06-38
RESOLUTION NO. 06-38
A RESOLUTION OF THE CITY OF CLEARWATER, FLORIDA,
APPROVING THE FORM OF GAS SUPPLY AGREEMENT NO.2 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 ON
BEHALF OF THE CITY AS PROVIDED IN SUCH AGREEMENT, AND
SUBSEQUENTLY, AT THE DIRECTION OF THE CITY'S AUTHORIZED
REPRESENTATIVE AS PROVIDED FOR HEREIN; AUTHORIZING THE
EXECUTION AND DELIVERY OF THE GAS SUPPLY AGREEMENT;
AUTHORIZING FLORIDA GAS UTILITY TO PLEDGE THE CITY'S
PAYMENT OBLIGATIONS THEREUNDER TO SECURE THE PAYMENT
OF COSTS AS PROVIDED IN THE GAS SUPPLY 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
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; AND PROVIDING CERTAIN OTHER DETAILS WITH
RESPECT THERETO; PROVIDING AN EFFECTIVE DATE
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 Gas Supply Agreement No.2, a
proposed form of which is attached hereto as Exhibit A (the "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 Gas Supply Agreement, it is
necessary for Project Participant to authorize and approve the form of the Gas Supply
Agreement with such changes, insertions, omissions and filling in of blanks as may be
approved by the officers of Project Participant approving and/or 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 Gas Supply
Agreement (together with the Gas Supply Agreement of other Project Participants of the
Project, sometimes collectively called the "Agreements"), it is necessary for Project
Participant to authorize the Project Participant Representative to give the Directives
Resolution No. 06-38
provided for in the Gas Supply Agreement as may be required, 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 Gas Supply Agreement and authorize its execution and delivery by
its authorized representatives, and (b) designate the percentage of Gas available under
the long term supply agreement that it is committed to receive annually during the term
(referred to in the Gas Supply Agreement 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 and pay basis requiring Project Participant to purchase its Gas
Entitlement Share to the extent Gas is tendered for delivery at FGU's receipt point, and as
otherwise provided in the Gas Supply Agreement; (ii) which will require that in the event of
a default in the purchase of Gas or other failure to pay by another Project Participant,
Project Participant will be required to pay a pro rata share of Costs of such defaulting
Project Participant until the delivery of Gas is discontinued pursuant to Section 15 of the
Gas Supply Agreement and certain other Costs not related to the Cost of Gas and Debt
Service on the Bonds; and (iii) which will authorize the participation in derivatives under the
Gas Supply Agreement or other documentation as a part of the project; and
WHEREAS, Project Participant desires to take certain other actions and make
certain authorizations and delegations of authority with respect to the Gas Supply
Agreement.
Unless otherwise provided, defined terms as used herein shall have the meanings
as provided in the Gas Supply Agreement. WHEREAS, it is necessary for the governing
body of each Project Participantto (a) approve the form of the Gas Supply Agreement and
authorize its execution and delivery by its authorized representatives, and (b) designate
the percentage of gas available under the long term supply agreement that it is committed
to receive (referred to in the Gas Supply Agreement as its "Gas Entitlement Share"), (i)
which, as provided therein, will require the purchase of the gas so nominated by each
Project Participant will be on a take and pay basis; (ii) which will require that in the event of
a default in the purchase of gas or other failure to pay by another Project Participant,
Project Participant will be obligated to pay a pro rata share of Costs of such defaulting
Project Participant until the delivery of Gas can be discontinued pursuant to Section 15 of
the Gas Supply Agreement; and (iii) which will authorize the participation in derivatives
under the Gas Supply Agreement or other documentation as a part of the project; and
NOW, THEREFORE, BE IT RESOLVED BY THE CITY OF CLEARWATER,
FLORIDA, that:
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 Gas
Supply Agreement.
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Resolution No. 06-38
Section 3. Findinqs. It is hereby ascertained, determined and declared that Project
Participant is authorized under the authority cited above to approve the form of the Gas
Supply Agreement in the manner herein provided.
Section 4. Approval of Form of Gas Supplv Aqreement and Other Aqreements
Authorized Therebv. The Gas Supply Agreement in substantially the form attached hereto
as Exhibit A, is hereby approved, with such changes, insertions, omissions and filling in of
blanks therein as may be approved and made to such form of the 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 negotiating and approving
modifications or amendments to the Gas Supply Agreement and negotiating and approving
of any Financial Instruments described therein (to the extent required thereby) and in this
Resolution are hereby delegated to the Project Participant Representative(s) designated in
paragraph 8 below. Such execution and delivery of the final form of such Agreement shall
be conclusive evidence of the approval of such Agreement by the officers executing the
same and Project Participant shall be bound by such Agreement as executed and
delivered. Such officers are hereby authorized to deliver such Agreement, as so
negotiated, modified and amended, as executed, to FGU for its consideration and
execution.
Section 5. Particular Covenants.
A. The payments required to be made by Project Participant pursuant to the
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 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.
Project Participant covenants that it will not take any action to cause such payments to be
treated otherwise than as a cost of operation and maintenance, under any bond
ordinances, resolutions or otherwise to which it shall become a party or be obligated after
the date of the Agreement, except for those for which it shall be obligated prior to the date
of the Agreement.
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
Gas Supply Agreement and shall constitute an obligation payable solely from the revenues
of Project Participant's System, which revenues are pledged therefore, subject and
subordinate to certain payments as provided in said Section 4(g).
C. The provisions of the Financial Instruments creating Financial Products as
described in the 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
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Resolution No. 06-38
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
therefore, subject and subordinate to certain payments as provided in Section 4(g) of the
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 Gas Supply Agreement 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 Gas Supply
Agreement 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 Gas Supply Agreement 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 Gas Supply Agreement, to pay all operating expenses
of Project Participant's System, and to make all payments of principal of and interest on
Project Participant's outstanding obligations for bonded or other indebtedness.
Section 7. Rate Covenant. Under the terms of the 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 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 eighty (180) 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 Gas Supply Agreement.
Section 8. Appointment of Proiect Participant Representative. As required by
Section 28 of the Gas Supply Agreement, the individual who shall serve from time to time
as City Manager of Project Participant, or in his absence, 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
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Resolution No. 06-38
actions as are provided in Section 4 of this Resolution and in Section 28 of the 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 Gas Supply
Agreement. The Project Participant Representative shall have full authority to represent
and bind Project Participant for all purposes authorized by the 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. AssiQnment. As provided in the Gas Supply Agreement, Project
Participant hereby authorizes the full or partial assignment of the Gas Supply Agreement
or the payments to be made thereunder by FGU to any bond trustee, or otherwise as may
be necessary for the payment of the obligations for the purchase of gas or other
obligations under the Gas Supply Agreement, Financial Instruments, Bond Resolutions or
other obligations issued by FGU for the payment thereof.
Section 10. Authorizations ConcerninQ AQreement.
A. The Mayor of Project Participant shall be and are hereby authorized to execute
and deliver the 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, with such changes, insertions and omissions and filling in of blanks thereih as such
officers may approve, such approval to be conclusively evidenced by the execution
thereof.
B. Such officers authorized hereby are also directed to complete or approve
Appendix 1 to the Gas Supply Agreement, to complete Appendix 2 to the Gas Supply
Agreement, to insert the Point(s) of Delivery, to complete Exhibit B to the Gas Supply
Agreement to describe Project Participant's enterprise System and gas burning or
distribution facilities, to complete Exhibit C to the Gas Supply Agreement to list and
describe Project Participant's outstanding obligations.
C. The Chief Financial Officer and such other officers and employees of Project
Participant as may be designated by the officers charged with the execution of the Gas
Supply Agreement, including the Project Participant Representative and representatives
on the Board of Directors or Executive Committee of FGU, are each designated as agents
in connection with the issuance and delivery of the Gas Supply Agreement 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
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Resolution No. 06-38
are specifically authorized or are not inconsistent with the terms and provisions of this
Resolution.
Section 11. Makinq Certain Commitments Reqardinq the Securities Exchanqe 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 eighty (180) 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 FGU's bonds or other
indebtedness.
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 in the manner set forth in the Gas Supply
Agreement.
Section 12. Resolution to Constitute Contract. This Resolution shall be deemed to
be and shall constitute a contract between Project Participant and FGU and the other
Project Participants of FGU. The covenants and agreements herein set forth to be
performed by Project Participant shall be for the benefit, protection and security of FGU
and the other Project Participants and those third parties in the manner and to the extent
provided in the Agreements.
Section 13. Severabilitv. 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 14. Repeal of Inconsistent Resolutions. All resolutions or parts of
resolutions in conflict herewith are hereby repealed.
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Resolution No. 06-38
Section 15. Effective Date. This Resolution shall become effective immediately
upon its adoption.
PASSED AND ADOPTED this 15th day of
Approved as to form:
Laura Lipo ski
Assistan ity Attorney
June
,2006.
~..~/~
~nk V. Hibbard
Mayor
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Resolution No. 06-38
EXHIBIT A
GAS SUPPLY AGREEMENT NO.2
Resolution No. 06-38
CERTIFICATE OF CLERK
I, , the City Clerk of the City of Clearwater, Florida
(the "City"), HEREBY CERTIFY as follows:
1. Attached hereto
adopted by the City on
IS a true and correct copy of Resolution No.
_, 2006 (the "Resolution").
2. Attached hereto is a true and correct copy of an Extract from the
minutes of the meeting of the City held on _, 2006, which meeting
was duly called and held and at which meeting a quorum was present and voting
throughout, as such minutes appear of record in the public records of the City
pertaining to the adoption of the Resolution.
The Resolution has not been modified, amended, revoked or
repealed in any respect since its date of adoption and remains in full force and effect as of
the date hereof.
WITNESS my hand and official seal this _ day of
,2006.
CITY OF CLEARWATER, FLORIDA
(SEAL)
By:
City Clerk
Attach: Resolution
Extract of Minutes
# 3733639 vI
'EXHIBIT A
GAS 'SUPPLY AGREEMENT NO.2
Resolution No. 06-38
CERTIFICATE OF CLERK
I, , the City Clerk of the City of Clearwater, Florida
(the "City"), HEREBY CERTIFY as follows:
1. Attached hereto
adopted by the City on
IS a true and correct copy of Resolution No.
_, 2006 (the "Resolution").
2. Attached hereto is a true and correct copy of an Extract from the
minutes of the meeting of the City held on _, 2006, which meeting
was duly called and held and at which meeting a quorum was present and voting
throughout, as such minutes appear of record in the public records of the City
pertaining to the adoption of the Resolution.
The Resolution has not been modified, amended, revoked or
repealed in any respect since its date of adoption and remains in full force and effect as of
the date hereof.
WITNESS my hand and official seal this _ day of
,2006.
(SEAL)
CITY OF CLEARWATER, FLORIDA
By:
City Clerk
Attach: Resolution
Extract of Minutes
# 3733639 vI
EXHIBIT A
PREPAY FINANCING TRANSACTION -
AGREEMENT WITH PROJECT PARTICIPANTS
GAS SUPPLY AGREEMENT NO.2
BETWEEN
FLORIDA GAS UTILITY
AND
CITY OF CLEARWATER, FLORIDA
Dated as of
_,2006
TABLE OF CONTENTS
Page
SECTION 1. Definitions and Explanations of Terms. ................................................2
SECTION 2. Term of Agreement.............................................................................. .10
SECTION 3. Gas Supply Service and Pricing........................................................... 11
SECTION 4. Method of Payment. .................... ....................................................... ..14
SECTION 5. Scheduling of Deliveries; Title. ............................................................18
SECTION 6. Point(s) of Delivery. ..............................................................................19
SECTION 7. Curtailment......................................................................................... .19
SECTION 8. Availability of Gas or Gas Entitlement Shares................................... 19
SECTION 9. Insurance............................................................................................. .19
SECTION 10. Annual Budget; Accounting. ........... ........... ....... ......... ............... .......... 20
SECTION 11. Information to be Made Available. .....................................................20
SECTION 12. Project Participant Covenants; Representations and Warranties. ..22
SECTION 13. Pledge of Payments. ............................................. ................ ...............27
SECTION 14. Event of Default........................ ...........................................................27
SECTION 15. Continuing Obligation, Right to Discontinue Service........................ 28
SECTION 16. Transfer of Nominated Quantities Following Default....................... 28
SECTION 17. Other Default by Project Participant. ................................................30
SECTION 18. Default by FGU. .............. .................................................................... 30
SECTION 19. Abandonment of Remedy. ........................... ......... ............................... 30
SECTION 20. Waiver of Default..... .............................. ...... ........ ...... ....... ............ ....... 31
SECTION 21. Relationship to and Compliance with Other Instruments. .........:.....31
SECTION 22. Measurement of Gas............................................................................ 31
SECTION 23. Liability of Parties. ..... ........ ............. ............ .... ...... ..... ... .... .......... ........31
SECTION 24. Sale of Project Participant's Excess Nominated Quantity. ...............34
SECTION 25. Assignment of this Agreement; Sale of Project Participant's
System. ................................................... ........................................35
SECTION 26. Termination or Amendment. ............. ............ ...... ...... ......................... 36
SECTION 27. Force Majeure. ..... ...... .......... ....... ..... ............................. ..... .......... ........ 37
SECTION 28. Project Participant Representative. ........... ..................... .............. .... 39
SECTION 29. Notice and Computation of Time. ......................................................40
SECTION 30. Applicable Law; Construction. .... ....... ....... ........ ................ ............... ...41
SECTION 31. Severability.... ...... ................... ................... ................... .......................41
Exhibi t A
Exhibit B
Exhibit C
Appendix 1 -
Characteristics of Financial Products
Description of System
Project Participant Outstanding Obligations
Schedule of Project Participants' Nominated Quantity for Gas
Supply Pool No.2 Gas Entitlement Share
Project Participant's Point or Points of Delivery
Form of Opinion of Counsel to Project Participant
Appendix 2 -
Appendix 3 -
PREPAY FINANCING TRANSACTION -
AGREEMENT WITH PROJECT PARTICIPANTS
GAS SUPPLY AGREEMENT NO.2
This GAS SUPPLY AGREEMENT NO.2 ("Agreement") made and
entered into as of , 2006, by and between FLORIDA GAS UTILITY, a
public body corporate and politic formed under the Florida Interlocal Cooperation
Act ("FGU") and the CITY OF CLEARWATER, FLORIDA, a municipal corporation
of the State of Florida ("Project Participant").
