EXHIBIT 10.72
GAS SALES AGREEMENT
This Agreement is made and entered into as of the 26th of
March, 1992 by and between YANKEE GAS SERVICES COMPANY, a
Connecticut corporation ("Buyer"), and AQUILA ENERGY MARKETING
CORPORATION, a Delaware corporation ("Seller"), both Buyer and
Seller sometimes referred to collectively as "Parties" or
singularly as "Party".
I. Definitions
1.1 "Agreement" means the provisions of this document and
those contained in Exhibit "All attached hereto, as such may be
amended from time to time.
1.2 "Btu" (British Thermal Unit) means the amount of heat
energy required to raise the temperature of one avoirdupois pound
of water from fifty-nine-degrees Fahrenheit (59oF) to sixty degrees
Fahrenheit (60oF) , as determined on a dry basis.
1.3 "Contract Year" shall mean a period of twelve (12)
consecutive months from the first day of the first month following
the date of first deliveries of Gas under this Agreement, and
annually thereafter.
1.4 "Delivery Point(s)" shall be the point or points
identified in Exhibit "All hereto, and shall include both Primary
Delivery Point(s) and Secondary Delivery Point(s).
1.5 "Demand Charge" shall have the meaning as set forth in
Article V herein.
1.6 "FERC" means the Federal Energy Regulatory Commission or
any successor government authority.
1.7 "Gas" or "Natural Gas" means the effluent vapor stream
(including Liquid Hydrocarbons) in its natural state produced from
wells, including all hydrocarbon and nonhydrocarbon constituents
and including casinghead gas produced with crude oil, residue gas
resulting from the processing of gas well gas or casinghead gas,
liquified natural gas (LNG) in either liquid or vapor phase, gas
redelivered from storage fields or wells, or propane.
1.8 "Index Price" shall have the meaning as set forth in
Article V herein.
1.9(a) "Liquefiable Hydrocarbons" means any hydrocarbons
contained in the vapor phase of the Gas stream which can be
liquefied and extracted from the Gas by means of lean oil
processing, cryogenic processing, or other means, and shall in
any case mean natural gasoline (iso-pentanes plus heavier
hydrocarbons), butane, propane, and ethane and entrained methane.
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(b) "Liquid Hydrocarbons" means any hydrocarbons which, in
their natural state, are liquids and which shall include any
Liquefiable Hydrocarbons that condense out of the Gas stream during
production or transportation.
1.10 "Maximum Daily Quantity" or "MDQ" means ******** of Gas
per day, plus fuel requirements to deliver Gas from the Delivery
Point(s) to Buyer's city-gate stations as imposed by Tennessee
under its FERC-approved tariff, as such may be revised from time to
time.
1.11 "MMBtu" means one million (1,000,000) Btu.
1.12 "Monthly Nominated Quantity" shall have the meaning set
forth in Paragraph 2.2(a) herein.
1.13 "Primary Delivery Point(s)" shall be as set forth in
Paragraph 4.1 herein.
1.14 "Secondary Delivery Point(s)" shall be as set forth in
Paragraph 4.1 herein.
1.16 "Transporter" means the pipeline(s) transporting the Gas
delivered under this Agreement from the source of supply to the
Delivery Point(s).
1.17 "Tennessee" means Tennessee Gas Pipeline Company.
II. Quantity
2.1 Subject to the other provisions of this Agreement, Seller
shall sell and deliver and Buyer shall purchase and receive, on a
firm basis, the MDQ, which includes such additional quantities of
Gas as may be necessary to account for fuel requirements to deliver
Gas from the Delivery Point(s) to Buyer's city-gate stations as
imposed by Tennessee under its FERC-approved tariff, as such may be
revised from time to time. If the Parties mutually agree to a
quantity in excess of the MDQ, then such quantity shall be
delivered and received on a fully interruptible basis.
2.2(a) On or before five (5) business days prior to the
earlier of the first-of-the-month nomination deadline for
Transporter or Tennessee, Buyer shall notify Seller of the daily
quantity of Gas to be purchased, up to the MDQ, by Buyer from
Seller for the coming month (the "Monthly Nominated Quantity"). To
the extent practicable, deliveries and receipts of Gas shall be at
uniform hourly and daily rates of flow.
2.2(b) Buyer shall have the right during a month to
purchase a ******** by nominating to Seller, in accordance with
Paragraph 2.2(a), a Monthly Nominated Quantity ********.
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2.2(c) Buyer may ******** from Seller during a month by
providing Seller at any time with notice of Buyer's intention to
******** at least ******** full business days prior to Tennessee's
nomination deadline to implement such changes; provided, however,
that if Buyer ******** as provided herein, such a ******** shall be
treated as a failure to purchase and receive the Monthly Nominated
Quantity. Buyer's notice to ******** shall include a good faith
estimate of the duration of such ******** and a statement of the
reason for such ********. At any time during a month, Buyer may
******** from Seller, up to the MDQ, by providing Seller with
notice of Buyer's request to ******** at least two (2) full
business days prior to Tennessee's nomination deadline to implement
such changes. Any such ******** from the Monthly Nominated
Quantity shall be priced in accordance with Paragraph-5.1(B)(ii).
