Exhibit 10.78
FIRM GAS SALES AGREEMENT
This FIRM GAS SALES AGREEMENT is made as of November 1, 1993 by
and between Mobil Natural Gas Inc., ("Seller") and Yankee Gas
Services Company ("Buyer").
WITNESSETH
WHEREAS, Seller has certain volumes of gas which are
available for sale; and
WHEREAS, Buyer desires to purchase such gas from Seller and
Seller desires to sell such gas to Buyer, both on a firm basis.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
Definitions
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1.1 The term "Btu" means British thermal unit, and is the
quantity of heat energy required to raise the temperature of one
avoirdupois pound of water from 58.5 to 59.5 degrees Fahrenheit.
1.2 The term "Contract" means this agreement, including all
exhibits attached hereto and all amendments hereof that may be
made from time to time.
1.3 The term "day" means a period of twenty-four
consecutive hours, beginning and ending at 8:00 a.m. Eastern
Time.
1.4 The term "FERC" means the Federal Energy Regulatory
Commission or successor agency.
1.5 The term "MMBtu" means one million British thermal
units.
1.6 The term "month" means the period beginning at
8:00 a.m., Eastern Time, on the first day of a calendar month
and ending at 8:00 a.m., Eastern Time, on the first day of the
next succeeding calendar month.
1.7 The term "Party" or "Parties" means Seller
and/or Buyer under this Contract.
1.8 The term "Point(s) of Delivery" means the point or
points on Transporter(s)' pipeline system where gas is to be
delivered by Seller to Transporter(s) for Buyer's account, as set
forth in Exhibit A attached hereto and made a part hereof.
1.9 The term "Transporter(s)" means primarily Texas Eastern
Transmission Corporation, but in addition may include any
upstream or downstream Transporter(s), as dictated by context.
1.10 The term "Transportation Segment" shall mean Texas
Eastern Transmission Corporation's East Louisiana Pooling Zone or
West Louisiana Pooling Zone, within which Seller is to deliver
and Buyer is take gas hereunder.
ARTICLE 2
Quantity
2.1 Seller's Obligation. Subject to the other provisions
of this Contract, Seller will make available to Buyer each day,
on a firm basis, at the Point(s) of Delivery, on a firm basis,
daily quantities of natural gas equal to the lesser of the
Maximum Dally Quantity ("MDQ") or Buyer's Nominated Purchase
Quantity ("NPQ") under Sections 2.4 through 2.6 of this Contract,
as applicable, or pay a Deficiency Charge as provided in Section
2.8.B.
2.2 Buyer's Obligation. Subject to the other provisions of
this Contract, Buyer shall take from Seller each day at the
Point(s) of Delivery, on a firm basis, Buyer's Nominated Purchase
Quantity under Sections 2.4 through 2.6 of this Contract, as
applicable, and shall pay Seller the applicable Reservation Fee
and Commodity Charge, together with any Deficiency Charge due
pursuant to Section 2.8.A.
2.3 MDQ. The MDQ under this Contract shall be 15,000 MMBtu
per day, plus sufficient additional gas as Transporter's tariff
may require from time to time as fuel to effect delivery of the
gas delivered hereunder to Transporter's Zone M-3.
2.4 At least two business days prior to the time each month
that monthly nominations are due to Transporter, Buyer shall
notify Seller in writing of the NPQ that Buyer desires to
purchase and take from Seller on the first day of the next Month.
The first-of-month NPQ may be any quantity of gas from zero up to
the full MDQ. If Buyer fails to notify Seller of a new NPQ for
the next month on or before the date specified in this section,
Buyer's NPQ for the first day of the next month shall be deemed
to be unchanged from the last effective nomination.
2.5 At any time during a month, Buyer may increase or
decrease the NPQ; provided, however, that the change shall not be
less than 5,000 MMBtu (plus fuel), with the total NPQ never to
exceed the MDQ; and provided, further, that Buyer may not so
change the NPQ under this section more than four times in any
given month.
2.6 After making the four changes in NPQ permitted under
Section 2.5, Buyer may further increase or decrease the NPQ at
any time during a month; provided, however, that the change shall
not be less than 5,000 MMBtu (plus fuel), with the total NPQ
never to exceed the MDQ; and provided, further, that for each
such increase or decrease Buyer will pay the renomination fee set
forth in Section 7.2 hereof.
2.7 Buyer shall provide Seller with at least one business
da y's notice of any nomination increase or decrease under
Sections 2.5 and 2.6.
