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HomeMy WebLinkAboutPR 17427: SABINE PASS LIQUEFACTION CONTRACT AMENDMENT Interoffice MEMORANDUM To: Mayor, City Council, and City Manager • From: Valecia R. Tizeno, City Attorney I Date: December 6, 2012 Subject: P.R. No. 17427; Council Meeting November 21, 2012 Attached is P. R. No. 17427 approving a Second Amendment to the Contract between the City and Sabine Pass Liquefaction, LLC. I have attached for your review copies of the Original contract and the First Amendment. Please contact me if you have any questions. VRT:gt Attachment s.pr17427_memo Original Contract WATER SERVICE •GREE,MENT s7 hk NVATER SERVICE A1;REEMEN1 (this "Agreement"), dated as of this 2 * 2oi I, is made by and bC een Sabine Pass Liquefaction, 1„LC, a Delaware itahnity company with offices at 700 Milam Street, Suite 800, Houston, Texas 77002 satin k C Pa,s Liquefaction") and City of 1N Arthur. a home rule municipality located at 444 l'X 77640 ( Sabine Pass Liquefaction and the City may be reha :ed rein together as the - Parties" and each may be referred to individually as a "Party RECFIALS VVIAL RE NS. Skine Pass Liquelaction*s affiliate, Sabine Pass LNG„ 1 ,P O flS and a liquefied natural gas ("1,N( ng and regasification terrnitml situated on the of the Sabine Neches Waterway in southwest C'ameron Parish, Louisiana ("Sabine Pa-- IIEREAS. Sibine Pass Liquefaction is developing and intends to construct and on an 1 :\V tacility ("Sabine Liquefaction Facility"), which will be operated lankvo with a portion of the currently existing LNG import capacity at the Sabine Pass mak mg the Sabine Pass Facility a bi-directional LNG import and export terminal; I F. EAS. Sabine Pass 1.iquethetion desires to purchase potable water liar the Sabine aia,baelloo l iVill'REAS. the City of Pod. Arthur owns and operates a water utility system for the use 0: . panty and ita residents: VVIRATAS, pursuant to Section 552.001 of the "fexas Local Government Code, a itItria,ipuith may contract with persons outside its boundaries to permit them to connect with 01J , :y:sterns oh h. the municipality considers to be in its best interest: vvilt-REAS, the City has detertruneki that it is in the best interest of the City to enter into ltjeernCire rt,4 the sale of potable water to provide a source of potable water supply WHEREAS, the potable Water will be delivered by the City to Sabine Pass Liquefaction ba of the ilighway 82 bridge , which crcisses Sabine 1,ake to an interconnection with a Sabin. Pass Liquebaaion water line, which will be the de,livery point for water to Sabine, Facility. Saki delivery point Will be within the corporate limits of the City of Port C1 1 ‘8,111 14L AS, the obligations of the (:ity to deliver water udder the terms of this contract ai e upon the ability of the City to obtain water from the Lower Neches Valley , \utl " , - or any other third party" provider of water and all permits necessary for the 1)1 “, -o it s i n iter from stale and federal entities for the delivery of potable water and any other o =art = e re gUire rneots necessawy to carry" out the duties and responsibilities pursuant to this 1HE "E S. the City has been top. by LNVA that leNVA expects to have sufficient .. _ ,a i =d tee supply the City with the water it will sell to Sabine Pass Liquefaction; NOW, , THEREFORE, for good and valuable consideration and for the mutual _,. , herein. the receipt and sufficiency of which is hereby acknowledged by the 1 . , fl; ; . . " r Pass i Liquefaction and the City hereby agree as follows: FF`, fleetly e Date and Term. This Agreement shall 'become effective on the date first written ao, k : Effectio a Date and shall remain in effect for a period of thirty (30) years fallowing a s 4srairr ,;: einent of delivery of Water under this Agreement (the "Term"). Notwithstanding the h rc :In , the Parties have the right to terminate this Agreement prior to the end of its 11 - rant to Section 7 hereof, , "ater Delivery fee °fiv° of Water. fkeginnin . on April 1, 2014. the City agrees to utilize its best efforts to eg i , e s fficient quantities of water meeting the City's standards for potable water ( a \r1iL hie to meet the maximum delivery flow rate quantity requirements at the Delivery -lot as shown in Section 2,2 and are delivered in accordance with the terms and conditions ' y . rrement, l 1 tow Rate. Pursuant to Section 2.1, the City shall utilize its hest efforts to deliver to .ibrne Pass 1 its requirements for Water up to the maximum flow rates for of Water at the Delivery Point as set forth below: Max Water Delivery Flow Rate Sabine Liquefaction Gallons per facility frains Date of Service Minute i =min '.\pri1 2014 T Dee 2015 875 ral ,' Jan 2016 Jan 2017 1,750 11eb2017....No' 201' 2.620 4 !Dec 21117 Term 3.500 2 of t 2 Pressure. lite City shall utilize its best efforts to deliver water.at the Delivery Point at a4, in 'ssurc of not less than 35 pstg. 1` file; Rink of Loss; Responsibility. Title and risk of loss with respect to the Water slr ' I pass to Sabine Pass Liquefaction at the Delivery Point. The City shall be re- =,ins hle< i`trr all claims. costs.. liabilities and expenses which arise with respect to the \ ate °r° prior to its delivery to Sabine Pass Liquefaction at the Delivery Point, and Sabine I`.:r, . Liquet ecti € >n shall he responsible for all claims, costs, liabilities and expenses with re roce;t to the Water which arise at and after it is delivered to Sabine Pass Liquefaction rc Del iv ers Paint. t ontinuity of Services. consideration of Sabine Pass Liquefaction purchasing water from the City, ;y: ;.reunder. the parties agree that the Sabine Pass