AN ORDINANCE AUTHORTIZING THE MAYOR AND FISCAL OFFICER
OF THE VILLAGE TO EXECUTE A TEN (10) YEAR LEASE
AGREEMENT WITH SUBURBAN NATURAL GAS.

BE IT ORDAINED BY THE COUNCIL OF THE VILLAGE OF GRAND RAPIDS, COUNTY OF WOOD AND STATE OF OHIO:

SECTION 1: That the Mayor and Fiscal Officer are authorized to execute a ten-year Lease Agreement with Suburban Natural Gas in substantial accordance with the exhibit attached hereto and made a part hereof.

SECTION 2: This Ordinance shall take effect at the earliest time permitted by law.


Passed:  July 9, 2012

 

LEASE AGREEMENT
THIS AGREEMENT of lease made as of this 10th day of August, 2012, between the VILLAGE OF GRAND RAPIDS, a municipal corporation duly organized and existing under the laws of the State of Ohio and situated in Wood County in said State, herein referred to as Lessor, and SUBURBAN NATURAL GAS COMPANY, a corporation duly organized and existing under the laws of the State of Ohio with its principal office in Lewis Center, Ohio, herein referred to as Lessee.

WITNESSETH:
WHEREAS, Lessor owns a natural gas transmission and distribution system
constructed in accordance with plans and specifications approved by Council of Lessor on May 15, 1962, which are on file with the Council, herein referred to as the Utility; and

WHEREAS, Lessor, together with Suburban Fuel Gas, Inc. and the Ohio
Villages of McClure and Tontogany, executed a certain instrument designated "Deed and Indenture," dated as of August 1, 1962 (hereinafter referred to as "Indenture"), in which Suburban Fuel Gas, Inc. granted unto Lessor and said Villages certain rights-of-way and leases and reserved rights and providing, among other things, for the construction by said Villages of their respective parts of the gas system described therein, including the agreement of Lessor to construct the Utility which is part of said system, providing further for reciprocal rights of
Lessor and said Villages to receive gas through the lines of the others and the maintenance of such lines, which Indenture is incorporated herein by reference and made a part hereof; and
WHEREAS, said agreement was modified by Ordinance Number 88-14 of the Village of Grand Rapids, which is incorporated herein and made a part hereof; and

WHEREAS, Lessor and Suburban Fuel Gas, Inc. entered into a lease of the Utility which will expire on August 10, 2012 and desire to enter into a new lease to become effective on said expiration date; and

WHEREAS, Lessor's Council has determined that the interests of Lessor, its inhabitants, and others, within and without the corporate limits of Lessor, who are to be served with gas through the Utility (hereinafter sometimes collectively referred to as the "Consumers") can best be served by the leasing of said Utility to Lessee upon the terms and conditions herein set forth; and
WHEREAS, Lessee is in a position to furnish an adequate supply of gas for such purpose.

NOW, THEREFORE, Lessor lets and leases unto Lessee the Utility for a term of ten (10) years from the date hereof for the sole purpose of operating the
same so as to supply gas to the Consumers, including Lessor, subject to the following terms, conditions, and covenants:

1. Lessee will operate the Utility under the provisions of the applicable laws of the State of Ohio and in accordance with all lawful requirements imposed by the State of Ohio or any other lawfully-constituted authority and will indemnify Lessor against liability or penalty for any asserted violations thereof and will furnish as to all persons owning or occupying premises abutting the streets, alleys, public grounds, or rights-of-way in which are laid the pipelines of the Utility or any extensions of such lines which may hereafter be made, whether within or without the corporate limits of Lessor, and will efficiently maintain and operate the Utility.

2. Lessee shall keep the Utility, and every part thereof, in good condition, repair, and working order, replacing any part or parts thereof which may become worn out or injured by other suitable property of at least equal value and efficiency; provided, however, that with the consent of Lessor, Lessee may discontinue the use and operation of any property or equipment forming a
nonessential part of the Utility if it is no longer profitable to use and operate such property or equipment.

3. Lessee agrees to pay all ad valorem or other taxes, special assessments, and similar charges payable during the term of this Lease, becoming due and payable during the term of this Lease, which have or may at any time be levied, taxed, or assessed upon the Utility, including all interests in real property incidental thereto, the possession or operation thereof, the sale of gas or otherwise related to the Utility, and shall pay and hold Lessor harmless against any such taxes, including interest and penalties thereon, for which Lessor may become liable. Lessee also agrees to pay all claims or charges for or on account of water, light, heat, power, and any other service or utility furnished in connection with the Utility or any part thereof.

4. The rates which may be charged to the Consumers of gas from the Utility may be those fixed by Lessor from time to time, subject, however, to any right of the Lessee to apply or appeal to the Public Utilities Commission of Ohio to fix the applicable lawful rates. Lessor may designate a representative who shall be permitted by Lessee to participate informally in Lessee's rate-making deliberations before Lessee's next rate case.