2.8 If Buyer fails on any day to purchase the total
quantity of gas nominated by Buyer for that day pursuant to this
Article 2, and to the extent that such failure was not caused by
force majeure or Seller's failure to make appropriate quantities
of gas available, a Deficiency Charge shall apply. The unit
Deficiency Charge shall be equal to the amount, if any by which
the Commodity Charge applicable under this Contract during the
month in which the deficiency occurred exceeds the weekly NGW
Spot Price, as hereinafter defined, for the Texas Eastern
Transmission Corp. Pooling Zone in which the deficient quantity
was to have been delivered by Seller. The "weekly NGW Spot
Price" shall be determined by reference to the table "Spot Prices
On Interstate Pipeline Systems, Delivered-to Pipeline" in the
issue of Natural Gas Week published during the week following the
week in which the deficiency occurred. The price used will be
the price per MMBtu quoted for gas delivered to Texas Eastern
Transmission Corporation in the appropriate Pooling Zone under
the column labeled "This Week." The unit Deficiency Charge will
then be multiplied by the unexcused deficiency quantity. If an
unexcused purchase deficiency occurs in more than one week, the
unit Deficiency Charge will be separately computed for each week
and applied to the unexcused deficiency quantity for that week.
If an unexcused purchase deficiency occurs in more than one
Pooling Zone during a month, the unit Deficiency Charge shall be
calculated separately for each Pooling Zone and shall be applied
to the deficient quantities which were to have been delivered in
each such Pooling Zone. The unexcused deficiency quantity shall
be Buyer's NPQ for each day, less (a) the volumes actually
purchased by Buyer on such day and (b) any volumes which Buyer
was prevented from purchasing on such day by force majeure or
Seller's failure to make appropriate volumes of gas available.
Any Deficiency Charges incurred in a month may be included in
Seller's invoice for deliveries during that month or in the next
succeeding invoice issued by Seller after the Deficiency Charge
has been calculated. Payment for the Deficiency Charge shall be
due on the payable date of the invoice in which it is included.
B. If Seller fails, in whole or in part, to make
available to Buyer on any day Buyer's NPQ for that day, and if
such failure is not excused by an event of force majeure or
Buyer's failure to take quantities of gas which Seller was ready,
willing, and able to deliver, Seller shall pay Buyer a Deficiency
Charge equal to the unexcused shortfall in delivery from the NPQ,
multiplied by the difference between (a) the Commodity Charge
which was applicable during the month in which the deficiency
occurred plus Buyer's cost of transportation that would have been
incurred from the Delivery Point(s) to Buyer's city gate, and (b)
the price Buyer paid to obtain and deliver to Buyer's city gate
alternate fuel supplies (including, without limitation, natural
gas, fuel oil, propane, penalty gas, and/or after-the-fact
corrections such as cash outs); provided, however, that if Buyer
is unable after reasonable efforts (with due consideration being
given to all relevant circumstances) to obtain such alternate
fuel supplies, then Buyer's replacement cost shall be deemed to
be equal to the rate applicable under the Transporter's FERC
tariff for imbalance or unauthorized overrun gas. Buyer shall
use its best efforts, acting in a commercially reasonable manner
(with due consideration being given to all relevant
circumstances), to obtain alternate fuel supplies at the lowest
available price. Seller agrees to pay Buyer any Deficiency
Charges to which Buyer is entitled under this section on or
before the tenth day after Seller receives a written calculation
of the amount of such charges from Buyer.
C. Except for Transportation Imbalances discussed in
Article 3 herein, below, neither Party shall be liable in any
event for consequential damages or losses which may be suffered
by the other as a result of the failure to deliver or take the
required quantities of gas, and both Parties agree that recovery
of Deficiency Charges as set forth in this Section 2.8 shall
constitute the sole and exclusive remedies for any such failure
to deliver or receive gas.
ARTICLE 3
Transportation
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3.1 Transportation Guidelines. The Transporter(s)' rules,
guidelines, operational procedures and policies, as they may be
changed from time to time, shall define and control the manner in
which gas delivered and sold under this Contract is transported.
Seller and Buyer each agree to provide to the other, in as prompt
a manner as reasonable, all information necessary to permit
scheduling pursuant to such requirements.
3.2 Transportation Imbalances. If Seller delivers or Buyer
takes a quantity of gas not equal to the quantity nominated for
transportation, a "Transportation Imbalance" may occur. Upon
notification by the other Party or Transporter that a
Transportation Imbalance exists, each Party will exercise its
best efforts to correct the Transportation Imbalance, subject to
any restrictions imposed by Transporter(s). Buyer and Seller
agree to use their best efforts to prevent or diminish any
occurrences of imbalances by adjusting their transportation
nominations to match actual flow rates as closely as possible,
and to minimize any imbalance penalties through the use of
imbalance trading procedures or other available methods.
Adjustments to transportation nominations made pursuant to this
Article for the purpose of avoiding or minimizing Transportation
Imbalances shall not modify the parties' obligations or remedies
under Article 2 hereof.
3.3 Costs and Penalties. Saner shall hold Buyer harmless
from all costs and penalties which may be assessed by
Transporter(s) against Buyer as a result of over or under-
delivery of gas caused by Seller. Buyer shall hold Seller
harmless from all costs and penalties which may be assessed by
Transporter(s) against Seller as a result of over or under-takes
of gas caused by Buyer. If any such costs or penalties are
anticipated, the Party becoming aware that such costs or
penalties may be assessed or incurred shall inform the other
Party as soon as the Party becomes aware, followed by notice in
writing. Each Party shall then immediately cooperate in good
faith with the other Party to minimize or eliminate, if possible,
such costs or penalties. Notwithstanding the foregoing,
transportation imbalances cashed out with the Transporter(s)
shall be governed by Section 3.4, rather than this Section.