Liquefaction. will be provided water the same manner as services to City inhabitants and other direct service customers to the maximum flow rate specified in Section 2.1. Sabine Pass Liquefaction will their h:f the terms of the Water Conservation Program(s) adopted by the City which t =a if he implemented by the City with the assistance and support of the Sabine Pass quefat;rion 13 Fa general emergency or water shortage occurs requiring the imposition of "severe onditkon measures" of the City's Drought Contingency Plan, Sabine Pass quet;,lction agrees to adhere to there restrictions, Sabine Pass Liquefaction agrees to ;:r,fhere to and support such emergency, curtailment measures. `, ; he City vrll provide written notice to Sabine Pass Liquefaction. if the City determines that an interruption or reduction in service is necessary or reasonable for 4 tern emergencies or to instal! equipment, nuke repairs, replacements, esugations and inspections or perform other maintenance work on the City system. , those parts of the system supplying Sabine Pass Liquefaction. Except in cases of t.rr er ,erri:y and in order that the Sabine Pass 1. iquefact on ;s operations will not be nercasonably interfered with. the City shall also give Sabine Pass Liquefaction isona 1e notice of any such inten°uption or reduction, the reason, and the probable =;oration. the City agrees to exercise reasonable diligence and foresight to repair, lacc and maintain its treatment plants and other facilities so as to provide a normal ¢lurne and pressure of water to the point of Sabine Pass Liquefaction's , rrrtectront i during the term of'rhis Agreement. 1 of 11 t ' its awe System Enhancements, "; . t. i itr Enhancements. In order fir° the City to be able to delivery Water to Sabine l.kit..aef at the Delivery point certain enhancements to the City's existing Ater s) stem will be needed vi,hich include upgrades to the City's surface water i . =nnaent plant, a water line or lines in downtown Port Arthur and along Highway 82 ;_n Pleasure island, and a 500.000 gallon ground storage tank and pump station on P : asure tslarrc.i (the Facility l rr raneements" ), 3.2. C cost uetion of Facility Enhancements. Promptly following the execution of this \ wr cement. the City shall hire at Sabine Pass Liquefaction's cost an engineering firm a prepare and deliver to the City the proposed design, engineering plans and detailed rest estimate for the Facility Enhancements ( "Engineering Study "). The engineering lam will pray ide, both the City and Sabine Pass Liquefaction a copy of the 1 egineering Study promptly hollowing its completion. Upon receipt of a notice to >eeetd with the construction of the Facility Enhancements from Sabine Pass (the n votie t< .Pr& eeed ") the City; shall select the contractor for the construction of the . ,;: i l ity Enhancements based upon the City's standard procurement process as stated la- Chapter 252 of the Texas Local Government Code. The City shall also obtain all , : •; a, =.rir cl permits, rights of vi,ay. authorizations and other rights related to the ,instruction and operation of the Facility Enhancements and the delivery of Water to Deliae r°y- Point, The current cost estimate for the Facility Enhancements is $20.6 to : 111013. ' 1 " his is a preliminary scope and estimate. Sabine Pass Liquefaction will pay 1,e , the costs for the Facility Enhancements ncements as delineated in a resolution approved by t Coy Council awarding the construction contract to an approved vendor. Payment ! Sabine Pass Liquefaction is contingent upon their prior approval of the nstruetion contract, Said payment shall be provided to the City prior to the amm ncement of construction, Said payment is non - refundable once the rastruetion contract has been awarded by the City. ;_ 1, t nmpletion of Facility Enhancements. The City shall cause the Facility Enhancements to be constructed in accordance with the Engineering Study and aaplc to ct or before April 1, 2014, 4 Metering and Measurement, nit of Measurement. The unit et' measurement for Water delivered hereunder shall be 1 S, Standard Liquid Measure It asuring Equipment. [he City, shall f "urnish, install, operate and maintain at its own i. ei e# at the Delis Delivery Point the necessary electronic or other equipment, meters and devices for „rk.sfesturing pinned) the quantity of Water delivered under this Agreement. Such equipment shall =,,a eon tia t ={ ;party of the City. Sabine Pass Liquefaction shall have access to such equipment at b..l tea sora<Ifel;k times hut the reading, calibration and adjustment thereof shall be done only by :ire , mplo,ees or agents of the City, Pot the purpose of this Agreement the original record or °14.1,11p , }1' t rtac a; urin ; equipment shall be the _journal or other record book of City in its office t all h ti records ot the employees or agents of the City who take readings are or may be tin hi pon wiitten request of Sabine Pass Liquefaction, the City will give Sabine Pass 1 °q=1,1.Atior a copy of such journal or record book, or permit Sabine Pass Liquefaction to have f n tf tame in the office of the City during reasonable business hours. h City hall calibrate its measuring equipment periodically, but at least every three (3) years in writing by Sabine Pass Liquefaction to do so given no more frequently than arow ihe presence of a representative of Sabine Pass Liquefaction, and the Parties shall obscrae any adjustments which are made to the measuring equipment in case any adne-drienh shall be necessary, and if the check meters hereinafter provided for have been insta!ied, file same shall also be calibrated bv Sabine Pass Liquefaction in