2.3 Buyer and Seller shall cooperate to ensure that
nominations are timely made to Transporter and that such
nominations reflect the actual expected deliveries and receipts.
Seller shall be responsible for nominations upstream from the
Delivery Point(s) and Buyer shall be responsible for nominations
downstream from the Delivery Point(s), unless Seller is delegated
or assigned any of Buyer's rights under Buyer's firm transportation
agreements with Tennessee, in which case, Seller shall be
responsible for nominations pursuant to such delegation or
assignment.
2.4 If either Party becomes aware of any reason why the
quantities established or nominated in accordance with this Article
II may not be delivered or taken, then that Party shall notify the
other Party as soon as possible. The Parties will cooperate to
ensure that corrected nominations are provided to Transporter as
soon as possible.
2.5 Should Buyer fail to nominate or take a quantity of Gas
in accordance with this Article II and should such failure result
in the imposition of a penalty, charge or expense, then, as between
the Parties, Buyer shall be liable for and hold Seller harmless for
such amount. Should Seller fail to nominate or deliver a quantity
of Gas in accordance with this Article II and should such failure
result in the imposition of a penalty, charge or expense, then, as
between the Parties, Seller shall be liable for, and hold Buyer
harmless for such amount.
2.6 Seller will have and, subject to Article XI hereof, will
maintain throughout the term of this Agreement such valid contracts
and Gas supply available to Seller for resale to Buyer, capable of
being delivered to the Delivery Point(s) for the account of Buyer,
that will enable Seller to satisfy one hundred percent (100%) of
the quantity nominated by Buyer from time to time under the terms
of this Agreement. Seller shall supply Buyer from different supply
sources in order to minimize the potential for a production-related
force majeure occurrence. Buyer and Seller acknowledge that their
obligations hereunder are firm and that to the extent ********.
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Seller will not ******** would, in Seller's reasonable judgment,
substantially impair the ability of Seller to satisfy its
obligations to Buyer as set out herein. Seller will notify Buyer
within thirty (30) days of any change in availability of Seller's
Gas supply or reserves that may materially adversely affect
Seller's ability to satisfy its obligations to Buyer hereunder.
2.7 Upon Buyer's reasonable request and at its sole expense,
but not more than ********, Seller shall within thirty (30) days of
receiving such request provide to an independent consultant,
current ******** information reasonably sufficient to allow such
independent consultant to ascertain Seller's ability to provide the
firm Gas supplies provided for herein. The independent consultant
shall: (a) be mutually agreed to by the Parties; (b) not represent
the interests of one Party over the other; and (c) maintain the
strict confidentiality of all of Seller's documents and information
by, among other things, (i) signing any reasonable confidentiality
agreements as requested by Seller, and (ii) not revealing to Buyer
or any other party, the names of the parties to any of Seller's
agreements which such consultant may review. The information that
Buyer or such independent consultant may request may include, but
is not limited to, ********; and ********; provided, however, that
Seller shall have the right to maintain the confidentiality of its
agreements with other parties, by providing copies with ********.
Upon Buyer's reasonable request, Seller shall allow the independent
consultant to inspect all such books, records or documents of
Seller, reasonably necessary to verify the data provided by Seller.
The independent consultant shall first report its findings to
Seller, who shall have the opportunity to explain, clarify, expand
or verify such findings. The independent consultant shall report
such findings, as revised, if applicable, to Buyer.
2.8(a) If Seller fails to sell and deliver a quantity of
Gas nominated by Buyer pursuant to this Agreement, then Buyer's
sole remedy shall be to ********. This difference shall then be
multiplied by the ********. Provided, however, that Buyer shall
first use its best efforts (with due consideration given to all
relevant circumstances) to obtain Deficiency Gas from the same
production region as the Delivery Point(s) during the term of
Seller's underdelivery before obtaining Deficiency Gas from other
regions and shall use its best efforts to obtain Deficiency Gas at
the lowest cost available.
(b) Such acquisition of Deficiency Gas by Buyer and recovery
of Buyer's costs from Seller as specified in Paragraph 2.8(a) shall
be limited to those quantities underdelivered and to the period of
underdelivery. Buyer's recovery from Seller may be, at Buyer's
choice, either a credit against future purchases or a cash payment
in accordance with Article XIV. Provided, however, that ********.
Within ******** business day following receipt of such
notification, ********. Seller's failure to replace the Gas within
******** business day following receipt of notification shall
constitute a waiver of Seller's right to supply the Deficiency Gas
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and shall then subject Seller to the credit or payment requirements
of this paragraph; provided, however, that in order to allow Buyer
to make adequate arrangements for replacement Gas, Seller must
exercise the right to replace the Gas and give notice of such
exercise to Buyer prior to Buyer's deadline to arrange for the
transportation and delivery of its replacement Gas. The remedy
stated in this Paragraph 2.8 shall be ********.
