04-34 (2)
RESOLUTION NO. 04-34
A RESOLUTION OF THE CITY OF CLEARWATER, FLORIDA, APPROVING
THE FORM OF PGP GAS SUPPLY AGREEMENT NO.1 FOR THE PURCHASE
AND SALE OF GAS AND OTHER SERVICES AND AUTHORIZING FLORIDA
GAS UTILITY TO NEGOTIATE THE TERMS OF RELATED FINANCIAL
PRODUCTS AND FINANCIAL INSTRUMENTS RELATED TO THE PURCHASE
OR PRICING OF GAS IN ACCORDANCE WITH THE GAS SUPPLY
AGREEMENT NO.1, AT THE DIRECTION OF THE CITY'S AUTHORIZED
REPRESENTATIVE AS PROVIDED FOR HEREIN; AUTHORIZING THE
EXECUTION AND DELIVERY OF THE PGP GAS SUPPLY AGREEMENT
SUBJECT TO CONDITIONS AS SPECIFIED HEREIN; AUTHORIZING
FLORIDA GAS UTILITY TO PLEDGE THE CITY'S PAYMENT OBLIGATIONS
THEREUNDER TO SECURE THE PAYMENT OF COSTS OF PUBLIC GAS
PARTNERS, INC., AS PROVIDED IN ITS NATURAL GAS PRODUCTION
SHARING AGREEMENT, OR OTHER OBLIGATIONS REQUIRED UNDER
SUCH AGREEMENT, AND BONDS OR OTHER OBLIGATIONS ISSUED BY
FLORIDA GAS UTILITY; PROVIDING FOR THE MAKING OF PAYMENTS
PURSUANT TO SAID PGP GAS SUPPLY AGREEMENT, AND MAKING
CERTAIN COVENANTS IN CONJUNCTION WITH SAID PAYMENTS;
PROVIDING FOR THE MAKING OF PAYMENTS PURSUANT TO SAID
FINANCIAL INSTRUMENTS AND MAKING CERTAIN COVENANTS IN
CONJUNCTION WITH SAID PAYMENTS; PROVIDING FOR THE
APPOINTMENT OF THE PROJECT PARTICIPANT REPRESENTATIVE;
PROVIDING CERTAIN OTHER AUTHORIZATIONS; PROVIDING AN
EFFECTIVE DATE; AND PROVIDING CERTAIN OTHER DETAILS WITH
RESPECT THERETO.
WHEREAS, the City of Clearwater, Florida ("Project Participant"), in its capacity as a
Member of Florida Gas Utility ("FGU") wishes to purchase a supply of natural gas from FGU and
wishes to authorize certain financial products and services relating to the pricing and/or
financing thereof, all as contemplated in the PGP Gas Supply Agreement No.1, a proposed form
of which is attached hereto as Exhibit A (the "PGP Gas Supply Agreement"); and
WHEREAS, in order to provide the benefits of the gas supply and other services to Project
Participant and other Project Participants of FGU and in order to assure the flexibility in pricing
and other services provided by the PGP Gas Supply Agreement, it is necessary for Project
Participant to authorize and approve the form of the PGP Gas Supply Agreement, to be revised
only as to a Schedule of Project Participants, determining the definitive number of Participants
and their allocated share of risk, and such other minor revisions as may arise, to be approved by
the officers of Project Participant executing such Agreement, which duty and responsibility is
delegated hereby to such officers; and
WHEREAS, in order to take advantage of certain Financial Products as provided in
Financial Instruments and the issuance of Bonds as described in the PGP Gas Supply
Agreement, it is necessary for Project Participant to authorize the Project Participant
Representative to give the Directives provided for in the PGP Gas Supply Agreement, binding
Project Participant for the obligations set forth therein; and
WHEREAS, it is necessary for the governing body of each Project Participant to (a)
approve the form of the PGP Gas Supply Agreement and authorize its execution and delivery by
its authorized representatives, and (b) to designate the volume of Gas that it is committed to
receive (referred to in the PGP Gas Supply Agreement as its Nominated Quantity and expressed
as a percentage of the Nominated Quantities by all other Project Participants and referred to as
its "Gas Entitlement Share"), (i) which, as provided therein, will require the purchase of the gas
so nominated by each Project Participant on a take or pay basis; (ll) which will require that in the
event of a default in the purchase of gas or other failure to pay by another Project Participant or
a Member under the Natural Gas Production Sharing Agreement for Gas Supply Pool No.1
attached as Exhibit D to the PGP Gas Supply Agreement ("Production Agreement"), a Project
Participant will be required to "step.up" and be obligated to pay such additional amount, up to
25% of its Gas Entitlement Share under the PGP Gas Supply Agreement, and up to 25% of FGU's
Participation Share with respect to the Production Agreement; (in) which will authorize the
participation in derivatives under the Production Agreement, of which any termination payment
will be considered an item of Cost to be passed through as operating expenses, to hedge the cost
of gas, in the order of priority and as otherwise provided in the Production Agreement; and (iv)
which will provide for a broad definition of Costs to include capital expenditures, which will be
passed through as operating expenses.