WITNESSETH:
WHEREAS, FGU was formed by Interlocal Agreement on September 1, 1989,
which was subsequently amended by the Amended Interlocal Agreement on June 1,
1992, and thereafter amended and restated by Amended and Restated Interlocal
Agreement dated as of July 1, 1996, and thereafter amended and restated by
Second Amended and Restated Interlocal Agreement dated as of July 27, 1999 (the
"Interlocal Agreement"); and
WHEREAS, in order to take advantage of perceived opportunities created by
the restructuring of natural gas services, FGU was established between and among
several public agencies for the purpose of achieving savings through joint services
for, or which otherwise benefit, its Members; and
WHEREAS, Project Participant is a Member of FGU, wishes to obtain the
benefits of participating in Gas Project No.2 pursuant to this Agreement, which is
intended to be a gas services contract within the meaning of the Interlocal
Agreement, and is willing to assume the burdens of such participation described
herein; and
WHEREAS, FGU will take or cause to be taken all steps necessary for the
acquisition of, and will undertake such contractual arrangements necessary to
secure, a suitable supply of Gas or a suitable pricing mechanism including Financial
Products, or both, under one or more Gas Purchase Agreements or Financial
Instruments, and will provide the Gas and pricing mechanism and services
pursuant to this Agreement and/or other related or suitable Financial Instruments,
and pursuant to agreements similar to this Agreement and related or suitable
Financial Instruments with other Project Participants, all as hereinafter defined;
and
WHEREAS, in order to enable FGU to provide its services hereunder, to pay
the Costs provided for herein, and issue its Bonds to pay the Costs of Acquisition,
FGU may have substantially similar Agreements with other Project Participants;
WHEREAS, Article VI of the Interlocal Agreement authorizes the Board of
FGU to undertake a Special Project, and it is intended that each of Project
Participants shall become a party to substantially similar Agreements, such
undertakings with respect to Gas Project No.2 shall each be treated as a Special
Project.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, it is agreed by and between the parties hereto as
follows:
SECTION 1. Definitions and Explanations of Terms.
As used herein:
A2"gre2"ated Transportation Contracts shall have the meaning ascribed to
that term in Section 3(a).
Agreement shall mean this Gas Supply Agreement No.2 as the same may be
amended or supplemented in accordance with its terms, including any other related
or suitable Financial Instruments that may accompany this Agreement or be
appropriate for the purposes to be achieved by this Agreement.
Annual Budget shall mean the budget adopted by the Board of FGU pursuant
to paragraph (a) of Section 10, or, in the case of an amended Annual Budget adopted
by the Board or Executive Committee of FGU, during the remainder of the Fiscal
Year.
Approved Rate Tariff shall mean the tariff for the transportation of Gas by
the Transporter as approved by FERC or the governmental or other entity charged
with this responsibility.
Board of FGU shall mean the Board of Directors of FGU or if said Board shall
be abolished, its successor board, body, commission or agency succeeding to the
principal functions thereof or to whom the power and duties granted or imposed by
any Bond Resolution shall be given by law.
Bond Resolution shall mean a resolution providing for the issuance of the
Bonds, as may be adopted by the Board of FGU, and all amendments and
supplements thereto adopted in accordance with the provisions thereof, and shall
include any trust indenture providing for the issuance of and security for the Bonds,
and other related documentation approved by the Board of FGU or delegated to the
Executive Committee of FGU.
Bonds shall mean the bonds, notes or other evidences of indebtedness, or
notes issued in anticipation of the issuance thereof, which may be issued from time
to time by FGU pursuant to the Bond Resolution to pay any part of the Costs of
2
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I:'
Acquisition of Gas Project No.2, whether or not any such issue shall be
subordinated as to payment to any other issue, and shall include refunding bonds
issued in accordance with this Agreement and the Bond Resolution.
Business Day shall mean any day except (i) Saturday or Sunday, (ii) any day
on which nationally chartered banking institutions located in the states of New
York and Florida are required or authorized by law to close or (iii) any day on which
the New York Stock Exchange is closed. Unless otherwise specified as a Business
Day, a day or days shall mean calendar day or days.
Calvon Hedge Agreement shall have the same meaning as set forth in the
Gas Purchase Agreement.
Commencement Date shall mean the earlier of (i) the first date on which
FGU shall make Gas available to the Project Participants pursuant to the Gas
Purchase Agreement, (ii) the effective date of any Financial Instrument entered into
for the benefit of Project Participant pursuant to this Agreement or the Special
Project authorized hereby, (iii) the effective date of the incurrence by FGU of any
obligations under the Gas Purchase Agreement, or (iv) the date of issuance of
Bonds.
Contract Year shall mean the twelve (12) month period commencing at 12:01
a.m. on October 1 of each year, except that the first Contract Year shall commence
on the first to occur of (i) the date which is twelve (12) months prior to the date on
which the first principal installment on any of the Bonds is due or (ii) the
Commencement Date, and shall expire at 12:01 a.m. on the next succeeding October
1.
Costs shall mean Monthly Costs and, to the extent not paid from proceeds of
the Bonds, Costs of Acquisition.
Costs of Acquisition shall mean all costs of acquiring, planning, financing,
pricing, transporting, storing and implementing the supply of Gas under the Gas
Purchase Agreement, including, without limitation, the following:
(1) interest accruing in whole or in part on Bonds for such period as
may reasonably be determined to be necessary in accordance with the
provisions of the Bond Resolution;
(2) the deposit or deposits required to be made under the Bond
Resolution from the proceeds of Bonds into any fund or account established
pursuant to the Bond Resolution to meet Debt Service reserve requirements
for Bonds or other requirements thereunder;
(3) the costs and expenses incurred in the issuance and sale of the
Bonds, the proceeds of which have been or will be required to be applied to
3
one or more purposes for which Bonds could be issued, including, without
limitation, bond insurance premiums, letter of credit or other credit
enhancement or liquidity fees, rating agency fees, discounts to the
underwriters or other purchasers thereof, if any, legal, consulting and
financial advisory costs, and amounts required to be paid under any interest
rate exchanges or swaps, cash flow exchanges, options, caps, floors or collars,
in each case made in cOnnection with the issuance of the Bonds;
(4) the payment of principal, premium, if any, and interest when
due (whether at the maturity of principal or at the due date of interest or
upon redemption) on notes or other evidences of indebtedness from time to
time issued in anticipation of the issuance of Bonds, the proceeds of which
have been or will be required to be applied to one or more purposes for which
Bonds could be issued;
(5) all planning and development costs, insurance premiums, legal,
consulting and financing costs, administrative and general costs, and all
other costs properly allocable to the acquisition and implementation of the
Project;
(6) all other costs incurred in connection with and properly
chargeable to, the acquisition or implementation of the Project, and all costs
in respect of commodity swaps, balancing contracts, hedging arrangements
and other similar agreements related to the supply of Gas hereunder; and
Financial Products authorized hereunder or by Financial Instruments
implemented in accordance with FGU's obligations thereunder for the
purchase of Gas (in each case, subject to the provisions of Section 3(t) below);
and
(7) the provision for working capital or any other operating reserves
that FGU deems reasonably required in connection with the Gas Purchase
Agreement and Financial Instruments and for which may be required by
FGU under this Agreement, and all costs relating thereto, and the cost of
credit facilities or enhancements, in such amounts as FGU shall be obligated
for under the Gas Purchase Agreement or this Agreement.
Debt Service shall mean, with respect to any period, the aggregate of the
amounts required by the Bond Resolution to be paid or deposited during said period
into any fund or account created by the Bond Resolution for the sole purpose of
paying the principal (inclUding sinking fund installments) of, premium, if any, and
interest on all Bonds from time to time outstanding as the same shall become due;
provided, however, that Debt Service shall not include any amount payable as
principal solely as a result of acceleration of maturity of Bonds.
')
4
Default Share shall mean, as to each Project Participant on each respective
date of calculation, an amount equal to the percentage of a Defaulted Gas Payment
determined by multiplying the Defaulted Gas Payment by the ratio determined by
dividing such Project Participant's aggregate Nominated Quantities of Gas for the
remaining term of this Agreement by the aggregate Nominated Quantities of Gas of
all Project Participants that are not then in default, for the remaining term of this
Agreement, in each case as of the date of calculation.
Defaulted Gas Payment shall mean those Costs that were not paid when due
by a Project Participant, including all unbilled Costs accruing to and including the
date on which FGU discontinues providing Gas to a Project Participant pursuant to
Section 15 hereof. Defaulted Gas Payment shall not include transportation costs.
Designee shall mean FGU as the contractually authorized agent of a Project
Participant pursuant to the. terms of the general terms and conditions of
Transporter's Approved Rate Tariff.
Direct Costs shall mean, with respect to any Gas not tendered for delivery to
Project Participant (or FGU as its agent) pursuant to the terms of this Agreement,
those items of Costs attributable to such Gas that are included within the definition
of Monthly Costs related to payments (i) with respect to debt service on the Bonds
and (ii) FGU payments due under the Calyon Swap. However, for purposes hereof,
"Direct Costs" shall not include (and thus the Project Participant will remain liable
for) the incremental difference, if any, between payments required under the Calyon
Hedge Agreement with respect to such Gas (based on First of the Month Index
pricing, minus the discount as described in the Calyon Hedge Agreement), and
payments received from the Gas Supplier with respect to such Gas under the Gas
Purchase Agreement (based on a Gas Daily spot index price on the respective
date(s) of failed delivery).
Directive shall mean an instrument, in writing, executed and delivered by a
Project Participant Representative that gives directions to FGU hereunder, or
otherwise authorizes actions by FGU hereunder, or implements all or a part of this
Agreement, and upon which FGU may rely as being duly authorized, executed and
delivered by Project Participant.
Division shall mean a Project Participant of FGU, and the associated Point(s)
of Delivery of that Project Participant, whose transportation entitlements have been
aggregated under one transportation contract held by FGU to which Transporter's
Approved Rate Tariff applies.
FERC shall mean Federal Energy Regulatory Commission or any successor
governmental or other entity charged with its responsibility.
5
Financial Instrument shall mean an agreement entered into with respect to
the purchase, financing or pricing of Gas or other services provided under this
Agreement that provides for Financial Products by and between the parties thereto
that may include FGU, or Project Participant, or both, or between Project
Participant and any third parties or counterparties; the Project Participant
Representative shall be authorized to provide a Directive with respect to any
Financial Instrument on behalf of the Project Participant.
Financial Products shall mean futures contracts, commodity swaps and
hedging arrangements related to the pricing or supply of Gas or other services
provided hereunder, interest rate swaps (relating to Bonds), in either case, whether
entered into by FGU, or by Project Participant and/or FGU, including balancing or
similar agreements or interest rate exchanges or swaps, cash flow exchanges,
options, caps, floors or collars implemented in accordance with the Derivatives
Policy adopted by the Board of FGU from time to time. Without limiting the
generality of the foregoing, such Financial Products may consist of those products
described in Exhibit A and may have characteristics similar to those set forth in
Exhibit A hereto.
Fiscal Year shall mean the twelve (12) month period commencing at 12:01
a.m. on October 1 of each year.
Gas shall mean pipeline quality natural gas (i) supplied pursuant to the Gas
Purchase Agreement for Gas Project No.2 and (ii) any gas furnished to replace
undelivered Gas.
Gas Entitlement Share shall mean, with respect to each Project Participant,
in any Contract Year, its share of Gas, expressed as an annual percentage
determined by dividing such Project Participant's Nominated Quantities of Gas for
such Contract Year by the aggregate Nominated Quantities of Gas of all Project
Participants for such Contract Year, in each case as shown in the Schedule of
Nominated Quantities set forth on Appendix 1 hereto, as the same may be adjusted
from time to time in accordance with the provisions hereof.
Gas Project No.2 shall mean the Gas to be provided pursuant to a Gas
Purchase Agreement for Project Participants.
Gas Purchase Agreement shall mean one or more gas purchase contracts
(including amendments thereto) entered into between FGU and one or more Gas
suppliers or owners of interest in Gas for Gas Project No.2, all or a part of the cost
of which is to be funded with proceeds from the issuance of Bonds, and which shall
initially consist of the Prepaid Gas Purchase Agreement between Florida Gas
Utility and UBS AG.
6
Gas Supplier shall mean one or more suppliers or owners of interests in Gas,
under the Gas Purchase Agreement.
Gas Supply Agreement shall mean this Gas Supply Agreement No.2 and, as
appropriate, the substantially similar Gas Supply Agreements between FGU and
other Project Participants and any substantially similar contract entered into by
FGU in connection with any transfer of a Project Participant's Gas Entitlement
Share pursuant to Section 16, any assignment of such Gas Entitlement Share
pursuant to paragraph (b) of Section 25 or any assignment of such Gas Entitlement
Share with the consent of FGU in accordance with paragraph (a) of Section 25.
Member or Members shall mean, as the context shall require, the members of
FGU who are Project Participants to this Agreement or similar gas supply
agreements relating to the purchase of Nominated Quantities of Gas.
Month shall mean a calendar month.
Monthly Costs shall mean all items of cost included within the definition the
Costs of Acquisition, to the extent not funded with proceeds received from Bonds,
and all other costs that are paid or incurred, monthly or periodically, b~FGU
directly or indirectly with respect to the purchase, pricing, supply, storage or
transportation of Gas to Project Participants hereunder and pursuant to the Bond
Resolution, the Gas Purchase Agreement and Financial Instruments, including
contingency reserves and any ongoing requirements for capital expenditures not
funded with Bond proceeds, including without limitation, the following items of
cost:
(1) amounts related to the purchase of Gas for which FGU may be
liable under the Gas Purchase Agreement or the Bond Resolution, including
amounts required to be paid or deposited during such Month into any fund or
account established thereunder, for the payment of Debt Service on Bonds, or
for any other payments required by the Bond Resolution, including, as may
be applicable, the Default Share required to be paid by Project Participant;
(2) all fees and expenses of the trustee, remarketing agent, broker-
dealer, credit or liquidity provider, provider of insurance and other parties to
the financings contemplated by the Bond Resolution or this Agreement;
(3) the costs, as determined in accordance with the Pricing Policy
(to the extent not covered through the payments described in clause (1)
above) as follows:
(i) Gas supply purchased by Project Participant under this
Agreement, whether provided by FGU from the Gas supply under the
Gas Purchase Agreement, or any other such instrument;
7
(ii) Gas transportation to the Point(s) of Delivery of the Gas
pursuant to the Transportation Contracts;
(iii) FGU service charges for its administrative servIces
provided hereunder;
(iv) adjustments, and an equitably allocated portion of all
FGU's other expenses; and
(v) any additional amount which must be paid by FGU
during such Month in order to meet its requirements with respect to
any rate covenant under the Bond Resolution with respect to Debt
Service coverage for the Bonds, or with respect to the Gas Purchase
Agreement.
(4) amounts required to be paid by FGU to meet any hedging
requirements of FGU (subject, however, to the provisions of Section 3(f)
below), including those required by the Gas Purchase Agreement, the Bond
Resolution and Financial Instruments entered into in respect of Financial
Products for such purposes, and shall include both scheduled payments and
termination payments in the order of priority as specified herein or therein.
Unless expressly otherwise provided to the contrary in the Financial
Instrument, the Bond Resolution or the Gas Purchase Agreement, payments
on such obligations shall be allocated to Project Participant in accordance
with its Gas Entitlement Share;
(5) any additional amounts not specified in the other items of this
definition which must be paid by FGU during such Month that are either
properly allocable to the Project or as determined in accordance with the
Pricing Policy, including, without limitation, costs imposed or permitted by
any regulatory agency, that are paid or incurred in connection with the
supply of Gas or services thereunder, the provision of services by FGU for
Project Participants, or relating to operations for which FGU may incur on its
own behalf, or for which FGU may be liable under the Gas Purchase
Agreement;
(6) all costs and expenses (including, but not limited to, legal fees
and expenses) relating to personal injury and damage claims and
extraordinary costs, expenses or assessments required to be paid by FGU
pursuant to the Gas Purchase Agreement or this Agreement, in connection
with the Project, or the delivery of Gas hereunder or thereunder, including,
but not limited to, all federal, state and local taxes and payments in lieu of
taxes required to be paid by FGU with respect to the services rendered
pursuant to the Gas Purchase Agreement and all costs and expenses relating
to claims or judgments (including injury and damage claims) arising out of
8
the acquisition or implementation of the Project or relating to operations for
which FGU may be liable under the Gas Purchase Agreement or this
Agreement;
(7) any reserves required by FGU to meet obligations pursuant to
the Gas Purchase Agreement, the Bond Resolution, any Financial Instrument
and this Agreement, necessary for payment of those items of costs and
expenses incurred in the delivery of services, to the extent not covered by any
preceding clause and as may be determined by FGU for its operations; and
(8) All paYments and charges on any line of credit, letter of credit,
standby bond purchase agreement, working capital or other loans for which
FGU shall be obligated. PaYments on such obligations shall be allocated to
Project Participant in accordance with its Gas Entitlement Share.