2.9(a) If on any day during a month, Buyer fails to
purchase and receive the Monthly Nominated Quantity in effect for
such day, then Seller's remedy shall be to ********. Provided,
however, that for purposes of determining the ********, Seller's
price to such alternate market shall be deemed to be either: (a) as
mutually agreed upon in writing by the Parties; or (b) if the
Parties are unable to agree, deemed to be ********, most proximate
in time to the effective date of the decrease in purchases, for
production from the same region as the Delivery Point(s) ********
during the term of Buyer's failure to purchase; provided, further,
that if the Parties are unable to agree, Seller's price to such
alternate market shall be deemed to be ********. Such difference(s)
shall then be multiplied by the quantities not taken by Buyer.
(b) Seller shall recover from Buyer the amount set forth in
this Paragraph 2.9 by invoicing Buyer in accordance with Article
XIV of this Agreement, and Buyer shall pay Seller in accordance
with Article XIV. The remedy stated in this Paragraph 2.9 shall be
Seller's exclusive remedy for Buyer's failure to purchase and
receive the nominated quantity, and all other remedies are hereby
waived.
2.10 In the event of interruption, proration, or curtailment
of quantities delivered to Buyer or for Buyer's account (including
deliveries to storage) due to force majeure, the following measures
shall apply:
(a) If a force majeure event occurs ********, the following
shall apply:
(i) If a ******** is in effect pursuant to ********
hereof, Seller shall deliver Gas to Buyer at Primary
and/or Secondary Delivery Point(s) located within the
area subject to the ********; provided, however, that
Seller has both Gas supply and transportation available
to supply Buyer. Buyer shall use its best efforts to
assist Seller in making arrangements to deliver Gas in
accordance with this paragraph. The Index Price for Gas
sold and delivered to Buyer at Primary Delivery Point(s)
under this Paragraph 2.10(a)(i) shall be as set forth in
Paragraph 5.1(B)(i) hereof. The Index Price for Gas sold
and delivered to Buyer at Secondary Delivery Point(s)
under this Paragraph 2.10(a)(i) shall be as set forth in
Paragraph 5.1(B)(iii) hereof; and/or
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(ii) If a ******** is in effect pursuant to ********
hereof but Seller is unable to secure alternate supplies
within the area subject to delegation or assignment after
first using its best efforts to do so (with due
consideration given to all relevant circumstances), then
Seller shall deliver Gas to Buyer at Secondary Delivery
Point(s) ********; provided, however, that Seller has
both Gas supply and transportation available to supply
Buyer. Buyer shall use its best efforts to assist Seller
in making arrangements to deliver Gas in accordance with
this paragraph. The Index Price for Gas sold and
delivered to Buyer at Secondary Delivery Point(s) under
this Paragraph 2.10(a)(ii) shall be as set forth in
Paragraph 5.1(B)(iii) hereof. The Index Price for Gas
sold and delivered under alternate arrangements
satisfactory to Seller and Buyer shall be as set forth in
Paragraph 5.1(B)(iv) hereof.
(iii) If no ******** is in effect pursuant to
******** hereof, Seller shall deliver Gas to Buyer at
Secondary Delivery Point(s) and/or under reasonably
priced alternate arrangements satisfactory to Seller and
Buyer; provided, however, that Seller has both Gas supply
and transportation available to supply Buyer. Buyer
shall use its best efforts to assist Seller in making
arrangements to deliver Gas in accordance with this
paragraph. The Index Price for Gas sold and delivered to
Buyer under this Paragraph 2.10(a)(iii) shall be as set
forth in Paragraph 5.1(B)(iv) hereof.
(b) If a force majeure event occurs ********, Seller shall
use its best efforts to provide a ******** supply of Gas
accessible to Buyer's facilities, including, but not limited
to ********, and/or other delivery points or arrangements
satisfactory to Seller and Buyer; provided, however, that
Seller has both Gas supply and transportation available to
supply Buyer. Buyer shall use its best efforts to assist
Seller in making arrangements to deliver Gas in accordance
with this paragraph.
(c) In supplying Gas to Buyer under the measures set forth in
Paragraphs 2.10(a) and 2.10(b), Seller must (i) first provide
Buyer with notice of its proposed supply arrangements
(including price); (ii) provide Buyer with a reasonable
opportunity (commensurate with the circumstances in obtaining
such supply) to decline to purchase such Gas; and (iii) make
all necessary arrangements to deliver such Gas if Buyer does
not decline to purchase such Gas within a reasonable time
(commensurate with the circumstances in obtaining such supply)
after receiving Seller's notice of proposed arrangements.