3.4 Cash Out of Imbalances. If one party hereto is
required by the Transporter to cash out an imbalance caused by
the other party's failure to deliver or receive the quantity of
gas nominated and confirmed for transportation, the party at
fault shall reimburse the other party for the penalty component
of the cash out price. For purposes of this Contract, the
penalty component of a cash out price shall be the amount(s) by
which the price(s) at which a party is required to buy the cashed
out quantity(ies) exceed(s) the Commodity Charge in effect under
Article 8 hereof during the month in which the imbalance accrued,
or the amount(s) by which the Commodity Charge in effect under
Article 8 hereof during the month in which the imbalance accrued
exceeds the price(s) at which a party is required to sell the
cashed out quantity(ies), in each case multiplied by the cashed
out quantity(ies).
3.5 Cooperation and Verification. The Parties shall
cooperate with each other and with the Transporter to verify
delivery and receipt of gas under this Contract on a timely
basis.
3.6 Upstream Transportation . Seller shall be responsible
for transportation to and at the Point(s) of Delivery and payment
of all transportation charges relating thereto. Buyer shall be
responsible for transportation from the Point(s) of Delivery and
payment of all transportation charges relating thereto.
ARTICLE 4
Quality
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4.1 Transporter(s)' Specifications. All gas delivered
hereunder shall conform to the quality specifications set forth
in the transportation agreement and/or FERC-approved tariff of
the Transporter receiving the gas for Buyer's account at the
Point(s) of Delivery. If any of the gas delivered by Seller
hereunder fails to meet such specifications, then Buyer shall
have the right to refuse to accept deliveries of such
nonconforming gas, and, should Seller fail to replace the
nonconforming gas as soon as possible (but in no event later than
the first day for which Transporter will accept gas from Seller
to replace the nonconforming gas), such failure shall be deemed
to be a failure by Seller to sell and deliver a quantity of gas
under Section 2.5.B hereof, and Buyer may purchase deficiency gas
and be reimbursed for the cost of such purchases as provided
therein. If the Transporter's quality specifications are changed
to be more stringent and the gas from the sources Seller is then
utilizing to supply this Contract fails to meet the new
specifications, Seller shall have the option of either (a)
installing any necessary equipment to conform the gas to the new
specifications or (b) terminating this Contract upon not less
than sixty days prior written notice to Buyer.
4.2 Testing. Buyer shall have the right to be represented
and to participate in all tests of gas delivered hereunder, and
to inspect any equipment used in determining the quality of gas
delivered hereunder.
ARTICLE 5
Delivery and Pressure: Title and Control: Liability.
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5.1 Delivery and Pressure. All gas to be sold and
purchased hereunder shall be delivered to Buyer at the Point(s)
of Delivery, as listed in Exhibit A, at pressures sufficient to
enter Transporter(s)' facilities from time to time.
5.2 Title and Control. Title to the gas delivered
hereunder shall pass to and vest in Buyer at the Point(s) of
Delivery. Seller shall be deemed to be in exclusive control and
possession of said gas prior to delivery to Buyer, and Buyer
shall be deemed to be in exclusive control and possession of said
gas thereafter.
5.3 Liability. The party deemed to be in control and
possession of the gas hereunder shall be responsible for and
shall indemnify, defend and hold the other party harmless with
respect to any losses, claims, liabilities or damages arising
therefrom when such gas is deemed to be in that Party's control
and possession.
ARTICLE 6
Measurement
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6.1 Units of Measurement. The unit of volume for
measurement of gas delivered hereunder shall be one cubic foot of
gas at a base temperature of sixty degrees Fahrenheit and at an
absolute pressure of fourteen and seventy-three hundredths pounds
per square inch. The sales unit of the gas shall be one MMBtu,
determined on a dry basis. All measurements of gas delivered and
sold hereunder shall be in accordance with the provisions of
Transporter(s)' tariff(s) as applicable at the Point(s) of
Delivery.
ARTICLE 7
Reservation Fee
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7.1 Reservation Fee. As consideration for the right to
nominate and receive quantities of gas each month up to the -
applicable MDQ, Buyer shall pay Seller each month the monthly
Reservation Fee, regardless of the quantities of gas actually
purchased by Buyer in such month. The monthly Reservation Fee
shall be calculated each month by ********, includng fuel as
required by the Transporter's tariff, by ******** and ********.
7.2 Renomination Fee: For each change made in any month in
the NPQ pursuant to Section 2.6, Buyer shall pay a Renomination
Fee equal to (a) three percent (3%) of the Commodity Charge
under Section 8.1 multiplied by (b) the increase or decrease in
the NPQ from the previously effective NPQ multiplied by (c) the
number of days remaining in the month from the date when the
change in NPQ becomes effective until the end of the month. All
such Renomination Fees shall be cumulative in any given month,
even if the NPQ on which any Renomination Fee is based is
subsequently changed.
********CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
ARTICLE 8
Price
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8.1 Commodity Charge. For each MMBtu of gas delivered to
Buyer by Seller at the Point(s) of Delivery, Buyer shall pay
Seller a Commodity Charge which shall be equal to the Inside FERC
Index Price (hereinafter defined) for deliveries in the Texas
Eastern Transmission Corporation Pooling Zone in which the gas is
delivered by Seller. The Inside FERC Index Price shall be the
price per MMBtu quoted in the first issue published during the
delivery month of Inside FERC's Gas Market Report in the table
entitled "Prices of Spot Gas Delivered to Pipelines (per MMBtu
dry)" under the column entitled "Index." If Seller delivers gas
hereunder in more than one Pooling Zone during a month, the
Inside FERC Index Price for each Pooling Zone shall be applied to
the quantities delivered in each such Pooling Zone.
8.2 Temporary Interruption of Index Publication. If the
requisite price quotes utilized to established the Commodity
Charge are unavailable for any reason, then, until the Parties
agree on a replacement method of determining the Commodity
Charge, the Commodity Charge shall equal the average of the
closing prices for the three last days of trading of gas futures
contracts for the applicable month on the New York Mercantile
Exchange ("NYMEX"), plus or minus the average (rounded to the
nearest cent), over the twelve most recent months, of the
differences between the NYMEX closing price for gas futures
contracts and the Commodity Charge as determined by reference to
the publication described above.
ARTICLE 9
Billing and Payment: Audit Rights: Credit Terms
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9.1 Billing and Payment. Not later than the fifteenth day
of each month, Seller shall provide Buyer an invoice (which may
be transmitted by electronic facsimile) setting forth (a) the
Reservation Fee due for the current month, (b) the quantities of
gas delivered at the Point(s) of Delivery during, the preceding
month and the amount due therefor, and (c) any deficiency
payments due pursuant to Paragraph 2.8. For example, Seller's
invoice rendered during the month of April would cover gas
delivered furing the preceding month of March, any deficiency
payment due for failure to receive or deliver quantities of gas
in March, and the Reservation Fee for April. If actual volumes
are not available at the time Seller issues its invoice, Seller
may invoice -based on the volumes nominated and confirmed for
transportation, subject to appropriate adjustments to actual
volumes when available. Buyer shall make payment by wire
transfer within ten business days following receipt of Seller's
invoice.
9.2 Bona Fide Disputes. If a bona fide dispute arises as
to the amount payable in any invoice rendered hereunder, Buyer
shall nevertheless pay when due the amount not in dispute under
such invoice. Such payment shall not be deemed to be a waiver of
the right by Buyer to recoup any overpayment, nor shall
acceptance of any payment be deemed to be a waiver by Seller of
any underpayment. In the event Buyer fails to forward the entire
undisputed amount due to Seller when same is due, interest on the
unpaid portion shall accrue at a rate equal to two percent (2%)
above the prime rate charged by Chase Manhattan Bank, N.A., from
time to time, or the maximum legal rate, whichever is the lesser,
compounded monthly from the date such payment is due until the
same is paid. If Buyer's failure to pay the undisputed portion
of any invoice rendered hereunder continues beyond thirty days
after the due date of such payment, then Seller, in addition to
all other legal remedies available to it, shall have the right
and option to suspend further deliveries of gas until such
default shall have been cured.
9.3 Resolution of Billing Disputes. If Buyer withholds
payment of any disputed amount as authorized herein, Buyer shall
within fifteen days after the due date of the disputed invoice
submit to Seller a written explanation of the dispute and any
available supporting documentation. The parties shall then
cooperate in good faith to resolve such dispute as expeditiously
as possible, and the portion, if any, of such disputed amount
eventually determined to be due shall bear interest at the rate
stated in Section 9.2 from the original due date until the date
actually paid.
9.4 Audit. Each Party shall have the right, during the
term of this Contract and for twenty-four months thereafter, to
examine and audit, at its own expense and at any reasonable time,
the books, records and charts of the other to the extent
necessary to verify the accuracy of any statements or charges
made under or pursuant to any of the provisions of this Contract;
provided, however, that neither Party shall be required to
maintain books, records or charts for a period of more than two
calendar years following the end of the calendar year to which
they pertain. Upon request, Buyer shall also make available to
Seller for audit purposes any relevant records of Buyer's
Transporter(s) to which Buyer may have access. A formal audit of
accounts shall not be made more often than once each calendar
year. Any inaccuracy will be promptly corrected when discovered;
provided, however, that neither Party shall have any right to
question or contest any charge or credit if the matter is not
called to the attention of the other Party in writing within two
years after the end of the calendar year to which such charge or
credit pertained.
9.5 Credit Terms. Prior to the commencement of deliveries
of gas hereunder, and at any time and from time to time
thereafter upon request from Seller, Buyer shall provide Seller
such credit information as may reasonably be required by Seller
to determine Buyer's creditworthiness. If, based on the
information provided and Seller's review thereof using generally
accepted financial evaluation standards applied on a non-
discriminatory basis, Seller concludes that Buyer does not
currently meet Seller's reasonable requirements for extension of
unsecured credit in an amount commensurate with the estimated
outstanding receivables under this Contract, Seller may request
and Buyer shall promptly provide an irrevocable standby letter of
credit, guaranty, or other good and sufficient security of a
continuing nature, satisfactory in form, issuer and amount to
Seller, as determined by Seller in its reasonable discretion.