Notwithstanding the foregoing, if an item of cost or expense referred to above or any
part thereof shall relate to less than all of the Project Participants (such as current
transportation costs, or the cost of replacement Gas as described in the definition of
Gas or the cost of Financial Products entered into for the benefit of one or more, but
not all Project Participants) or shall clearly not be applicable to a Project
Participant, such item shall only be included as an item of Cost with respect to
those Project Participants to which such cost or expense relates.
Nominated Quantity shall mean the quantity of Gas in dekatherms per day
that the Project Participant has requested FGU to acquire and sell to the Project
Participant under the terms and conditions of this Agreement as reflected on
Appendix 1 hereto.
Point or Points of Delivery shall mean the point or points of delivery specified
in Appendix 2 hereto or such other point or points of delivery from time to time
agreed to between Project Participant and FGU.
Point of Receipt shall have the meaning ascribed to that term under the Gas
Purchase Agreement.
Pricing Policy shall mean the policy on pricing of Gas as may be adopted by
the Board of FGU and in effect from time to time.
Proiect or Gas Project No.2 shall mean the planning, financing, acqUIrIng
and placing in operation of the Gas Purchase Agreement and the delivery of
services and/or Gas under the Gas Purchase Agreement or this Agreement.
Proiect. Participants shall mean Members who are the parties, including
Project Participant, other than FGU, to this Agreement and gas supply agreements
substantially similar to this Agreement for which Bonds or other sources of
9
financing may be required for a special project for such purpose. An initial list of
Project Participants for Gas Project No.2 is set forth in Appendix 1 hereto.
Project Participant Representative shall mean Project Participant
Representative as defined in Section 28 hereof.
Service Area means, with respect to a Project Participant that is a natural
gas utility, any area throughout which Project Participant provided at all times
during the 5-year period beginning January 1, 2001, and ending December 31, 2005,
natural gas transmission or distribution services; and, with respect to a Project
Participant that is an electric utility, any area throughout which Project Participant
provided at all times during the 5-year period beginning January 1, 2001, and
ending December 31, 2005, electricity distribution services. A Project Participant's
Service Area also includes (a) any area within a county contiguous to the area
described in the preceding sentence in which retail customers of the Project
Participant are located if such area is not also served by another natural gas or
electric utility, as the case may be, and (b) any area recognized as the service area of
such Project Participant under Florida or federal law. The term, Service Area, shall
have the same meaning with respect to a governmentally-owned utility other than
Project Participant.
System shall mean and refer to a Project Participant's gas and/or electric
enterprise system or other operations or combinations, as more particularly
described in Exhibit B hereto, which describes those facilities or operations that
require or permit the utilization or local distribution of gas or electricity, and any
additions or improvements thereto, and all other gas and/or electric enterprise
systems that may be constructed, acquired or operated by Project Participant.
Transportation Contracts shall mean the contract or contracts for the
transportation of Gas between Transporter and (a) FGU, (b) FGU on behalf of
Project Participant, or (c) Project Participant with the designation ofFGU as Project
Participant's agent.
Transporter shall mean Florida Gas Transmission Company, Gulfstream
Natural Gas Systems, L.L.C., or any other company legally authorized to transport
Gas, and its successors in interest.
Terms used herein in capitalized form and not defined herein shall have the
meanings ascribed to such words in the Gas Purchase Agreement, Financial
Instruments or the Bond Resolution.
SECTION 2. Term of Agreement.
The provisions of this Agreement shall become effective upon the
Commencement Date with respect to any Project Participant who shall have
10
executed and delivered this Agreement, and shall, unless this Agreement is
terminated pursuant to Section 26 hereof, continue until the earlier of (a) the date
Project Participant's Nominated Quantity of Gas as shown on Appendix 1 has been
delivered and all payments with respect thereto have been made as required by the
terms hereof, and (b) the last to occur of the following: (i) the date the principal of,
premium, if any, and interest on all Bonds, and all payments required under
Financial Instruments for which Project Participant shall be obligated have been
paid in full, (ii) the date that funds which, together with interest earnings from the
investment thereof, have been set aside in irrevocable escrow for the payment of the
Bonds and such Financial Instruments, all in accordance with the terms of the
Bond Resolution and such Financial Instruments, (iii) FGU shall have received all
rights and benefits under the Gas Purchase Agreement prior to its termination, (iv)
all costs due hereunder have been paid in full, and (v) the Gas Purchase Agreement
shall have been terminated and all obligations of FGU thereunder satisfied.
The invalidity or unenforceability, in whole or in part, of any Gas Supply
Agreement of any other Project Participant shall in no way affect the
commencement, term or enforceability of this Agreement or Project Participant's
obligations hereunder.
Neither termination nor expiration of this Agreement shall affect any accrued
liability or obligation hereunder. In addition, the termination of this Agreement
shall not relieve Project Participant of its obligations under Sections 23 hereof.
SECTION 3. Gas Supply Service and Pricing.
(a) Certain Project Participants have, pursuant to separate agreements
with FGU, aggregated their firm transportation entitlements with other Project
Participants (referred to herein as the "Aggregated Transportation Contracts") and
have authorized FGU to administer that capacity in the delivery of Gas to each such
Project Participant. Certain other Project Participants have designated FGU as
their agent for the utilization of their respective gas transportation entitlements for
the delivery of Gas hereunder.
(i) FGU is hereby authorized, and shall be responsible for utilizing
Project Participant's firm transportation entitlements, to the extent available
under its respective Transportation Contract(s), if applicable to Project
Participant, to cause Project Participant's Gas to be transported to Project
Participant's Point(s) of Delivery and for all operational decisions and
arrangements associated with the transportation of Gas on or upstream of
Transporter's pipeline, including but not limited to, transportation along
pipelines other than Transporter, selection of Point(s) of Delivery, scheduling,
balancing and dispatching of Gas on such pipelines other than Transporter,
as well as on "Transporter's pipeline.
11
(ii) The administration of the Aggregated Transportation
Contract(s), if applicable to Project Participant, shall be governed solely in
accordance with the Pricing Policy.
(iii) Project Participant shall, throughout the Term, provide
sufficient firm transportation for the Gas to be delivered under this
Agreement.
(iv) Notwithstanding any other provision of this Agreement, Project
Participant shall assume full responsibility for payment of actual
transportation charges, including demand charges, incurred by the
Aggregated Transportation Contract(s) for the benefit of Project Participant,
if applicable to Project Participant. To the extent another Division or
customer of FGU may make actual use of Project Participant's transportation
rights, a reallocation of demand costs shall be made by FGU in accordance
with the Pricing Policy.
(v) Unless otherwise agreed to by FGU and Project Participant,
Transporter and third parties will rely on FGU for all purposes connected
with servicing the transportation of Gas for Project Participant on
Transporter's system or otherwise, including, but not limited to, the
furnishing and receipt of information concerning daily nominations,
scheduling, balancing, Point(s) of Delivery, invoice payment, accounting,
third party transportation, and communications with Project Participant, and
that operational conditions may allow limited time for communications
concerning such matters. To facilitate this process, and except with respect
to services covered by the Aggregated Transportation Contract(s), Project
Participant agrees to name and hereby designates FGU, or a representative
of FGU, as Project Participant's designee to perform Project Participant's
obligations with respect to nominations, scheduling and payment under the
various Transporter transportation rate schedules under which Project
Participant arranges transportation service for Gas purchased from FGU
hereunder.
(vi) Notwithstanding the foregoing, FGU's responsibilities to
arrange for transportation of Gas to Project Participant's Point(s) of Delivery
shall be limited to Project Participant's transportation entitlements made
available to FGU hereunder and Project Pa~ticipant shall ultimately be
responsible for securing transportation rights with respect to Gas to be
delivered hereunder.
(vii) Project Participant agrees that, except for (1) any obligations it
may have under any other projects for which payments for gas have been
pledged for payment of debt service on any indebtedness and (2) any other
contractual obligations in existence on the date hereof as set forth on
12
Exhibit C hereto (collectively, "0ther Gas Proj ects "), it will satisfy all of its
gas requirements for its System from its Other Gas Projects, and this Gas
Project No.2, before it satisfies its gas requirements from any other source.
(b) Subject to the availability of Gas at Project Participant's Point(s) of
Delivery, FGU agrees to sell and does hereby sell, and Project Participant does
hereby agree to purchase and does hereby purchase, Project Participant's
Nominated Quantity of Gas each Contract Year as shown on Appendix 1. FGU
shall be authorized to calculate and enter on Appendix 1, Project Participant's Gas
Entitlement Share for each Contract Year when all Gas Supply Agreements have
been executed and delivered to FGU; and to amend Appendix 1 as and when Project
Participant's Gas Entitlement Share is adjusted pursuant to Section 16, or
otherwise.
(c) Project Participant shall, in accordance with and subject to the
provisions of Section 4 hereof, pay FGU for its Nominated Quantities of Gas,
periodically as billed during the term of this Agreement, an amount determined by
multiplying the Costs applicable to all Project Participants by Project Participant's
applicable annual Gas Entitlement Share, plus the items of Cost specifically
allocable to Project Participant individually under the definition of Costs with
respect to, among other things, replacement Gas, in each case as such Costs may be
adjusted and allocated among Project Participants in accordance with the Pricing
Policy; provided. however, that Project Participant shall be liable for Direct Costs to
the extent and only to the extent (on a pro rata basis) Project Participant's
Nominated Quantities of Gas are tendered for delivery at the Point of Receipt, or
FGU provides alternative quantities of Gas in lieu thereof. If Project Participant's.
share of Gas tendered at the Point of Receipt in any month is less than Project
Participant's Nominated Quantity of Gas for such Month, Project Participant's
share of Direct Costs for such Month shall be proportionately reduced.
(d) In addition to Project Participant's payment obligations with respect to
its Gas Entitlement Share, and notwithstanding the failure to tender Gas at FGU's
Point of Receipt, if there has been a Defaulted Gas Payment, Project Participant
shall also pay its Default Share.
(e) If Project Participant's scheduled deliveries of Gas fluctuate monthly,
FGU, in its discretion, may manage Project Participant's cash flow during such
month or Contract Year in accordance with the Pricing Policy so that Project
Participant's cash flow requirements with respect to payment of Monthly Costs
more closely match the Nominated Quantities of Gas it receives on such monthly
basis. FGU agrees to cover such payments to the extent of its available working
capital as determined from time to time by FGU in its sole discretion. However,
notwithstanding FGU's agreement, nothing contained herein shall relieve Project
Participant of its payment obligations otherwise required under Section 3(c) and (d)
above and Section 4(d) below.
13
(f) FGU agrees that without the prior written consent of Project
Participant, it will not undertake or engage in any activity described in clause (6) of
the definition of Costs of Acquisition in Section 1, or incur indebtedness of the type
described in subparagraph (4) thereof and to the extent involving Financial
Products, subparagraph (4) of the definition of Monthly Costs in Section 1 of this
Agreement; provided, however, that FGU is not required to obtain such prior
written consent with respect to initial indebtedness incurred in connection with the
acquisition of a long term supply of gas for Gas Project No.2 or the commodity
swaps and other derivative transactions provided for in the initial transaction for
the implementation of the Gas Purchase Agreement.
SECTION 4. Method of Payment.
In the event of any dispute as to any portion. of any periodic statement,
Project Participant shall nevertheless pay the full amount of the disputed charges
when due and shall give written notice of the dispute to FGU not later than thirty
(30) days after the date such payment is due. Such notice shall identify the disputed
bill, state the amount in dispute and set forth a full statement of the grounds on
which such dispute is based. No adjustment shall be considered or made for
disputed charges unless notice is given as aforesaid. FGU shall give consideration to
such dispute and shall advise Project Participant with regard to its position relative
thereto within thirty (30) days following receipt of such written notice. Upon final
determination (whether by agreement, arbitration, adjudication or otherwise) of the
correct amount, any difference between such correct amount and such full amount
shall be properly reflected in the statement next submitted to Project Participant
after such determination.
(a) As soon as possible after the execution of this Agreement, the
Executive Committee of FGU shall adopt and mail to Project Participant an
amendment to the Annual Budget for the Contract Year which begins on the
Commencement Date, which shall provide an estimate of Project Participant's
periodic payments hereunder for Costs for such Contract Year. During each
Contract Year, FGU may from time to time amend the Annual Budget to take into
account changes in gas prices, extraordinary receipts, credits or costs substantially
affecting the Costs. Neither the Annual Budget, nor amendments thereto, shall be
binding on FGU or affect the amount a Project Participant is obligated to pay
hereunder.
(b) As soon as the billing information is available, FGU shall render to
Project Participant, by mail, courier or facsimile or other electronic transmission, a
periodic statement no less often than monthly, showing (i) the amount payable by
Project Participant in respect of Costs and, if applicable, its Default Share, (ii) the
amount, if any, reasonably determined by FGU on a periodic basis, and any
amounts determined in accordance with this Section 4(b) on an annual basis, to be
14
credited to or paid by Project Participant with respect to any adjustment for actual
Costs incurred during the next preceding period or Contract Year, (iii) the credits
against Project Participant's share of Costs, including payments under hedge
agreements received by FGU in such period, credits determined in accordance with
Section 4(c), and other credits established pursuant to the Pricing Policy, and (iv)
any other amounts (except amounts in respect of Costs and Default Share which are
intended to be billed exclusively pursuant to clause (i) above) payable by or credited
to such Project Participant pursuant to this Agreement or the Bond Resolution not
otherwise shown; and such Project Participant shall pay the total of such amounts
on the earlier of the scheduled due date provided by FGU annually or the date ten
(10) days after Project Participant's receipt of any periodic statement. FGU will
provide a calendar of invoice and due dates at the beginning of each fiscal year, to
the extent feasible. If payment in full is not made on or before the close of business
on the due date, or, if a scheduled due date is not a Business Day, on the next
preceding Business Day, a delayed-payment charge on the unpaid amount due for
each day overdue may be imposed at the prime rate of interest as published from
time to time by the Wall Street Journal and in effect in the calendar month for
which the unpaid balance shall be received, plus 2%, or the maximum rate lawfully
payable by Project Participant, whichever is less. Failure by Project Participant to
pay the full amount due by the due date may result in the discontinuance of gas
supply service by FGU as set forth in Section 15 below but such discontinuance
shall not relieve Project Participant of its payment obligations hereunder. All
statements will be trued up as provided in the Gas Purchase Agreement.