WHEREAS, Project Participant desires to take certain other actions and make certain
authorizations and delegations of authority with respect to the Agreements
BE IT RESOLVED BY THE CITY COUNCIL OF CLEARWATER, FLORIDA;
Section 1. Authoritv. This Resolution is adopted pursuant to the Constitution and laws of
the State of Florida, including, particularly, Section 163.01, Florida Statutes, and Chapter 166,
Florida Statutes.
Section 2. Definitions. Unless the context otherwise requires, all terms used herein in
capitalized form shall have the same meanings ascribed to such terms in the Agreements or in
the Production Agreement, as the case may be.
Section 3. Findine:s. It is hereby ascertained, determined and declared that Project
Participant is authorized under the authority cited above to approve the form of the Agreements
in the manner herein provided.
Section 4. Aooroval of Form of PGP Gas Suoolv Ae:reement and Other Ae:reements
Authorized Therebv. The PGP Gas Supply Agreement in substantially the form attached hereto
as Exhibit A, is hereby approved, to be revised only as to a Schedule of Project Participants,
determining the definitive number of Participants and their allocated share of risk, and such
other minor revisions as may arise, to be approved and made to such form of the PGP Gas Supply
Agreement by the officers designated below executing the same in the manner consistent with
the provisions of this Resolution. The duty and responsibility for approving modifications or
amendments to the PGP Gas Supply Agreement and negotiating and approving of any Financial
Instruments described therein and in this Resolution (the "Agreements") may be approved by the
Clearwater City Council or delegated to the Project Participant Representative(s) designated in
paragraph 8 below, as permitted by the City of Clearwater Code of Ordinances. Such officers are
hereby authorized to deliver the Agreements, as so negotiated, modified and amended, as
executed, to FGU for its consideration and execution.
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Section 5. Particular Covenants.
A. The payments required to be made by Project Participant pursuant to the PGP Gas
Supply Agreement shall constitute an obligation of Project Participant payable as an operating
expense of Project Participant's System ("System"), to the extent legally permissible, solely from
the revenues and other available funds of Project Participant's System, and such payments shall
be made as provided in the PGP Gas Supply Agreement and subject to the provisions thereof, to
the extent such payments would constitute operating expenses under Project Participant's
indentures, bond resolutions or other bond documents entered into in connection with the
financing of Project Participant's System.
B. If such payments are not treated as operating expenses, such payments shall be
made by such Project Participant pursuant to the provisions of Section 4(g) of the PGP Gas
Supply Agreement and shall constitute an obligation payable solely from the revenues of Project
Participant's System, which revenues are pledged therefor, subject and subordinate to certain
payments on existing obligations as provided in said Section 4(g).
C. The provisions of the Financial Instruments creating Financial Products as
described in the PGP Gas Supply Agreement obligating Project Participant for certain payments
thereunder and to perform certain covenants will constitute obligations of Project Participant
enforceable against it in accordance with the respective terms thereof. It is intended that
payments required under such Financial Instruments will constitute operating expenses of
Project Participant's System to the extent legally permissible, and within the meaning of Project
Participant's indentures, bond resolutions or other bond documents. If such payments do not
constitute operating expenses as provided above, such payments payable under such Financial
Instruments shall constitute obligations payable solely from revenues of the Project Participant's
System, which revenues are hereby pledged therefor, subject and subordinate to certain
payments as provided in Section 4(g) of the PGP Gas Supply Agreement.