the presence of a ri„presentat Ye of City and the Parties shall jointly observe any adjustment in case any adjustment if Sabine Pass Liquefaction shall in writing request City to calibrate its measuring treti it> NhAil. give Sabine Pass Liquefaction notice of the time when any such calibration is to be made, and if a representative of Sabine Pass Liquefaction is not present at the time set, the ny Thu pr ieeed with calibration arid adjustment in the absence of any representative of Sabine n; 1 Iti,tc irty at any time observes a variation between the delivery meter or meters and the the 11',1 3 )r meters, if any such check meter or meters shall be installed, such Party will pion houfy the other Party, and the Parties hereto shall then cooperate to procure an namediate hhration test and joint obsenation of any adjustment, and the said meter or meters \nail then be adjusted to accuracy. Each Party shall give the other Party at least forty-eight (48) hood: none, of the time of all tests or calibration of meters and other measuring equipment so Ikat Party have a representative present. gio test, the percentage of inaccuracy of any measuring equipment is found to be in c of 1w percent (12 registration thereof shall be corrected for a period extending back to U:. me NA ben such inaccuracy began, if such time is ascertainable, and if such time is not dd.. then tor a period extending back one-half (4) of the time elapsed since the last d tic 4 taltbration, but in no event Wither back than a period of six (6) months. If for any reason an' eicasuring equipment is out of service or out of repair so that the amount of water delivered c,uto as be a ‘certained ot computed from the reading thereof, the water delivered during the period such equipment is out of service or out of repair shall be estimated and agreed upon by the Pattie upon the basis of the best data available. For such purpose, the best data available shall be deemed to b, the registration of any check meter or meters if the same have been installed and a Jceuratek registering. Otherwise the amount of Process Water delivered during such period T he estimated ti by correcting the error if the percentage of the error is ascertainable by noon tests or mathematical calculation, or tilt by estimating the quantity of delivery by :nes ding he piceeding periods under similar conditions when the measuring equipment vi cn tk ing accurately sanme Pa Liquefaction may, at its option and expense, install and operate a check meter to che the ,IKasuring equipment installed by City, but the tneasurerrtent of Process Water for the purpose d ihis Agreement shall be solely by the City's measuring equipment, except in the cases vicrabo‘t , pecilically provided to the contrary. All such check meters shall be of standard n ato and ',hail be subject at all reasonable times to inspection and examination by any employee ot I ('it)., but the reading, calibration and adjustment thereof shall be made only by 5 of iqueftictiiiii. except during any period when a check meter may be used under the &n heof 1-(q measuring the amount of Process Water delivered, in which case the V( adi 1.!f(dit and adjustment thereof shall be made by City with like effect as if such , neter fr meters had been furnished or installed by City. 5 P meat 5.1„ ater Rate. Sabine Pass Liquefaction will pay the City for the volumes of Water delivered to it pursuant to this Agreement the City in-city water rate which is eurrently 1;4.85 per 1,000 gallons. Sabine Pass Liquefaction understands that the irTlicablv in-city water rate is governed d by Chapter 110 of the Code of Ordinances of the City of Port Arthur, On or before the City's fifth business day of each month , ltowing the commencement of delivery of Water under this Agreement, the City 11 read the meter referred to in Section 4 above and invoice Sabine Pass lueltiction tor the fee for Water delivered during the prior month. Except to the tent that it disputes an invoice, Sabine Pass Liquefaction will pay the invoice on or before the thirtieth (30 day after its receipt of the invoice; provided if such day is net a -City business day. Sabine Pass Liquefaction will pay the invoice on the next ; e bust-nese, day, In the event that all charges and bills are not paid as stated above, a I charge rate of ten percent will be added to the delinquent amount. 6 Force :Majeure o 1 Force Majeure Defined. Neither Party shall be liable to the other Party for any delay or failtilt: in performance under this Agreement if tmd to the extent such delay or failure is a result of Force Majeure. The term "Force Majeure" shall mean any act, event or arnstance whether of the kind described herein or otherwise, that is not reasonably v, anal the control of, does not result from the fault or negligence of, and would not have been avoided or overcome by the exercise of reasonable diligence by the Party claiming twee Majeure, Force Majeure may include circumstances of the following kind, pro\ /fled that such circumstances satisfy the definition of Force Majeure set forth above: I disturbances, unusually severe weather conditions, fires. explosions, the breakdown or hi, lure oF freezing of, breakage or accident to, or the necessity for rnaking repairs or e.',.terte ions to the Facilities, i; Notiee. Upon the occurrence of a Force Majeure event that prevents, interferes with or tsela‘. s the performance by a Party. in whole or in part, of any of its obligations under this 'kw( ement, the Party affected shall give notice thereof to the other Party describing such 0 IV And stating ihe obligations the performance of which are affected Mitigation. lin, Party affected by an event of Force Majeure shall take all commercially reaonable effitris to overcome or mitigate the effects of such event of Force Majeure. Prima to resumption of normal perfonnance„ the Parties shall continue to perform their obligat ions under this Agreement to the extent not prevented or delayed by such event of lone Majeitic. 