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Resolution No. 6484 1 RESOLUTION NO. 6484 2 3 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND AUTHORIZING THE EXECUTION OF A NATURAL GAS SALES AGREEMENT BY AND BETWEEN THE CITY OF VERNON AND ASSOCIATED GAS SERVICES, INC. 4 5 WHEREAS, the City Council of the City of Vernon by Resolution No. 6294 on July 20, 1993, approved and authorized the execution of a natural gas sales agreement with Grand Valley Gas 6 7 8 Company, for the period August 1, 1993 to July 31, 1994; and WHEREAS, Grand Valley Gas Company has merged with and 9 lO II Associated become subsidiary Natural wholly of Gas owned a corporation; and l2 l3 WHEREAS, Associated Natural Gas Corporation, as part of its reorganization, has assigned the Grand Valley Gas Company l4 Associated Gas Services, contract to another subsidiary, Inc. , l5 pursuant to condition no. 12 of the agreement which authorizes l6 l7 assignment to an affiliate; and WHEREAS, Associated Gas Services, Inc., has agreed that 18 the maximum allocation of natural gas to the city of Vernon be 19 reduced from 500/MMBtu to 100/MMBtu per day; and 20 WHEREAS, the City of Vernon has need of the services of 2l Associated Gas Services, Inc. to sell natural gas on favorable terms 22 to the City of Vernon during a one-year term from August 1, 1994 23 through July 31, 1995; and 24 25 WHEREAS, the Director of Light and Power of the City of an agreement with Associated Gas Vernon has recommended that 26 Services, Inc. be approved, effective August 1, 1994. 27 28 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: (*" ... 1 SECTION 1: The City council of the City of Vernon hereby 2 finds and determines that the recitals contained hereinabove are 3 true and correct. 4 SECTION 2: The City Council of the city of Vernon hereby 5 approves the Natural Gas Sales Agreement, a copy of which has been 6 presented to the City Council concurrently with this resolution, and 7 the City council hereby orders said Agreement to be received and 8 filed by the city Clerk. 9 SECTION 3: The City council of the city of Vernon hereby lO authorizes the Mayor and the City Clerk to execute said Agreement II for, and on behalf of, the City of Vernon. l2 SECTION 4: The City Clerk of the City of Vernon shall l3 certify to the passage of this resolution, and thereupon and l4 thereafter the same shall be in full force and effect. l5 APPROVED AND ADOPTED this 2nd day of August, 1994. l6 ~: ~~A~~t:G~;;fo/ 19 A^- /ft/~ 20 BRUCE V. MALKENHORST, City Clerk 2l 22 23 24 25 26 27 28 -2- r .. 1 STATE OF CALIFORNIA ) )ss COUNTY OF LOS ANGELES ) 2 3 I, BRUCE V. MALKENHORST, ci ty Clerk of the ci ty of 4 Vernon, do hereby certify that the foregoing Resolution, being 5 Resolution No. 6484, was duly adopted by the City Council of the city of Vernon at a regular meeting of the City Council duly held on Tuesday, August 2, 1994, and thereafter was duly signed by the Mayor 6 7 8 of the City of Vernon. 9 ~. lO BRUCE V. II l2 (SEAL) l3 l4 l5 l6 l7 l8 19 20 2l 22 23 24 25 26 27 28 -3- - GJ .~ NATURAL GAS SALES AGREEMENT AGS Agreement No. GSA 272 Dated: July 28, 1994 Seller ASSOCIATED GAS SERVICES, INC. 19800 MacArthur Blvd. Suite 500 Irvine, CA 92715 Buyer CITY OF VERNON CALIFORNIA 4305 Santa Fe Avenue Vernon, CA 90058 Notices & Correspondence: Attn: Contract Administration Phone: (714) 757-4114 Facsimile: (714) 757-4116 Notices & Correspondence: Attn: J. R. Sweeney Phone: (213) 583-8811 Facsimile: (213) 583-1983 Payments: Associated Gas Services, Inc. c/o Continental Bank N.A. Chicago, Illinois . ABA #071000039 Account #76-56971 Invoices: Attn: Phone: Facsimile: Dept. of Light & Power (213) 583-8811 (213) 583-1983 Seller and Buyer are collectively referred to as the "Parties". The Parties represent as follows: A. Seller owns or controls quantities of natural gas which it desires to sell. B. Buyer desires to purchase the quantities of gas Seller has available. The Parties have agreed to the foilowing terms and conditions for the sale of natUral gas: 1. The primary term of this Agreement shall be from August 1, 1994 through July 31, 1995. This Agreement shall extend month-to-month thereafter until terminated by either party by giving thirty (30) days prior written notice. 