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HomeMy WebLinkAbout06741 ORD - 12/28/1962IMS:aKH:12 -28 -62 AN ORDINANCE AUTHORIZING AND DIRECTING THE CITY MANAGER TO EXECUTE, FOR AND ON BEHALF OF THE CITY, A COLLATERAL AGREEMENT BETWEEN HOUSTON NATURAL GAS CORPORATION, CORPUS CHRISTI MUNICIPAL GAS CORPORATION AND THE CITY OF CORPUS CHRISTI, A COPY OF WHICH IS ATTACHED HERETO AND MADE A PART HEREOF, SO AS TO PROCEED WITH THE CLOSING OF THE SALE OF THE SYSTEM UNDER THE CONTRACT OF SALE HERETOFORE EXECUTED BY SAID PARTIES, AND DECLARING AN EMERGENCY. WHEREAS, IT IS DEEMED NECESSARY TO ENTER INTO AN AGREEMENT • TO PROVIDE FOR A PROCEDURE FOR THE HANDLING OF THE PROPERTIES IN THE EVENT FINAL CONSUMMATION OF THE CONTRACT OF SALE NOW IN EXISTENCE BETWEEN THE HOUSTON NATURAL GAS CORPORATION, CORPUS CHRISTI MUNICIPAL GAS CORPORA- TION AND THE CITY OF CORPUS CHRISTI IS PREVENTED: NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI, TEXAS: SECTION 1. THE CITY MANAGER BE, AND HE IS HEREBY, AUTHORIZED TO EXECUTE, FOR AND ON BEHALF OF THE CITY, A COLLATERAL AGREEMENT BETWEEN HOUSTON NATURAL GAS CORPORATION, CORPUS CHRISTI MUNICIPAL GAS CORPORATION AND THE CITY OF CORPUS CHRISTI, A COPY OF WHICH IS ATTACHED HERETO AND MADE A PART HEREOF, SO AS TO PROCEED WITH THE CLOSING OF THE SALE OF THE SYSTEM UNDER THE CONTRACT OF SALE HERETOFORE EXECUTED BY SAID PARTIES. SECTION 2. THE NECESSITY FOR SETTING UP A PROCEDURE FOR THE HANDLING OF GAS SYSTEM PROPERTIES IN CASE OF AN OCCURRENCE OF EVENTS RECITED IN THE COLLATERAL AGREEMENT MENTIONED ABOVE SO AS TO FACILITATE THE CONSUMMATION OF THE GAS SALES CONTRACT WITHIN THE TIME AND TERMS PROVIDED IN SAID CONTRACT CREATES A PUBLIC EMERGENCY AND AN IMPERATIVE PUBLIC NECESSITY REQUIRING THE SUSPENSION OF THE CHARTER RULE THAT NO ORDINANCE OR RESOLUTION SHALL BE PASSED FINALLY ON THE DATE OF ITS INTRODUCTION AND THAT SUCH ORDINANCE OR RESOLUTION SHALL BE READ AT THREE SEVERAL MEETINGS OF THE CITY COUNCIL, AND THE MAYOR HAVING DECLARED SUCH 67411 0* 1 1 A EMERGENCY AND NECESSITY TO EXIST, HAVING REQUESTED THE SUSPENSION OF SAID CHARTER RULE AND THAT THIS ORDINANCE BE PASSED FINALLY ON THE DATE OF ITS INTRODUCTION AND THAT THIS ORDINANCE TAKE EFFECT AND BE IN FULL FORCE AND EFFECT FROM AND AFTER ITS PASSAGE, IT IS ACCORDINGLY SO ORDAINED THIS THE 28TH DAY OF DECEMBER, 1962. ATTEST: O AYOR THE CITY OF CORPUS CHRISTI' XIS CITY SECR'TA APPROVED AS TO LEGAL FO THIS THE 28TH DAY OF DECEMBER, 1962: Q�'Lv CITY ATTORNEY COLLATERAL AGREEMENT THE STATE OF TEXAS ) COUNTY OF NUECBS THIS COLLATERAL AGREEMENT, made and entered into December 28, 1962, between HOUSTON NATURAL GAS CORPORATION, a corporation organized and existing under and by virtue of the laws of the State of Texas, with its principal office in Houston, Harris County, Texas, hereinafter called "Houston Natural'; the CITY OF CORPUS CHRISTI, TEXAS, Nueces