Buyer's declination to purchase such Gas will relieve Seller
of its obligation to deliver Gas under this Paragraph 2.10 for
the duration of, and to the extent of, such force majeure
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event. Buyer's declination shall not constitute a failure to
take under Paragraph 2.9 hereof, and Seller shall not be
considered to have failed to deliver under Paragraph 2.8
hereof. In the event Buyer declines to purchase Gas pursuant
to this Paragraph 2.10(c), purchases and deliveries of Gas
shall resume immediately upon termination of the force majeure
event.
(d) The actions described in this Paragraph 2.10 are in
addition to any other actions which the Parties may undertake
to remedy or mitigate a force majeure condition. Buyer's
exclusive remedy for Seller's failure to deliver Gas which
Seller has available in accordance with this Paragraph 2.10
shall be the remedy described in Paragraph 2.8 hereof;
provided, however, ********.
III. Transportation
3.1 During the term of this Agreement, Buyer and Seller may
agree that certain of Buyer's transportation rights and
responsibilities may be delegated or assigned to Seller. In such
event, the Parties shall deliver and execute a mutually agreeable
document fully setting forth the terms of such delegation or
assignment and the rights and responsibilities associated
therewith. Further, Seller agrees to enter into and maintain an
Operational Balancing Agreement ("OBA") with Tennessee, containing
terms and conditions acceptable to Seller. Seller shall not be in
default of this provision, however, if it is unable to enter into
or maintain such OBA due to no fault of its own.
IV. Delivery Point(s)
4.1 The Primary Delivery Point(s) and Secondary Delivery
Point(s) shall be as set forth in Exhibit "All hereto, as such may
be amended from time to time. Such Delivery Point(s) shall be the
point(s) at which title to the Gas passes to Buyer and the point(s)
at which Gas is delivered for the account of the Buyer.
4.2 Seller shall be allowed to deliver Gas to Secondary
Delivery Point(s) in accordance with Buyer's transportation
agreement with Tennessee. Buyer agrees to use its best efforts to
add or delete Primary Delivery Point(s) upon the reasonable request
of Seller and to affirmatively seek such changes in its
transportation agreement with Tennessee. The Parties agree to
prepare, execute and deliver an appropriate revised Exhibit "All to
reflect such changes in Delivery Point(s).
V. Price
5.1 The price to be paid for Gas sold in accordance with this
Agreement shall be as set forth below:
(A) ********
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From the date of initial deliveries through the end of
the fifth Contract Year, the ******** shall be calculated by
********. Beginning no later than ******** prior to the end
of ********, the Parties shall enter into good faith
negotiations to arrive at a new ********. If the Parties
cannot agree on a new ******** prior to the beginning of the
********, such issue shall be subject to arbitration in
accordance with Article XIII herein. Unless otherwise agreed,
during the period of arbitration, the ******** shall be that
amount in effect as of the end of the ********; and further,
unless otherwise agreed, the ******** determined through
arbitration shall be effective as of the ********.
The ********, as calculated herein, shall be paid monthly
by Buyer, based on the MDQ, regardless of the quantity of Gas
actually purchased and received by Buyer during each month.
(B) ********
Buyer shall also pay Seller the Index Price for all
quantities of Gas purchased and received each month by Buyer
in accordance with the terms of this Agreement.
(i) For the ******** be the ******** under the
applicable heading as designated below:
For deliveries into: ********
******** ********
(ii) For ******** made in accordance with Paragraph
2.2(c), the ********, under the applicable heading as
designated below. If the Parties are unable to agree
********, then the ******** shall be ********.
For deliveries into: ********
******** ********
(iii) For all quantities of Gas sold and delivered to
Buyer at Secondary Delivery Point(s) pursuant to Paragraphs
2.10(a)(i) and (ii) hereof, the ******** shall be ********.
If the Parties are unable to agree on a price, then the Index
Price for such Gas shall be as follows:
(a) the ******** (for each day of delivery, for
each Secondary Delivery Point where such Gas is
delivered) if prices are ******** and the point is a
valid point for pricing purposes); or
(b) if there is no ******** for the Secondary
Delivery Point or if that point is not a valid point for
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pricing purposes, then the ******** (for each day of
delivery, for each Secondary Delivery Point where such
Gas is delivered) shall be ********.
For the purposes of this Paragraph 5.1(B)(iii), a "valid point
for pricing purposes" shall be a point that, for the day for
which a price is sought, has downstream transportation
available, and has Gas available for purchase.
(iv) For all quantities of Gas sold and delivered to
Buyer under the mutually satisfactory arrangements described
in Paragraph 2.10(a)(ii) and under Paragraphs 2.10(a)(iii) and
2.10(b), the ********. If the Parties are unable to agree on
a price, then the ********. In determining reasonable costs
for the purposes of this Paragraph 5.1(B)(iv), due
consideration shall be given to all relevant circumstances.
5.2 The price as specified herein is a price per MmBtu as
measured in accordance with this Agreement.
5.3 Seller and Buyer hereby agree that all Gas purchased and
sold under this Agreement is decontrolled and not subject to any
maximum lawful price and is subject to all of the provisions of the
Natural Gas wellhead Decontrol Act of 1989.