2. The Term, Basis, Price, Quantity and Point(s) of Delivery of any transaction as agreed to by J3uyer and Seller from time to time shall be set forth in Exhibit "A" (attached hereto). 3. The attached "Conditions of Sale" are hereby incorporated into and made a part of this Agreement as essential terms and conditions. By their signatures as they appear below, Buyer and Seller hereby accept and agree to the terms and conditions of this Agreement. Seller ASSOCIATED GAS SERVICES, INC. Buyer CITY OF VERNON CALIFORNIA By: ~.~ DlR[CTOR GAS SUPPlYJMARKETlNG Title: May oJ /<; Name: BY:~~" .. , ~ '. Name: T .pon; ~ C }1",ql1mrg ./ _ /W4~ Malkenhorst, ity Clerk Title: Firm GSA ATTEST: Bruce V. APPROVE AS TO FORM: ~ i .. . , CONDITIONS OF SALE to the Gas Sales Agreement Dated: July 28, 1994 ASSOC1A TED GAS SERVICES, INC. (SELLER) and CITY OF VERNON CALIFORNIA (BUYER) 1. Basis of Purchase and Sale: Gas shall be purchased and sold hereunder on a "Firm" basis. "Firm" shall mean that actual amount within their control, the parties hereto are able to deliver and accept. Seller agrees that Buyer's volume shall be priority level one (PI) from Seller's pool and shall flow as "first gas" from Seller's pool. 2. Invoices and PaYment: Seller shall invoice Buyer on or before the fifteenth (15th) day of the month for deliveries made in the prior month. Invoices and payments shall be delivered as set forth on page 1. Buyer shall pay Seller not later than ten (10) days after the receipt, via facsimile or overnight courier, of Seller's invoice. Failure by Buyer to pay any invoice when due, except for bonafide disputes, shall be cause for Seller to sUspend deliveries to Buyer until Buyer has paid the amount due. In the event actual volume statements are not available from Transporter by the billing date, billing will be prepared by Seller based on nominations, Buyer agrees to pay as invoiced and the nominated volume numbers will be corrected to the actual volume numbers on the following month's invoices, or as soon thereafter as actual information is available. Interest atprime interest rate or base rate oflarge money center banks as reported in the Wall Street Journal plus two percent (2%) will be charged from the due date on all past due accounts. Seller may demand assurance of Buyer's ability to pay and may from time to time demand different terms of payment whenever it reasonably appears that Buyer's financial condition requires such change. Seller may upon making of such demand suspend deliveries hereunder. Ifwithin the period stated in such demand, Buyer fails or refuses to agree to such different terms of payment or fails or refuses to give adequate assurance of ability to pay, Seller may treat such failure as repudiation of this Agreement. 3. Title and Possession: Risk ofloss and title shall pass to Buyer at the Point(s) of Delivery. Seller shall be solely liable and responsible for losses or damages prior to delivery at the Point(s) of Delivery and Buyer shall be solely liable and responsible for losses and damages thereafter, each party to hold the other hannless from third party claims of any nature attributable to such while it holds title. 4. Qualitv: All gas delivered shall be merchantable and shall conform to all of the specifications promulgated or otheIWise required by the owner(s) of the facilities at the Point(s) of Delivery. Buyer may refuse to accept such gas pending correction of quality deficiencies. 5. Entiretv of A2reement: This document shall constitute the entire agreement between the parties and supersedes all previous agreements with respect to the gas sold hereunder, unless otherwise provided herein. No other promises, agreements, or warranties additional to the Agreement shall be deemed a part hereof nor shall any alteration or amendment of this Agreement be effective without the written consent of each party. 