand Charge for the Treated Water produced by the City for LCWSD from the Water Treatment Plant will be based on the Test Year Maximum Day Metered Demand at the delivery points as identified in Article 2.3, adjusted for lost and unaccounted for water, as provided in Article 2.3, and known and measurable changes. 6. Water Distribution Demand Charge. Allocation for the Demand Charge for Treated Water delivered through the Water Distribution System will be based on the Test Year Distribution Maximum Day Metered Demand, adjusted for known and measurable changes. 7. Water Treatment Plant Volume Charge. Allocation for the Volume Charge for the Treated Water produced by the City for LCWSD from the Water Treatment Plant will be based on the Test Year total water consumption for LCWSD as measured at the delivery points identified in Article 2.3, adjusted for lost and unaccounted for water, as provided in Article 2.3, and known and measurable changes. 8. Water Distribution Volume Charge. Allocation for the Volume Charge for Treated Water delivered through the Water Distribution System will be based on the total water delivered through the Water Distribution System, adjusted for known and measurable changes. d. Review and Update of Cost Methodology. On or before June I, 2010 and every five years thereafter during the tenn of this Agreement, the cost methodologies contained in the Water Rate Study will be reviewed by Paris and LCWSD. The cost methodologies may be modified by agreement of the Parties to reflect changed circumstances, change regulatory requirements, and to ensure that Paris is recovering the cost of providing service under this Agreement. If the Parties are unable to reach agreement concerning modification of cost methodologies within one hundred twenty (120) days following the first meeting between the Parties to review such cost 13 l'aris/LCWSD Wholesale Treated Water Contract r methodologies, the Parties agree to submit this issue to binding arbitration pursuant to Chapter 171 of the Texas Civil Practice and Remedies Code. 3.3 BILLING AND PAYMENT. (a) Volume Charge. Each month during the term of this Agreement, Paris shall read the Meter(s) measuring Treated Water being provided to LCWSD. The numbers of gallons of Treated Water measured by the Meter(s) will be multiplied by the appropriate Volume Rate to get the Volume Charge. Paris shall prepare and deliver to LCWSD a statement showing the Volume Charge for all Treated Water delivered to LCWSD, in addition to the monthly Demand Charge and Capacity Charge. Payment shall be made by the lQth day after receipt of the statement. (b) Demand Charge. The Demand Charge shall be paid in twelve equal monthly installments with the payment for the Volume Charge and Capacity Charge. (c) Capacity Charge. The Capacity Charge shall be paid in twelve equal monthly installments with the payment for the Volume Charge and Demand Charge. (d) Excess Demand Charge. If LCWSD's actual total coincidental Individual Maximum Diversion Rates exceed the Maximum Hour Capacity Demand, LCWSD shall also pay to Paris the Excess Demand Charge. The Excess Demand Charge shall be calculated by subtracting the Maximum Hour Capacity Demand from LCWSD' s actual total coincidental Individual Maximum Diversion Rates to determine the Excess Demand. The Excess Demand, stated in gallons per hour, shall be applied to the Rate Year's Capacity Charge expressed in dollars per gallons per hour and then multiplied by a factor of 1.5 times. LCWSD shall be notified within thirty (30) days of Paris' determination that LCWSD has exceeded its Maximum Hour Capacity Demand. LCWSD shall be provided the Excess Demand Charge billing on or before June 1 st of the subsequent Rate Year with full payment due within thirty (30) days from receipt of invoices. During a temporary emergency condition created by unforeseeable mechanical failure or by unprecedented high rate of Treated Water usage, such as might result from a major fire or a major water main break, it may be necessary that Treated Water be withdrawn from the Paris system at a rate of usage in excess of that required for the Maximum Hour Capacity Demand. It is agreed that the Excess Demand Charge that would normally be applicable shall not apply for such bona fide emergency withdrawals provided that Paris is notified in writing within 10 days of LCWSD's notification by Paris that LCWSD exceeded the Maximum Hour Capacity Demand. In any event, the Volume Charge for all Treated Water delivered shall be due and payable as described elsewhere herein. 14 Paris/LCWSD Wholesale Treated Water Contract ''-'.