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HomeMy WebLinkAboutResolution - 5949 - Addendum To Contract - LG&E Energy Marketing Inc. & Coral Energy Resources LP - 07_08_1998Resolution No. 594! Item No. 6 July 8, 1998 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock an Addendum to Gas Supply Contract by and between the City of Lubbock, L G & E Energy Marketing Inc. and Coral Energy Resources, L.P., attached hereto, which shall be spread upon the minutes of the Council and as spread upon the minutes of this Council shall constitute and be a part of this Resolution as if fully copied herein in detail. Passed by the City Council this 8th ATTEST: ' Darnell, City Secretary APPROVED AS TO CONTENT: Paul Thompson, Managing Director of Electric Utilities APPROVED AS TO FORM: day of July , 1998. r DY I N, MAYOV— / 0- �� ( 2e�= � Richard K. Casner, Natural Resoiihes Attorney da/ccdocs/a-gassupplycon-LG&E.res June 30, 1998 Resolution No. 5949 Item No. 6 July 8, 1998 ADDENDUM TO GAS SUPPLY CONTRACT This Addendum to Gas Supply Contract (this "Addendum"), dated as of July 9, 1998, among the City of Lubbock, Texas (hereinafter referred to as the "Buyer"), L G & E Energy Marketing Inc. (hereinafter referred to as the "Supplier"), and Coral Energy Resources, L.P. (hereinafter referred to as the "Dealer"), WITNESSETH: WHEREAS, the Buyer and the Supplier will have entered into a contract dated as of July 1, 1998 (hereinafter, together with extensions and replacements thereof and amendments thereto entered into by the Buyer and the Supplier, referred to as the "Supply Contrail'), under which, for the term, on the conditions, and up to the maximum amount specified therein, the Supplier has agreed to sell and deliver to the Buyer, at the point or points designated therein or pursuant thereto (hereinafter referred to as the "Buyer's Point of Receipt'), natural gas as detailed therein; WHEREAS, the Texas Municipal Gas Corporation (hereinafter referred to as "TMGC') has offered to admit the Buyer as a party to a Joint Gas Purchase Contract, dated as of February 1, 1998 (hereinafter referred to as the "Cooperative Contract'), under which TMGC would cause to be sold and delivered to the Buyer, and the Buyer would receive and purchase from TMGC, at the Buyer's Point of Receipt certain quantities of gas at a lower price than the price of gas sold and delivered to the Buyer by the Supplier pursuant to the Supply Contract; )WHEREAS, in order to enable TMGC to perform its obligations under the Cooperative Contract without excessive transportation costs for (and to accommodate seasonal imbalances in supply of and demand for) the gas to be sold and delivered to the Buyer pursuant to the Cooperative Contract, TMGC and the Dealer have entered into a Gas Exchange and Annual Balancing Agreement, effective as of June 1, 1998 (hereinafter referred to as the "Exchange Agreement") under which the Dealer is required to deliver quantities of gas to TMGC at the Buyer's Point of Receipt, from and to the extent of gas sold and delivered to the Dealer by the Supplier pursuant hereto, in exchange for gas delivered by TMGC to the Dealer at one or more other locations; and `WHEREAS, the Supplier is willing to enter into this Addendum to sell and deliver gas to the Dealer at the Buyer's Point of Receipt and to reduce the quantities of gas required to be received and purchased by the Buyer from the Supplier at the Buyer's Point of Receipt pursuant to the Supply Contract; F:at! uwc/uvgrJcxbli2clubbmkdoc NOW, THEREFORE, for and in consideration of the premises and of the mutual covenants, agreements, conditions, and undertakings herein set forth, the parties hereto agree as follows: 1. Sale and Delivery to Dealer. On each day while the Supply Contract and this Addendum are in effect, the Supplier shall sell and deliver or cause to be delivered to or for the account of the Dealer, and the Dealer shall receive or cause to be received and purchase from the Supplier, at the Buyer's Point of Receipt and for the same price as the price for gas sold and delivered by the Supplier to the Buyer pursuant to the Supply Contract including transportation and compression charges but excluding administrative charges under the Supply Contract, quantities of gas equal to the quantities of gas nominated and confirmed for delivery to the Buyer at the Buyer's Point of Receipt on such day pursuant to the Cooperative Contract, but not more than the lesser of (a) the maximum quantity of gas then required to be sold and delivered by the Supplier to the Buyer at the Buyer's Point of Receipt pursuant to the Supply Contract, determined without giving effect to Section 2 hereof, or (b) the quantity of gas accepted for delivery from TMGC by the Buyer at the Buyer's Point of Receipt. Such sale and purchase of gas between the Supplier and the Dealer shall be made on the same terms (including