Seller will periodically review its evaluation of Buyer's
creditworthiness and will release any such security instruments
when and if Seller concludes, applying the standards set forth
above, that Buyer meets Seller's requirements for extension of
unsecured credit. Seller shall have the right to delay
commencement of deliveries, or suspend deliveries after they are
commenced, pending Buyer's full compliance with this Section 9.5.
ARTICLE 10
Processing Rights and Injection of Liquids
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10.1 Seller hereby reserves the right to process all or any
portion of gas deliverable to Buyer hereunder for the removal of
all or any constituents thereof other than methane, and to remove
such methane as is necessary in the operation of the processing
facilities; provided, however, that Seller's's exercise of such
rights shall not have the effect of reducing the quantities of
gas (determined on a thermal basis) sold and delivered hereunder
below Buyer's Nominated Purchase Quantity pursuant to Article 11.
Such processing rights may be exercised either upstream of or, if
the Transporter allows, downstream of the Delivery Point(s) and
may be accomplished by Seller or by any assignee or designee of
Seller; provided, however, that if Seller elects to process gas
downstream of the Delivery Point(s), Seller shall deliver to
Transporter for Buyer's account any additional quantities of gas
necessary to account for any reduction in quantity and/or heating
value that may result from such processing. When Seller is
exercising its right to process the gas (and such right may be
exercised at any time and from time to time during the term of
this Contract), title to the liquefiable hydrocarbons and other
constituents removed or consumed during processing shall not pass
to Buyer, but shall remain at all times in Seller. Buyer and
Seller agree that they will cooperate in good faith to facilitate
the exercise of Seller's processing rights, including, without
limitation, taking the actions described in the remainder of this
Article 10.
10.2 Regardless of whether or not Seller initially elects to
process the gas, Buyer shall make reasonable efforts to ensure
that all transportation agreements entered into by Buyer for
transportation of the gas downstream of the Point(s) of Delivery
shall contain a provision acknowledging and providing for the
exercise of Seller's's processing rights upon reasonable terms
and conditions at a mutually agreeable point on the system of
Transporter.
10.3 When and if Seller elects to exercise its processing
rights, Buyer and Seller will establish reasonable accounting and
billing procedures so that (a) Buyer will pay only for the
quantities of residue gas remaining after processing (b) all
charges of the Transporter will be equitably allocated between
Buyer and Seller, with Seller paying all costs attributable to
the exercise of its processing rights (including any cash-outs
imposed by Transporter) and Buyer paying all costs attributable
to the gas purchased by it hereunder.
10.4 It is understood that Seller's gas wells may produce
liquid hydrocarbons (condensate) along with the gas well gas to
be delivered hereunder. To the extent that any Point of Delivery
provided for in this Contract is located on an offshore platform,
Buyer agrees that Seller may inject condensate into the gas
stream delivered hereunder for transportation and redelivery to
Seller at a separation facility to be located onshore. Buyer
shall make reasonable efforts to ensure that all transportation
agreements entered into by Buyer for transportation of the gas
downstream of any offshore Point(s) of Delivery shall contain a
reservation in favor of Seller of the right to inject and have
such condensate transported in Transporter's pipeline for
redelivery to Seller at the onshore separation facility. Seller
agrees to bear, or reimburse Buyer for, all charges of
Transporter attributable to the injection, transportation, and
redelivery of Seller's condensate.
10.5 Buyer shall furnish Seller with documentation
establishing the actual charges incurred by Buyer and borne by
Seller under Sections 10.3 and 10.4. Such documentation shall
reflect the method allocation of such charges between Buyer and
Seller.
10.6 Seller shall indemnity and save Buyer harmless from all
losses, damages, expenses, and liabilities (including reasonable
attorneys'' fees) that may occur or be asserted by reason of
accidents or occurrences resulting from Seller's or any third
party's operations as authorized by this Article 10.
ARTICLE 11
Taxes
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The price for gas delivered hereunder is inclusive of all
production, severance, ad valorem, or similar taxes levied on the
production or transportation of the gas prior to its delivery to
or for the account of Buyer at the Point(s) of Delivery, and all
such taxes shall be borne and paid exclusively by Seller;
provided, however, that if Buyer is required by law to remit such
taxes to the collecting authority, Buyer shall do so and deduct
the taxes so paid on Seller 's behalf from payments otherwise due
to Seller hereunder. The price does not include any Federal,
Indian, State or local sale, use, consumption or similar taxes
which may now or hereafter be imposed on the transfer of title or
possession of the gas to or for the account of Buyer, or on
Buyer's subsequent use or disposition thereof. Any such taxes
shall be paid by Buyer directly to the taxing authority unless
Seller is required by law to collect and remit such taxes, in
which case Buyer shall reimburse Seller for all amounts so paid.