5.4 In the event ******** are no longer published or are no
longer representative of prices for Gas delivered in the vicinity
of the Delivery Point(s), then the Party which becomes aware of
such event shall notify the other Party, and the Parties shall
attempt in good faith to select an alternate index. If, within
thirty (30) days of receipt of such notice, the Parties have not
reached agreement on an alternate index, then such issue shall be
subject to arbitration pursuant to Article XIII herein.
5.5 The price(s) as set forth in this Article V are inclusive
of all costs or expenses incurred by Seller to deliver Gas to the
Delivery Point(s); provided, however, that in the event ********,
Buyer shall reimburse Seller for ******** as are related to Gas
purchased and sold hereunder.
VI. Responsibility
6.1 Except as provided in any ********, all charges,
expenses, fees,, taxes, damages, injuries, and other costs incurred
in or attributable to the handling or transportation of the Gas
delivered in accordance with this Agreement (or otherwise caused by
or attributable to the Gas) prior to delivery to Buyer at the
Delivery Point(s) shall be the responsibility of Seller, as between
the Parties hereto, and Seller shall indemnify, defend, and hold
Buyer harmless from all such costs.
6.2 Seller shall be responsible for the maintenance and
operation of any of its facilities (including those it owns an
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interest in) and shall indemnify, defend, and hold Buyer harmless
from any and all costs arising from any act or accident in
connection with the installation, presence, maintenance, and
operation of the facilities.
6.3 All charges, expenses, fees, taxes (including sales or
transfer taxes), damages, injuries, and other costs incurred in or
attributable to the purchase and transfer, transportation, and
handling of the Gas (or otherwise caused by or attributable to the
Gas) from and after delivery shall be the responsibility of Buyer,
as between the Parties hereto, and Buyer shall indemnify, defend,
and hold Seller harmless from all such costs. Buyer shall provide
Seller with an exemption certificate applicable to any sales or
similar taxes or charges on purchases and sales under this
Agreement.
6.4 Except as provided in Article XII herein, Buyer warrants
that it has all necessary regulatory approvals and authorizations
for the purchase of Gas by Buyer hereunder.
6.5 Buyer shall be responsible for the maintenance and
operation of any of its facilities (including those it owns an
interest in) and shall indemnify, defend, and hold Seller harmless
for any and all costs arising from any act or accident in
connection with the installation, presence, maintenance, and
operation of the facilities.
6.6 As used in this Agreement, "indemnify, defend, and hold
harmless", means that the indemnifying Party shall pay any and all
costs incurred by the indemnified Party (including, but not limited
to, attorneys' fees and court costs) associated with or relating to
any breach of warranty or any responsibility or risk assigned to
the indemnifying Party under this Agreement.
VII. Term
7.1 The term of this Agreement shall commence as of the date
first written above; however, the obligations to sell and deliver
and to purchase and receive Gas and to make payments hereunder
shall commence ********, shall continue for a term of ********;
provided, however, that the term hereof shall be extended until
********.
7.2 The term of this Agreement shall be extended beyond the
period described in Paragraph 7.1 for ********, unless terminated
by either Party ********.
VIII. Measurement
8.1 The quantity of Gas delivered at the Delivery Point(s)
shall be calculated from the measurements taken by the Transporter
transporting the Gas to the Delivery Point(s) and from the heating
value determined by the instruments operated by the Transporter at
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the Delivery Point(s). The unit of measurement shall be one MmBtu.
IX. Quality and Pressure
9.1 The Gas delivered to Buyer at the Delivery Point(s) shall
be of merchantable quality and shall meet the quality and pressure
specifications (including the specifications regarding heating
content) of Tennessee's FERC-approved tariff. If any of the Gas
delivered hereunder fails to meet the quality and pressure
specifications described in this paragraph, then Buyer will have
the right to refuse to accept deliveries of such nonconforming Gas,
and such failure shall be deemed to be a failure by Seller to sell
and deliver a quantity of Gas nominated by Buyer under Paragraph
2.8 hereof.
9.2 To the extent Buyer accepts Gas delivered by Seller at
the Delivery Point(s), Seller shall be deemed to have complied with
the quality specifications contained herein.
9.3 Seller shall cause the Gas to be delivered to Buyer at a
pressure sufficient to enable the Gas to enter Transporter's
pipeline at the Delivery Point(s). Without relieving Seller of its
obligations to sell and deliver Gas, Seller shall not be obligated
to install or provide any additional compression.
X. Processing
10.1 Subject to the requirements of Article IX, ******** at
the Delivery Point(s). In the event ******** the Gas, ******** and
all costs (including related transportation costs) shall be paid by
Seller and Seller shall indemnify, defend and hold Buyer harmless
therefrom. In the event ********, Seller shall deliver into
Buyer's transportation agreement with Tennessee without charge to
Buyer any additional quantities of Gas necessary to account for any
reduction in quantity and/or heating value that may result from
such processing.