warranties and indemnities of the Supplier and the effect of force majeure) and subject to the same conditions as the terms and conditions of the Supply Contract to the same extent and for all purposes as if the Supplier and the Dealer had entered into the Supply Contract. If more than one price is set forth in the Supply Contract for gas sold and delivered thereunder (e.g., due to graduated volume discounts), the price for gas sold to the Dealer pursuant to this paragraph shall be the weighted average price (determined in accordance with Section 3 hereof) for gas sold and delivered by the Supplier to the Buyer pursuant to the Supply Contract. The Buyer acknowledges that the price payable by the Dealer to the Supplier hereunder is the same as the "Index" referred to in the Purchase Contact by which the Buyer became a party to the Cooperative Contract. The Buyer and Supplier acknowledge that the net amounts payable by the Buyer to the Supplier pursuant to the Supply Contract (as amended by this Addendum) shall equal the amounts payable by the Buyer to the Supplier pursuant to the Supply Contract (determined as if not amended by this Addendum), less the amounts payable by the Dealer to the Supplier pursuant to this Addendum. Furthermore, notwithstanding anything to the contrary in the Cooperative Contract, the Buyer's payments to TMGC for gas delivered to the Buyer pursuant to the Cooperative Contract shall be due and payable on the earlier of (i) the date payments are due to the Supplier under the Supply Contract for gas delivered to the Buyer by the Supplier thereunder or (ii) the 201e day of the month following the month in which such gas is delivered. 2. Sale and Delivery to Buyer. The quantity of gas to be sold and delivered by the Supplier to the Buyer and received and purchased by the Buyer from the Supplier at the Buyer's Point of Receipt pursuant to the Supply Contract on each day shall be reduced by the quantity of gas sold and delivered or caused to be delivered by the Supplier to or for the account of the F:&11_merdtMcJexlnmtdlubboh.doe 2 Dealer at the Buyer's Point of Receipt pursuant to Section I hereof, and the Buyer and the Supplier release each other from all obligations under the Supply Contract relating to such quantity of gas. If more than one price is set forth in the Supply Contract for gas sold and delivered thereunder, then the price at which such reduced quantity of gas shall be sold to and purchased by the Buyer thereunder shall be equal to the weighted average price referred to in Section 1 hereof. 3. Payments. The Dealer shall notify or cause TMGC to notify the Buyer and the Supplier in writing, on or before the first day of each month, of the quantities of gas confirmed for delivery by TMGC to the Buyer at the Buyer's Point of Receipt in such month pursuant to the Cooperative Contract. To the extent of gas delivered by the Supplier at the Buyer's Point of Receipt in such month, the quantities so notified shall be deemed to be delivered to the Dealer, rather than to the Buyer, in such month. The Supplier shall invoice such deliveries to the Dealer, and the Dealer shall pay for such deliveries, at the price referred to in Section I hereof in accordance with the applicable provisions of (and within the times permitted by) the Supply Contract for gas delivered to the Buyer, which are incorporated herein by reference. All other gas delivered by the Supplier at the Buyer's Point of Receipt in such month shall be deemed to be delivered and shall be invoiced by the Supplier to the Buyer at the same price in accordance with the provisions of the Supply Contract. Solely for purposes of computing any applicable weighted average price, all gas sold and delivered by the Supplier to the Dealer or the Buyer at the Buyer's Point of Receipt in such month pursuant hereto or the Supply Contract shall be deemed to have been sold and delivered to the Buyer. 4. Administrative Fee. The Buyer shall pay to the Supplier an Administrative Fee as described in the Supply Contract dated July 1, 1998. 5. No Liability. The Supplier and the Buyer agree that the Dealer shall not be liable under any theory to the Supplier or the Buyer for (a) any breach by the Buyer of any term of the Supply Contract, the Cooperative Contract, this Addendum, or any other contract to which the Buyer is a party, (b) any breach by the Supplier of any of the terms of the Supply Contract, this Addendum, or any other contract to which it is a party, or (c) any breach by either the Supplier or the Buyer of any duty of care, law, regulation, or other legal obligation applicable to it, for gas sold and delivered by the Supplier to the Buyer pursuant to the Supply Contract. The Dealer and the Buyer agree that the Supplier likewise shall not be liable under any theory to the Buyer or the Dealer for (a) any breach by the Buyer of any term of the Supply Contract, the