If Buyer claims exemption from any such taxes, Buyer shall
provide Seller a tax exemption certificate or other appropriate
documentation thereof.
ARTICLE 12
Laws and Regulation
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This Contract is subject to all valid laws, orders, rules
and/or regulations of any and all duly constituted governmental
authorities, Federal, State or local, to the extent such laws,
regulations, and orders are applicable and effective from time to
time; provided, however, that if any such governmental authority
shall take any action or assert any jurisdiction whereby the
sale, delivery, receipt, or use of gas as contemplated hereunder
will be subjected to terms, conditions, or restraints that in the
sole judgment of the party affected are unduly burdensome or
unacceptable, then such party, within 30 days after teaming of
such action or assertion of jurisdiction, may cancel and
terminate this Contract effective one day prior to the effective
date of such governmental action. In the event of such
termination, the parties agree. that all gas received by Buyer
hereunder prior to cessation of deliveries shall be paid for by
Buyer at the rate in effect immediately prior to the termination
of this Contract.
ARTICLE 13
Force Majeure
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13.1 Suspension of Obligations During Force Majeure. If
either Party hereto is rendered unable, wholly or in part, by
force majeure to carry out its obligations under this Contract,
other than to make payment for gas delivered hereunder, then upon
such Party's giving notice and full particulars of such force
majeure in writing to the other Party as soon as practicable
after the occurrence of the cause relied on, the obligations of
both parties, except unpaid financial obligations arising prior
to the force majeure event, shall be suspended to the extent and
insofar as they are affected by the force majeure event, for the
duration of the force majeure event, but for no longer period,
and to the extent that the 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.
13.2 Relationship of Force Majeure to Seller's Supply
Obligations Under This and Other Contracts. The Parties
acknowledge and agree that Seller may make sales of gas to other
buyers under other firm contracts and that those other contracts
may provide for deliveries of gas on the same Transportation
Segment(s) as this Contract. The Parties further recognize that
a force majeure occurrence affecting Seller's ability to deliver
gas on a Transportation Segment could result in Seller's having
less gas available on that Transportation Segment than Seller is
contractually obligated to deliver under all of those contracts.
If a force majeure occurrence results in Seller's total supply of
available gas on a Transportation Segment being less than the sum
of Seller's total firm sales obligations on that Transportation
Segment, even if such available supply is sufficient to fulfill
Seller's obligations under one or more of such contracts, then
such force majeure occurrence shall be deemed to have rendered
Seller unable to fulfill its obligations under each one of such
contracts, including this Contract, and Seller shall be entitled
to the protection afforded by Section 13.1 so long as Seller
endeavors in good faith to allocate its available supply in
accordance with Section 13.4, giving due regard to the nature of
the force majeure occurrence, any restrictions imposed by
transporters, and the time required for Seller to make alternate
arrangements.
13.3 Definition of Force Majeure. The term "force majeure"
as employed herein means acts of God, strikes, lockouts, or other
industrial disturbances, acts of the public energy, wars,
blockades, insurrections, riots, epidemics, landslides,
lightning, hurricanes or storms, hurricane or storm warnings
which in Seller's judgment require the precautionary shutdown or
evacuation of production facilities, earthquakes, fires, floods,
washouts, arrest and restraints of governments and people, civil
disturbances, explosions, breakage or accidents to machinery,
equipment, or lines of pipe, freezing of wells or lines of pipe,
partial or entire failure of wells, failure of firm pipeline
transportation, and any other cause beyond the reasonable control
of the Party affected which renders that Party unable to carry
out its obligations under this Contract. The settlement of
strikes or lockouts shall be entirely within the discretion of
the Party having the difficulty, and the above requirements that
any force majeure shall be remedied with all reasonable dispatch
shall not require the settlement of strikes or lockouts by
acceding to the demands of opposing party when such course is
inadvisable in the discretion of the party having the difficulty.
13.4 Allocation of Supplies During- Force Majeure
Occurrences. The Parties recognize and agree that there are no
specific reserves or wells dedicated to this Contract, and that
designation of a Point or Points of Delivery hereunder does not
mean that any gas flowing to any such Point or Points of Delivery
is dedicated specifically to this Contract or to any other
contract before actually being delivered to a buyer. In the
event of a force majeure occurrence affecting Seller's ability to
deliver gas on one or more Transportation Segments associated
with this Contract, unless prevented by the force majeure from
doing so, Seller shall take the following actions, in the order
listed, to the extent reasonably necessary to maintain or restore
its deliveries to Buyer and Seller's other firm sales customers,
which, for all purposes of this Article 13 shall be deemed to
include any of Seller's own corporate facilities receiving gas on
the affected Transportation Segment(s) under a written memorandum
of understanding:
1. Curtailing or interrupting some or all of Seller's
interruptible sales on the affected Transportation Segment(s).
2. Delivering all or part of the gas to be delivered
hereunder at any mutually agreeable alternate Point(s) of
Delivery on the affected Transportation Segment(s) (excluding any
storage facilities owned or held by Seller) where Seller has gas
which can be delivered to Buyer without violating other
contractual obligations of Seller.