5. With respect to the Consumers outside the municipal limits of Lessor who are served from the Utility, Lessee shall, by agreement with such Consumers, charge rates to them which are the same as the rates from time to time in effect for
the Consumers within Lessor's municipal limits.

6. Lessee agrees to sell and deliver to the Consumers the daily aggregate volume of 548,000 cubic feet of gas or such lesser amount as they may require at the rates and upon the terms and conditions as herein provided. In the event that this Lease shall for any reason be terminated, Lessee hereby agrees that, at Lessor's option, it will sell and deliver said volume of gas to Lessor or any other person, firm, or corporation which shall operate the Utility at a rate not to exceed by more than ten cents ($.10) per 1,000 cubic feet the cost of such gas to the Lessee, and at such point or points of delivery as Lessor may specify, provided that Lessee shall not be required to construct any pipeline to such point of delivery. The supply of gas as hereinabove provided shall at all times be subject to the valid laws, orders, rules, and regulations of duly-constituted authorities having jurisdiction.

7. Lessee at all times will procure and maintain at its expense insurance on the Utility of such kinds and in such amounts as shall accord with the practice of private companies engaged in the same type of business. All such insurance policies shall provide for the payment of any loss to the Lessor or as Lessor may designate, and the sole right to receive the proceeds of such insurance on the Utility and the right to collect and receipt for all claims thereunder shall be vested in Lessor or as otherwise designated by Lessor. Originals or duplicate originals of such policies shall be delivered to Lessor. In case Lessor shall at any time notify Lessee in writing that it disapproves of any insurance company or the terms of any policy, Lessee shall forthwith affect other insurance satisfactory to Lessor. In the event of damage to or partial or total destruction of any part of the premises covered by such insurance, Lessor, with the proceeds of the insurance and any other funds which may be lawfully made available, and with reasonable dispatch,
will repair, replace, or rebuild the property damaged or destroyed; provided that such repair, replacement, or rebuilding is essential to proper operation of the Utility. The obligation of Lessor so to repair, replace, or rebuild shall be limited to the proceeds of such insurance. Notwithstanding any other provision hereof, Lessee shall not be obligated to repair or replace any damaged or destroyed property if such damage or destruction is covered by insurance as provided above.

8. Lessee agrees to indemnify and hold Lessor harmless against any liability whatsoever because of accidents or injury to persons or property occurring in or related to the operation of the Utility by Lessee. Lessee also agrees that during the term of this Lease, it will procure and maintain public liability insurance and property damage insurance of such kinds and in such amounts as shall accord with the practice of private companies engaged in the same type of business.
Policies evidencing such insurance shall name Lessor as an insured, and originals or duplicate originals thereof shall be delivered to Lessor.

9. Lessee shall, not less than quarterly, report to Lessor (a) the aggregate volume of gas sold to the Consumers of the Utility located inside and outside the Village corporate limits based on the meter readings for any designated period, and (b) the nature, kind, character, and locations of substantial extensions to the lines of Lessor, together with the cost thereof. Lessor shall at all times have access to and opportunity for inspecting all records and accounts in any way pertaining to the ownership or operation of the Utility.

10. Upon request, Lessee shall promptly extend the lines of the Utility within the corporate limits of Lessor in order to reach any consumer which desires gas but, in no event, shall Lessee be required to extend such lines for a distance in excess of one hundred (100) feet for one consumer. Lessee shall have the right to construct any extensions or improvements to the Utility if it so desires. All extensions or improvements, including meters, made by Lessee shall immediately become the property of Lessor and subject to the terms of this Lease, except as provided in Ordinance No. 88-14 passed by the Council on July 11, 1988 which is incorporated herein and made a part hereof by this reference. At least quarterly, Lessee will update Lessor in writing of the physical system improvements so made and their location, in writing and delivered to the Village Fiscal Officer. Lessee will continue to install additional meters that may be necessary to measure the volume of gas supplied to such customer at its sole cost and expense, whether
located inside or outside the Lessor's corporate limits, with meters so installed on the Village's portion of the system to become the sole and absolute property of the Lessor.

11. For the purpose of constructing, erecting, maintaining, operating, and extending gas mains, meters, outlets, connections, manholes, and all other apparatus necessary or appropriate to the operations of the Utility, Lessee shall have the right to use streets, lanes, alleys, avenues, and other public thoroughfares, easements, licenses, and rights of Lessor, together with all necessary privileges thereto; provided, however, that in the maintenance, repair, or extension of said Utility, Lessee shall not unnecessarily interrupt or obstruct the use of any street, lane, alley, avenue, or public thoroughfare and, in connection with any such work, shall obtain such permits and approvals as may be required by the ordinance of Lessor. When any streets, lanes, alleys, avenues, or public thoroughfares are entered upon or facilities removed therefrom, Lessee shall restore the same to their original condition and shall clear all such places of dirt, obstructions, and anything that might constitute a nuisance or prevent such street, lane, alley, avenue, or public thoroughfare from being open and in repair. Such restoration to original condition shall be made by Lessee under the supervision and control of the appropriate official of Lessor.