(c) On or before one hundred fifty (150) days after the end of each
Contract Year, and at such other times as it shall deem desirable, FGU will submit
to Project Participant a detailed statement of the actual aggregate Costs and
Default Share due hereunder and any adjustment thereof or credit thereto pursuant
to Section 4(b) above and Project Participant's share thereof, and all other amounts,
if any, payable by or credited to Project Participant pursuant hereto during such
Contract Year or for such number of months as FGU deems appropriate, and
adjustments of the aggregate Costs, if any, for any prior Contract Year and any
adjustment thereof or credit thereto pursuant to Section 4(b) above, based on the
annual audit of accounts provided for in Section 10 hereof or, if for a period other
than a full Contract Year, on such other information as FGU deems reliable.
Notwithstanding the foregoing, actual costs as compared to amounts billed by FGU
will be trued up within one hundred fifty (150) days of the end of the Fiscal Year
and shall be payable forthwith byFGU, if not applied by FGU upon any other Costs
of Project Participant, or if payable by a Project Participant, within sixty (60) days
from receipt of invoices.
(d) The obligation of Project Participant to make payments under this
Agreement shall not be subject to any reduction, whether by offset, counterclaim, or
otherwise, and shall not be otherwise conditioned upon performance of FGU under
15
this Agreement, Financial Instruments, the Gas Purchase Agreement or any other
agreement or instrument or the validity' or enforceability of this Agreement,
Financial Instruments, the Gas Purchase Agreement, or any other agreement
between FGU and any other Project Participant; provided however, that except as
otherwise provided in Section 3(c) hereof, Project Participant will not be obligated to
pay that portion of Direct Costs related to the Nominated Quantity that was not
tendered for delivery as provided under this Agreement. The obligation of Project
Participant to make the payments under this Agreement for its share of Monthly
Costs and other such amounts, shall constitute an obligation of Project Participant
payable as an operating expense of Project Participant's System solely from the
revenues and other available funds of the System.
(e) The obligation of Project Participant to make payments under this
Agreement 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, and neither Project
Participant nor the State of Florida or any agency or political subdivision thereof
shall ever be obligated or compelled to levy ad valorem taxes to make the payments
provided for under this Agreement, and the obligation of Project Participant to
make payments pursuant to this Agreement shall not give rise to or constitute a
lien upon any tangible property of Project Participant or any tangible property
located within its boundaries or service area.
(f) Notwithstanding the last sentence of Section 4(d), if the obligations of
Project Participant to make payments under this Agreement or any part of the
obligation under any Financial Instrument, would not be legally permissible as, or
would not be treated as, or otherwise be accorded the status of, operation and
maintenance payments under the provisions of Project Participant's indentures,
bond resolutions or other bond documents or contractual obligations entered into in
connection with the financing of or purchases for operation and maintenance for
Project Participant's System, such part of such obligations that are precluded such
status will be incurred and accorded the treatment in accordance with the
provisions of paragraph (g) below. Project Participant covenants that it will not
amend any existing indenture or bond documents relating to the System, or
execute, adopt or enter into any new indenture, bond documents or contractual
obligations, the effect of which would be to cause such payments to be treated
otherwise than as a cost of operation and maintenance.
(g) If any part of Project Participant's obligations for the payment of
services hereunder or under the Bonds or a Financial Instrument cannot be treated
as, or otherwise accorded the status of, operation and maintenance costs of Project
Participant's System for the reasons set forth in Section 4(f) above, such obligations
shall constitute an obligation payable solely from the revenues and other funds of
Project Participant's System, which Project Participant hereby pledges for such
16
purpose, subject and subordinate to the following obligations of Project Participant
to the extent, and only to the extent Project Participant's existing indentures, bond
documents or contractual obligations would expressly preclude Project Participant
from making the payments required hereunder senior to such obligations (i)
operation, maintenance, renewal and replacement expenses of Project Participant's
System, (ii) bonds (as well as bond anticipation notes), notes or other obligations for
contractual commitments or borrowed money, now outstanding or hereafter issued,
for System purposes payable from revenues of Project Participant's System, (iii)
subordinated bonds, notes or other obligations of the System payable from revenues
of Project Participant's System and senior in credit to, or subject to a negative
pledge with respect to, the obligations of the type imposed hereby, in each case,
outstanding on the date of execution of this Agreement by Project Participant, and
(iv) payments required to be made into or from funds established under the
ordinances or resolutions or other documents authorizing bonds, notes or other
obligations referred to in clauses (ii) or (iii) hereof. All such obligations in existence
on the date hereof shall be listed on Exhibit C hereto, and all future obligations
shall be listed on an amended Exhibit C and delivered to FGU.
(h) If at any time Project Participant has revenue bonds outstanding
payable from or secured by a pledge of net revenues of its System, Project
Participant agrees that, in connection with any financial tests or conditions for the
issuance of additional revenue bonds or other obligations payable from and secured
by a pledge of the revenues of its System, Project Participant shall, notwithstanding
Section 4(f) and (g) above, treat all payments made or estimated to be made to FGU
under this Agreement as operating expenses for purposes of computing the amount
of revenues available for the payment of such outstanding revenue bonds and such
additional revenue bonds.
If FGU is entitled to payments with respect to Gas not delivered under the
Gas Purchase Agreement (other than termination payments, payments intended to
reimburse FGU for its costs and expenses, and other than payments required under
any applicable document or the Bond Resolution to be used in accordance with the
Bond Resolution to pay Debt Service on the Bonds or other costs and expenses of
Gas Project No.2), FGU shall distribute such payments or Gas credits to each
Project Participant in proportion to its respective Nominated Quantities of Gas that
were not delivered, or provide replacement Gas as requested by Project Participant,
in each case, after deducting therefrom any amounts otherwise due by such Project
Participants hereunder for payment of Costs as provided by this Agreement. FGU
shall distribute such payments or Gas credits to each Project Participant after
deducting therefrom any amounts otherwise due by such Project Participant
hereunder, all in accordance with the Pricing Policy. Any termination payment
under the Gas Purchase Agreement shall be applied in accordance with the Bond
Resolution.
17
SECTION 5. Scheduling of Deliveries; Title.
(a) All of the provisions of this Section 5 are subject to the provisions of
the Gas Purchase Agreement, and in the event of any inconsistencies between this
Section 5 and the provisions of the Gas Purchase Agreement governing scheduling,
the terms of the Gas Purchase Agreement shall govern.
(b) The quantity to be supplied by FGU shall be nominated monthly by
Project Participant as provided in Appendix 1 hereto and delivered in substantially
equal daily quantities except as otherwise provided in this Section 5. No revisions
to such Nominated Quantities shall affect Project Participant's payment obligations
hereunder, except as may be otherwise permitted under Section 3(e).
(c) It will be Project Participant's responsibility to notify FGU of any
variations in Project Participant's daily Gas usa.ge rate. Project Participant will
provide FGU with its Gas requirements in such a manner to allow FGU to
effectively arrange for the required Gas transportation and associated services and
as required by the Gas Purchase Agreement, in a timely and cost effective manner
for Project Participant. The actual details of such daily and monthly information
requirements will be mutually agreed upon by the parties and may change from
time to time to meet varying conditions.
(d) Project Participant shall advise FGU of any change in any of the Gas
requirements at Project Participant's Point(s) of Delivery as soon as is reasonably
possible to allow FGU to make necessary adjustments in other Project Participants'
gas volume nominations to avoid imbalances and penalties and to fully comply with
the Gas Purchase Agreement.
(e) FGU will promptly notify Project Participant of all pipeline operating
conditions, including but not limited to operational flow orders and alert days for
which Project Participant may be subject to costs or penalties as a result of
noncompliance. If Project Participant does not fully comply with such operational
requirements, Project Participant will assume full liability for any noncompliance.
(f) Title to the Gas transported for Project Participant with its own
transportation contracts will pass to such Project Participant upon and concurrently
with the purchase thereof by FGU under the Gas Purchase Agreement. Title to Gas
purchased for transportation under the Aggregate Transportation Contracts will
pass upon delivery by FGU to Project Participant at Project Participant's Point(s) of
Delivery.
(g) Although FGU may hold title to the Gas during the transportation
process to Project Participant's Point(s) of Delivery under paragraph (f) above,
Project Participant shall bear the full risk of loss for all such Gas during such
transportation by FGU on Transporter's system or otherwise, including but not
18
limited to, injury, loss or damage caused by the Gas during the transportation
thereof and any economic or consequential damages to Project Participant for
failure to deliver Gas or otherwise.
Project Participant agrees, to the extent permitted by law, and pro rata
with other Project Participant to the extent of its Gas provided hereunder, and/or its
annual Gas Entitlement Share, in effect on the date of occurrence of the event
giving rise to the claim, to indemnify and holdFGU harmless from any and all
losses or damages sustained by FGU under this Agreement, the Gas Purchase
Agreement, Financial Instruments or otherwise, including any and all suits,
actions, damages, losses, and expenses arising out of adverse claims of any persons,
including Project Participant, to such Gas or the title thereto, regardless of the
party responsible for its delivery, or to royalties, taxes, license fees, or charges
thereon, and from any and all liability to any persons, including Project Participant,
or for any property damage, occasioned by FGU holding title to Gas for benefit of
Project Participant.
SECTION 6. Point(s) of Delivery.
Gas scheduled by Project Participant pursuant to Section 5 of this Agreement
will be delivered at Project Participant's Point or Points of Delivery, which such
party shall designate to FGU in writing. The quantity of Gas actually delivered to
Project Participant shall be adjusted to take into account Gas used or consumed in
the transportation thereof to the Points of Delivery.
SECTION 7. Curtailment.
It is understood that, in the event of a capacity curtailment on the
Transporter's system or other transportation system used by FGU which causes an
interruption of transportation service, curtailment shall be implemented in
accordance with Transporter's currently effective curtailment plan.
SECTION 8. Availability of Gas or Gas Entitlement Shares.
Except as provided otherwise by this Agreement, and subject to the
provisions of the Gas Purchase Agreement and any applicable Transportation
Contracts or other transportation arrangements, Project Participant's Gas
Entitlement Share, as the case may be, shall be made available in accordance with
this Agreement during the term hereof.
SECTION 9. Insurance.
FGU shall carry such insurance as shall be carried in accordance with
customary industry standards, but in any event with such coverage as it has
customarily carried in the last five (5) years to the extent commercially reasonably
available at a commercially reasonable cost.
19
SECTION 10. Annual Budget; Accounting.
(a) At FGU's annual meeting each year, the Board of FGU shall adopt an
Annual Budget for the next ensuing Fiscal Year and shall deliver the Annual
Budget to each Project Participant prior to the beginning of each Fiscal Year.
During each Fiscal Year, FGU, by action of its Board or Executive Committee, may
from time to time amend the Annual Budget. Notwithstanding the foregoing, any
Costs payable by Project Participant shall be governed by this Agreement.
(b) FGU agrees to keep accurate records and accounts in accordance with
generally accepted accounting principles, consistently applied. Said accounts shall
be audited annually by a firm of certified public accountants, experienced in
governmental accounting and electric and gas utility company accounting and of
suitable reputation, to be employed by FGU. A copy of each annual audit, including
all written comments and recommendations of such accountants, shall be furnished
by FGU to Project Participant not later than one hundred fifty (150) days after the
end of each Fiscal Year. Project Participant" shall have the right to audit the books
and records of FGU from time to time, upon reasonable notice, to the extent
necessary to verify the Costs and, with respect to Project Participant, payable
hereunder.
SECTION 11. Information to be Made Available.
(a) Based, in each case, upon the data most recently available to FGU
pursuant to the Gas Purchase Agreement or Financial Instruments, FGU will
furnish or otherwise make available to Project Participant all information related to
Gas supply or pricing of Gas, which FGU receives under the Gas Purchase
Agreement or any Financial Instrument and all transportation costs under the
Transportation Contracts, where available to FGU, and will prepare and issue to
Project Participant reports each quarter of the Fiscal Year.
(b) Project Participant shall, upon request, furnish to FGU all such
information, certificates, certified copies of official proceedings, engineering reports,
feasibility reports, information relating to its system, Transportation Contracts,
financial statements, opinions of counsel (including the opinion required by
subsection (c) hereof), official statements and other documents as FGU shall be
reasonably requested to deliver pursuant to the services provided under this
Agreement.
(c) Project Participant shall at the times requested by FGU, cause an
opinion or opinions (i) in substantially the form attached hereto as Appendix 3 to be
delivered by one or more attorneys or firms of attorneys satisfactory to FGU with
respect to the authorization, execution and validity of this Agreement or any
Financial Instrument, as it relates to Project Participant, and, if Project Participant
shall have bonds or other obligations outstanding secured by a pledge of revenues of
20
its System, the legality under the terms and conditions of the ordinance, resolution,
indenture or other contractual arrangement with the holders of such bonds, of the
performance by Project Participant of its covenants and agreements under this
Agreement, and (ii) in such other form as may be required under the Gas Purchase
Agreement, Financial Instrument or this Agreement and with respect to Project
Participant, the Bond Resolution or bond purchase agreement executed in
connection with the sale and delivery of the Bonds.
(d) 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.
(e) 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 eighty (180) 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 FGU's bonds or other indebtedness.
(f) Project Participant further agrees to enter into a continuing disclosure
agreement or other contractual undertaking as may be reasonably requested by
FGU to provide FGU with financial and operating data relating to the Project
Participant, its System and financial condition and to provide it with information
concerning other disclosure events.
(g) Project Participant shall provide to FGU, or its designee, on a timely
basis and in such form as shall be reasonably requested by either, any and all
documents or information necessary to assure that interest on the Bonds remains
excluded from gross income for federal income tax purposes. FGU shall have the
right to audit Project Participant's records regarding the use or resale of its Gas or
Gas Entitlement Share for that purpose. In the event of an examination of Gas
Project No.2 or the Bonds by the Internal Revenue Service, Project Participant
21
shall provide to FGU any documents or information needed to respond to an inquiry
by the Internal Revenue Service.
SECTION 12.
Warranties.
Project Participant Covenants; Representations and
(a) Covenants. Project Participant covenants as follows:
(i) If, for any reason, the proceeds derived from the sale of Bonds
shall be insufficient for the purpose of paying Costs or for purposes of
refunding all or a part of the Bonds previously issued in accordance with
clauses (ii) and (iii) below, additional Bonds may be sold and issued by FGU
in accordance with the provisions of the Bond Resolution at any time and
from time to time.
(ii) Any such additional Bonds shall be secured by the pledge made
pursuant to the provisions of Section 13 hereof, of the payments required to
be made by Project Participant under Sections 3 and 4 of this Agreement, and
all other payments attributable to the Project to be made in accordance with
or pursuant to any other provision of this Agreement, as such payments may
be increased, decreased and/or extended by reason of the issuance of such
additional Bonds, and such additional Bonds may be issued in amounts
sufficient to pay the full amount of such Costs referred to in clause (a) (i)
above and to provide such reserves as may be reasonably determined to be
desirable. Any such additional Bonds issued in accordance with the
provisions of this Section 12 and secured by the pledge of payments to be
made in accordance with the provisions of this Section 12 and Section 13
hereof, may rank pari passu as to the security afforded by the provisions of
this Agreement with all Bonds theretofore issued pursuant to and secured in
accordance with the provisions of this Agreement or the Bond Resolution.