County, a municipal corporation, hereinafter sometimes called the "City "; and CORPUS CHRISTI MUNICIPAL GAS CORPORATION, a nonprofit corporation organized and existing under and by virtue of the laws of the State of Texas, hereinafter some- times called "Municipal Gas"; W I T N E S S E T H: WHEREAS, Houston Natural, the City, and Municipal Gas, on November 28, 1962 entered into a "Contract of Sale ", since amended, (said Contract of Sale as amended hereinafter referred to as the "Contract of Sale ") providing for, among other things, the sale by Houston Natural to either the City or Municipal Gas of the System as described therein (all references herein to the "System" being the same as the "System" in said Contract of Sale); WHEREAS, it has been agreed that Municipal Gas rather than the City is to be the "Buyer" under the Contract of Sale; WHEREAS, a law suit numbered 78,015 -C and entitled Robert T. Rylee II v. City of Corpus Christi, Corpus Christi Municipal Gas Corporation, and Houston Natural Gas Corporation has been filed in the 94th District Court of Nueces County, Texas attacking the validity of the transactions contemplated by the Contract of Sale and other law suits attacking the validity of all or part of the transactions contemplated by the Contract of Sale may be instituted; • WHEREAS, IN VIEW THEREOF, AND TO INDUCE SELLER TO PRO- CEED WITH CLOSING OF THE SALE OF THE SYSTEM NOTWITHSTANDING THE EXISTENCE OF SUCH LITIGATION, MUNICIPAL GAS AND CITY HAVE AGREED WITH SELLER TO ENTER INTO THIS COLLATERAL AGREENEINT INCIDENT TO AND AS A PART OF THE CLOSING OF THE SALE OF THE SYSTEM TO MUNICIPAL GAS) Wd, THEREM, FOR AND IN CONSIDERATION OF THE MUTUAL COVENANTS HEREIN CONTAINED, THE EXECUTION SIMULTANEOUSLY HEREWITH OF OTHER DOCUMENTS CONCERNING THE SYSTEM, AND OTHER VALUABLE CON- SIDERATIONS SET FORTH HEREIN, THE PARTIES AGREE AS FOLLOWS1 1. ALL TERMS USED HEREAFTER AND NOT PREVIOUSLY DEFINED HEREIN SHALL HAVE THE SANE MEANING AS IN THE INDENTURE OF MORTGAGE AND DEED OF TRUST DATED DECEMBER 15, 196E BETWEEN MUNICIPAL GAS AND CORPUS CHRISTI STATE NATIONAL BANK, TRUSTEE. II. IF AT ANY TIME PRIOR TO JANUARY 1, 1956 ANY COURT OF COMPETENT JURISDICTION HAS ISSUED ANY FINAL JUDGMENT, DECREE, OR ORDER, NOT SUBJECT TO FURTHER APPEAL, HOLDING THAT ANY OF THE BONDS OR ADDITIONAL BONDS ARE UNENFORCEABLE, IN WHOLE OR IH PART, THEN HOUSTON NATURAL SMALL HAVE THE ELECTION, TO BE EXERCISED BY GIVING NOTICE IN WRITING TO MUNICIPAL GAS AT ANY TIME BEFORE JANUARY 31, 1956, TO RESCIND THE SALE OF THE SYSTEM TO MUNICIPAL GAS AND ALL AGREEMENTS, CONTRACTS, AND CONVEYANCES BETWEEN THE PARTIES HERETO ENTERED INTO OR DELIVERED INCIDENT TO THE SALE OF THE SYSTEM, OR TO PURSUE ITS OTHER REWEOIES_INC,LUDING THOSE UNDER THE AFORESAID INDENTURE OF MORTGAGE AND DEED DF TRUST) PROVIDED, "VER, THAT IF CITY OR MUNICIPAL GAS CAN, BY A PROCEDURE SET WORTH