12. Lessee, in the operation of the Utility, shall be entitled to exercise those rights of Lessor and does hereby assume and agree to be bound by those obligations of Lessor provided for in Sections 1, 2, 7, 8, 9, and 10 of the Indenture referred to in the preamble hereto and incorporated herein by reference, provided that all costs incurred by Lessee thereunder shall be recovered as provided in Paragraph 14 of this Lease. Lessee's rights hereunder shall be subject and subordinate to the grants and agreements made by Lessor in said Indenture. Lessee is and shall be bound by Tontogany's obligations under said Indenture in the same way and to the same degree as Tontongany was, including taking no actions that cause the availability of gas to Lessor to fall below 548,000 cubic feet per day. Further, each party hereto will permit the other to use the transmission and distribution system without charge pursuant to the July 1988 agreement between the parties in the event that this Lease is terminated for any reason.

13. Lessee's obligations to repair, maintain, replace, and/or extend the Utility or any portion thereof are conditioned on and subject to Lessor's obligation to pay or reimburse Lessee for any costs incurred by Lessee which have not been recovered by Lessee through rates upon the expiration, cancellation, or termination of this Lease. Except for any improvements necessary for safety reasons, as determined in Lessee's sole discretion, any improvements to the Village's portion of the system contemplated by Lessee the cost of which will not be recoverable
prior to the termination of this Lease shall first be approved by Lessor's Village Council, which approval will not be unreasonably withheld.

14. Lessee will not, without the prior written consent of Lessor, sell, assign, or pledge this Lease or any of its rights or obligations hereunder or sublease or permit the use by others of any of the property covered by this Lease.

15. Lessor shall at all times have the right to sell, assign, mortgage, pledge, or otherwise encumber all or any of its rights under this Lease and reserves unto itself the right to mortgage, pledge, and otherwise encumber the Utility in preference to the rights of Lessee in order to secure the payment of obligations incurred in order to construct, complete, replace, or extend the Utility, or any part thereof. Lessee's rights hereunder shall be subject and subordinate to the lien of a mortgage or any other encumbrance given or to be given by Lessor for such purpose. This Lease Agreement shall inure to the benefit of and be binding upon the successors and assigns of Lessor and of Lessee in the event that Lessor shall consent to assignment by Lessee as provided above.

16. Lessor, its successors or assigns, by notice in writing to Lessee, may cancel this Lease, or any extension thereof, in the event (a) Lessee is adjudged insolvent or bankrupt and a receiver or trustee is appointed for Lessee or its property; Lessee makes an arrangement for the benefit of creditors; Lessee becomes insolvent; or a petition is filed by or against Lessee pursuant to any of the provisions of the United States Bankruptcy Act, as amended, for the purpose of adjudicating Lessee a bankrupt or for reorganization of Lessee, or for the purpose of effecting a composition of rearrangement with Lessee's creditors, and such petition is not dismissed within sixty (60) days, or (b) of any other violation of any of the terms, conditions, or covenants of this Lease by Lessee and the failure of Lessee to cure such violation within sixty (60) days from the giving of written notice thereof by Lessor, its successors or assigns to Lessee. Upon the expiration, termination, or cancellation of this Lease, Lessor, its successors or assigns, shall have the right to invoke any remedy permitted by law or in equity for the protection of its interests hereunder; and Lessee hereby expressly waives all rights which it may have to redeem or to be served with any further notice of the intention to cancel or terminate this Lease other than as herein provided. In the event of sale of the Utility upon foreclosure under a mortgage or any other encumbrance placed on the Utility to which Lessee's rights hereunder are subject and subordinate, the purchaser shall have the option to terminate this Lease Agreement in its entirety upon written notice to Lessee given within one (1) year after confirmation of the sale by the court having jurisdiction, provided that such notice may fix as the termination date the date of such notice or any other date within two (2) years following the date of such notice.

17. Notices hereunder shall be in writing and shall be considered duly delivered when mailed by certified mail to the post office address of Lessor or Lessee, as the case may be, or at such other address as either may designate by formal written notice. Until so changed, notices to Lessor shall be addressed to the Village Fiscal Officer of Lessor; and notices to Lessee shall be addressed to its President at 2626 Lewis Center Road, Lewis Center, OH 43035-9206.
IN WITNESS WHEREOF, we have hereunto set our hands as of the day and year first above written.

Signed and acknowledged in VILLAGE OF GRAND RAPIDS, OHIO the presence of:
By: Marjory Obermyer, Mayor
By: Karen Rader, Fiscal Officer
as to the Village of Grand Rapids

Signed and acknowledged in SUBURBAN NATURAL GAS COMPAY the presence of:
By: David L. Pemberton, Jr., President
By: Sally A. Phillips, Secretary
as to Suburban Natural Gas Company

  

 
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