6 of 11 tanntation and Liability. Sabine Pass Liquefaction recognizes and agrees that no tNt r damages shall attach to the City hereunder on account of any failure to accurately auncipiiie availability of water or because of actual failure of supply due to any damage to t.E e ticatment plants, equipment, pipelines. or facilities caused by vandalism, war, riot, ',1., lire restriction, strikes, inabilit: to procure supplies, Acts of God, weather related itinupo m. earthquakes or other causes beyond its control; provided that in the event of occurrence referred to in the preceding sentence. the City shall take all commercially ten-teneHe efforts w overcome or mitigate the effects of such occurrence. Prior to rct,.tinipt 9n of normal performance. the City shall continue to perform its obligations under I ,ligiment to the extent not prevented or delayed by such occurrence . eriuMation and Termination Rights Sabine Pass Liquefaction's Termination Rights. Sabine Pass Liquefaction shall t the Oght to terminate this Agreement for any reason including the convenience Sabine Pass Liquefaction by giving written notice to the City at any time prior to me 30, 2012 in addition, Sabine Pass Liquefaction shall have the right to terminate , Agreement by giving written notice to the City if at any time the City is in iterial breach of this Agreement and the City has failed to cure such breach within (30) days from the date it receives written notice of such breach from Sabine liquefaction, it's Termination Rights. "Inc City shall have the right to terminate this Agreement it Sabine Pass Liquefaction has not provided the Notice to Proceed by June 30, 2012. addition. the City shad have the right to terminate this Agreement by giving written to Sabine Pass Liquefaction if at any time Sabine Pass Liquefaction is in ruuterizti breach of this Agreement and Sabine Pass Liquefaction has failed to cure breach within thirty (30) days from the date it receives written notice of such ht,9ach from the City. Furthermore. the City may terminate this agreement by rot.iding to Sabine Pass Liquefaction a five (5) year written notice of such to initiation, In the event of termination, the City will provide Sabine Pass litelaction with a U30 pro-rata reimbursement of the costs of construction, based LEN , r1 the number of year remaining in the contract at the time of terinination. Upon :initiation of this Agreement, all of the City's rights, title, and interest in and its Itgations under this agreement shall terminate effective upon the expiration of the e year notice period, 8, 'Assigno ent. othei wise expressly provided herein, neither Party niay assign its rights or e:ohg,litet, under this Agreement without the prior written consent of the other Party. \o.v iths ending the foregoing Sabine Pass Liquefaction may assign its rights and obligations og th Agreement to an Affiliate or to its lenders as security for its obligations to its t„nders y ithout the prior written consent of City. However, Sabine Pass Liquefaction will tt City with notice of such assignment within ten (10) days. Upon the request of thlue ss liquefaoion's lenders or their agent, City shall enter into a form of consent and 7 Of L 1 a veers en- which is customary for financings, and in connection with any financing or iirr r re fit . of the Sabine Liquefaction Facility, City, shall, if so requested by Sabine Pass iqueracnon. deliver to Sabine Pass i,.:iquefaction ` s lenders or their agent certified copies of Charit resolutions, f nancial, statements. legal opinion, and such other items as such their agent may reasonably request, as such items may be available. Upon the _tit by Sabine Pass Liquefaction's transferee of an assignment and assumption of all Sir it P ;s Liquefaction's rights and obligations under this Agreement in a fonn reasonably to City. Sabine Pass Liquefaction shall be released and relieved of all obligations o ° under or m connection with this Agreement on or after the date of such assignment or Ulf pn' let esent tions and Warranties, . f l epresentatic ns and Warranties of City. . "Fhe City hereby represents and warrants to Sabine Pass Liquefaction that: 1. :rhe C:'ity is a horne rule municipality' of the State of Texas. The City has all requishe power and authority to conduct its business, own its properties and execute and deliver this Agreement. and perform its obligations hereunder in accordance with the terms hereof. 1.3. Ibis Agreement has been curly authorized, executed and delivered by a representative of the City who has the requisite power and authority to execute and deliver this Agreement in the name of and on behalf of the City. I .. "`his <1greernent constitutes the legal. valid and binding obligation of the City. enforceable- against the City in accordance with the terms and conditions hereof, ; 1 5. l he execution, delivery, and performance of this Agreement will not violate, or be in conflict with. or result in a material breach of, or constitute a default undo , any material agreement, order,` judgment, or decree to which the City is a party or by which the C hy" is bound. , 1 .6 1he parties acknowledge the City is not engaged in the water business and ry. not created to sell water outside the corporate limits of the City, however the City nsuar t to Section 552.001 of the Texas Local