NATURAL GAS SALE AND PURCHASE AGREEMENT
BETWEEN:
SHELL CANADA LIMITED, A Canadian Corporation with
head office in Calgary, Alberta, Canada.
(hereinafter referred to as "Seller")
and
GREAT FALLS GAS COMPANY, A Montana Corporation
with head offices in Great Falls, Montana USA
(hereinafter referred to as "Buyer")
INDEX
ARTICLE PAGE
I Interpretation. . . . . . . . . . . . . . . . . . . . . . . . 1
II Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . 4
III Delivery and Ownership. . . . . . . . . . . . . . . . . . . . 5
IV Gas Specifications and Measurement. . . . . . . . . . . . . . 5
V Contract Volumes. . . . . . . . . . . . . . . . . . . . . . . 6
VI Term and Price. . . . . . . . . . . . . . . . . . . . . . . . 8
VII Payment . . . . . . . . . . . . . . . . . . . . . . . . . . .12
VIII Force Majeure . . . . . . . . . . . . . . . . . . . . . . . .15
IX Covenants, Warranties and Indemnities by Seller . . . . . . .18
X Arbitration . . . . . . . . . . . . . . . . . . . . . . . . .19
XI Default and Remedies. . . . . . . . . . . . . . . . . . . . .21
XI General Provisions. . . . . . . . . . . . . . . . . . . . . .22
NATURAL GAS SALE AND PURCHASE AGREEMENT
This Agreement dated the 20th day of July, 1992 is made between:
SHELL CANADA LIMITED, A Canadian Corporation with
head office in Calgary, Alberta, Canada.
(hereinafter referred to as "Seller")
and
GREAT FALLS GAS COMPANY, A Montana Corporation
with head offices in Great Falls, Montana USA
(hereinafter referred to as "Buyer")
WHEREAS, Seller has available for sale certain supplies of natural gas, and
Seller desires to sell and deliver to Buyer such natural gas supplies in the
quantities and under the terms and conditions hereinafter provided; and
WHEREAS, Buyer and it's subsidiaries desire to receive and purchase such
natural gas in the quantities and under the terms and conditions hereinafter
provided;
NOW THEREFORE, in consideration of the premises and mutual covenants and
agreements herein set forth, Seller and Buyer contract and agree as follows:
ARTICLE I - INTERPRETATION
1.01 DEFINITIONS
As used in this Agreement:
(a) "ANNUAL CONTRACT QUANTITY" OR "ACQ" means the volume obtained when
multiplying the number of Days in the Contract Year by the Maximum
Daily Quantity in effect for that Contract Year;
(b) "BUSINESS DAY" means all calendar days excluding:
(i) Saturdays and Sundays;
(ii) All statutory holidays under the laws of Alberta, Montana,
Canada or the United States of America; and,
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(iii) All calendar days on which the head office of Seller or Buyer
is not open for business, provided however that all such
calendar days during each calendar year shall be identified
by notice from Seller to Buyer and vice versa on or before
February 15 of the calendar year in question;
(c) "BRITISH THERMAL UNIT" OR "BTU" means the amount of heat required to
raise the temperature of one (1) pound of water from fifty-nine degrees
Fahrenheit (59 DEG F) to sixty degrees Fahrenheit (60 DEG F) at a
constant pressure of fourteen and seventy-three hundredths pounds per
square inch absolute (14.73) psia). Total BTU's shall be determined by
multiplying the total volume of Gas delivered times the Gas Heating
Value expressed in BTU's per cubic foot of Gas adjusted on a dry basis;
(d) "MAXIMUM DAILY QUANTITY" or "MDQ" means the specified volume of Gas
which Buyer contracts to purchase each Day under this Agreement as set
out in section 5.02 herein, or as otherwise provided in this Agreement;
(e) "DAY" means a period of 24 consecutive hours, beginning and ending at
0800 hours MST;
(f) "DELIVERY POINT" has the meaning as set forth in section 3.01;
(g) "INTERRUPTIBLE DAILY QUANTITY" or "IDQ" means the specified volume of
Gas which Buyer may purchase on an interruptible basis, as set forth in
section 5.06;
(h) "Mcf" means the quantity of Gas occupying a volume of one thousand
(1,000) cubic feet at a temperature of sixty degrees Fahrenheit (60 DEG
F) and at a pressure of fourteen and seventy-three hundredths pounds
per square inch absolute (14.73 psia);
(i) "MONTH" means a period beginning at 0800 hours MST on the first Day of
a calendar month and ending 0800 hours MST on the first Day of the next
succeeding calendar month;
(j) "GAS" means natural gas and or residue gas comprised primarily of
methane;
(k) "NOVA" means Nova Corporation of Alberta or any successor thereof;
(1) "PARTY" means a party to this Agreement;
(m) "YEAR" or "CONTRACT YEAR" means a period of 12 consecutive months
commencing on November 1, 1992 and on each subsequent anniversary
thereof;
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(n) "HEATING VALUE" means the quantity of heat, measured in Btu, produced