- (e) Late Fees. If LCWSD is late in the payment of any charge or fee due and payable to Paris under this Agreement, late payments shall bear per annum interest at a rate equal to the lesser of two percentage points (2%) above the Prime Interest Rate as published in the Wall Street Journal on the day said statement becomes delinquent, or the maximum allowed by law to be charged to LCWSD. If any charges remain unpaid at the expiration of thirty (30) days after receipt of the statement, LCWSD shall be in default under this Agreement, and Paris may invoke the remedies specified herein. 3.4 BILLING QUESTIONS AND DISPUTES. (a) Statement Dispute; Protest. If LCWSD has a protest or dispute concerning a statement, LCWSD shall notify Paris in writing within twenty (20) days of receipt of said statement. LCWSD shall pay the portion of the statement that is not being disputed or protested. Upon written notification, the portion of the statement under dispute or protest (provided the dispute or protest is made in good faith and is not unreasonable) will be set aside until resolved and will not be subject to the penalties (such as Late Fess and Excess Demand Charge) stated herein. If Paris is not notified in writing, postmarked within twenty (20) days of receipt of said statement, said protest or dispute shall be considered waived. (1) The Parties will negotiate in good faith to resolve the dispute. The Parties shall agree to submit the dispute to non-binding mediation as provided in Article 10.1. (b) Inspection and Audit. Complete records and accounts, required to be maintained by each Party, shall be kept for a period of five (5) years. Each Party shall at all times, upon notice, have the right at reasonable times to examine and inspect said records and accounts during normal business hours. If required by any law, rule or regulation, a Party shall make said records and accounts available to federal and/or state auditors. 3.5 RATE CASE EXPENSES. LCWSD and Paris recognize and agree that Paris has entered and may enter into other wholesale water supply agreements with other customers, including other cities, water districts, and retail public utilities. LCWSD and Paris agree that if any legal or administrative proceeding is hereafter instituted by LCWSD or any other wholesale water customer of Paris that in any way relates to the rates, the methodology set forth in the Water Rate Study or the methodology or rate model used in performing the Cost of Service Study to establish rates, or terms related to water supply service provided by Paris, the reasonable expenses incurred by Paris in participating in such proceedings shall be deemed to be expenses borne by Paris that are incurred for the benefit of, and are solely attributable to, the Wholesale Customer Class of Paris and are not incurred for the benefit of, or attributable to, Paris' retail customers. Accordingly, all such reasonable expenses of Paris shall be included in the operation and maintenance expenses of Paris in setting rates for the Wholesale Customer Class, subject 15 Paris/LCWSD Wholesale Treated Water Contract r'- to a finding by the regulatory authority that the rate case expenses incurred by Paris were reasonable and necessary. 3.6 PLEDGE OF REVENUES. LCWSD represents and has determined that the Treated Water supply to be obtained from Paris is of critical importance to the present and future operation of its water system and is the most efficient and readily available source of an adequate supply of Treated Water and, therefore, all payments required by this Agreement to be made by LCWSD shall constitute reasonable and necessary operating expenses of LCWSD's water utility system with the effect that the obligation to make such payments from revenues from the system shall have priority over any obligation to make any payments from such revenues, whether principal, interest, or otherwise, with respect to all bonds heretofore or hereafter issued by LCWSD. 3.7 LCWSD'S DUTY TO FIX AND COLLECT RATES. LCWSD agrees throughout the term of this Agreement to operate and maintain its water system continuously and to fix and collect such rates and charges for water services to be supplied by its water system as will produce revenues in an amount equal to at least (i) all of its payments under this Agreement and (ii) all other amounts as required by the provisions of ordinances or resolutions authorizing its revenue bonds or other obligations now or hereafter outstanding. ARTICLE IV - RESTRICTIONS AND CONDITIONS 4.1 WATER UTILITY SERVICE IN PARIS' CORPORATE LIMITS AND ETJ. LCWSD and Paris agree that Paris shall have the first right to provide water utility service to any new customer located within the city's corporate limits or extraterritorial jurisdiction as such limits currently exist or may hereafter be modified. If Paris fails to agree to provide service to such new customer within the thirty (30) days following its receipt of a written request, LCWSD may provide water utility service to the customer. In return for the Treated Water provided pursuant to this Agreement, LCWSD consents to the adjustment of the Certificates of Convenience and Necessity of Paris and LCWSD to authorize Paris to provide water utility service to such new customers it agrees to serve pursuant to Article 4.1 or 4.2. Both Parties agree that this Agreement will be submitted to TCEQ for approval pursuant to Tex. Water Code ~ 13.248. 