(iii) In the event Costs may be reduced by the refunding of any
Bonds then outstanding or in the event it shall otherwise be advantageous to
refund any Bonds, refunding Bonds may be issued and sold in accordance
with the Bond Resolution to be secured by the pledge, made pursuant to the
provisions of Section 13 hereof, of the payments required to be made by
Project Participant under Sections 3 and 4 of this Agreement, and all other
payments to be made in accordance with or pursuant to any other provision
of this Agreement, as such payments may be increased, or decreased and/or
extended by reason of the issuance of such refunding Bonds. Any such
refunding Bonds issued in accordance with the provisions of this Section 12
and secured by the pledge of the payments to be made in accordance with the
provisions of this Section 12 and Section 13 hereof, may rank pari passu as to
the security afforded by the provisions of this Agreement with all Bonds
22
theretofore issued pursuant to and secured in accordance with the provisions
of this Agreement or the Bond Resolution.
(iv) Project Participant will not take any action or omit to take any
action, which, if taken or omitted, would adversely affect the exclusion of
interest on the Bonds from gross income for federal income tax purposes. To
assure its compliance with this Section 12(a)(iv):
(A) Project Participant will not make any sales of its
Nominated Quantity of Gas to persons other than state or local
governments unless:
(1) such sale is a retail sale to a residential customer;
(2) such sale is a retail sale to an industrial or
commercial customer and is not made pursuant to a take or pay
contract, or a requirements contract obligating the customer to
make payments that are not contingent on its output
requirements or obligating the customer to have output
requirements.
(3) such sale is (i) pursuant to a contract having a
term, including all renewal options, not longer than 3 years and
(ii) the contract is either a negotiated, arm's-length arrangement
that provides for compensation to the Project Participant at fair
market value or is based on generally applicable and uniformly
applied rates; or
(4) prior to making the sale, the Project Participant
obtains a determination from FGU that such sale will not
adversely affect the exclusion of interest on the Bonds from
gross income for federal income tax purposes; and
(B) Project Participant will include in any contract with a
person purchasing all or any portion of its Nominated Quantity of Gas
a covenant that the purchaser will not resell such gas other than in a
sale described in Section 12(a)(iv)(A) or shall otherwise notify the
purchaser that it may only resell such gas in a sale described in
Section 12(a)(iv)(A).
(v) Project Participant shall (1) maintain its System in good repair
and operating condition; (2) cooperate with FGU in the performance of the
respective obligations of such Project Participant and FGU under this
Agreement, the Gas Purchase Agreement and all Financial Instruments; and
(3) establish, levy and collect rents, rates and other charges for the products
23
and services provided by its System, which rents, rates, and other charges
shall be at least sufficient (a) to meet the operation and maintenance
expenses of such System, (b) to comply with all covenants pertaining thereto
contained in, and all other provisions of, any resolution, trust indenture, or
other security agreement relating to any bonds or other evidence of
indebtedness issued or to be issued by Project Participant, including, without
limitation, all deposit requirements to pay debt service, fund debt service and
operating reserves and to pay ongoing project costs hereunder, (c) to generate
funds sufficient to fulfill the terms of this Agreement and all other contracts
and agreements made by Project Participant and to fulfill its pro rata
obligations to FGU to provide funds sufficient to satisfy FGU's obligations
under the Bond Resolution, the Gas Purchase Agreement, and Financial
Instruments, and to budget, appropriate and make all payments required
hereunder in each fiscal year of Project Participant during the term hereof,
and (d) to pay all other amounts payable from or constituting a lien or charge
on the revenues of its System.
(vi) For good and valuable consideration and for the purpose of
obtaining a source of gas supply upon favorable terms and price, Project
Participant will not take any action, except as permitted by Section 25(b)
hereof which will lead to its withdrawal as a Member of FGU, and Project
Participant will not vote for or otherwise participate in any action to dissolve
or otherwise terminate the existence ofFGU.
(vii) Without first securing FGU's consent, Project Participant will
only enter into Financial Instruments with respect to the Gas if all
termination payments with respect to the related Financial Products shall be
subordinate to the operation and maintenance expenses of its System
required to be paid hereunder as Costs, and to the extent that the Costs are
not payable from operation and maintenance expenses, as provided by this
Agreement, such termination payments with respect to such Financial
Instruments shall be subordinate to the Costs payable under this Agreement
from other sources of its System.
(viii) Unless and until it shall sell all or substantially all of its System
in accordance with the provisions of Section 25(b) hereof, Project Participant
will maintain its present existence as a public body to the full extent
permitted by its charter and other governing instruments, the Constitution
and laws of the State of Florida.
(ix) Project Participant's Annual Nominated Quantity shown on
Appendix 1 hereto does not exceed the annual average amount of Gas during
the 5-year period beginning January 1, 2001, and ending December 31,2005:
24
(A) purchased (other than for resale) by customers of Project
Participant who are located within Project Participant's Service Area
and who remain customers of Project Participant as of the date of
issuance of the Bonds; or
(B) purchased to generate electricity if (1) the electricity was
either generated by Project Participant itself or another utility owned
by a governmental unit, and (2) the electricity was sold (other than for
resale) to customers of Project Participant (or the other
governmentally-owned utility) who are located within the Service Area
of Project Participant (or the other governmentally-owned utility);
reduced by the sum of (C) the applicable share of any Gas being held in
storage or otherwise by Project Participant on the date of issuance of the
Bonds, and (D) any other Gas that Project Participant has a right or
obligation to acquire, as of the date of issuance of the Bonds, during the Term
of this Agreement. For purposes of the preceding sentence, the "applicable
share" of Gas being held on the date of issuance of the Bonds shall be
determined by allocating such Gas ratably over the number of Contract Years
during which the Project Participant will receive Nominated Quantities of
Gas. Project Participant's Annual Nominated Quantity shown on Appendix 1
hereto may exceed the amount specified in the preceding sentence, however,
if Project Participant obtains a determination from FGU that such larger
Annual Nominated Quantity will not adversely affect the exclusion of interest
on the Bonds from gross income for federal income tax purposes.
(b) Representations and Warranties.
represents and warrants as follows:
Project Participant hereby
(i) Project Participant is a Member in good standing of FGU and
has taken all actions, and executed all documents required by the lnterlocal
Agreement to be a Member.
(ii) Project Participant has not entered into, nor is it a party,
directly or indirectly to, any contract, agreement or understanding, whether
oral or written, the provisions of which would or might be breached by Project
Participant's execution of this Agreement or the performance by it of its
obligations hereunder.
(iii) Project Participant is a municipality, duly organized and validly
existing under the laws of the State of Florida and in good standing under the
laws of the State of Florida, and has the power and authority to own its
properties, to carryon its business as now being conducted, and to execute,
deliver, and perform this Agreement.
25
(iv) The execution, delivery, and performance by Project Participant
of this Agreement have been duly authorized by all necessary corporate
action of Project Participant and do not and will not require, subsequent to
the execution of this Agreement by Project Participant, any consent or
approval of the governing body or any officers of Project Participant, any
consent or approval of any third party, or any other governmental consents or
approvals.
(v) This Agreement is the legal, valid, and binding obligation of
Project Participant, enforceable in accordance with its terms, except as such
enforceability may be subject to (1) the exercise of judicial discretion in
accordance with general principles of equity and (2) bankruptcy, insolvency,
reorganization, moratorium, and other similar laws affecting creditors'
rights.
(vi) There is no action, suit, proceeding, inquiry, or investigation at
law or in equity, before or by a court, a public board, or another body, pending
(i.e., as to which Project Participant has received service of process) or, to
Project Participant's knowledge, threatened, against or affecting Project
Participant (or, to Project Participant's knowledge, any meritorious basis
therefor) (1) attempting to limit, enjoin, or otherwise restrict or prevent
Project Participant from functioning, or contesting or questioning the
existence of Project Participant, or the titles of the present officers of Project
Participant to their offices; or (2) wherein an unfavorable decision, ruling, or
finding would (a) materially adversely affect the existence or powers of this
Agreement or any other agreement or instrument to which Project
Participant is a party and which is used or contemplated for use in the
consummation of the transactions contemplated by this Agreement, or (b)
materially adversely affect (x) the financial condition or results of operations
of Project Participant or (y) the transactions contemplated by this Agreement.
(vii) The execution and delivery by Project Participant of this
Agreement and its compliance with its provisions will not conflict with or
constitute on Project Participant's part a violation of, breach of, or default
under (1) any of Project Participant's governing instruments, (2) any
Constitutional provision or statute, indenture, mortgage, lease, resolution,
note agreement, or other agreement or instrument to which Project
Participant is a party or by which Project Participant is bound, or (3) any
order, rule or regulation of any court or governmental agency or other body
having jurisdiction over Project Participant or any of its properties.
(viii) Any certificate signed by an authorized officer of Project
Participant delivered in accordance with this Agreement or the Gas Purchase
Agreement shall be deemed a representation and warranty by Project
Participant as to the statements made therein.
26
(ix) To the extent Project Participant has ever incurred debt, it has
not, since December 31, 1975, been in default as to the payment of principal
or interest on any such debt.
(x) To the knowledge of the Project Participant, there has been no
material adverse change in the financial condition of the Project Participant
or its System since the end of its most recently completed fiscal year for
which audited financial statements are available, nor does the Project
Participant have current knowledge of events or circumstances expected to
occur that would have a material adverse effect on the business affairs of the
Project Participant or its System.
(xi) Project Participant has not previously defaulted under or failed
to comply with its obligations under any continuing disclosure agreement
entered into pursuant to SEC Rule 15c2-12.
SECTION 13. Pledge of Payments.
All right, title and interest of FGU in, to and under this Agreement and all
payments required to be made by Project Participant pursuant to the provisions of
Sections 3 and 4 hereof, and all other payments to be made in accordance with or
pursuant to any other provision of this Agreement, may be pledged and assigned, in
whole or in part, for the payment of Bonds, subject to application in accordance with
the provisions of the Bond Resolution or for other such payments required to be
made by FGU pursuant to the Gas Purchase Agreement or, jf permitted by the
Bond Resolution, the Gas Purchase Agreement or this Agreement, any Financial
Instrument, to secure or provide for the payment of Bonds and any other obligations
of Project Participant authorized by this Agreement, Financial Products or Costs,
and Project Participant hereby expressly acknowledges and consents thereto. In
this regard, the assignment and pledge may expressly provide for the order and
priority of the payment or pledge for the payment of Costs and for the payment of
the specified obligations of either FGU or Project Participants. To accomplish the
foregoing, FGU may deliver possession of this Agreement to an agent of such
assignee or pledgeein connection therewith, and, upon such assignment and pledge,
FGU may grant to such party any rights and remedies herein provided to FGU, and
thereupon any reference herein to FGU shall be deemed, with the necessary
changes in detail, to include such trustee which shall be a third party beneficiary of
the covenants and agreements of Project Participant herein contained.
SECTION 14. Event of Default.
Failure of Project Participant to make to FGU when due any of the payments
for which provision is made in this Agreement shall constitute an immediate default
on. the part of Project Participant.
27
SECTION 15. Continuing Obligation, Right to Discontinue Service.
In the event of any default referred to in Section 14 hereof, Project
Participant shall not be relieved of its liability for payment of the amounts in
default and FGU shall have the right to recover from Project Participant any
amount in default. In enforcement of any such right of recovery, FGU may bring
any suit, action, or proceeding in law or in equity, including mandamus, injunction,
specific performance, declaratory judgment, or any combination thereof, as may be
necessary or appropriate to enforce any covenant, agreement or obligation to make
any payment for which provision is made in or contemplated by this Agreement or
Financial Instrument, against Project Participant, and FGU may, upon five (5)
Business Days written notice to Project Participant, cease and discontinue, either
permanently or on a temporary basis, providing all or any portion of the Gas sold
hereunder or Project Participant's Gas Entitlement Share. Unless FGU reasonably
determines that there is a valid business purpose for a delay in discontinuing the
providing of Gas or temporarily discontinuing the providing of Gas, it will give the
required written notice to Project Participant of its intent to permanently
discontinue such providing of Gas immediately upon any payment default and shall
permanently discontinue such providing of Gas immediately upon the expiration of
such notice.
SECTION 16. Transfer of Nominated Quantities Following Default.
In the event of a default by Project Participant and permanent
discontinuance of service under this Agreement pursuant to Section 15, FGU is
hereby appointed the agent of Project Participant for the purpose of disposing of
Project Participant's Nominated Quantities of Gas and as such agent, FGU shall
proceed to dispose of the defaulting Project Participant's Nominated Quantities of
Gas as follows:
(a) FGU shall, as soon as reasonably practical, terminate any spot, short
term or terminable supply of Gas that Project Participant may otherwise have the
right to receive from FGU that Project Participant has not otherwise paid for.
(b) FGU shall then, with respect to long term or non-terminable Gas,
pursuant to the Gas Purchase Agreement and this Agreement, offer to transfer to
all other nondefaulting Project Participants, a pro rata portion of the defaulting
Project Participant's Nominated Quantities of Gas which shall have been
discontinued by reason of such default. Any part of such Nominated Quantities of
Gas of a defaulting Project Participant which shall be declined by any non defaulting
Project Participant shall be reoffered pro rata to the nondefaulting Project
Participants which have accepted in full the first such offer; such reoffering shall be
repeated until the defaulting Project Participant's Nominated Quantities of Gas has
. been reallocated in full or until all nondefaulting Project Participants have declined
28
to take any portion or additional portion of the defaulting Project Participant's
Nominated Quantities of Gas.
(c) In the event less than all of a defaulting Project Participant's
Nominated Quantities of Gas shall be accepted by the other nondefaulting Project
Participants, pursuant to clause (b) above, FGU shall, to the extent permitted by
law, use its reasonable best efforts to sell the remaining portion of a defaulting
Project Participant's Nominated Quantities of Gas for the remaining term of the
defaulting Project Participant's Gas Supply Agreement with FGU. The purchasers
shall be reasonably acceptable to any credit provider with respect to the Bonds, and
the agreement for such sale shall contain such terms and conditions as will not
adversely affect the security for the Bonds afforded by the Gas Supply Agreement of
such defaulting Project Participant, including provisions for discontinuance of
service upon default and as are otherwise acceptable to FGU, and such purchases
shall, in the determination of FGU, not adversely affect the exclusion from gross
income for federal income tax purposes of interest on the Bonds; in the event of
default and discontinuance of service under such agreement, the Project
Participant's Nominated Quantities of Gas sold pursuant to such agreement shall
be offered and transferred as provided for defaulting Project Participants in this
Section 16.
(d) Any portion of the Nominated Quantities of Gas ofa defaulting Project
Participant transferred pursuant to this Section to a nondefaulting Project
Participant in accordance with clauses (b) and (c) above, shall become a part of and
shall be added to the Nominated Quantities of Gas of each transferee Project
Participant effective on and as of the date of transfer, and the transferee Project
Participant shall be obligated to pay for its Gas Entitlement Share increased as
aforesaid, as if the Gas Entitlement Share of the transferee Project Participant in
the Gas Supply Agreement with FGU had been stated originally to increase as
aforesaid on the effective date of the transfer.
(e) In the event less than all of a defaulting Project Participant's
Nominated Quantities of Gas shall be sold or transferred pursuant to the foregoing
clauses of this Section 16, FGU shall, to the extent permitted by law, use its
reasonable best efforts to sell the remaining portion of a defaulting Project
Participant's Nominated Quantities of Gas on such terms and conditions as are
acceptable to FGU and that will not adversely affect the exclusion from gross
income for federal income tax purposes of interest on the Bonds, including sales
made by the Gas Supplier as may be directed by FGU.