XI. Force Majeure
11.1 In the event that either Seller or Buyer is rendered
unable, by reason of an event of force majeure, to perform, wholly
or in part, any obligation or commitment set forth herein, then,
provided that such Party gives notice and reasonably full
particulars of such event as soon as practicable after the
occurrence thereof, the obligations of both Parties, except for
unpaid financial obligations arising prior to such event of force
majeure, and except for the obligations arising under Paragraph
2.10 hereof, shall be suspended to the extent of, and insofar as
they are affected by such force majeure event and for the duration
of the force majeure event.
11.2 The term "force majeure" as employed herein shall mean
acts of God, strikes, lockouts, or industrial disputes or
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disturbances, civil disturbances, arrests and restraints of rulers
and peoples, interruptions by government or court orders, necessity
for compliance with any court order, law, statute, ordinance or
regulation promulgated by a governmental authority having
jurisdiction, acts of the public enemy, war, riots, blockades,,
insurrections, inability to secure labor or materials, including
inability to secure materials by reason of allocations promulgated
by authorized governmental agencies, epidemics, landslides,
lightning, earthquakes, fire, storms, floods, washouts, inclement
weather that would necessitate extraordinary measures and expense
to construct facilities and/or maintain operations, explosions,
breakage or accident to machinery or lines of pipe, freezing of
wells or pipelines, inability to obtain or delays in obtaining
easements or rights of way, shutting-in of facilities for the
making of repairs, alterations, or maintenance to wells, pipelines,
or plants, or any other cause not reasonably within the control of
the Party claiming force majeure; provided, however, that loss of
markets by Buyer and the inability of Seller to obtain supply shall
not be considered events of force majeure.
11.3 To the extent such force majeure situation can be
mitigated or eliminated by the exercise of due diligence by the
Party claiming force majeure, such Party shall act to remedy the
situation with all reasonable dispatch; provided, however, that
settlement of strikes and lockouts will be entirely within the
discretion of the Party affected, and the requirement that any
event of force majeure be remedied with all reasonable dispatch
will not require the settlement of strikes and lockouts by acceding
to the demands of the parties directly or indirectly involved in
such strikes or lockouts when such course is inadvisable in the
discretion of the Party having the difficulty.
11.4 If during the term of this Agreement either Party claims
a suspension of obligation by reason of one or more events of force
majeure and if ********.
XII. Government Regulation
12.1 This Agreement shall be subject to all valid applicable
state, federal, and local laws, rules, and regulations; and either
Party hereto shall be entitled to regard all such laws, rules, and
regulations as valid and may act in accordance therewith until such
time as the same may be held invalid by final judgment in a court
of competent jurisdiction. Nothing herein shall be taken to
preclude Buyer or Seller or both from contesting the validity of
any such laws, rules, or regulations.
12.2 If at any time during the term of this Agreement any
governmental authority shall take any action whereby the purchase,
sale, delivery, transportation, redelivery, or resale of Gas as
contemplated hereunder is proscribed or made subject to terms,
conditions, regulations, restraints, or rate or price controls that
(i) would render the performance of this Agreement ********, or
<F1> ******** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
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(ii) would cause the ********, or (iii) would ******** ("adverse
governmental action"), then the Party so affected may ********. If
the Parties are unable, after ********, either Party may ********
as to the changes necessary to eliminate the effect of such adverse
governmental action, pursuant to ********. Upon completion
********, but either Party shall have the ******** upon written
notice given to the other Party at least ******** in advance;
provided, however, that such notice must be given within ********
of receipt of ********.
XIII. Arbitration
13.1 Arbitration under this Agreement shall be available only
for the determination of the issues as presented under ********.
Arbitration of such issues, discovery pursuant to such arbitration,
as well as all recourse to the courts from any decision of the
arbitrator(s) shall be subject to the United States Arbitration
Act, as codified at 9 U.S.C. Sec. 1-16 (1991), and the Commercial
Arbitration Rules of the American Arbitration Association. In the
event of a conflict between the provisions of the United States
Arbitration Act and the provisions of the Commercial Arbitration
Rules of the American Arbitration Association, the provisions of
the United States Arbitration Act shall prevail. The Parties agree
that all other provisions of this Agreement, and any issues arising
thereunder, are non-arbitrable.
13.2 Either Party may request arbitration pursuant to this
Article XIII upon providing written notice to the other Party. The
Parties shall attempt to agree upon a single arbitrator within
fifteen (15) days following receipt of such notice. In this event,
the dispute shall be arbitrated by this single arbitrator. If the
Parties are unable to agree upon a single arbitrator within such
fifteen (15) day period, then each Party shall select an arbitrator
within fifteen (15) days of the failure to agree upon a single
arbitrator. The two arbitrators shall select a third arbitrator
within fifteen (15) days after selection of such arbitrators. In
this event, the dispute shall be arbitrated by these three
arbitrators.