4.2 WATER UTILITY SERVICE OUTSIDE PARIS' CORPORATE LIMITS AND ET J. LCWSD and Paris agree that LCWSD shall have the first right to provide Treated Water to any new customer outside of the City's corporate limits and ETJ as it now exists or may hereafter be modified. If LCWSD fails to agree to provide service to such new customers within thirty (30) days following its receipt of a written request, Paris may provide Treated Water utility service to the customer. 4.3 LCWSD SUPPLY OF TREATED WATER TO PARIS. LCWSD agrees to supply Treated Water to Paris in quantities and at pressures prevalent within LCWSD's system sufficient for the City to provide continuous and adequate retail water service to its customers within the Wildwood and Hills subdivisions and any new City customer that 16 Paris/LCWSD Wholesale Treated Water Contract f" Paris hereafter requests to be added to LCWSD's distribution system in the City's corporate limits or extraterritorial jurisdiction. The customer shall bear any cost of connecting to LCWSD's distribution system. The Point of Delivery for such Treated Water shall be at the individual customer meter for each of the City customers who receive water from the LCWSD Water Distribution System. The City shall provide LCWSD an offset for each gallon of water delivered through LCWSD's water distribution system to the City's customer equal to the City's water distribution system rate then in effect and charged to LCWSD. The Maximum Hour Capacity Demand shall be adjusted to reflect the LCWSD metered purchased water. from the City, which has been utilized by LCWSD in providing service to customers of the City, for purposes of prompting the Excess Demand Charge. The Maximum Hour Capacity Demand shall be reduced by the hourly demand of the City customers supplied water by LCWSD. Hourly demand of the City customers supplied water by LCWSD shall be determined by increasing the Test Year average daily water consumption of the City customers supplied water by LCWSD by 10% for lost and unaccounted for water on LCWSD water distribution system and the lesser of 10% or the actual percentage of water lost and unaccounted for in the Water Distribution System, then grossing up this figure by the maximum day to average day ratio of the metered water purchased by LCWSD through the Water Distribution System. This maximum day figure shall be grossed up by a factor of 1.5 to reflect the maximum hourly demand of the City customers supplied water by LCWSD. 4.4 NON-PEAK DEMAND ADJUSTMENTS. The Individual and Total Maximum Diversion Rates specified in Articles 2.2 and 2.3 are based on LCWSD's Current Water Usage Pattern, which reflects peak demand during summer months, and the peak production capacity of the City's Water Treatment Plant. For Phase I, during the months of November through March the Total Maximum Diversion Rate that Paris is required to deliver shall not exceed the Phase 1 Total Maximum Diversion Rate divided by the Initial Rated Plant Capacity (395,820 gph / 1,333,333 gph) times the reliable production capacity of the City's Water Treatment Plant, occurring during the months of November through March. For Phase 2, during the months of November through March the Total Maximum Diversion Rate that Paris is required to deliver shall not exceed the Phase 1 Total Maximum Diversion Rate divided by the Initial Rated Plant Capacity (395,820 gph / 1,333,333 gph) times the reliable production capacity of the City's Water Treatment Plant, occurring during the months of November through March plus the difference in Phase I and Phase 2 Total Maximum Diversion Rates, 104,160 gph (499,980 gph - 395,820 gph). During the tern1 of this Agreement, should the Rated Plant Capacity be determined by applicable state criteria to be less than the then current Rated Plant Capacity, the Total Maximum Diversion Rate shall be proportionally reduced to reflect the reduction in Rated Plant Capacity. 4.5 ALTERNATE CAPACITY REQUIREMENTS. LCWSD shall provide Paris a copy of its request for approval of alternative capacity requirements specified in TCEQ's rules that LCWSD hereafter files with TCEQ. 17 I'aris/LCWSD Wholesale Treated Water Contract 4.6 AMENDMENT TO LCWSD'S OR PARIS' CERTIFICATE OF CONVENIENCE AND NECESSITY. LCWSD agrees that it will not amend its CCN to increase its service area within the corporate limits of Paris or the City of Paris' extraterritorial jurisdiction without the prior written consent of Paris. Except as provided in Article 4.1, Paris agrees that it will not amend its CCN to increase its service area within an area then-certificated to LCWSD without the prior written consent of LCWSD. 