Government Code has the right and t ority to contract with Sabine Pass Liquefaction and other persons outside its , undarnes to permit them to connect with its water systems and to purchase water horn the City on terms the City considers to be in its best interest and the City has %'terrrrined that it is in the City's best interest to enter into this Agreement.. The City terewith expresses confdenee m its desire and ability to furnish sufficient water to r,eet the need of Sabine Pass Liquefaction; however. in the event there should ever «,use in the 'future an inabilit2, on the part of the City to furnish sufficient water to Sabine Pass Liquefaction, it is understood that so long as the City uses its best efforts h= do so, the t. :ity shall not be liable on account of any such inability. sofa Ill. Representations and Warranties of Sabine Pass Liquefaction 1 Sabine Pass Liquefaction hereby represents and warrants to the City that 1 1.1 1. Sabine Pass Liquefaction is a limited liability company validly existing and in good standing under the laws of the State of Delaware. Sabine Pass 1 iquetaction has all requisite limited liability company power and authority to conduct its business, own its properties and execute and deliver this Agreement and perforin its obligations hereunder in accordance with the terms hereof, 1 1,1 2 , l'hls Agreement has been duly executed and delivered on behalf of Sabine Pass Liquefaction and constitutes the legal, valid and binding obligation of Sabine Pass Liquctaction, enforceable against Sabine Pass Liquefaction in accordance with the terms hereof, 11 ,1 3. 'the execution, deliNery. and performance of this Agreement will not ‘dolate, or be in conflict I4A, ith, or result in a material breach of, or constitute a default under, any rnaterial agreement, order. judgment, or decree to which Sabine Pass Liquefaction is a party or by which Sabine Pass Liquefaction is bound, 1 \ attire of Agreement. This Agreement represents the entire understanding and agreement of the Parties and supersedes any prior communications, agreements and understandings ;sae Parties relating to the subject matter hereof. 1, Wahers; Amendments; Counterparts. This Agreement may not be modified, amended or aht ed , ,:ept 11:, a written instrument duly executed by both Parties. No failure or delay by icier 1 in exercising any right, power or privilege hereunder shall operate as a waiver 'our shall any single or partial exercise thereof preclude any other or further exercise o! the exercise of any right, pow er or privilege hereunder. This Agreement may be - nad w wo counterpart originals, each of which shall constitute an original document. 3 Disputt Resolution, In the event of any dispute, controversy, or claim arising under or icliitatg '1/ this Agreement, the Parties agree to attempt in good faith to resolve such dispute, intro). rsy. or claim through negotiation or settlement for a period of thirty (30) days. If at ,c clitsiori of such thirty (30) day period the matter has not been resolved then, subject to seehor 15 heiovii, either Party may pursue any remedy in law or at equity to which it is croifec 4 Damages Neither Party shall be liable to the other Party for any consequential, incidental, c‘etriplary or punitive damages arising out of or related to this Agreement. In adithion neither Part N shall be liable to the other for any fees and expenses incurred in the oparot,i,n and negotiation of this Agreement, 411 3. 1 Notices,. Nit dez m mth. notices and other communications made pursuant to this Agreement Iali -.4 writing and delivered personally or mailed recorded delivery, postage prepaid, or ',till by 11 'simile, to the following. tlit'a Lists f r: .;ty. .Iie f,r Liquefaction. LLC City of Port Arthur '0, ) 'awn Street. Suite 800 444 4 Street o , w t(; Fi. IX 77002 Port Arthur, TX 7764 P Keith Teague, President Attn: City Attorney I: 713 Facsimi le: 409 983.8124 iµ;s„ . en by pet sonal delivery or mail shall be effective upon actual receipt. Notice given tac,i =ile shall be effective upon actual receipt if received during recipient's normal kx , iine s lours or at the beginning of recipient's next business day after receipt if not s e0:1‘4.-,1 dwing recipient's normal business hours. Any Party may change its address to hit k he given hereunder _h providing notice of the same in accordance with this 11(H °1° OF LAW; JtIRISDICTION, TRES AGREEMENT SHALL BE GOVERNED :t ,V CONSTRUED, AND THl; LEGAL RELATIONS BETWEEN THE PARTIES 1x 1.1_: 1ti., ENFOR(.E1). IN ACCORDANCE CI WITH THE LAWS OF THE S`I ATE OF 1 :., X AS I1011 GIVING EFFEC 110 PRINCIPLES CIPLES OF CONFLICTS OF LAW. THE \l 111w- I11 Ri < °I "C:0 FURTHER HER AC::IRI.1 11IAY1 ' THE PROPER JURISDICTION ANI) I . 11 W ANY CLAIMS. CA(.ISFS OF ACTION OR LITIGATION ARISING OUT OF 1111 A(JREFMHN `I` SIIA .,L ILL, JLIFERSON COUNTY, TEXAS. It) of I IN IA El ti res W 'HER,E0 , each of the Parties has caused this Agreement to be executed by t.,t _. ° t . glet.t k c, Bill),- authorized representatives as tbe date first written above. s. i N Pa , iquc;tiic1io City: sir,uu Pa-: =; i i uct Kctic r -c, t.l,C City of Port Arthur e E t o Nam , : ;- Name: Steve Fitzgibbons i 1:: �_- I Title: City Manager. City of Port Arthur Approved as to Form. 4 key. 1 1 i ,:::// t , to Marne: Val Tizeric 'title: City Attorney, City of Port Arthur 1i t1'i First Amended Contract FIRST AMENDMENT TO WATER SERVICE AGREEMENT This FIRST AMENDMENT TO WATER SERVICE AGREEMENT (this "Amendment "), dated as of this 1'2 day of . . , 2012, is made by and between Sabine Pass Liquefaction, LLC, a Delaware limited liability company with offices at 700 Milam Street, Suite 