ON THE DECREE OF THE COURT OR,OTHERW /SE, TAKE ACTION BY THE EXERCISE OF REASONABLE DILIGENCE WITHIN SIX MONTHS FROM THE DATE OF SUCH NOTICE BY HOUSTON NATURAL WHICH WILL RESULT IN EITHER CITY OR MUNICIPAL GAS BEING ABLE TO CARRY OUT THE TRANSACTIONS CONTEN° PLATED BY THE CONTRACT OF SALE, THEN CITY.OR MUNICIPAL GAS, AS THE CASE MAY SE,.WtLL USE DUE DILIGENCE TO TAKE SUCH ACTION AND IF, AS ®am a result of such action, either City or Municipal Gas will be able to carry out the transactions contemplated by the Contract of Sale, and if Municipal Gas and City execute a supplemental agreement as described in Article III hereof, then this right of rescission granted in this Collateral Agreement shall cease to exist. III. In the event of the existence of the situation as set forth in the proviso clause of Article II hereof, the parties hereto hereby agree to a supplemental contract in all respects identical to the Contract of Sale except for (i) reducing the purchase price of the System by the amount of principal of the Bonds or Additional Bonds theretofore paid, (11) suitable adjust- ment of dates to make the rights and duties accrue and continue under the supplemental contract as near as practical to the times they would have accrued and existed under the Contract of Sale, (iii) suitable adjustment made necessary by the fact that the System has already been conveyed, and (iv) modifications which may be necessary to comply with the decree of the court as set forth in Article II hereof; provided, however, that such modifications shall not result in a reduction of the total consideration for the System as now provided in the Contract of Sale. N. In the event Houston Natural gives notice of its right of rescission as provided herein and a sale connot be consummated under the procedure set forth in Articles II and III above, the rescission shall be promptly accomplished as follows: A. Houston Natural shall repay to Municipal Gas the purchase price paid by Municipal Gas for the System and shall deliver to Municipal Gas all of the Bonds and Additional Bonds then outstanding. B. Municipal Gas shall pay to Houston Natural the money it received for all Bonds and Additional Bonds. -3- 0 0 C. All assets of Municipal das, subject to all its liabilities, such assets to include all money in the Revenue Fund, Operating Fund, Interest and Sinking Fund, Reserve Fund, and Ex- tension and Redemption Fund shall be promptly paid to Houston Natural which amount of money together with all payments of prin- cipal and interest theretofore made on any of the Bonds and Addi- tional Bonds is here agreed to be a reasonable rental for the System while held by Municipal Gas. D. Municipal Gas and Houston Natural will terminate the Gas Sales Agreement of 1962 entered into of even date herewith without prejudice to the right of either party thereto to collect any