The defaulting Project Participant shall remain liable for all payments to be
made on its part pursuant to this Agreement, except that the obligation of the
defaulting Project Participant to pay FGU shall be reduced to the extent that
payments shall be received by FGU for that portion of the defaulting Project
29
Participant's Gas Entitlement Share which may be transferred or sold as provided
in this Section 16.
Each nondefaulting Project Participant shall be obligated to pay its Default
Share; provided, however, each such nondefaulting Project Participant is hereby
expressly made a third party beneficiary of this Agreement and as such shall have a
direct cause of action against such defaulting Project Participant for the amount of
damages suffered as a result of such default. At a nondefaulting Project
Participant's request, FGU shall take such enforcement actions as FGU deems
reasonably appropriate to enforce Project Participant's obligations hereunder, or
shall reasonably cooperate with such nondefaulting Project Participant in any
action brought by such nondefaulting Project Participant against the defaulting
Project Participant, in each case, upon the receipt of an indemnification agreement
satisfactory to FGU of any costs and expenses it may incur in connection with such
action.
SECTION 17. Other Default by Project Participant.
In the event of any default by Project Participant under any other covenant,
agreement or obligation of this Agreement other than Section 14 hereof, which shall
be governed by Sections 15 and 16 hereof, FGU may bring any suit, action, or
proceeding in law or in equity, including mandamus, injunction, specific
performance, declaratory judgment, or any combination thereof, as may be
necessary or appropriate to enforce any covenant, agreement or obligation of this
Agreement against Project Participant. Such remedies shall be in addition to all
other remedies. provided for herein.
SECTION 18. Default by FGU.
In the event of any default by FGU under any covenant, agreement or
obligation of this Agreement, Project Participant's remedy for such default shall be
limited to mandamus, injunction, action for specific performance or any other
available equitable remedy designed to enforce any covenant, obligation or
agreement of FGU hereunder as may be necessary or appropriate.
SECTION 19. Abandonment of Remedy.
In case any proceeding taken on account of any default shall have been
discontinued or abandoned for any reason, the parties to such proceedings shall be
restored to their former positions and rights hereunder, respectively, and all rights,
remedies, powers and duties of FGU and Project Participant shall continue as
though no such proceedings had been taken.
30
SECTION 20. Waiver of Default.
Any waiver at any time by either FGU or Project Participant of its rights
with respect to any default of the other party hereto, or with respect to any other
matter arising in connection with this Agreement, shall not be a waiver with
respect to any subsequent default, right or matter.
SECTION 21. Relationship to and Compliance with Other Instruments.
(a) It is recognized by the parties hereto that FGU, in undertaking, or
causing to be undertaken, the planning, acquisition, and supply of Gas hereunder,
may be required to comply with the applicable requirements of the Bond Resolution,
the Gas Purchase Agreement, the Financial Instruments and all licenses, permits
and regulatory approvals necessary therefor, and it is therefore agreed that the
performance of FGU under this Agreement is made subject to the terms and
provisions of the Bond Resolution, the Gas Purchase Agreement, Financial
Instruments and all such licenses, permits and regulatory approvals.
(b) FGU covenants and agrees to use commercially reasonable efforts for
the benefit of Project Participant to comply in all material respects with all terms,
conditions and covenants of the Gas Purchase Agreement and all licenses, permits
and regulatory approvals relating thereto. FGU shall diligently pursue all rights
and remedies set forth in the Gas Purchase Agreement and Project Participant
shall fully cooperate with FGU in such endeavor, perform such obligations as may
be required by Project Participant to enable FGU to do so, and pay all of the Costs
for which it shall be obligated hereunder.
SECTION 22. Measurement of Gas.
All Gas delivered hereunder shall be metered at the Point(s) of Delivery by
meters operated by Transporter, or as the parties shall otherwise agree.
SECTION 23. Liability of Parties.
(a) Except as otherwise herein provided, FGU and Project Participant
shall each assume full responsibility and liability for the maintenance and
operation of their respective properties and each shall, to the extent permitted by
law, indemnify and save harmless the other from all liability and expense on
account of any and all damages, claims, or actions, including injury to or death of
persons arising from any act or accident in connection with the installation,
presence, maintenance and operation of the property and equipment of the
indemnifying party and not caused by the negligence of the other party; provided
that any liability which is incurred by FGU hereunder and not covered, or not
covered sufficiently, by insurance shall be paid solely from the revenues of FGU
derived from sales of Gas and other services under this Agreement, and any
31
payments made by FGU, or which FGU is obligated to make, to satisfy such liability
shall become a part of Costs. The indemnification provided for herein shall include
any liability or obligations for which FGU is obligated to indemnify the Gas
Supplier under the Gas Purchase Agreement.
(b) For purposes of any indemnification under this Section 23,
(1) promptly after the party seeking indemnification (the
"Indemnified Party") learns of any event or circumstance, including, without
limitation, any claim or assertion by a third party that, in the judgment of
the Indemnified Party, may give rise to a claim for indemnification hereunder
(each such claim being referred to as a "Loss" and collectively as "Losses"), the
Indemnified Party shall deliver to the party from which indemnification is
sought (the "Indemnifying Party") a certificate (the "Certificate"), which
Certificate shall:
(i) state that the Indemnified Party has incurred or
anticipates that it will incur a Loss for which such Indemnified Party
is entitled to indemnification pursuant to this Agreement; and
(ii) specifY in reasonable detail each individual item of Loss
included in the amount so stated, the date such item arose or was
incurred, the basis for any anticipated Loss or Losses and the nature of
the claim to which the Loss is related and the computation of the
amount to which such Indemnified Party claims to be entitled
hereunder;
provided, however, that any failure or delay by the Indemnified Party in
delivering a Certificate to the IndemnifYing Party shall not affect the
Indemnified Party's right to indemnification under this Section 23, except to
the extent that the Indemnifying Party is able to establish damages resulting
directly from such failure or delay.
(2) If the Indemnifying Party objects to the claim for the
indemnification by an Indemnified Party in respect of any Loss, the
Indemnifying Party shall, within thirty (30) days after receipt by the
Indemnifying Party of such Certificate, deliver to the Indemnified Party a
written notice to such effect and the Indemnifying Party and the Indemnified
Party shall, within such 3D-day period beginning on the date of receipt by the
Indemnified Party of such written objection, attempt in good faith to agree
upon the rights of the respective parties with respect to each of such claim to
which the Indemnifying Party shall have so objected. If the Indemnified
Party and the Indemnifying Party shall succeed in reaching agreement on
their respective rights with respect to any of such claims, the Indemnified
32
Party and the Indemnifying Party shall promptly prepare and sIgn a
memorandum setting forth such agreement.
(3) Notwithstanding any provision hereof, if any claim for any Loss
is asserted against FGU hereunder, FGU may, at its option, assume the
defense of the Indemnified Party against such claim or may undertake any
remedial action required in connection therewith or both (including the
employment of counsel, and the payment of expenses), provided, however,
that any failure or delay by the Indemnified Party in delivering such written
notification to FGU of any such occurrence, event or circumstance, other than
the filing of any such claim, action or proceeding, shall not affect the
Indemnified Party's right to indemnification under this Section 23, except to
the extent that FGU is able to establish its damages resulting directly from
such failure or delay.
(4) Until the Indemnifying Party shall have assumed the defense of
the Indemnified Party against such claim following the delivery of such
notice, the Indemnified Party may, but shall not be obligated to, undertake
the defense of such claim on behalf of and for the account and risk of the
Indemnifying Party, and if such Indemnified Party is entitled to
indemnification under this Section 23, all legal or other expenses reasonably
incurred by the Indemnified Party shall be borne by the Indemnifying Party.
(5) Any Indemnified Party shall have the right to employ separate
counsel in any such action or claim and to participate in the defense thereof,
but except with respect to FGU, the fees and expenses of such counsel shall
not be at the expense of the Indemnifying Party unless (iJ the Indemnifying
Party shall have failed, within ten (10) Business Days after having been
notified by the Indemnified Party of the existence of such claim as provided
in the preceding sentence, to assume the defense of such claim or to notify the
Indemnified Party in writing that it will assume the defense of such claim, or
(ii) the employment of such counsel has been specifically authorized in
writing by the Indemnifying Party, and in each case above, FGU whether as
an Indemnifying Party or an Indemnified Party shall have the right to
assume full control of the defense of the claim or Loss in the manner provided
below.
(6) An appealable final judgment will not give rise to an
indemnification payment obligation if and only to the extent that the
Indemnifying Party diligently undertakes an appeal of such final judgment
and posts a supersedeas bond or takes other action which prevents the
execution of the final judgment pending the appeal. Notwithstanding the
foregoing (x) any liability or Loss incurred by FGU hereunder shall be paid in
the manner provided above from the revenues of FGU derived from sale of
Gas or other services hereunder, as a part of Costs; (y) FGU shall in all
33
events, at its option, have the right to assume the defense of any claim for
any Loss whether against the Indemnifying Party or as an Indemnified Party
and shall be entitled to be reimbursed for the full amount of any such costs of
defense including fees and expenses of counsel in trial or on appeal; and (z) as
a part of its control of the defense of any claim for Loss, FGU shall have the
full right and authority to compromise or settle any such claim or Loss for
and on behalf of and for the account and risk of the Indemnifying Party, the
Indemnified Party and/or itself.
(7) After any such claim has been filed or initiated, each party shall
make available to the other and its attorneys and accountants all pertinent
information under its control relating to such claim which is not confidential
or proprietary in nature or which is made available under the terms of a
confidentiality agreement or is delivered or obtained under appropriate
protective orders satisfactory to such party and the parties agree to render to
each other such assistance as they may reasonably require of each other in
order to facilitate the proper and adequate defense of any such claim.
(8) In no event shall the indemnification obligations of the
Indemnifying Party under this Section 23, whether based on contract,
warranty, tort (including negligence), strict liability or otherwise, extend to or
include special, incidental, consequential or punitive damages of any kind
whatsoever, except to the extent that the Indemnified Party is obligated to
pay any of such damages to a third party under any claim for which such
indemnification is sought.
SECTION 24. Sale of Project Participant's Excess Nominated Quantity.
In the event Project Participant shall determine that all or any part of the
Gas which can be supplied from Project Participant's Nominated Quantity of Gas is
in excess of the requirements of Project Participant, at the written request of
Project Participant, FGU will thereby be appointed as Project Participant's agent
for the purpose of the Project Participant's Nominated Quantity of Gas and shall
use commercially reasonable efforts to sell and transfer on behalf of such Project
Participant for any period of time all or any part of such excess Gas to such other
Project Participant or Project Participants as shall agree to take such excess Gas, at
such prices as may be agreed to, provided, however, that in the event the other
Project Participants do not agree to take the entire amount of such excess, FGU
shall have the right, to the extent permitted by law and this Agreement, to dispose
of such excess to other parties, including sales made by the Gas Supplier as may be
directed by FGU. Project Participant's Nominated Quantity of Gas and/or Gas
Entitlement Share and resulting payments required hereunder shall not be reduced
on account of such sale, and Project Participant shall remain liable to FGU to pay
the full amount due as if such sale had not been made; except that such liability
shall be discharged to the extent that FGU shall receive payment for such Gas from
34
the purchaser or purchasers thereof and a~y net amounts received by FGU as
payment for such sale of excess Gas which is greater than the liability owed by
Project Participant to FGU in respect of such excess Gas shall be credited by FGU
to Project Participant on a subsequent invoice to Project Participant.
Notwithstanding the foregoing, if another Project Participant or Project
Participants, each of equal or greater credit quality as Project Participant to whom
all of such Nominated Quantity of Gas shall be sold shall agree to assume Project
Participant's obligations under this Agreement and include such Nominated
Quantity of Gas as a part of each such other Project Participant's Gas Entitlement
Share hereunder for the remaining term of this Agreement, Project Participant may
be released from any further obligations or liabilities with respect to this
Agreement, except for any obligations or liabilities which shall have accrued prior to
such sale and except with respect to its obligations of indemnity pursuant to
Section 23 hereof. In exercising its rights under this Section 24, neither FGU nor
Project Participant shall take any action or fail to take any action which would
adversely affect the exclusion from gross income for federal income tax purposes of
interest on any tax-exempt bonds of FGU, from the gross income of the holders
thereof and/or Project Participant.
SECTION 25. Assignment of this Agreement; Sale of Project Participant's
System.
(a) This Agreement shall inure to the benefit of and shall be binding upon
the respective successors and assigns of the parties to this Agreement; provided,
however, that, except as provided in Section 16 hereof, in the event of a default,
except for the assignment and pledge authorized by Section 13 hereof and, except
for the sale or assignments authorized by Section 24 and paragraph (b) of this
Section 25, neither this Agreement nor any interest herein shall be transferred or
assigned by either party hereto except with the consent in writing of the other party
hereto.
(b) Project Participant agrees that, except as otherwise provided herein, it
will not sell, lease, abandon or otherwise dispose of all or substantially all of its
System except upon ninety (90) days prior written notice to FGU and, in any event,
will not sell, lease, abandon or otherwise dispose of the same unless the following
conditions are met: (i) Project Participant shall, subject to the terms and conditions
of the Gas Purchase Agreement, assign this Agreement and its rights and interest
hereunder to the purchaser or lessee of said System, if any, and any such purchaser
or lessee shall assume all obligations of Project Participant under this Agreement
and shall have the financial capacity to do so; (ii) FGU shall be permitted by then
applicable law to sell Gas to said purchaser or lessee, if any; and (iii) FGU shall by
appropriate action determine, in its sole discretion, that such sale, lease,
abandonment or other disposition will not adversely affect FGU's ability to meet its
obligations under the Gas Purchase Agreement or the Bond Resolution and will not
35
adversely affect the value of this Agreement as security for the paYment of Bonds
and interest thereon or the Gas Purchase Agreement, or affect the exclusion from
gross income of interest on the Bonds for federal income tax purposes or the
exclusion of such interest as to bonds or other obligations which could be issued in
the future.
Notwithstanding the foregoing, but subject to the provisions of clause
(iii) above, Project Participant may sell, lease, abandon or otherwise dispose of all or
substantially all of its System and may assign this Agreement and its rights and
interests hereunder upon the payment of sufficient funds, as determined by FGU, to
cause the purchase of a pro rata part of the outstanding Bonds equal to Project
Participant's remaining Nominated Quantity to the aggregate Nominated Quantity
of all Project Participants remaining to be delivered under this Agreement. Project
Participant and its successor shall, however, remain liable for all ongoing Monthly
Costs to the extent such Costs are not offset by the corresponding allocable
payments received by FGU under the Calyon Hedge Agreement and the net
proceeds received by FGU from the remarketing of Project Participant's Nominated
Quantity for such Month. If such revenues exceed Project Participant's Monthly
Costs, the difference will be remitted to Project Participant monthly in accordance
with the Pricing Policy.
(c) Project Participant, in making or accepting such assignment, shall
agree to assume any costs incurred in reporting the assignment as a "material
event" or such other event pursuant to the Rule or any successor provision, or any
law, judicial decision, regulation, rule or policy 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 such matters, requiring any such reporting.