800, Houston, Texas 77002 ( "Sabine Pass Liquefaction ") and City of Port Arthur, a home rule municipality located at 444 4 Street, Port Arthur, TX 77640 ( "City "). Sabine Pass Liquefaction and the City may be referred to herein together as the "Parties" and each may be referred to individually as a "Party ". RECITALS WHEREAS, Sabine Pass Liquefaction and the City are parties to that certain WATER SERVICE AGREEMENT (the "Agreement ") dated December 21, 2011, under which Sabine Pass Liquefaction will purchase potable water for the Sabine Liquefaction Facility; WHEREAS, the City and Sabine Pass Liquefaction desire to amend the Agreement in the manner set forth herein; NOW THEREFORE, for good and valuable consideration and for the mutual covenants contained herein, the receipt and sufficiency of which is hereby acknowledged by the Parties, Sabine Pass Liquefaction and the City hereby agree as follows: OPERATIVE PROVISIONS: 1. Defined Terms. Capitalized terms used in this Agreement and not otherwise defined herein shall have the same meanings given them in the Agreement. AMENDMENTS: 1. Subsection 3.2 of Section 3 (City Water System Enhancements) of the Agreement is hereby amended and restated to read in its entirety as follows: 3.2 Construction of Facility Enhancements. Promptly following the execution of this Agreement, Sabine Pass Liquefaction shall hire at Sabine Pass Liquefaction's cost an engineering firm to prepare and deliver to the City the proposed design, engineering plans and detailed cost estimate for the Facility Enhancements ( "Engineering Study "). The engineering firm will provide both the City and Sabine Pass Liquefaction a copy of the Engineering Study promptly following its completion/ Upon receipt of a notice to proceed with the construction of the Facility Enhancements from Sabine Pass (the "Notice to Proceed "), the City shall select an engineering firm to provide construction administration, and select the contractor for the construction of the Facility Enhancements based upon the City's standard procurement process as stated in Chapter 252 of the Texas Local 1 of 3 Government Code. The City shall also obtain all required permits, rights of way, authorizations and other rights related to the construction and operation of the Facility Enhancements and the delivery of Water to the Delivery Point. The current cost estimate for the Facility Enhancements is $20.6 million. This is a preliminary scope and estimate. Sabine Liquefaction will pay for the costs for the construction of the Facility Enhancements as delineated in the resolutions approved by the City Council awarding the construction contract and the construction administration contract; provided however, the City will not award these contracts until Sabine Pass Liquefaction has had the opportunity to review and approve the selections. Said payments shall be provided to the City prior to the commencement of construction. Said payments are non - refundable once the contracts have been awarded by the City. Any change orders to the above referenced contracts shall be reviewed and approved by Sabine Pass Liquefaction prior to approval and execution by the City, with payment to be made upon execution. 2. Subsections 7.1 and 7.2 of Section 7 (Termination and Termination Rights) of the Agreement are hereby amended and restated to read in their entirety as follows: 7.1 Sabine Pass Liquefaction's Termination Rights. Sabine Pass Liquefaction shall have the right to terminate this Agreement for any reason including the convenience of Sabine Pass Liquefaction by giving written notice to the City at any time prior to December 31, 2012. In addition, Sabine Pass Liquefaction shall have the right to terminate this Agreement by giving written notice to the City if at any time the City is in material breach of this Agreement and the City has failed to cure such breach within thirty (30) days from the date it receives written notice of such breach from Sabine Pass Liquefaction. 7.2 City's Termination Rights. The City shall have the right to terminate this Agreement if Sabine Pass Liquefaction has not provided the Notice to Proceed by December 31, 2012. In addition, the City shall have the right to terminate this Agreement by giving written notice to Sabine Pass Liquefaction if at any time Sabine Pass Liquefaction is in material breach of this Agreement and Sabine Pass Liquefaction has failed to cure such breach within thirty (30) days from the date it receives written notice of such breach from the City. Furthermore, the City may terminate this agreement by providing to Sabine Pass Liquefaction a five (5) year written notice of such termination. In the event of termination, the City will provide Sabine Pass Liquefaction with a 1130 pro -rata reimbursement of the costs of construction, based upon the number of years remaining in the contract at the time of termination. Upon termination of this Agreement, all of the City's rights, title, and interest in and its obligations under this agreement shall terminate effective upon the expiration of 180 days. 2 of 3 MISCELLANEOUS: Governing Law; Entire Agreement. This Agreement shall be enforced, in accordance with the laws of the state of Texas without giving effect to principles of conflicts of law. The venue of any claims, causes of action or litigation arising out of this agreement shall be Jefferson County, Texas. No Other Amendment. Except as amended by this Amendment, all other terms of the Agreement remain in full force and effect. IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed by their respective, fully authorized representatives as of the date first written above. Sabine Pass