amounts then due it under the Gas Sales Agreement of 1962. E. The parties hereto will terminate all obligations and rights under the Contract of Sale as may have survived this closing. F. Municipal Gas shall reconvey to Houston Natural the System (plus all extensions and additions thereto, if any, paid for out of any fund required or created by the Indenture of Mort- gage and Deed of Trust, plus the additional property referred to in Article III B of the Contract of Sale, if any has been then acquired by Municipal Gas, less the accounts receivable included in the System, plus all accounts receivable from customers served by the System at the time of the reconveyance) free and clear of all mortgages, liens, and encumbrances whatsoever except as existed on the date hereof. City agrees to enter into such reconveyance to the extent of its interest in the property to be reconveyed. G. The parties hereto shall cause to be canceled the Indenture of Mortgage and Deed of Trust between The First State Bank of Corpus Christi, Trustee, and Municipal Gas. H. Municipal Gas shall terminate whatever franchise it has to use the public streets of the City for constructing, main- taining, or operating natural gas pipelines../%4e I. All books and records of Municipal Gas pertinent to the operation of the System shall be delivered to Houston Natural. -4- J. EACH PARTY SHALL PAY ITS OWN EXPENSE$ INCIDENT TO THE RESCISSION EXCEPT THAT MUNICIPAL GAS SHALL PAY THE COST OF ALL DOCUMENTARY AND OTHER TRANSFER STAMPS AND RECORDING FEES IN CON- NECTION THEREWITH AND SHALL ALSO PAY ANY CHARQES OR TRANSFER FEES REQUIRED FOR OBTAINING CONSENTS TO THE A581GUMENT TD HOUSTON NATURAL OR ANY NECESSARY ADDITIONAL ASSIGNMENTS OR TRANSFERS OF TITLE TO HOUSTON NATURAL OF ANY OF THE INDIVIDUAL PROPERTIES INCLUDED IN THE PROPERTIES IN THE SYSTEM. ALL AD VALOREM OR PROPERTY TAXES APPLICABLE TO THE SYSTEM AND ANY RENTAL ON ANY LEASE INCLUDED IN THE SYSTEM SHALL BE PRO RATED BETWEEN MUNICIPAL GAS AND HOUSTON NATURAL AS OF THE DATE OF THE RECONVEYANCE OF THE SYSTEM. MUNICIPAL GAS WILL PAY ALL GROSS RECEIPTS TAXES OR OTHER TAXES MEASURED BY SALES OR DELIVERIES OF GAS THROUGH THE SYSTEM INCURRED OR ACCRUING DOWN TO THE DATE OF SUCH RECONVEYANCE. K. HOUSTON NATURAL AND MUNICIPAL GAS WILL TERMINATE THE LEASE, IF ANY' REFERRED TO IN ARTICLE XX OF THE CONTRACT OF SALE WITHOUT PREJUDICE TO THE RIGHT OF MUNICIPAL GAS TO COLLECT ANY AMOUNTS THEN .DUE IT UNDER THE LEASE FROM HOUSTON NATURAL. (THERE SHALL BE NO RHCONVEYANCE OF ANY MISCELLANEOUS PROPERTY DESCRIBED IN ARTICLE III A OF THE CONTRACT OF SALE.) it IF AT ANY TIME AFTER JANUARY 1, 1966 AND WHILE THERE STILL REMAINS UNPAID ANY OF THE INTEREST AND PRINCIPAL OF THE BONDS AND ADDITIONAL BONDS, ANY COURT OF COMPETENT JURISDICTION HAS ISSUED ANY FINAL JUDGMENT, DECREE, OR ORDER, NOT SUBJECT TO FURTHER APPEAL,, HOLDING THAT ANY OF THE