by combustion in air of one (1) cubic foot of anhydrous Gas at a
temperature of sixty degrees Fahrenheit (60 DEG F) and a constant
pressure of fourteen and seventy-three hundredths pounds per square
inch absolute (14.73 psia), the air being at the same temperature and
pressure as the Gas, after the products of combustion are cooled to the
initial temperature of the Gas and air, and after condensation of the
water formed by combustion;
(o) "CANADIAN REGULATORY AUTHORITIES" means the federal, provincial or
local governmental agencies or other authorities in Canada, which have
jurisdiction over the sale, export or transportation of Gas or other
matters in question, including, without limitation, the National Energy
Board of Canada ("NEB"), the Energy Resources Conservation Board of
Alberta ("ERCB"), the Alberta Petroleum Marketing Commission ("APMC"),
and the federal and provincial Governors-in-Council; and,
(p) "U.S. REGULATORY AUTHORITIES" means the federal, state or local
government agencies or other authorities in the United States of
America which have jurisdiction over the sale, import, transportation
of Gas or other matters in question, including, without limitation,
the Office of Fossil Fuels of the United States Department of Energy
("OFE"), the Federal Energy Regulatory Commission ("FERC") and the
Montana Department of Public Service Regulation ("PSR").
1.02 CUSTOM
In this Agreement, words, phrases or expressions which are not defined
herein, and which, in the usage or custom of the business of the exploration,
production, transportation, distribution or sale of Gas, have an accepted
meaning, shall have that meaning.
1.03 SCHEDULES
Any and all schedules appended hereto shall constitute part of, and be
incorporated into this Agreement.
1.04 CURRENCY
All conversions from Canadian currency to currency of the United States or
vice-versa, shall be done by the parties using the average Bank of Canada
posted noon spot exchange rates for the conversion of Canadian funds into
United States funds or vice-versa, as quoted for the calendar month in which
the transaction occurred.
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ARTICLE II - CONDITIONS
2.01 CONDITIONS PRECEDENT
This Agreement is subject to the satisfaction of the following conditions
precedent on terms and conditions satisfactory to the Party, acting
reasonably, entering into or obtaining same:
(a) Seller entering into firm, non-interruptible transportation agreements
with NOVA and Seller and NOVA obtaining all necessary certificates,
permits, licenses and authorizations from Canadian Regulatory
Authorities for the transactions contemplated by this Agreement,
including without limitation, the sale and removal of the Maximum Daily
Quantity from Alberta, the export of the Maximum Daily Quantity from
Canada and the firm, non-interruptible transportation of the Maximum
Daily Quantity in Canada from Seller's facilities through the
facilities of NOVA;
(b) Buyer entering into firm, non-interruptible transportation agreements
with Montana Power Company and Buyer and Montana Power Company
obtaining all necessary certificates, permits licenses and
authorizations from U.S. Regulatory Authorities for the transactions
contemplated by this Agreement for the full term of this Agreement,
including without limitation, the purchase and importation of the
Maximum Daily Quantity from Canada and for the firm, non-interruptible
transportation of the Maximum Daily Quantity in the United States
through the facilities of Montana Power Company.
2.02 FULFILLING CONDITIONS
(a) If by October 15, 1992, any condition precedent referred to in section
2.01 has not been satisfied, or with respect to subsection 2.01(a)
waived by written notice provided by Seller or with respect to
subsection 2.01(b) waived by written notice provided by Buyer then
either Party may thereafter, at any time, provide written notice to the
other Party of its election to terminate this Agreement and unless such
conditions precedent are so satisfied or waived within ninety (90) Days
after the receipt of such notice, this Agreement shall thereupon
terminate.
(b) Both Buyer and Seller shall act with due diligence and exercise all
reasonable efforts to fulfill all such conditions precedent.
(c) Buyer and Seller shall notify each other forthwith in writing upon the
conditions precedent in section 2.01 having been met.
(d) Seller and Buyer shall cooperate with each other so as to assist each
other in fulfilling the conditions precedent set forth in section 2.01
in order that the delivery of Gas hereunder may commence on a timely
basis.