D. Project Participant shall not be required to make such payments from taxes or
revenues other than the revenues of Project Participant's System. The obligations of Project
Participant to make payments under the Agreements shall not constitute a debt of Project
Participant within the meaning of any constitutional or statutory provision or limitation or a
general obligation of or pledge of the full faith and credit of Project Participant. Project
Participant shall never be required under the Agreements to levy ad valorem taxes on any real
property to make said payments, and the obligations of Project Participant thereunder shall not
constitute a lien upon any tangible property owned by or located within the boundaries or the
service area of Project Participant, but shall be payable solely from the aforementioned revenues.
No obligee under the Agreements shall ever have the power to require or compel the levy of ad
valorem taxes upon any property of Project Participant or within its boundaries or service area to
make any of the payments required to be made under the Agreements.
Section 6. System Revenues. The estimated revenues to be derived by Project Participant
from its System will be sufficient to make the payments required to be made by Project
Participant pursuant to the PGP Gas Supply Agreement, to pay all operating expenses of Project
Participant's System, and to make all payments of principal and of interest on Project
Participant's outstanding obligations for bonded or other indebtedness.
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Section 7. Rate Covenant. Under the terms of the PGP Gas Supply Agreement, Project
Participant agrees that it will establish, impose, maintain, enforce and collect rates, fees and
charges for all services and facilities of its System sufficient to produce revenues at the times and
in the amounts required to pay all costs of the supply of Gas and other energy or other output
and other services for Project Participant's System, including the payments to be made under the
PGP Gas Supply Agreement, as well as all other costs of operation, administration, maintenance
and debt service of the System and all other amounts payable from or constituting a lien or
charge on the revenues of Project Participant's System.
Project Participant will provide to FGU, or its designee, annually, promptly upon its
preparation, but no later than one hundred fifty (150) days after the end of its Fiscal Year, a copy
of its annual audit and such other financial and other records, and within such time as may be
required by the PGP Gas Supply Agreement or the Production Agreement.
Section 8. Appointment of Proiect Participant Representative. As required by Section 28
of the PGP Gas Supply Agreement, the individual who shall serve from time to time as City
Manager of Project Participant, or the individual who shall serve from time to time as either the
Managing Director & Executive Officer, of Clearwater Gas System, or the Gas Program
Coordinator/Gas Supply & Technology Engineer, of Project Participant shall serve as the Project
Participant Representative authorized to take such actions as are provided in Section 4 of this
Resolution and in Section 28 of the PGP Gas Supply Agreement, including the giving of
instructions and Directives to FGU for the negotiation and execution of Financial Instruments
that will be legally binding upon Project Participant, and otherwise to fulfill all duties of such
representative under Section 28 of the PGP Gas Supply Agreement. The Project Participant
Representative shall have full authority to represent and bind Project Participant for all
purposes authorized by the PGP Gas Supply Agreement, including those matters related to
Financial Instruments and Financial Products as contemplated therein, including Section 28(b)
thereof, until such Project Participant Representative shall be changed by Project Participant
and written notice of such change shall be given to FGU. FGU may rely upon any instructions,
as well as a Directive executed by the Project Participant Representative and such action of such
Project Participant Representative shall be deemed duly authorized, executed and delivered by
the Project Participant Representative on behalf of Project Participant and shall be the legally
binding obligation of Project Participant.
Section 9. Assie:nment. Project Participant hereby authorizes the full or partial
assignment of the PGP Gas Supply Agreement or the payments to be made thereunder by FGU
to any bond trustee, Public Gas Partners, Inc., or otherwise as may be necessary for the payment
of the obligations of Public Gas Partners, Inc., for the purchase of gas or other obligations under
the PGP Gas Supply Agreement, bonds or other obligations issued by FGU for the payment
thereof.