6, Pipeline Confirmations: Buyer shall provide Seller confirmation of volumes received from transporting pipeline by the fourth (4th) day of the month following delivery. If Buyer fails to provide the pipeline confirmations by the fourth (4th) day of the month following delivery, Buyer shall be billed on estimated volumes and agrees to pay as invoiced with any corrections being made as adjustments offuture invoices. Finn GSA 2 >, \ ,. : 7. Force Maieure: In the event either party is rendered unable, wholly or in part, to perform its obligations under this Agreement due to acts of God, floods, fires, explosions, weather, strikes, lockouts or other industrial disturbances, wars or any law, rule, order or action of any court or instrumentality of the federal or state government, or due to exhaustion, reduction or unavailability of gas at the source of supply from which deliveries are normally made, failure of third party transportation or any other cause or causes (except financial) beyond its control whether similar or dissimilar to those stated above, it is agreed that the obligations of each party shall be suspended for the continuance of any inability so caused but for no longer period. The party claiming force majeure shall immediately notify the other party by telephone and with written confirmation sent by facsimile, overnight courier, etc, describing the nature and estimated duration of such inability to. perform. The cause of such inability to perform shall, so far as possible, be remedied with all reasonable dispatch. 8, Tax:es and Fees: Seller shall pay and discharge all production, severance, or similar taxes levied on the gas delivered by Seller and hold Buyer harmless in connection therewith. All taxes, fees, tariffs, and charges incurred after delivery at the Point(s) of Delivery shall be borne by Buyer and Buyer shall hold Seller harmless in connection therewith. All other taxes shall be borne by the party having title to and possession of the gas at the point of levy or assessment. 9, Notices: Any notice shall be in writing and shall be delivered personally, by mail, or by facsimile, as set forth on page l;unless changed by notice. Such notice shall be deemed received when deposited in the United States Post Office or Canada Post, with postage fully prepaid. All notifications related to nominations may be accepted verbally, but shall be confirmed in writing immediately by facsimile. 10. Audit: Each party hereto shall have the right at all reasonable times to audit the books and records of the other party to the extent necessary to verify the accuracy of any statement, charge, computation, or demand made under or pursuant to this Agreement. Any statement shall be final as to both parties unless questioned within two (2) years after the month in which deliveries of gas were made. 11. Ri2ht of Offset: Each party shall have the right to offset dollar amounts due under this Agreement with any dollar amounts due under any and all agreements between the parties, regardless of whether directly related to this Agreement or not. 12. Asshmment: This Agreement shall not be assignable by either party without written consent of the other, except that either party may assign this Agreement to an affiliate, provided that such assignment shall not release the assignor of any of the obligation hereunder unless consented to in writing by the nonassigning party. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. 13. Waiver: Failure ofa party to advise the other of any disagreement with any provision of this Agreement prior to initial delivery of gas shall be deemed a waiver thereof, and this Agreement shall be binding as to all terms and conditions as set forth herein. The waiver by either party of the breach of any provision hereof by the other party shall be not deemed to be a waiver of the breach of any other provision or provisions hereof or of any subsequent or continuing breach of such provision or provisions. 14. Successors: This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. 15. Liti2ation and Disputes: In any litigated dispute under this Agreement, the prevailing party shall be entitled to recover from the other party all reasonable legal costs and all direct out-of-pocket costs associated with the litigation incurred by the prevailing party, This Agreement, and any disputes arising hereunder, shall be governed by the laws of the state of California Firm GSA 3 . 'l .. . . 