Liquefaction: City: Sabine P . - ac on, 1 C City of Port Arthur By: I uJLat. y q ac.,-,;(04.4,0, i , T., . Name: ' o r (� U l� Name: ©iU4 A. cbM tiy. Title: OP/ t Title: Gil iI / /,Adl 6E+2 3 of 3 P. R. NO. 17427 11/30/12 gt RESOLUTION NO. A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE THE SECOND AMENDMENT TO THE WATER SERVICE AGREEMENT BETWEEN SABINE PASS LIQUEFACTION, LLC AND THE CITY OF PORT ARTHUR WHEREAS, on December 13, 2011, the City Council authorized the City Manager to enter into a Water Service Agreement with Sabine Pass Liquefaction, LLC; and WHEREAS, on May 15, 2012, per Resolution No. 12 -231, the City Council authorized the First Amendment to the Water Service Agreement; and WHEREAS, Sabine Pass Liquefaction, LLC, has requested that the City authorize a Second Amendment to the Water Service Agreement as to the Delivery of Water, Construction of Facility Enhancements, First Phase Connection of Sabine Pass Liquefaction to the Delivery Points, and Completion of Facility Enhancements, in substantially the same form as attached hereto as Exhibit "A ". NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR: Section 1. That the facts and opinions in the preamble are true and correct. Section 2. That the City Manager is hereby authorized and instructed to execute the Second Amendment to the Water Service s.pr17427 Agreement with Sabine Pass Liquefaction, LLC, in substantially the same form as attached hereto as Exhibit "A ". Section 3. That a copy of the caption of this Resolution shall be spread upon the Minutes of the City Council. READ, ADOPTED, AND APPROVED, this day of December, 2012 A.D., at a Regular Meeting of the City Council of the City of Port Arthur, Texas by the following vote: AYES: Mayor: ; Councilmembers: NOES: Deloris "Bobbie" Prince, Mayor ATTEST: Sherri Bellard, City Secretary APPROVED AS 0 FORM: A Valeci i en• City Attorney APPROVED FOR ADMINISTRATION: Floyd T. Johnson, City Manager s.pr17427 EXHIBIT "A" s.pr17427 SECOND AMENDMENT TO WATER SERVICE AGREEMENT This SECOND AMENDMENT TO WATER SERVICE AGREEMENT (this `Amendment "), dated as of this day of , 2012, is made by and between Sabine Pass Liquefaction, LLC, a Delaware limited liability company with offices at 700 Milam Street, Suite 800, Houston, Texas 77002 ( "Sabine Pass Liquefaction ") and City of Port Arthur, a home rule municipality located at 444 4 Street, Port Arthur, TX 77640 ( "City "). Sabine Pass Liquefaction and the City may be referred to herein together as the "Parties" and each may be referred to individually as a "Party ". RECITALS WHEREAS, Sabine Pass Liquefaction and the City are parties to that certain WATER SERVICE AGREEMENT (the "Original Agreement ") dated December 21, 2011, under which Sabine Pass Liquefaction will purchase potable water for the Sabine Liquefaction Facility, as amended by that certain FIRST AMENDMENT TO WATER SERVICE AGREEMENT, dated June 12, 2012 (the "First Amendment" and, together with the Original Agreement, the "Agreement "); WHEREAS, the City and Sabine Pass Liquefaction desire to further amend the Agreement in the manner set forth herein; NOW THEREFORE, for good and valuable consideration and for the mutual covenants contained herein, the receipt and sufficiency of which is hereby acknowledged by the Parties, Sabine Pass Liquefaction and the City hereby agree as follows: OPERATIVE PROVISIONS 1. Defined Terms. Capitalized terms used in this Agreement and not otherwise defined herein shall have the same meanings given them in the Agreement. 2. Section 2 (Water Delivery), first unnumbered paragraph (Delivery of Water) of the Original Agreement is hereby amended and restated in its entirety to read as follows: Delivery of Water. The City will deliver water meeting the City's standards for potable water ( "Water" to Sabine Pass Liquefaction at either one, or both, of the following two locations: (1) the location near the City's standpipe in the City's neighborhood of Sabine Pass (the "Standpipe Delivery Point "), or (2) the location near the base of the Highway 82 bridge which crosses Sabine Lake (the "Pleasure Island Delivery Point "). The Standpipe Delivery Point and the Pleasure Island Delivery Point shall each be delivery points for \\ water into the new Sabine Pass Liquefaction water lines through which Sabine Pass Liquefaction will deliver \A/ water to its Sabine Liquefaction Facility. Both delivery points shall be within the corporate limits of Port Arthur. Both delivery points may be referred to individually or collectively herein as the "Delivery Point ". 1 of 3 3. Subsection 3.2 (Construction of Facility Enhancements) of Section 3 (City Water System Enhancements) of the Original Agreement is hereby amended and restated in its entirety to read as follows: 3.2 Construction of Facility Enhancements. Promptly following the execution of this Agreement, Sabine Pass Liquefaction shall hire at Sabine Pass Liquefaction's cost an engineering firm to prepare and deliver to the City the proposed design, engineering plans and detailed cost estimate for the Facility Enhancements ( "Engineering Study "). The engineering firm will provide both the City and Sabine Pass Liquefaction a copy of the Engineering Study promptly following its completion. Upon receipt of a notice to proceed with the detailed engineering design of the Facility Enhancements ( "Detailed Engineering Design ") from both Sabine Pass Liquefaction and the City (the "Notice to Proceed with Detailed Engineering Design "), Sabine Pass Liquefaction shall direct the engineering firm to prepare the Detailed Engineering design, which shall be paid for by Sabine Pass Liquefaction. The engineering firm