4.7 PLANS AND SPECIFICATIONS. All water utility facilities to be constructed by, for, or on behalf of LCWSD within Paris' corporate limits or its extraterritorial jurisdiction other than routine maintenance and repairs of existing facilities, shall be designed and constructed in accordance with sound engineering practices and Paris' standards. The plans and specifications shall be subject to review and approval by Paris before commencement of construction. Further, Paris shall have the right of inspection during construction. 4.8 WATER CONSERVATION AND DEMAND MANAGEMENT. (a) Water Conservation. LCWSD shall cooperate with and assist Paris in its efforts to develop and implement plans, programs, and rules to develop water resources and to promote practices, techniques, and technologies that will reduce the consumption of Treated Water, reduce the loss or waste of Treated Water, improve the efficiency in use of Treated Water, or increase the recycling and reuse of water. This may include the development of any conservation or rationing plans by either Paris or LCWSD that may be necessary or appropriate to address operational constraints, whether or not the same are required by any state or federal regulatory agency. LCWSD agrees to develop and implement drought contingency and conservation plans or measures required by federal or state agencies or other regulatory jurisdictions, including but not limited to the requirements of 30 T AC Chapter 9288. LCWSD shall provide a copy of such plan to Paris within 10 days following its adoption. Such plans shall be consistent with and as stringent as Paris' adopted plans. If Paris determines that LCWSD's plans do not meet this standard, Paris shall notify LCWSD in writing. LCWSD shall then amend its plans and resubmit the plans to Paris for review. (b) Demand Management. If Paris shall manage demand through rationing the use of Treated Water to its retail customers, then a proportional rationing of Treated Water supplied to LCWSD by Paris shall be instituted, at Paris' option, without liability to LCWSD. Rationing does not relieve LCWSD from its obligation to pay the monthly Demand Charge and Capacity Charge. (c) Temporary Rationing. Where emergency conditions dictate temporary conservation or rationing requirements for either Paris or LCWSD, either Party may implement any measures considered appropriate by it to alleviate the emergency conditions. If LCWSD implements measures to alleviate an emergency condition, LCWSD shall notify Paris in writing within five (5) 18 Paris/LCWSD Wholesale Treated Water Contract r' days. Action taken under this sub Article does not relieve LCWSD from its obligation to pay the monthly Demand Charge and Capacity Charge. 4.9 REGULATORY REQUIREMENTS. This Agreement is subject to Regulatory Requirements. However, nothing contained in this Agreement shall be construed as a waiver of any right to question or contest any law, ordinance, order, rule or regulation in any forum having jurisdiction, and Paris and LCWSD each agree to make a good faith effort to support proposed laws and regulations that would be consistent with the performance of this Agreement in accordance with its terms. Paris and LCWSD agree to secure all Approvals as necessary and to maintain compliance with all their Approvals as necessary to fulfill their obligations hereunder in compliance with all Regulatory Requirements. ARTICLE V - TERM 5.1 TERM. The term of this Agreement is twenty (20) years from the Effective Date unless earlier terminated in accordance with the provisions hereof. LCWSD agrees that Paris has no duty or obligation to provide Treated Water, or any other type of water, to LCWSD after expiration or termination of this Agreement. 5.2 RENEW AL. This Agreement may be renewed and extended for up to four successive periods of five (5) years each upon mutual written agreement by the Parties to extend the teml of this Agreement. If LCWSD desires to extend this Agreement, it will provide written notice of its request to renew the Agreement at least one (1) year prior to the termination date of the Agreement. If at least one (1) year prior to the expiration date of this Agreement or its subsequent extension LCWSD has not provided Paris notice that it intends to renew, LCWSD shall provide Paris evidence that LCWSD has secured an aItemative and sufficient water supply. This requirement is enforceable by specific performance. ARTICLE VI - EVENTS OF DEFAULT~ TERMINATION 6.1 DEFAUL T BY LCWSD. In addition to the other termination provisions of this Agreement, each of the following events or conditions shall constitute an "Event of Default" by LCWSD hereunder for which Paris may terminate the Agreement as provided in Article 6.4: (a) LCWSD fails to observe or perfonn any of its covenants or material duties or obligations contemplated by this Agreement, and such failure is not cured within thitiy (30) days after notice thereof from Paris; (b) LCWSD (i) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause under any bankruptcy or similar law for the protection of creditors, or have such petition filed against it, and such 19 I'aris/LCWSD Wholesale Treated Water Contract r..