If, in response to a force majeure occurrence, Seller takes the
above actions and still is unable to meet all of its firm sales
obligations on the affected Transportation Segment(s), then
Seller shall curtail ratably its firm sales customers (including
Buyer) receiving gas on the affected Transportation Segment(s)
based on each customer's nominated quantities on the affected
Transportation Segment(s); provided, however, that Seller's
obligation to prorate hereunder shall not extend to any of
Seller's Warranty Sales Contracts. If, at the inception of any
force majeure occurrence, Seller is delivering gas from a single
source to more than one Transportation Segment (i.e., from a
split-connected source) Seller shall curtail deliveries from that
source to each such Transportation Segment on a pro rata basis,
based on the relative quantities nominated by Seller's firm
customers on each of the affected Transportation Segments.
13.5 Special Arrangements. During any period when Buyer's
Nominated Purchase Quantity is being prorated as provided above,
Seller shall also use reasonable efforts to locate and offer to
Buyer substitute gas supplies on other Transportation Segments or
other pipeline systems in the vicinity of the affected
Transportation Segment, but only to the extent that (a) Buyer has
so requested, (b) Seller can do so without violating Seller's
contractual obligations to other customers, and (c) Buyer and
Seller first agree on the allocation between them of any
additional costs incurred in utilizing" such alternate sources.
If such substitute supplies are available, Seller shall use
reasonable efforts to equitably allocate them among Buyer and
other adversely affected firm customers which are capable of
receiving gas at the alternate sources.
ARTICLE 14
Warranty of Title and Royalties
-------------------------------
14.1 Title. Seller hereby warrants title to the gas sold by
it hereunder and its right to sell the same and warrants that all
such gas shall be delivered by Seller free from all liens,
encumbrances and adverse claims, including, but not limited to,
liens to secure payment of production taxes, severance taxes and
other taxes.
14.2 Royalties and Other Charges. Seller shall pay or cause
to be paid all royalties and other sums due on the gathering and
handling of the gas prior to its delivery to Buyer.
14.3 Indemnity. Seller shall indemnity and save Buyer
harmless from and against all suits, actions, damages, costs and
expenses arising from or out of any breach of Seller's
obligations, representations, or warranties as expressed in this
Article 14.
ARTICLE 15
Term
-----------
This Contract shall become effective as of the date first
above written and shall continue in -force and effect, unless
terminated earlier under the provisions hereof, for a primary
term of five months. After the primary term, this Contract shall
continue in effect on a month to-month basis, unless and until
terminated by either Party giving written notice to the other at
least thirty days prior to the end of the primary term or any
successive one month extension.
ARTICLE 16
Resolution of Disputes
----------------------
16.1 Any dispute arising under any paragraph of this
Contract shall be resolved as provided in this Article. During
the process of dispute resolution, the parties shall continue
performance of their respective obligations under this Contract.
16.2 Prior to resorting to mediation or litigation, the
parties agree to consult about any differences they may have
under this Contract.
16.3 Prior to initiating litigation hereunder, the parties
agree to attempt to mediate their dispute through the selection
of a mutually acceptable neutral mediator upon such terms and
conditions as they might agree to.
16.4 If, after a period of two months after selection of the
neutral mediator, the parties are unable to reach agreement
through mediation, either party may then resort to litigation or
any other legal remedy which may be available to resolve the
dispute.
16.5 Neither party shall be required to delay the
commencement of litigation in order to comply with this Section
16 unless the other party first agrees to toll any applicable
statute of limitations that might otherwise require commencement
of litigation to preserve either party's rights in the disputed
matter.
ARTICLE 17
Confidentiality
---------------
17.1 Except as specifically provided herein, each Party
agrees that it will maintain this Contract and all terms and
conditions of this Contract in strictest confidence and that it
will not cause or permit disclosure of this Contract or of the
contents thereof to any third party without the express written
consent of the other Party hereto; provided, however, that such
third party restriction does not apply to affiliated companies.
Disclosures otherwise prohibited by this Article 17 may be made
by either Party (a) to the extent necessary for such Party to
enforce its rights hereunder against the other Party, (b) to the
extent a Party is contractually or legally bound to disclose
financial information to a third party such as a royalty owner or
partner, or (c) to the extent to which a Party hereto is required
to disclose all or part of this specific Contract by a statute or
by a court, agency, or other governmental body exercising
jurisdiction over the subject matter hereof or the parties
hereto, by order, regulation or by other compulsory process
(including, but not limited to, deposition, subpoena,
interrogatory, or request for production of documents).
17.2 If either Party is or becomes aware of a fact,
obligation or circumstance that has resulted or may result in a
disclosure authorized in Section 17.1, it shall so notify the
other party immediately and shall provide documentation or an
explanation of the disclosure as soon as it is available. Each
Party further agrees to cooperate to the fullest extent in
seeking confidential status to protect any material so disclosed.