Cooperative Contract, or any other contract to which the Buyer is a party, (b) any breach by the Dealer of any of the terms of the Exchange Agreement or any other contract to which it is a party, or (c) any breach by either the Dealer or the Buyer of any duty of care, law, regulation, or other legal obligation applicable to it, for gas sold or exchanged and delivered by the Dealer pursuant to the Exchange Agreement. In addition, except as described in Section 3 hereof, the Dealer shall have no obligation to nominate or confirm for delivery any quantity of gas for any period. Except for the obligations to receive and purchase gas at the price described in Section 1, the Dealer shall F.akmer'angJuhLixtcAubbocL,ioc 3 have no obligations or liabilities, including, without limitation, obligations or liabilities for taxes, royalties or indemnities, under the Supply Contract. The obligations of the Dealer to the Supplier hereunder shall not be affected by any failure by TMGC to observe and perform its obligations under the Exchange Agreement or any imbalance existing thereunder. 6. Governing Law. This Addendum shall be. governed by and construed in accordance with the laws of the State of Texas. 7. Notices. Except as otherwise provided in this Addendum, any notice, request, demand, statement, bill, or other document required to be given to any party by this Addendum, and any notice which any party hereto may desire to give any other party hereto, shall be in writing and will be considered duly delivered when mailed by registered mail, return receipt requested, or sent by facsimile or electronic transmission with receipt acknowledged, to the address or number of the receiving party listed opposite its signature below or to any other address or number previously famished in writing for such purpose by the receiving party to the other parties hereto. S. .Successors and Assigns. The provisions of this Addendum shall be binding upon and inure to the benefit of the successors and assigns of each of the parties hereto. No party hereto may assign any of its rights or obligations hereunder without the consent of the other parties hereto, except to a trustee, individual or corporate, as security for bonds, securities, or other obligations. No such consent shall be unreasonably withheld, provided that any party may refuse so to consent if the assignee does not meet its credit requirements. 9. Waivers. No waiver by any party hereto of any default by any other party hereto in the observance or performance of any provision of this Addendum shall operate as a waiver of any future default, whether of a like or of a different character. 10. Entire Addendum. This Addendum and the Supply Contract contain the entire . agreement among the parties, and except as stated herein or therein there are no oral promises, agreements, warranties, obligations, or conditions, precedent or otherwise, affecting it. 11. Amendments. Any change, modification, or alteration of this Addendum shall be in writing, signed by the parties hereto, and no course of dealing between or among any parties hereto shall be construed to alter any term hereof, except as expressly stated herein. No amendment to the Supply Contract shall affect the rights and obligations of the Dealer hereunder (other than changing the price at which gas is to be purchased by it hereunder) unless approved in writing by the Dealer. The Buyer shall provide the Dealer with a copy of each such amendment promptly after execution thereof. 12. Severahitity. Except as otherwise stated herein, if any provision hereof or application thereof shall be declared or rendered unlawful by a court of law or regulatory agency F all_roercttmigclexhlbcm%kbock_doc with jurisdiction over any party hereto or deemed unlawful because of a statutory change, the remaining applications thereof and provisions of this Addendum shall nevertheless remain valid and enforceable. 13. Corporate Obligations. No recourse under or upon any obligation, covenant, or agreement contained in this Addendum, or for any claim based thereon or otherwise arising in respect thereof, shall be had against any incorporator or sponsor, or against any past, present, or future director, officer, employee, or member of the governing body, as such, of any party hereto or of any successor, or against any person or entity with whom any such party has contracted for goods or services, directly or through such party, whether by virtue of any constitution or statute or rule of law, or by the enforcement of any assessment, judgment, or penalty, or otherwise; it being expressly understood that this Addendum is solely a corporate obligation, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, sponsors, directors, officers, or employees, as such, of such party or any successor, or any member of its governing body, or any such contracting person, or any of them, by reason of the obligations, covenants, or agreements contained in this Addendum or implied therefrom, and that any and all such personal liability at common law or equity or by constitution or statute, and any and all such rights and claims against, every such incorporator, sponsor, member, director, officer, employee, or person, as such, are hereby expressly waived and released as a condition of, and in consideration for, the execution of this Addendum. 