---- proceeding remains uncontested for sixty (60) days or (ii) otherwise becomes bankrupt or insolvent (however evidenced); or (c) Any representation or warranty furnished by LCWSD is false or misleading in any material respect when made. 6.2 DEFAULT BY PARIS. In addition to the other termination proVIsIOns of this Agreement, each of the following events or conditions shall constitute an "Event of Default" by Paris hereunder for which LCWSD may terminate the Agreement as provided in Article 6.4: (a) Paris fails to observe or perfonn any of its covenants or material duties or obligations contemplated by this Agreement, and such failure is not cured within thirty (30) days after notice thereof from LCWSD; (b) Paris (i) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause under any bankruptcy or similar law for the protection of creditors, or have such petition filed against it, and such proceeding remains uncontested for sixty (60) days, or (ii) otherwise become bankrupt or insolvent (however evidenced); or (c) Any representation or warranty furnished by Paris is false or misleading in any material respect when made. 6.3 REMEDIES. Upon the occurrence of an Event of Default, the non-defaulting Party shall have the right to the following remedies in addition to the right to terminate as provide in Article 6.4: (a) Suspend services and withhold any payments due hereunder until the defaulting Party has cured such Event of Default; (b) In the event of a Paris Event of Default, exercise equitable remedies, specifically limited to the right of specific perfonnance and the right of injunctive relief; and (c) In the event of a LCWSD Event of Default, exercise all remedies available at law or at equity, except as limited herein. 6.4 TERMINATION RIGHTS. Either Party shall have the right to tenninate this Agreement, without charge or penalty, upon the occurrence of an Event of Default by the other Party that continues without cure for more than one hundred eighty (180) consecutive days after notice. ARTICLE VII - FORCE MAJEURE 7.1 FORCE MAJEURE. The tern1 "force majeure" as employed herein shall mean acts of God, strikes, lockouts or other industrial disturbances, acts of public enemy, war, orders 20 Paris/LCWSD Wholesale Treated Water Contract of any kind of the government of the United States or the State of Texas or any civil or military authority, insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, hurricanes, storms, floods, droughts, washouts, water contamination, shortage in water supply, restraints of government and people, civil disturbances, explosions, breakage or accidents to machinery, pipelines or canals, which affects the ability of Paris to deliver water hereunder, or of LCWSD to receive water hereunder, on account of any other causes not reasonably within the control of the Party claiming such inability. Ifby reason of force majeure either Party hereto is rendered unable wholly or in part to carry out its obligations under this Agreement, other than the obligation of LCWSD to make payment required under the tenns hereof, then if such Party gives 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 filing such notice, so far as 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. ARTICLE VIII - REPRESENTATION AND WARRANTIES 8.1 REPRESENTATIONS AND WARRANTIES OF PARIS. Paris hereby represents and warrants to LCWSD that the following are true, legal, and correct as of the Effective Date. (a) Paris has all reqUlslte power and authority to conduct its business, own its properties and execute and deliver this Agreement and perform its obligations hereunder in accordance with the tenns hereof. (b) This Agreement has been duly executed and delivered on behalf of Paris and constitutes the legal, valid and binding obligations of Paris, enforceable against Paris in accordance with its tenns, except as the enforceability thereof may be limited by bankruptcy; insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and general equitable principles. 