16. Confidentiality: This Agreement and all of its provisions are strictly confidential between the parties and shall not be disclosed, except to their respective attorneys and accountants and as required by law, without the prior written consent of the other party. 17. Imbalances: Buyer and Seller shall use all reasonable efforts to avoid the occurrence of any imbalances under this Agreement and shall notify the other upon discovery of any imbalance immediately. Both parties agree to cooperate to prevent or remedy any imbalance which may occur on a daily basis, and Seller shall be responsible for any imbalances which may occur under this Agreement, unless caused by Buyer's negligence or failure to cooperate and communicate with Seller in nominating and controlling gas volumes. Imbalances shall include. any "Buy Back" penalties incurred during periods when Southern California Gas Company declares an "overnomination day". 18. Nominations: Seller shall perform all nominations on Buyer's behalfwith Buyer's cooperation and shall act as Buyer's Contracted Marketer as provided by Southern California Gas Company's current Contracted Marketer Program or any successor program implemented by Southern California Gas Company, Buyer shall be responsible for notifying Seller of Buyer's projected gas usage as requested by Seller. 19. Regulatory: Should the implementation of Capacity Brokering or FERC Order 636, or any companion order thereto or any other order issued or tariff approved have a materially adverse economic impact on either party hereto or prevent either party from performing under the terms of this Agreement, the parties shall promptly and in good faith attempt to negotiate alternative arrangements satisfactory to each under which deliveries of gas in conjunction with this Agreement can continue. If no agreement on such terms can be reached within 30 days, then the obligations of the parties under this Agreement may be terminated by the adversely affected party upon 30 days notice to the other. 20. Demand Chan~es: Buyer acknowledges that Buyer may be obtaining firm interstate transportation and associated firm demand charges to deliver volumes to Buyer under this Agreement and Buyer agrees to reimburse Seller for any stranded demand charges Seller incurs as a result of Buyer's failure to take eighty percent of the volume stated in Exhibit "A". 21. Penalties: Should Buyer fail to take delivery of eighty percent of the volumes stated in an effective Exhibit "A" on a monthly basis and Seller receives a replacement price deficient of the then current contract price, then Buyer shall reimburse Seller for the deficient amount on an MMBtu basis. Likewise, should Seller fail to deliver ninety-five percent of the volumes stated in Exhibit "A" on a monthly basis and Buyer obtains replacement volumes at a price in excess of the current contract price, the Seller shall reimburse Buyer for the excess amount on an MMBtu basis. Penalties shall apply only to the deficient take or delivery MMBtus. 22. Service Fee: For all services rendered by Seller, as outlined in Seller's proposal to Buyer dated June 15, 1993, Buyer agrees to pay Seller a service fee equal to $.0 15/MMBtu. Finn GSA 4 . ~ r . . .' , , , EXHmIT "A" to GAS SALES AGREEMENT AGS Agreement No. 272 Dated: July 28, 1994 Seller ASSOCIATED GAS SERVICES, INC. 19800 MacArthur Blvd.. Ste. 500 Irvine, CA 92715 Buver CITY OF VERNON CALIFORNIA 4305 Santa Fe Avenue Vernon, CA 90058 Representative: Scott R. Bond Representative: Richard Sweeney Exhibit Date: July 28, 1994 Term: August I, 1994 through July 31, 1995 Price: The price shall be the monthly index price as published in GAS DAlLY Report for deliveries to the California border - endusers, minus $.OIJM:MBtu. Note: Should volumes be delivered at a price below the contract price, based on Seller's actual cost ofnaturaI gas and interstate transportation, the Seller shall retain forty percent (40%) of the savings with Buyer receiving, as a reduction in Seller's invoice to Buyer, sixty percent (60%) of the s~vings. Quantity: 100JM:MBtu per day. Point(s) of Delivery: AU primary receipt points of the Southern California Gas Company system. ACCEPTED and AGREED to: Seller GJ::S~TED QAS SER~~ m~~ Dare ~ Buver CITY OF VERNON CALIFORNIA ATl'EST :