(d) Notwithstanding any other provision of this Section 25, Project
Participant agrees that it will not assign or transfer any of its rights hereunder
without first obtaining and delivering to FGU and the bond trustee serving as such
under the Bond Resolution, an opinion of counsel nationally recognized as experts
on the subject of municipal bonds and acceptable to the Trustee and FGU, to the
effect that such transfer will not cause interest on the Bonds to be includable in
gross income of the holders thereof for federal income tax purposes.
SECTION 26. Termination or Amendment.
(a) This Agreement shall not be terminated by either party under any
circumstance, whether based upon the default of the other party under this
Agreement or any other instrument or otherwise except as specifically provided in
this Agreement.
(b) This Agreement shall not be terminated, amended, modified, or
otherwise altered in any manner that will adversely affect the security for any
36
obligations authorized by FGU afforded by the provisions of this Agreement upon
which the owners from time to time of the Bonds shall have relied as an inducement
to purchase and hold the Bonds or enter into the Gas Purchase Agreement, so long
as any of the Bonds or such obligations or the obligations of the Gas Purchase
Agreement or Financial Instruments entered into by FGU, in its name, or on behalf
of some or all of Project Participants shall rely thereupon. So long as any of such
obligations are outstanding or until adequate provisions for the payment thereof
have been made in accordance with the provisions of the instruments authorizing
such obligations, this Agreement or Financial Instruments, shall not be terminated,
amended, modified, or otherwise altered in any manner which will reduce the
payments pledged as security for such obligations or extend the time of such
payments provided herein or which will in any manner impair or adversely affect
the rights of the owners from time to time of such obligations.
(c) No Gas Supply Agreement entered into between FGU and another
Project Participant may be amended so as to provide terms and conditions
substantially different from those herein contained, except upon written notice to
and written consent or waiver by each of the other Project Participants, and upon
similar amendment being made to the Gas Supply Agreement of any other Project
Participants requesting such amendment after receipt by such Project Participant
of notice of such amendment. In such event, no such amendment shall cause any
increase in Costs or other increased obligations or burdens to those Project
Participants who do not sign substantially similar amendments.
(d) It is recognized by FGU and Project Participant that in the future,
events, circumstances or conditions may arise which, in FGU's reasonable
judgment, will require certain revisions to the provisions of Sections 5, 6 and 7
hereof. In such event, FGU and Project Participant agree to negotiate in good faith
and amend such provisions to reflect conditions prevailing at such times, provided
that such amendments shall not (i) adversely affect the payment of Debt Service on
the Bonds or the obligations of FGU under the Gas Purchase Agreement or any
Financial Instrument, and (ii) in the opinion of FGU's then existing bond counsel,
adversely affect the exclusion of interest on the Bonds from gross income for federal
income tax purposes.
SECTION 27. Force Majeure.
(a) In the event that either FGU or Project Participant ("Party" or
"Parties"), is rendered unable, wholly or in part, by force majeure to carry out its
obligations under this Agreement or any subsequent service agreement between the
Parties contemplated herein, other than the obligation of Project Participant to
make payments due hereunder, including the payment of Costs and other amounts
due under Sections 3 and 4, it is agreed that with respect to the Gas Supplier, the
terms and provisions of the Gas Purchase Agreement shall apply, and with respect
to this Agreement, upon such Party giving notice and full particulars of such force
37
majeure in writing to the other Party as soon as possible after the occurrence of the
cause relied on, then the obligations of the Party giving such notice (other than the
obligation to make payments due), so far as they are affected by such force majeure,
shall be suspended during the continuance of any inability so caused but for no
longer period, and such cause shall as far as possible be remedied with all
reasonable dispatch. It is further agreed that except for the obligation to make
payments due, neither FGU nor Project Participant shall be liable to the other for
any damage occasioned by force majeure.
(b) In the event of any nonperformance caused by any of the forces
described in clause (c), the Party affected shall within twenty-four (24) hours
promptly notify the other Party verbally, and within two (2) Business Days of
nonperformance, provide the other Party with written confirmation of the nature,
cause, date of commencement and anticipated extent of such nonperformance.
(c) The term "force majeure" shall have the meaning as set forth in the
Gas Purchase Agreement, to the extent applicable to the parties hereto, and as
employed in this Agreement shall also include acts of God, strikes, lockouts, or
other industrial disturbances, acts of the public enemy, wars, blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, storms,
floods, freezes, washouts, arrests and restraints of governments and people, civil
disturbances, explosions, breakage or accidents to machinery or lines of pipe, the
necessity for making repairs or alterations to machinery or lines of pipe (other than
regularly scheduled or routine maintenance), freezing of wells. or lines of pipe,
planned or unplanned outages, disruptions or curtailments by Transporter, Project
Participant or other parties in the transportation of the Gas, partial or entire
failure of source of supply, acts of civil or military authority (including, but not
limited to, courts or administrative or regulatory agencies), and any other similar or
related cause, whether or not enumerated herein, and whether caused or occasioned
by or happening on account of the act or omission of FGU or Project Participant or
any other person or concern, not reasonably within the control of the Party claiming
suspension and which by the exercise of due diligence such Party is unable to
prevent or overcome; such term shall likewise include, without limitation;
(1) in those instances where either Party is required to obtain
servitude, rights of way grants, permits or licenses to enable such Party to
fulfill its obligations hereunder, the inability of such Party to acquire, or the
delays on the part of such Party in acquiring, at reasonable cost and after the
exercise of reasonable diligence, such servitude, rights of way grants, permits
or licenses; and
(2) in those instances where either Party is required to furnish
materials and supplies for the purpose of constructing or maintaining
facilities or is required to secure grants or permissions from any
governmental agency to enable such Party to fulfill its obligations hereunder,
38
the inability of such Party to acquire, or the delays on the part of such Party
in acquiring, at reasonable cost and after the exercise of reasonable diligence,
such materials and supplies, permits and permissions.
(d) The settlement of strikes or lockouts shall be entirely within the
discretion of the Party having the difficulty, and the above requirement that any
force majeure shall be remedied with all reasonable dispatch shall not require the
settlement of strikes or lockouts by acceding to the demands of the opposing Party
when such course is inadvisable in the discretion of the Party having the difficulty.
(e) If a force majeure, including a force majeure applicable to FGU under
the Gas Purchase Agreement, prevents or curtails FGU's delivery of Gas, FGU shall
use commercially reasonable efforts to locate and make available to Project
Participant at its request, Gas from an alternative source at the then prevailing
prices as FGU may reasonably determine, until the force majeure affecting the
supply of Gas has ended.
(f) Consistent with Section 4(d), except as otherwise provided in Section
3(c) hereof, a force majeure affecting the supply of Gas or its transportation or
delivery to Project Participant shall not relieve Project Participant of its payment
obligations under this Agreement including, without limitation, its obligations
under Section 3 and the payment for any replacement Gas, at the then prevailing
prIce.
SECTION 28. Project Participant Representative.
Project Participant shall appoint from time to time by motion or resolution of
its governing body and provide to FGU evidence thereof, and written notice of the
name, mailing address, telephone number and facsimile transmission number of
one or more employees or agents with authority to give instructions required by this
Agreement and otherwise exercise decisions by Project Participant required under
this Agreement (the "Project Participant Representative").
(a) Project Participant Representative, or its designee as provided below,
shall represent Project Participant in giving and receiving notices and directives
regarding the routine operational decisions, which decisions may be relied upon by
FGUand shall be contractually binding upon Project Participant.
(b) Project Participant Representative may also, if so stated, represent
Project Participant in giving and receiving notices, Directives, taking actions or
making decisions required or that may be exercisable under this Agreement or
Financial Products provided by any Financial Instrument hereunder, in each case,
for and on behalf of Project Participant. Such Financial Products may involve those
risks and have characteristics similar to those set forth in Exhibit A hereto. The
decisions of Project Participant Representative may be relied upon by FGU and
39
such action and the due authorization, execution and delivery of such Directives
shall be contractually binding upon Project Participant.
(c) Project Participant Representative may from time to time designate an
operational representative to discharge its duties and obligations as set forth in
subsection (1) above.
(d) Notices and directives between Project Participant Representative, its
designee, and FGU may be transmitted orally when not required to be in writing,
provided that all such notices and directives shall be promptly confirmed by a
written notice as authorized by this Agreement.
SECTION 29. Notice and Computation of Time.
Any notice or demand under this Agreement shall be in writing, and shall be
deemed given in writing and properly given if sent by (i) telegraphic, cable or
wireless transmission (including by telecopy, facsimile, e-mail or other electronic
transmission, with appropriate hard copy being made available) or (ii) delivery to an
overnight courier or delivery service company in a sealed prepaid wrapper, or (iii)
certified mail, postage prepaid, in each case to the number or address set forth
below, or to such other number or address as a party hereto may give the other by
notice given in accordance with the provisions in this section.
To FGU:
Florida Gas Utility
Attn: General Manager
4619 NW 53rd Avenue
Gainesville, Florida 32606
To Project Participant:
Clearwater Gas System
400 N. Myrtle Avenue
ClearWater. F: 33855
Attention: Mr. Brian Langille
Unless otherwise specified herein, a notice is considered effectively given when it is
received by the intended recipient, or when the intended recipient refuses delivery.
If a notice is mailed by certified mail, or sent by courier or delivery service, to the
address of the intended recipient specified above (or such other address as the
intended recipient has previously specified in a written notice pursuant to the
provisions hereof), the notice shall be presumed to have been received or refused by
the intended recipient on the date indicated on the receipt or return invoice.
40
SECTION 30. Applicable Law; Construction.
This Agreement is made under and shall be governed by the laws of the State
of Florida. Headings herein are for convenience only and shall not influence the
construction hereof.
SECTION 31. Severability.
If any section, paragraph, clause or prOVISIOn of this Agreement shall be
finally adjudicated by a court of competent jurisdiction to be invalid, the remainder
of this Agreement shall remain in full force and effect as though such section,
paragraph, clause or provision or any part thereof so adjudicated to be invalid had
not been included herein.
(Remainder of page intentionally left blank.)
41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their proper officers respectively, being thereunto duly authorized,
and their respective seals to be hereto affixed, as of the day and year first above
written.
FLORIDA GAS UTILITY
By:
Attest:
Joe Cone, Chair
By:
Katrina R. Vaughan, Secretary
(Seal)
CITY OF CLEARWATER, FLORIDA
ATTEST:
By:
Mayor-Commissioner
Ci ty Manager
(SEAL)
Approved as to form:
Attest:
By:
By:
City Attorney
City Clerk
# 372653332
42
Exhibit A
CHARACTERISTICS OF FINANCIAL PRODUCTS
1. Types of Financial Products. The General Manager of FGU, in
accordance with the Derivatives Policy adopted by the Board of FGU from time to
time, may approve, and Project Participant Representative shall approve on behalf
of Project Participant, Financial Products which may consist of one or more of the
following (including combinations thereof), without limitation:
(a) Swaps and swap options or swaptions, pursuant to which (i) the
price of a commodity is converted from a fixed price to a floating price, a floating
priceto a fixed price, or from one floating price to another or (ii) the interest rate on
debt issued to acquire or prepay the cost of Gas or interests therein may be
synthetically converted from a floating rate to a fixed rate, or a fixed rate to a
floating rate or from one floating rate to another.
(b) Options or Forwards. pursuant to which a commodity can be
purchased or sold for future delivery on an optional or committed basis and on a
physical or cash-settled basis;
(c) Caps. Floors or Collars. pursuant to which the price of a
commodity can be limited to a maximum price, a minimum price, or a range
between a maximum and a minimum price and the interest rate on debt may be
limited to a maximum rate, a minimum rate on a range between a maximum and
minimum tate;
(d) Futures Contracts or Options on Futures Contracts, pursuant to
which a commodity can be purchased or sold for future delivery on a committed or
optional basis, and on a physical or cash-settled basis, through exchange traded and
regulated transactions;
(e) Other Hedges, pursuant to which the price or price fluctuations
of a commodity, interest rates on debt used to prepay or finance the acquisition of a
commodity or interests therein, or to the creditworthiness of a gas supplier or
counterparty, can be established or mitigated, either in whole or in part, so as to
reduce risk; and
(f) Combinations, including any combination of the foregoing.
For purposes hereof, a "commodity" includes, without limitation, natural gas of any
kind (in place or delivered) and any precursor or by-product of natural gas.
2. Terms of Financial Products. Financial Products may be (i)
established and regulated pursuant to the rules and regulations of exchanges upon
which such products trade or (ii) be documented and evidenced by written financial
contracts between the parties thereto pursuant to forms of agreements established
Exhibit A - Page 1
by industry associations, including, without limitation, the International Swaps and
Derivatives Association, Inc. (ISDA), such as ISDA's various forms of Master
Agreement (inclusive or any schedule or supplement, credit support document, and
confirmations related thereto).
3. Risks assumed in Financial Products. Inherent in Financial
Products will be a variety of risks including, without limitation, the following:
(a) Credit risks, including the risk that adverse financial changes
occur with respect to a gas supplier, a counterparty, an exchange, or a
clearinghouse (including bankruptcy) that would tend to reduce or negate the
benefit of the Financial Product.
(b) Pricing risks, including the risk of not obtaining the best or most
favorable price available for the Financial Product due to market conditions, lack of
pricing liquidity or transparency, and macroeconomic events.
(c) Basis risks, including the risk that the Financial Product is not
a complete or effective hedge with respect to a commodity, its price or the interest
rate paid on debt.
(d) Termination risks, including the risk that the Financial Product
must or should be liquidated or terminated early in light of the terms of the
Financial Product, which, in turn, may result in a significant payment by, or loss to,
a party due to then current market conditions, even though the party's actions did
not cause or trigger the termination. Termination can occur because of a number of
factors, including (i) a failure of a party to perform its obligations (whether related
to payment, delivery, providing collateral or margin, or otherwise) under the terms
of a Financial Product or some other agreement to which the Financial Product
refers (which may include the default by other Project Participants whose payments
are intended in part to make required payments under the hedge agreements), (ii)
the misrepresentation of a party to a Financial Product, (iii) cross defaults, (iv) the
bankruptcy, or decline in the creditworthiness, of a party to a Financial Product, (v)
the determination that a Financial Product is illegal or unenforceable whether due
to a change in law or regulation or otherwise, and (vi) other factors. Following a
termination, a party can be unhedged unless it terminates the transaction or
commodity being hedged or establishes a new hedge.
(e) Operating risks, including the risk that the Financial Product
may increase costs or present new or unusual accounting, tax or operating
difficulties that require adaptation of existing systems, processes and policies.
(f) Legal risks, including the risk that the Financial Product is
unenforceable (whether due to a change in law or regulation or otherwise) or is not
adequately documented to reflect the parties' agreement.
Exhibit A - Page 2
# 3726533_v2
Exhibit A - Page 3
Exhibit B
DESCRIPTION OF SYSTEM
(including gas burning, distribution facilities or other operations)
The City of Clearwater, Florida was incorporated in 1923 by Chapter 9710, Special
Laws of Florida, as amended. The Clearwater Gas System (CGS) is owned and
operated as an enterprise utility by the City of Clearwater.CGS operates over 750
miles of underground gas main and handles the supply and distribution of both
natural and propane (LP) gas throughout northern Pinellas County and western
Pasco County. As a "full service" gas utility, CGS provides gas appliance sales and
service, installation of inside customer gas piping, domestic and commercial gas
equipment service, construction and maintenance of underground gas mains and
service lines, and 24 hour response to any gas emergency call within the service area.