Section 10. Authorizations Concernine: Ae:reements.
A. Upon approval by the Clearwater City Council, the Mayor of Project Participant shall
be and is hereby authorized to execute and deliver the PGP Gas Supply Agreement for and on
behalf of Project Participant pursuant to the terms hereof, in substantially the form attached
hereto as Exhibit A, and the Financial Instruments, in such forms as shall be negotiated in the
manner provided herein, in each case, to be revised only as provided for herein, and as such
officers may approve, such approval to be conclusively evidenced by the execution thereof.
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B. Such officers authorized hereby are also directed to complete or approve
Appendix 1 to the PGP Gas Supply Agreement, to complete Appendix 2 to the PGP Gas Supply
Agreement, to insert the Point(s) of Delivery, to complete Exhibit B to the PGP Gas Supply
Agreement to describe Project Participant's enterprise System and gas burning or distribution
facilities, and to complete Exhibit C to the PGP Gas Supply Agreement to list and describe
Project Participant's outstanding obligations.
C. Such other officers and employees of Project Participant as may be designated by
the officers charged with the execution of the Agreements, including the Project Participant
Representative are each designated as agents in connection with the issuance and delivery of the
Agreements and are authorized and empowered, collectively or individually, to take all action
and steps and to execute all instruments, documents and contracts on behalf of Project
Participant that are necessary or desirable in connection with the execution and delivery thereof,
and which are specifically authorized or are not inconsistent with the terms and provisions of
this Resolution.
Section 11. Makine: Certain Commitments Ree:ardine: the Securities Exchane:e Act of
1934. Project Participant shall provide to FGU, or its designees, on a timely basis and in such
form as shall be reasonably requested by either, any and all documents, releases, financial
statements and other information necessary to enable FGU to comply with any disclosure or
other reporting requirement, including but not limited to Rule 15c2-12 of the Securities and
Exchange Commission promulgated under the Securities Exchange Act of 1934 (the "Rule"), now
or hereafter imposed by the United States of America, the State of Florida, or any political
subdivision or agency of either having jurisdiction over the issuance of any debt obligations for
the acquisition of gas, by law, judicial decision, regulation, rule or policy. Such information shall
be provided by Project Participant from time to time promptly following the occurrence of a
"material event" as described in the Rule, and as otherwise may be requested by FGU, or its
designees, but in any case, no less frequently than shall enable FGU, or the underwriters or
broker/dealers of the obligations of FGU, or such Project Participant, to comply with any such
law, judicial decision, regulation, rule or policy.
In addition to the foregoing, Project Participant will provide to FGU, or its designee,
annually, promptly upon its preparation, but no later than one hundred fifty (I50) days after the
end of its Fiscal Year, a copy of its annual audit and such other financial and other records as
may be required by the issuer of any credit facility or bond insurance policy or other security
instrument securing all or any part of FGUs bonds or other indebtedness, and otherwise as
required by the Production Agreement.
Project Participant shall further enter into a continuing disclosure agreement or other
undertaking as may be reasonably required by the original purchaser of the Bonds in order to
comply with the Rule.
The foregoing shall be provided III the manner set forth III the PGP Gas Supply
Agreement.
Section 12. Validation. Counsel for Project Participant shall cooperate with FGU and its
counsel in any validation proceedings necessary to validate the Bonds and all matters in
connection therewith.
Section 13. This section intentionally omitted.
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Section 14. Severability. If anyone or more provisions of this Resolution should
be determined by a court of competent jurisdiction to be contrary to law, such provisions
shall be deemed to be severable from the remaining provisions hereof and shall in no way
effect the validity or enforceability of such remaining provisions.
Section 15. Repeal of Inconsistent Resolutions. All resolutions or parts of
resolutions in conflict herewith are hereby repealed.
Section 16. Effective Date. This Resolution shall become effective immediately
upon its adoption.
PASSED AND ADOPTED this 2nd day of December
,2004.
Approved as to form:
Attest:
By:
~
" J..lNhZ-1I L'PdW-SJt!./
Assistant City Attorney
By: ~~ [:
City Clerk
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