13.3 All arbitrators shall be qualified to decide the matter
in dispute, by education and experience within the natural gas
industry, and shall be licensed attorneys. No arbitrator shall be
an employee, agent, or the beneficial owner of any interest or
common stock of either Party, any affiliate of either Party, or any
direct competitor of either Party.
13.4 The arbitrator(s) shall schedule the time and place for
hearings or the submission of written statements, at which time
each Party shall submit evidence. The Parties may only submit
evidence which is material and relevant to the dispute. At the
initiation of arbitration, the Parties shall agree on reasonable
evidentiary rules to govern the use and admissibility of evidence.
If the Parties fail to agree to such rules, then the arbitrator(s)
<F1> ******** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
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shall prescribe such reasonable rules to be applied. The decision
of the arbitrator(s) shall be made within thirty (30) days after
the conclusion of any hearings or the submission of written
statements of the Parties. The decision of the arbitrator(s) shall
be in writing, shall state with particularity the findings of fact
and conclusions of law used to make the decision, shall be signed
by the arbitrator(s) or a majority of them, and shall be subject to
court review in accordance with the United States Arbitration Act.
Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
13.5 Both Parties shall submit evidence in their separate
proposals to the arbitrator(s) establishing their relative
positions with respect to the dispute, or, in the event of a
pricing dispute, to establish a pricing mechanism that reflects a
price that is responsive to the market and fairly reflects the
prices of Gas dedicated to long-term sale in the interstate market
and delivered to Tennessee in the same region as the Delivery
Point(s) hereunder. The arbitrator(s) shall be limited to
selecting either Buyer's or Seller's proposal, provided that such
proposal: (i) ********; and (ii) ********.
13.6 Each Party shall pay the expenses of the arbitrator
selected by it, and of its counsel, witnesses and employees, and
all other costs of arbitration shall be equally divided between the
Parties.
XIV. Billing and Payment
14.1(a) On or before the tenth (10th) day of each calendar
month, Seller shall submit to Buyer (by telecopy, mail, or other
means, at Seller's option) a statement showing the amount of Gas
purchased during the preceding month and the amount due Seller for
such purchases as calculated in accordance with the terms of this
Agreement. If actual amounts are unavailable, billing and payment
shall be made on estimates subject to adjustment in succeeding
statements. Buyer shall make payment of the amount specified in
Seller's statement on or before the twentieth (20th) day of the
calendar month by wire transfer as follows:
********
14.1 (b) On or before the twentieth (20th) day of each
calendar month, Buyer shall submit to Seller (by telecopy, mail, or
other means, at Buyer's option) a statement showing the amount(s)
due Buyer hereunder, if any, related to transactions occurring in
the preceding month. If actual amounts are unavailable, billing
and payment shall be made on estimates subject to adjustment in
succeeding statements. Seller shall make payment of the amount
specified in Buyer's statement within ten (10) calendar days of the
statement, by wire transfer as follows:
********
<F1> ******** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
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14.2 Should either Party fail to pay part or all of the other
Party's statement as provided in Paragraph 14.1, then interest on
the unpaid portion shall accrue at the prime rate as charged by The
Chase Manhattan Bank, N.A. of New York, plus two percent (2%) (or
the maximum lawful rate, whichever is less) from the due date until
the date of payment.
14.3 (a) Should Buyer fail to pay part or all of any statement
on or before the due date, Seller, subject to Paragraph 14.4, but
in addition to any other remedy it may have (and without affecting
those remedies), may suspend delivery of Gas to Buyer upon notice.
Buyer shall have the right to have deliveries reinstated by paying
the full amount due, including interest, within ten (10) days of
the date when deliveries were suspended.
14.3(b) Should Seller fail to pay part or all of any
statement on or before the due date, Buyer, subject to Paragraph
14.4, in addition to any other remedy it may have (and without
affecting those remedies), may suspend receipts of Gas from Seller
and payment of the Demand Charge upon notice. Seller shall have
the right to have receipts and payment of the Demand Charge resumed
by paying the full amount due, including interest, within ten (10)
days of the date when receipts were suspended.
14.4 If either Party in good faith shall dispute the amount of
any invoice or part thereof rendered under any provision of this
Agreement, and shall pay to the other Party such amounts as it
concedes to be correct and at any time within thirty (30) days
after a demand made by the Party to be paid, shall furnish a good
and sufficient surety bond guaranteeing payment to the Party to be
paid of the amount ultimately found due after a final
determination, which may be reached either by agreement of the
Parties, arbitration pursuant to Article XIII, or final judgment of
the courts, the Party to be paid shall not be entitled to suspend
deliveries or receipts of Gas and payment of Demand Charges until
default be made in the conditions of such bond. The amount related
to any dispute which is ultimately determined to be owed to either
Party shall be paid in full, with interest which shall accrue at
the rate provided for in Paragraph 14.2 from the date payment of
such amount was originally due, until the date of payment.