8.2 REPRESENTATIONS AND WARRANTIES OF LCWSD. LCWSD hereby represents and warrants to Paris that the following are true, legal, and correct as of the Effective Date. (a) LCWSD has all requisite power and authority to conduct its business, own its properties and execute and deliver this Agreement and perform its obligations hereunder in accordance with the tenns hereof. (b) This Agreement has been duly executed and delivered on behalf of LCWSD and constitutes the legal, valid and binding obligations of it, enforceable against it in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws 21 Paris/LCWSD Wholesale Treated Water Contract r"O' affecting the enforcement of creditors' rights generally and general equitable principles. ARTICLE IX - OWNERSHIP. LIABILITY. AND INDEMNITY 9.1 NO JOINT OWNERSHIP. No provision of this Agreement shall be construed to create any type of joint or equity ownership of any property, any partnership or joint venture, nor shall same create any other rights or liabilities and LCWSD payments (whether past, present, or future) shall not be construed as granting LCWSD partial ownership of, prepaid capacity in, or equity in the Paris' water system. 9.2 REUSE OF RETURN FLOWS. LCWSD agrees that Paris may reuse Return Flows. LCWSD also agrees that it shall not authorize any of its customers to reuse the Return Flows. LCWSD agrees that Paris, but not LCWSD, is authorized to apply to the TCEQ to indirectly reuse any Return Flows. LCWSD will receive no compensation, credit, or offset for Paris' subsequent use and reuse of Return Flows. 9.3 RESPONSIBILITY FOR TREATED WATER. The liability for damages arising from the proper treatment, transportation and delivery for all Treated Water provided hereunder shall remain with Paris to the Points of Delivery and, upon passing through the Meter(s), the liability for such damages shall pass to LCWSD. As between the City and LCWSD, such liability for water delivered from the LCWSD distribution system to retail customers of the City pursuant to Article 4.1 shall pass to the City upon passing through the individual customer meter. 9.4 INDEMNITY. By signing this Agreement, LCWSD agrees on behalf of itself and its successors and assign that it will, to the fullest extent permitted by law, defend, protect, indemnify and hold harmless Paris and Paris' officers, directors, employees, agents, elected officials and consultants from and against all damages, liabilities or costs, including reasonable attorney's fees and defense costs, to the extent caused by LCWSD's negligent acts or omissions under this or incident to this agreement. By signing this Agreement, Paris agrees on behalf of itself and its successors and assign that it will, to the fullest extent permitted by law, defend, protect, indemnify and hold harmless LCWSD and its officers, directors, employees, agents, elected officials and consultants from and against all damages, liabilities or costs, including reasonable attorney's fees and defense costs, to the extent caused by Paris' negligent acts or omissions under this or incident to this agreement. 9.5 IMMUNITIES UNDER STATE LAW. Nothing in this Agreement shall be construed as waiving sovereign immunity or any other immunity that the Parties may be entitled to under state or federal law . 9.6 NO CONSEQUENTIAL DAMAGES. Notwithstanding any other provision of this Agreement, in no event shall the Parties or any of their affiliates, by reason of any of their respective acts or omissions relating to their obligations under this Agreement, be liable, 22 l'aris/LCWSD Wholesale Treated Water Contract r whether in contract, tort, misrepresentation, warranty, negligence, strict liability or otherwise, for any special, indirect, incidental or consequential damages arising out of or in connection with this Agreement, or the performance or breach thereof. ARTICLE X - DISPUTE RESOLUTION 10.1 NONBINDING MEDIATION. The Parties agree to submit to non-binding mediation any dispute related to the tenns of this Agreement or its implementation, other than a dispute under Article 3.2(d), before filing a claim with an administrative agency, the courts, or any other entity having jurisdiction to resolve such dispute. The Parties agree to each pay one-half of the costs of the mediator's fees and associated costs. The Parties agree that if any such dispute is not resolved within ninety (90) days of beginning the non-binding mediation process, then either Party may seek remedies in any appropriate forum. ARTICLE XI - NOTICE AND COMMUNICATIONS 11.1 NOTICE AND COMMUNICATIONS. Unless otherwise provided in this Agreement all notices or communications provided herein to be in writing shall be delivered to: If to Paris: City Manager P.O. Box 9037 Paris, Texas 75461-9037 Fax: 903/785-8519 If to LCWSD: General Manager Lamar County Water Supply District 140 CR 32180 Brookston, Texas 78421 11.2 CHANGE OF ADDRESS. Either party may change its address by giving written notice of the change to the other party at least ten (l0) days before the change becomes effective. ARTICLE XII - MISCELLANEOUS PROVISIONS 12.1 JOINT PREPARATION. This Agreement shall be considered for all purposes as having been prepared through the joint efforts of the Parties and shall not be construed against one Party or the other as a result of the preparation, substitution, submission or other event of the negotiation, drafting or execution hereof. 