14. Government Regulation. The delivery and receipt of gas by the Dealer, the Buyer, and the Supplier hereunder are subject to all valid laws with respect to the subject matter hereof and to all valid present and future orders, rules, and regulations of duly constituted governmental authorities having jurisdiction. 15. Benefits of Contract. Nothing in this Addendum, expressed or implied, shall give any benefit or any legal or equitable right, remedy, or claim under this Addendum to any person or entity other than the parties hereto, their successors and assigns permitted hereby and TMGC. 16. Effective Date. Notwithstanding the date hereof, this Addendum shall not become operative or effective until the first day of the month following the later of (1) the effective date for qualification of the Buyer as a'Buyer" under the Exchange Agreement and (2) the fast effective date for designation of a "Dealer's Point of Receipt" under the Exchange Agreement. Dealer shall notify Supplier in writing within three (3) days following the occurrence of either event. 17. Term and Termination. This Addendum shall extend for a period of 30 years unless sooner terminated pursuant to this Section. This Addendum shall terminate on the earliest of (a) the cancellation, termination, or expiration of the Supply Contract, (b) the extension, renewal, modification, amendment, or replacement of the Supply Contract in a F:aILnWrcnn c/cLku 9cAubbock.doc manner that adversely affects the rights and obligations of the Dealer hereunder (other than by changing the price at which gas is to be purchased by it hereunder) without the prior written approval of the Dealer, (c) cancellation, termination, or expiration of the Exchange Agreement or of the rights and obligations of the Buyer under the Cooperative Contract, or (d) the effective date of a gas exchange and balancing agreement between TMGC and the Supplier providing for the delivery of gas by the Supplier to TMGC at the Buyer's Point of Receipt, if at least 45 days prior written notice of such effective date has been given to the Dealer by the Supplier or TMGC. In addition, the Supplier may terminate this Addendum on account of any default by the Dealer in paying its obligations hereunder on the same terms and conditions as the Supplier may terminate the Supply Contract on account of any such default by the Buyer in paying its obligations thereunder. F:a!1_rtKrmltrn "hibitdlubbodt.dm IN WITNESS WHEREOF, the parties hereto have duly authorized and caused this Addendum to be executed as of the date first herein above written in multiple originals. Supplier's Addresses and Nos: L G & E Energy Marketing; Inc., as Supplier L G & E Energy Marketing Inc .. ............ By:................................................................................ 2777 Stemmons Freeway, Suite 1700 .... Name: Alvin Jones ...................................................... Dallas, Texas 75207................................ Title: Vice President.................................................... Telephone: 214 640-6733 ..................... Facsimile: 214 640-6031....................... Internet: alvin.jones@lgeenergy.com... Dealer's Addresses and Nos: Coral Energy Resources, L.P .................. 900 Fannin, Suite 700 ............................. Houston, Texas 77010 ............................. Telephone: 713 767-5427 ..................... Facsimile: 713 767-5441....................... Internet: pguilbault@coral-energy.com Buyer's Addresses and Nos: City of Lubbock ...................................... 916 Texas ................................................ Lubbock, Texas 79457 ............................ Telephone: 806 775-2500 ...................... Facsimile: 806 775-3112........................ APPROVED AS TO CONTENT: .1-7 dn&l <-11 AkMn==1- Paul Thomp on, Managing Dir. of Electric Utilities APPROVED AS T ORM: Richard K. Casner, Natural Resources Attorney F:dl—fnadungdtxtnbiltAubboci doc Coral Energy Resources, L.P., as Dealer By: ................................................................................ Name: R. Paul Guilbault............................................. Title: Vice President .................................................... City of Lubbock, as Buyer By: ............................W .......... Name: Windy Sitton�. .. ..... :�- Title: Mayor ............................... ............................... AZTjWLk Kay ie Darne City Secretary