14.5 The Parties shall have reasonable access to each other's
books and records to determine accurate measurement, billing and
payment under this Agreement.
14.6 If Seller owes funds to Buyer under another arrangement,
Seller may offset any amounts owed Buyer with amounts Buyer owes
Seller pursuant to this Agreement. If Seller makes such offset, it
shall be noted on Seller's statement.
XV. Succession and Assignment
15.1 Either Party may, without relieving itself of any
obligations hereunder, assign any of its rights hereunder to any
corporation, partnership, joint venture, or other entity with which
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it is affiliated, either on a permanent or temporary basis. But no
other assignment of this Agreement or any of the rights or
obligations hereunder may be made unless and until the Party
seeking the assignment obtains the written consent thereto of the
non-assigning Party, which consent shall not be unreasonably
withheld; provided, however, that nothing in this Agreement in any
way prevents either Party from pledging or mortgaging all or any
part of such Party's property or rights hereunder as security for
mortgage, debt, or other similar obligations; and provided,
further, that nothing in this Agreement prevents any company or
other entity that purchases, merges, consolidates with, or
otherwise succeeds to the interests of either Party hereto,
substantially as an entirety, from assuming the rights or
obligations of its predecessor in interest under this Agreement.
No transfer of or succession to the interest of either Party
hereunder, wholly or partially, will affect or bind the non-
assigning Party until it has been furnished with written notice and
a true copy of such assignment or with other proper proof that the
claimant is legally entitled to such interest.
XVI. Financial Responsib ility
16.1 If the financial responsibility of Buyer becomes or is
discovered to be impaired or unsatisfactory to Seller, Seller shall
have the right to demand a letter of credit satisfactory to Seller
to be received by Seller within thirty (30) days from the date of
notice by Seller or Seller may elect to terminate this Agreement.
XVII. Notices
17.1 Any notice, demand, request, statement, or correspondence
provided for in this Agreement, or any notice which a Party may
desire to give to the other, shall be in writing (unless otherwise
provided) and shall be considered duly delivered when received by
mail, telecopy, or overnight courier, at the addresses below:
(i) To Seller:
Aquila Energy Marketing Corporation
2533 North t Avenue
Suite 200
Omaha, Nebraska 68164-8618
Attention: Vice President, Long-Term Marketing Telecopy
No.: (402) 498-4595
(ii) To Buyer:
Yankee Gas Services Company
P.O. Box 1030
Meriden, Connecticut 06450-1030
Attention: Mr. Dave Egelson
Telecopy No.: (203) 639-4050
17.2 Either Party may change the information shown in
Paragraph 17.1 by giving written notice to the other Party.
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XVIII. Confidentiality
18.1 The terms of the Agreement, including, but not limited
to, the price paid for Gas, the quantities of Gas purchased or sold
and all other terms of this Agreement shall be kept confidential
by the Parties hereto, except to the extent such information is
disclosed to outside counsel or consultants of the Parties, or must
be disclosed for the purpose of effectuating transportation of Gas
or as may be required to be disclosed by regulatory bodies or
courts.
XIX. Miscellaneous
19.1 This Agreement shall be governed in accordance with the
laws of the State of Nebraska (including the Uniform Commercial
Code as adopted in Nebraska) except for laws concerning the
application of the laws of another jurisdiction. The Parties
hereto waive any and all rights, claims or other cause of action
arising under this Agreement for incidental, consequential or
punitive damages. Any damages resulting from a breach of this
Agreement by either Party shall be limited to actual damages
incurred by the Party claiming such damages.
19.2 THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT OF THE
PARTIES AND CANNOT BE ALTERED, MODIFIED, OR AMENDED EXCEPT IN A
WRITING SIGNED BY THE PARTY AGAINST WHOM IT IS TO BE ENFORCED.
THERE ARE NO WARRANTIES EXPRESS OR IMPLIED EXCEPT AS STATED IN THIS
AGREEMENT.
19.3 Any waiver of any default under this Agreement shall not
be construed as a waiver of any future defaults, whether of like or
different character.
19.4 No action, regardless of form, arising out of this
Agreement may be brought by either Party more than one (1) year
after the cause of action has arisen.
19.5 This Agreement shall not be construed to create any third
party beneficiary relationship in favor of anyone not a Party to
this Agreement. In addition, the Parties waive and disclaim any
third party beneficiary status as to any of the contracts of the
other Party.
19.6 This Agreement-may be executed in counterparts.
19.7 The covenant contained in Paragraph 18.1 survives the
term of this Agreement.
NOW THEREFORE, the Parties evidence their consent and
agreement to the foregoing by executing below:
BUYER: SELLER:
YANKEE GAS SERVICES COMPANY AQUILA ENERGY MARKETING CORP
By: /s Philip T. Ashton By: /s Scott M. Potter
Title: President & Title: Vice President
CEO
Attest:/s Mary J. Healey Attest: Assistant Secretary
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