BONDS OR ADDITIONAL BONDS ARE UNENFORCEABLE IN WHOLE OR IN PART, MUNICIPAL GAS IS NEVERTHELESS FIRMLY AND UN- CONDITIONALLY OBLIGATED TO REPAY TO HOUSTON NATURAL (OR ITS SUCCESSORS AS HOLDERS OF THE BONDS AND ADDITIONAL BONDS' THE ENTIRE AMOUNT OF THE CASH PAID BY HOUSTON NATURAL FOR THE BONDS AND ADDITIONAL BONDS, -5- TOGETHER WITH INTEREST THEREON AT THE MAXIMUM RATE PERMITTED BY LAW, (LESS ANY CREDITS RESULTING FROM PAYMENTS THERETOFORE MADE ON THE BONDS AND ADDITIONAL BONDS), AND MUNICIPAL GAS FIRMLY AND UNCONDITIONALLY OBLIGATES ITSELF TO MAKE SUCH REPAYMENT UPON DEMAND BY SUCH PARTY OR PARTIES ENTITLED TO RECEIVE SAME MADE AT ANY TIME AFTER FINAL DETERMINATION OF THE INVALIDITY OR UNENFORCEABILITY OF THE BONDS AND ADDITIONAL BONDS, AND MUNICIPAL GAS EXPRESSLY AGREES THAT ITS OBLIGATION TO ,MAKE SUCH REPAYMENT SHALL BE FULLY SECURED BY THE LIENS AND ASSIGNMENTS GRANTED AND CREATED UNDER AND BY VIRTUE OF THE INDENTURE OF MORTGAGE AND DEED OF TRUST, AND THAT THE INDENTURE OF MORTGAGE AND DEED OF TRUST MAY BE FORECLOSED IN ANY LAWFUL MANNER UPON THE DEFAULT OF MUNICIPAL GAS IN MAKING SUCH REPAYMENT. dl THE RIGHTS HEREIN GRANTED TO HOUSTON NATURAL OR OTHER HOLDER OF THE BONDS AND ADDITIONAL BONCSARE IN ADDITION TO AND CUMU- LATIVE OF ALL OTHER RIGHTS AND REMEDIES TO WHICH It OR THEY MAY BE ENTITLED IN THE EVENT OF ANY ATTACK UPON THE VALIDITY OR ENFORCEABILITY OF THE BONDS OR ADDITIONAL BONDS EXISTING EITHER UNDER THE COMMON LAW, AT EQUITY, UNDER THE TERMS OF THE INDENTURE OF MORTGAGE AND DEED OF TRUST, OR OTHERWISE. IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS INSTRUMENT TO BE DULY EXECUTED IN MULTIPLE ORIGINALS. HOUSTON NATURAL, GAS CORPORATION ATTEST* BY SECRETARY CORPUS CHRISTI MUNICIPAL GAS CORPORATION ATTEST* BY CITY OF CORPUS CHRISTI, TEXAS ATTEST* BY CITY MANAGER CITY SECRETARY APPROVED* DIRECTOR OF FINANCE AS TO LEGAL FORM CITY ATTORNEY CORPUS CHRISTI EXAS _60 DAY OF l 9_ TO THE MEMBERS OF THE CITY COUNCIL CORPUS CHRISTI, TEXAS FOR THE REASONS SET FORTH IN THE EMERGENCY CLAUSE OF THE FORE- GOING ORDINANCE, A PUBLIC EMERGENCY AND IMPERATIVE NECESSITY EXIST FOR THE SUSPENSION OF THE CHARTER RULE OR REQUIREMENT THAT NO ORDINANCE OR RESOLUTION SHALL BE PASSED FINALLY ON THE DATE IT IS INTRODUCED, AND THAT SUCH ORDINANCE OR RESOLUTION SHALL BE READ AT THREE MEETINGS OF THE CITY COUNCIL; I, THEREFORE, HEREBY REQUEST THAT YOU SUSPEND SAID CHARTER RULE OR REQUIREMENT AND PASS THIS ORDINANCE FINALLY ON THE DATE IT IS INTRODUCED, OR AT THE PRESENT MEETING OF THE CITY COUNCIL. RESPECTFULLY, THE CHARTER RULE WAS SUSPENDED BY THE FOLLOWING VOTE: BEN F. MCDONALD TOM R. SW4NTNER ^� DR. JAMES L. BARNARD JOSE R. DELEON M. P. MA LDONADO W. J. ROBERTS JAMES H. YOUNG THE ABOVE ORDINANCE WAS PASSED BY THE FOLLOVIN VOTE: BEN F. MCDONALD TOM R. SWANTNER DR. JAMES L. BARNARD JOSE R. DELEON M. P. MA LDONADO W. J. ROBERTS JAMES H. YOUNG