17.3 The Parties hereto acknowledge that independent legal
counsel or consultants may, from time to time, be provided with a
copy of this Contract and agree that such disclosure does not
require consent by the other Party, provided that such counsel or
consultant affirms in writing to the client that they agree to
abide by the terms and conditions of this Article 17.
ARTICLE 18
Miscellaneous
-------------
18.1 Waivers. No waiver by either Seller or Buyer of any
default of the other under this Contract shall operate as a
waiver of future default, whether of like or different character
or nature.
18.2 Binding Nature; Assignment As Security. This Contract
shall be binding upon and inure to the benefit of the successors
and assigns, or the heirs, administrators, or executors of the
Parties hereto. Either party hereto may assign its right, title
and interest in, to and under this Contract, including without
limitation, any and all renewals, extensions, amendments, and/or
supplements herein to any individual, bank, trustee, company or
corporation as security for any notes, bonds or other obligations
or securities of such assignor; provided, however, that no such
assignment shall in any way operate to enlarge, alter or change
any obligation of the other party hereto.
18.3 Assignment. Seller and Buyer reserve the right to
assign this Contract partially or in its entirety to any of their
affiliates; however, ultimate responsibility for performance
hereunder shall remain with the respective party hereto. Except
as otherwise provided in this Contract, this Contract may not be
assigned by either party without the written agreement of the
other party.
18.4 Notices. Any notice, request, demand, or statement,
provided for in this Contract, except as otherwise herein
provided, may be given in writing, delivered in person or by
United States Mail or by any other recognized delivery service,
to the parties hereto at the addresses shown below or at such
other addresses as may hereafter be furnished to the other party
in writing:
BUYER: Invoices, Notices, and Correspondence
Yankee Gas Services Company
P.O. Box 1030
599 Research Parkway
Meriden, Connecticut 06450-4050
Attention: Mr. Dave Egelson
Fax No.: (203) 639-4050
SELLER: Correspondence and Notices
Mobil Natural Gas Inc.
12450 Greenspoint Drive
Houston, TX 77060 - 1991
Attention: Northeast Area Gas Sales Manager
Payments Shall Be Made By Wire Transfer To:
Mobil Natural Gas Inc.
Account #4064-0969
Citibank, N.A.
ABA Ref. No. 021000089
Any notice initially delivered by telecopy shall be confirmed by
regular mail within one week after transmission of the telecopy.
18.5 Applicable Law. The parties agree that Connecticut law
exclusively shall govern all terms of this Contract, including
this section, disregarding, however, any applicable conflict-of-
laws provisions that would require the application-of the law of
some other state. If either party initiates litigation relating
to this Contract, then, in addition to complying with any
applicable statutory notice requirements, such party shall give
the other party notice thereof by certified mail, return receipt
requested, at the most recent address provided by such party in
accordance with Section 18.4.
18.6 Modifications. No modification of the terms and
provisions, of this Contract shall be or become effective except
pursuant to and upon the due and mutual execution of an
appropriate supplemental written contract by the Parties hereto.
18.7 No Third Party Beneficiaries. It is specifically
agreed that there are no third party beneficiaries to this
Contract, and that this Contract shall not impart any rights
enforceable by any person, firm, organization, or corporation not
a Party hereto.
IN WITNESS WHEREOF, the parties have executed this Contract
in duplicate originals, each of which shall constitute and be an
original contract.
BUYER: YANKEE GAS SERVICES COMPANY
By: /s/ Thomas J. Houde
----------------------------------
Title: Vice President - Rates and
Resource Planning
SELLER: MOBIL NATURAL GAS INC.
By: /s/ S. C. Freeman
----------------------------------
Title:
EXHIBIT A
To Gas Purchase Contract dated as of November 1, 1993 between
MOBIL NATURAL GAS INC., as Seller and YANKEE GAS SERVICES
COMPANY, as Buyer.
Points of Delivery
Texas Eastern
Pooling Zone Delivery Point Maximum Quantity
- -------------- --------------- -----------------
West Louisiana Pool Cameron System Service Pt. 7,000
MMBtu/day**
No.79503*
East Louisiana Pool Venice System Service Pt. 8,00O
MMBtu/day**
No.79504*
* Seller will deliver to the listed Service Points using its
TABS Agreement, which is currently designated as No. 600284.
** Plus fuel and lost and unaccounted for gas as required by
the Transporter's tariff.
EXHIBIT B
To Gas Purchase Contract dated as of November 1, 1993 between
MOBIL NATURAL GAS INC., as Seller and YANKEE GAS SERVICES
COMPANY, as Buyer.
Buyer's Monthly Purchase Nomination
To: Mobil Natural Gas Inc.
12450 Greenspoint Drive
Houston TX 77060-1991
Attention: Northeast Area Gas Sales Manager
Fax No. (713) 775-4107
Buyer's Nominated Purchase Quantity under the captioned contract
for the
month of , 199 , shall be for MMBtu
per day, plus fuel and lost and unaccounted for gas as required
by
the Transporter's tariff.
YANKEE GAS SERVICES COMPANY
By:
---------------------------
Title:
-------------------------
Date:
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