The Clearwater Gas System is regulated for safety by the Florida Public Service
Commission and the Federal Department of Transportation.
CGS has been serving customers in the Clearwater area for over 83 years (since 1923)
when operations were begun with a manufactured gas plant operation from coal and
coke. In 1959, when natural gas transmission lines were finally extended to peninsula
Florida, CGS discontinued the manufacturing of gas and began receiving piped
natural gas from Florida Gas Transmission.
Clearwater Gas System serves over 18,500 customers in a 330 square mile service
territory, which includes 18 municipalities as well as the unincorporated areas of
north and central Pinellas County and western Pasco County. The Pinellas County
service territory is 181 square miles and extends generally from Ulmerton and
Walsingham Roads on the South to the Pasco County line on the North and from the
Gulf of Mexico on the West to the Hillsborough County line on the East. This includes
all of the Pinellas beach communities south to Redington Beach. The Pasco County
service territory is 149 square miles and extends from the Gulf of Mexico on the West
inland about 10 miles to just West of State Road 41 and Land 0' Lakes (generally
along the right-of-way for the proposed North Suncoast Parkway) and from the
Pinellas and Hillsborough County lines on the South to generally State Road 52 on the
North.
Clearwater Gas System prides itself in being a competitive and public service-minded utility,
making economical and environmentally-fiiendly gas, which is made in America, available in our
community for all of the homes and businesses in our service area, with special focus on the
residential customers who make up nearly 88% of our customer base.
Exhibit B - Page 1
OIty of Ofearwa1er.FJortda
Statement of Aevenue$, Expenses, and Changes in Fund Net Assets
PrQprJetary Funds
For the Year Ended S9ptembel' 30, 2005
Business-type .
Enterprise
Wafer
lInd $ewer
Utlflty
Gas
Utility
SoUd Waste
UtlHf'l
operating revenues:
SaJeslo ClislOll'lerS
Servlce charges to customers
USMc:iharges to CU$toolers
Billings to de:partments
Rentals
TOta.l QPi'tatmg l'a\t&fl1.l1ilS
$
44,701,852 $
493,748
35.$41,806 $
1.556,829
16,291,306
74,620
45,201,400 37,198,635 1$,365,926
8.352,131 4,a85;01O' 5,356,$66
8.329,627 18,962.349 862
,M85,45$ 1730400 368,256
862,411 524,053 2,4<)4,187
2,149,$$$ 93,311'1 7$,909
5,298,495
M2;)'~ 1,501:1.44& 2$6,36$
5,259,240 '1,943,040 1,158,!;l50
2,402:,146 281,081 11,51:4
539,100 1,749
150,733 142,388 62,350
:221,340 129,600 149,7$0
2,631,587 212,84B 156.718
60,856 2,676
342,527 1003.229 31,425
404.6-?O 307.320 116,180
2,174.044
51,5903 48,652 35
$,:2.04,54:3 4,002.258 532,377
3&,265,039 3:2,O~M~ 15,4t;O,a65
6,006,381 5, I Qil,e;9 005,261
Operating expeMea:
Pef"$Ona.1 seNices
Purchases fO( resa!<'l'
Operating ma,lerjal$ and sup?!les
1r'a'rtsportatJon
Utility service
OUrl1lNng charges
O",predatlon
lotenundadmlniiSfralfve ctlarges
Other Cl.lrtenl C1'mfgel>;
Prof<l$siotlaJ fees
Mvarti!>lng
Co.'l'lriluolcaliOOs
Printing end bl/ldlng
Insurance
Repaj[$ $,;!'lC'mtlll'1lef')l!ll1ce
Rentals
Mlsooilanoous
Oa.ta proeessing charges
Taxecs
PrOVision for estimated UN.;o:lectabJe accounts
TOlar ot.lwr cUllenl charges
TOlalOpltraiing expenses
Operating rncome (loss}
The notes t:> the finanOial statements are an integra! part of this statomimt.
30
2
Oity Of Clearwater, 'Florida
Statement of Revenues, Ell,pa,nsa,s, and Changes in Fund Net A$$at$ (Continued)
ProprietalY Funcl$
For the Year Ended Septemb,er 30, 2006
BuslneslI,type
el'l1erptl~'
NcnoperaUog YllV,"Yl!O!l< (~lq)l!Ol'I$ell:}1
Earn1ngs OIl irwestments
Interest e~~nj;e
Amortization of' bond disoolJl'ltartd issue COsts
Gain (loss) on exchange of MSJl'ls
Omer
Total nonoperating revenue (",:;rpeflSss)
Income> lwforeoontr,bUfloo$ and trans/,Qt'!;
Wale-r
and Sewer
UUlliy
1,'072,253
(5,693,150)
(49'.(80)
(6.100)
104.899'
{4.57!; 17S}
2;365.183
2,3490,443
{1,90a,505}
440,9'36
2,.806:,121
137;24(},227
$ 140,046.348 S
Capital graols ll;IN conlributiotl$
'TmrHllers in
Translat'!; out
Changes In net IlSS~
Total net assets. beglrnlln,g
Total net assets, endlr,g
Gas SoUtt Waste
Utility VllIil.,
S27 .672
11,211,OOO}
{ZOI.S::!81
270.491
{814.H15f
4.292,514
(1,459,aOOI
(1,459,800)
2.632.714
~:Mta,32$
25.651,040 $
251,360
(S4;Igel
(3,.12il)
174,6$
:l$S,72(1
1,273,951
(m,870)
~ll33.870)
440,111
15.136,.329
15,576:,440
MjYSlm@tl0 reflwl theCO'1!WI!4atiQn '01 int~rn~1 S~l'I'il;aryni;l",oti\f]tja" Isla;t1ld to <;l:nlerpII"lil fUI1!J$
Chan()\lln netassats 01 bull1fless4ypa acllvlllBs (pa(:lB 19)
1he notes to the/inane!al sUI!.&menl$ afeM mtegi'al />bIt of lhlsslatl11t'.iffi1.
32
# 3726533_v2
3
Exhibit C
PROJECT PARTICIPANT OUTSTANDING OBLIGATIONS
Long Term Debt
Gas System Revenue Bonds
$6,710,000 Gas System Revenue Refunding Bonds, Series 1997B;
Serial bonds due in annual installments of $420,000 due September 1,
2006 to $565,000 due September 1, 2013, interest at 4.50% to 5.00%.
(Ordinance 5118-91, 5665-94, 6030-96; Resolution 97-54)
$8,020,000 Gas System Revenue Refunding Bonds, Series 1998; serial
bonds due in annual installments of $35,000 due September 1, 2005, to
$50,000 due September 1, 2012, interest at 4.00% to 4.60%; additional
serial bond annual installments ranging from $620,000 to $755,000 from
September 1, 2015 to September 1, 2019, interest at 4.75% to 4.90%;
4.70% term bonds in the amount of $645,000 maturing September 1,
2014; and 5.00% term bonds in the amount of $3,410,000 maturing on
September 1, 2023. (Ordinance 5118-91, 6188-97; Resolution 98-09)
$8,890,000 Gas System Revenue Refunding Bonds, Series 2004, serial
bonds due in annual installments of $160,000 due September 1, 2005, to
$1,575,000 due September 1, 2026, interest at 2.00% to 4.375%.
(Ordinance 5118-91, 7191-03; Resolution 03~36)
$7,195,000 Gas System Revenue Refunding Bonds, Series 2005; Serial
bonds due in annual installments of $40,000 due September 1, 2006 to
$325,000 due September 1, 2025, interest at 2.70% to 4.375%; term
bonds in the amount of $340,000 maturing September 1, 2026; and term
bonds maturing September 1, 2027, interest at 4.375%.
(Ordinance 7423-05; Resolution 05-16)
# 372653332
Exhibit C - Page 1
$3,920,000
$7,825,000
$8,870,000
$7,175,000
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Appendix 2
PROJECT PARTICIPANT'S POINT OR POINTS OF DELIVERY
PROJECT PARTICIPANT
Clearwater
POINT OR POINTS OF DELIVERY
· North Gate Station:
1010 N. Hercules Ave, Clearwater, DRN# 3171
· South Gate:
2531 Nursery Rd, Clearwater, DRN # 3172
· Northeast Gate:
2910 McMullen Booth Rd, Clearwater, DRN# 3168
· Trini ty Gate:
8017 Mitchell Blvd, New Port Richey (Pasco County), DRN# 291990
# 3726533_v2
Appendix 2 - Page 1
Appendix 3
FORM OF OPINION OF COUNSEL TO PROJECT PARTICIPANT
-,-,2005
[Underwriters, Counterparties
or other Interested Parties]
Florida Gas Utility
4619 NW 53rdAvenue
Gainesville, FL 32609
Re: Gas Supply Agreement No. 2[; Other Financial
Instruments]
Ladies and Gentlemen:
I am counsel to the fplease insertl (the "Public Agency"),
and am furnishing this opinion to you in connection with the Gas Supply Agreement
No. 2 ("Gas Supply Agreement") [Financial Instrument (the "Agreement")],
dated as of _, 2006, and executed between Florida Gas Utility ("FGU")
and the Public Agency as a Project Participant and as a purchaser of Gas from FGU
pursuant to the GSAP2 Project.
All terms used herein in capitalized form and not otherwise defined
herein shall have the same meanings as ascribed to them in the Gas Supply
Agreement.
In connection with this opinion, I have examined originals or copies,
certified or otherwise identified to my satisfaction, of the following:
(a) The Constitution and laws of the State of Florida including, as
applicable, special acts, ordinances, charters and agreements pursuant
to which the Public Agency was created and by which it is governed;
(b) Resolution No. _, duly adopted on , 200_ [please
insert one or, if applicable, more resolution numbers and
dates] (collectively, the "Resolution"), and certified as true and correct
by certificate and seal as of [ ], authorizing the Public Agency
to execute and deliver (i) the Gas Supply Agreement described below to
Appendix 3 - Page 1
participate in GSAP2 [and (ii) other Agreement], in accordance with
the provisions of the Constitution of the State of Florida, the Florida
Interlocal Cooperation Act of 1969, Section 163.01 and Chapter 166,
Florida Statutes, and other applicable provisions of law;
(c) A copy of the Gas Supply Agreement [other Agreement] executed by
the Public Agency;
(d) The Interlocal Agreement dated September 1, 1989, as amended on
June 1, 1992, and as amended and restated by Amended and Restated
Interlocal Agreement dated as of July 1, 1996, and thereafter amended
and restated by Second Amended and Restated Interlocal Agreement
dated as of July 27, 1999, between the Public Agency and the other
public agencies named therein (the "Interlocal Agreement");
(e)
The Official Statement
[Other], dated as of
[Private Placement Memorandum]
_,2006, relating to GSAP2 [ ];
(f) The Continuing Disclosure Agreement, dated as of , 2006
(the "Continuing Disclosure Agreement"), among the Public Agency,
FGU, [ ] and Holland & Knight LLP; and
(g) All outstanding instruments relating to bonds, notes or other
indebtedness of or relating to the Public Agency's System.
I have also examined and relied upon originals or copies, certified or
otherwise authenticated to my satisfaction, of such other records, documents,
certificates and other instruments, and made such investigations of law, as in my
judgment I have deemed necessary or appropriate to enable me to render the
opinions expressed below.
Based upon the foregoing, I am of the opinion that:
1. The Public Agency is [a public body corporate and municipal
corporation of the State of Florida], [a utility authority and a part of
government of the City of ], [a public agency as defined in
Section 163.01(3)(b), Florida Statutes, as amended, and an electric
utility as defined in Section 361.11(2), Florida Statutes, as amended]
[PLEASE SELECT AS APPROPRIATE], duly organized and validly
existing under the laws of the State of Florida, with the legal right to carry
on the business of its System as currently being conducted and as proposed to
be conducted as described in the [Official Statement] [Private Placement
Memorandum] [other].
Appendix 3 - Page 2
2. The Public Agency has the right and power to adopt the Resolution, and the
Resolution has been duly adopted by the Public Agency and is in full force
and effect as of the date hereof in the. form in which adopted.
3. The Gas Supply Agreement, [the Financial Instrument,] the Continuing
Disclosure Agreement and the lnterlocal Agreement (collectively, the
"Agreements") have been duly and lawfully authorized, executed and
delivered by the Public Agency, and constitute the legal, valid and binding
agreements and obligations of the Public Agency, enforceable against the
Public Agency in accordance with their respective terms.
4. The authorization, execution, delivery, receipt and performance of the
Agreements and all agreements and documents provided for or contemplated
by the Resolution do not violate any applicable judgment or order of any court
and do not conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, the terms of any statute of the
State of Florida, the Public Agency's ordinances or charter, any
administrative rule Or regulation of the State of Florida or any agency thereof
or of any bond resolution, indenture, agreement, license, permit, franchise, or
other instrument to which the Public Agency is subject, or by which it or any
of its properties is bound, or result in the creation or imposition of any lien,
charge or other security interest or encumbrance of any nature whatsoever
upon any of the properties or assets of the Public Agency, except as expressly
provided by the Agreements, nor do such actions result in any violation of
any order, rule or regulation applicable to the Public Agency of any court or of
any federal, state or other regulatory authority or governmental body having
jurisdiction over the Public Agency or any federal statute, order, rule or
regulation applicable to the Public Agency or the State of Florida.
5. Amounts payable by the Public Agency to FGU pursuant to the Gas Supply
Agreement [Financial Instrument] will constitute operating expenses of
the Public Agency's System.
6. All approvals, consents or authorizations of, or registrations, or filings with,
any governmental or public agency, authority or person required on the part
of the Public Agency in connection with the execution, delivery and
performance by it of the Agreements have been obtained or made.
7. There is no action, suit, litigation, inquiry, investigation or other proceeding
by or before any court, governmental agency, public board or body or other
tribunal of competent jurisdiction (either State or Federal) pending or, to the
best of my knowledge after due inquiry, threatened against the Public Agency
or its System which (a) questions the creation, organization or existence of
Appendix 3 - Page 3
the Public Agency, (b) affects or seeks to prohibit, restrain or enJOIn the
Public Agency from entering into, or wherein an unfavorable decision would
materially adversely affect the ability of the Public Agency to, comply with its
obligations contained in the Agreements, including the payment obligations
to FGU contained therein, or (c) in any way affects or questions the validity,
legality or enforceability of the Agreements, nor, to the best of my knowledge,
is there any basis therefor.
8. . Project Participant Representative has the power and authority to enter into
Financial Products of the type described in the Gas Supply Agreement or to
authorize FGU to enter into such transactions on Project Participant's behalf
and to bind Project Participant with respect thereto, subject in each case to
the general parameters set forth in Exhibit A to the Gas Supply Agreement.
. The opinions set forth herein as to the enforceability of the legal
obligations of the Public Agency are subject to and limited by (i) bankruptcy,
insolvency, reorganization, moratorium and similar laws, in each case relating to or
affecting the enforcement of creditors' rights generally, and (ii) other general
principles of equity.
This opinion is rendered only to the addressees, but may also be relied
upon by those parties with respect to the acquisition of the Gas and to any
institutions. making loans to, purchasing bonds from or engaging in Financial
Instruments with FGU with respect to gas acquisitions for the Public Agency.
Very truly yours,
# 3726533_v2
Appendix 3 - Page 4