12.2 COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. The Parties hereto may execute this Agreement by signing any such counterpart. 23 Paris/LCWSD Wholesale Treated Water Contract '.r.'. 12.3 AMENDMENTS. This Agreement may not be amended, supplemented or otherwise modified unless done so in a writing and signed by the Parties, and no provision hereof shall be deemed waived unless such waiver is in writing and signed by the waiving Party. 12.4 NO ASSIGNMENT. This Agreement shall be binding and inure to the benefit of the respective Parties, including their successors, but the Agreement shall not be otherwise assignable in whole or in part by either Paris or LCWSD without first obtaining the written consent of the other Party. 12.5 CAPTIONS. The captions of the various articles and Articles herein are intended for convenience or reference only and shall not define or limit any of the terms or provisions hereof. 12.6 SEVERABILITY. Except for Article III and Article 4.1 of this Agreement, the provisions of this Agreement are severable and if, for any reason, anyone or more of the provisions contained in this Agreement shall be held to be invalid, illegal, or unenforceable in any respect, the invalidity, illegality or unenforceability shall not affect any other provision of this Agreement and this Agreement shall remain in effect and be construed as if the invalid, illegal or unenforceable provision had never been contained in the Agreement. In the event any provision of this Agreement, other than Article III or Article 4.1, is declared invalid, illegal, or unenforceable, the Parties shall, upon the request of a Party, promptly renegotiate in good faith a new provision to eliminate the invalidity and to restore this Agreement as nearly as possible to its original intent and effect. In the event agreement cannot be reached in such renegotiation, this Agreement shall continue in force and effect as if it had been executed without the invalid provision. In the event Article III or Article 4.1 is held to be invalid, illegal, or unenforceable in any respect, Paris may terminate this Agreement without liability to LCWSD by providing LCWSD with ninety (90) days written notice. 12.7 THIRD PARTY BENEFICIARIES. The Parties acknowledge that there are no third party beneficiaries to this Agreement. 12.8 RECORDS. The Parties will maintain records on site for a period of five years, or longer if required by Regulatory Requirements. 12.9 CHOICE OF LAW. This Agreement, and the rights and obligations of the Parties under or pursuant to this Agreement, shall be governed by the laws of the State of Texas. Venue for legal actions arising hereunder shall lie exclusively in Lamar County, Texas for matters arising under state law and exclusively in the Eastern District of Texas, Paris Division, for matters arising under federal law. 12.10 SOLE AGREEMENT. This Agreement constitutes the sole and only agreement of Paris and LCWSD regarding the purchase of Treated Water and supersedes any prior understanding or oral or written agreements between Paris and LCWSD respecting the subject matter of this Agreement. 24 Paris/LCWSD Wholesale Treated Water Contract -1"'"-_U IN WITNESS WHEREOF, the Parties hereto, acting under authority of their respective governing bodies, have caused this Agreement to be duly executed as of the day and year first written above. SIGNED this the day of ,2006. City of Paris Lamar County WSD BY: BY: Curtis Fendley, Mayor , (title) ATTEST: ATTEST: Janice Ellis, City Clerk , (title) APPROVED: APPROVED: Tony Williams, City Manager , (title) 2S I';"is I( '\\'SIJ Wholesale Trc:'lcd WOlin ('''"lract r'.. STATE OF TEXAS 9 s s s ACKNOWLEDGMENT COUNTY OF LAMAR This instrument was acknowledged before me on the day of by , in his capacity as Paris, a Texas home-rule municipality, on behalf of said municipality. , 2006, of the City of Notary Public in and for the State of Texas ST A TE OF TEXAS ~ ~ ~ ACKNOWLEDGMENT COUNTY OF LAMAR This instrument was acknowledged before me on the day of , 2006, by , in his capacity as of the Lamar County Water Supply District, a Texas fresh water supply district, on behalf of said district. Notary Public in and for the State of Texas 26 Paris/LCWSD Wholesale Treated Waler Contract ,'-'.'