will provide both the City and Sabine Pass Liquefaction a copy of the Detailed Engineering Design promptly following its completion. Upon receipt of a notice to proceed with the construction of the Facility Enhancements from Sabine Pass Liquefaction (the "Notice to Proceed "), the City shall select an engineering firm to provide construction administration, and select the contractor for the construction of the Facility Enhancements based upon the City's standard procurement process as stated in Chapter 252 of the Texas Local Government Code. Construction may, upon agreement by Sabine Pass Liquefaction and the City, occur in phases, and Notice to Proceed may also be issued in corresponding phases. The City shall apply for all required permits, rights of way, authorizations and other rights related to the construction and operation of the Facility Enhancements and the delivery of Water to the Delivery Point, with all application and permit fees to be paid by Sabine Pass Liquefaction. Sabine Liquefaction will pay for the costs for the construction of the Facility Enhancements as delineated in the resolutions approved by the City Council awarding the construction contract and the construction administration contract; provided however, the City will not award these contracts until Sabine Pass Liquefaction has had the opportunity to review and approve the selections. Said payments shall be provided to the City prior to the commencement of construction. Said payments are non - refundable once the contracts have been awarded by the City. Any change orders to the above referenced contracts shall be reviewed and approved by Sabine Pass Liquefaction prior to approval and execution by the City, with payment to be made upon execution. 4. New Subsection 3.3 of Section 3 (City Water System Enhancements) of the Original Agreement is hereby added to read in its entirety as follows: 3.3 First Phase Connection of Sabine Pass Liquefaction to the Delivery Points. Upon execution of this Agreement and receipt of permits as may be required, and prior to Notice to Proceed with Detailed Engineering Design, Sabine Pass Liquefaction shall construct its new water line to connect to the City's water system at the Standpipe Delivery Point and the Sabine Pass Liquefaction and the City shall add, at Sabine Pass 2 of 3 Liquefaction's cost, the facilities to enable the City to deliver and measure such deliveries of \Veater at this location. Sabine Pass Liquefaction and the City may also mutually I agree to install, at Sabine Pass Liquefaction's cost, the facilities required to enable the City to deliver and measure such deliveries of Wwater to Sabine Pass Liquefaction through its existing facilities at the Pleasure Island Delivery Point at this time. Additional facilities may be added at either or both of these locations after the Detailed Engineering Design has been completed and Notice to Proceed has been issued. 5. Subsection 3.3 (Completion of Facility Enhancements) of the Original Agreement is hereby renumbered to Subsection 3.4. 6. Subsections 7.1 and 7.2 of Section 7 (Termination and Termination Rights) of the Original Agreement are hereby amended and restated in their entirety to read as follows: 7.1 Sabine Pass Liquefaction's Termination Rights. Sabine Pass Liquefaction shall have the right to terminate this Agreement for any reason including the convenience of Sabine Pass Liquefaction by giving written notice to the City at any time prior to June 30, 2013. In addition, Sabine Pass Liquefaction shall have the right to terminate this Agreement by giving written notice to the City if at any time the City is in material breach of this Agreement and the City has failed to cure such breach within thirty (30) days from the date it receives written notice of such breach from Sabine Pass Liquefaction. 7.2 City's Termination Rights. The City shall have the right to terminate this Agreement if Sabine Pass Liquefaction has not provided the Notice to Proceed by June 30, 2013. In addition, the City shall have the right to terminate this Agreement by giving written notice to Sabine Pass Liquefaction if at any time Sabine Pass Liquefaction is in material breach of this Agreement and Sabine Pass Liquefaction has failed to cure such breach within thirty (30) days from the date it receives written notice of such breach from the City. Furthermore, the City may terminate this agreement by providing to Sabine Pass Liquefaction a five (5) year written notice of such termination. In the event of termination, the City will provide Sabine Pass Liquefaction with a 1130 pro -rata reimbursement of the costs of construction, based upon the number of years remaining in the contract at the time of termination. Upon termination of this Agreement, all of the City's rights, title, and interest in and its obligations under this agreement shall terminate effective upon the expiration of 180 days. 7. Governing Law; Entire Agreement. This Amendment shall be enforced, in accordance with the laws of the state of Texas without giving effect to principles of conflicts of law. The venue of any claims, causes of action or litigation arising out of this agreement shall be Jefferson County, Texas. 8. No Other Amendment. Except as amended by First Amendment and this Second Amendment, all other terms of the Original Agreement remain in full force and effect. 1 of 3 IN WITNESS WHEREOF, each of the Parties has caused this Amendment to be executed by their respective, fully authorized representatives as of the date first written above. Sabine Pass Liquefaction: City: Sabine Pass Liquefaction, LLC City of Port Arthur By: By: Name: Name: Title: Title: 2 of 3