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ARTICLE III - DELIVERY AND OWNERSHIP
3.01 DELIVERY POINT
The Delivery Point for all Gas delivered hereunder shall be that point on the
Canada/United States of America border at the interconnection of the pipeline
systems of NOVA and Montana Power Company near Carway, Alberta.
3.02 TITLE AND POSSESSION
Property in and title to the Gas and all risk of loss respecting all Gas
delivered hereunder shall pass from Seller to Buyer and shall vest in Buyer at
the Delivery Point. As between Seller and Buyer, until delivery of the Gas at
the Delivery Point, Seller shall be deemed to be in control and possession of
the Gas and shall be responsible for all costs, losses, damages, injuries to
persons or property or liabilities arising from or out of Seller's title,
possession, custody or control of Gas hereunder prior to title to the Gas
passing to Buyer at the Delivery Point. As between Seller and Buyer, after
delivery of the Gas at the Delivery Point, Buyer shall be deemed to be in
control and possession of the Gas and shall be responsible for all costs,
losses, damages, injuries to persons or property or liabilities arising from or
out of Buyer's title, possession, custody or control of Gas hereunder after
title to the Gas passes to Buyer at the Delivery Point.
3.03 ROYALTIES AND TAXES
Seller shall pay or cause to be paid and shall be solely responsible for all
royalties, overriding royalties and payments out of production, together with
all applicable federal, provincial, municipal and local taxes, levies or
surcharges imposed by authorities that are applicable on Gas delivered
hereunder before title to such Gas passes to Buyer at the Delivery Point.
Buyer shall be solely responsible for the above enumerated payments, taxes,
levies or surcharges that are applicable on Gas delivered hereunder when and
after title to such Gas passes to Buyer at the Delivery Point.
ARTICLE IV - GAS SPECIFICATIONS & MEASUREMENT
4.01 GAS SPECIFICATIONS
Buyer and Seller each agree that Gas delivered hereunder will be in a
commingled stream and shall be at the pressure and meet or exceed the minimum
quality specifications required by NOVA and Montana Power Company.
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4.02 MEASUREMENT
It is understood and agreed that neither Buyer nor Seller owns or operates
measuring and testing equipment at the Delivery Point. Therefore, all Gas
delivered to Buyer hereunder shall be measured at the Delivery Point as to
volume and Heating value by Montana Power Company, in accordance with its
filed and approved tariffs and standard Industry practice. All such
measurements made (including all correction thereof) shall be final and
binding upon Seller and Buyer as to the Gas delivered under this Agreement.
Seller or Buyer may at their sole cost, risk and expense witness such
measuring and the testing of measuring equipment if they so desire.
ARTICLE V - CONTRACT VOLUMES
5.01 SUPPLY COMMITMENT
Subject to Article VIII, Force Majeure, Seller has, or shall have and shall
maintain at all times throughout the term of this Agreement, sufficient Gas
reserves and deliverability with respect to the delivery of Gas to the
Delivery Point, so as to enable Seller to meet its obligations hereunder.
5.02 MAXIMUM DAILY QUANTITY
The Maximum Daily Quantity shall be equal to 5,000 MMBtu/day (140
10(3)m(3)/d). On each Day during the term of this Agreement, Buyer may
nominate its Gas requirement and Seller shall be obligated to deliver the
amount so nominated by Buyer up to the MDQ.
5.03 CATEGORIES OF GAS
The quantities of Gas to be purchased by Buyer hereunder shall consist of
Tier I Gas and Tier II Gas which shall bear different prices as set forth in
Article VI below.
5.04 TIER I GAS
Commencing with each Contract Year, Buyer will purchase the initial
sixty-five percent (65%) of the ACQ ("Tier I Gas") at the then applicable
price for Tier I Gas, as set forth in section 6.02 herein. If and when the
Tier I Gas is taken by Buyer, the remainder of gas taken by Buyer in that
Contract Year will be Tier II Gas.
5.05 TIER II GAS
Commencing with the completion of the Tier I Gas Volume (defined as the
product of the MDQ and the number of Days in the Contract Year multiplied by
0.65), all Gas taken thereafter by Buyer in that Contract Year will be Tier
II Gas.
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5.06 INTERRUPTIBLE DAILY QUANTITY ("IDQ")
On any Day Buyer may request, over and above the MDQ, up to an additional
5,000 MMBtu/day (140 10(3)m(3)/d) and subject to agreement upon price, Seller
shall endeavor, on an interruptible basis, to supply the difference between
the IDQ and the MDQ. The price for the volume of gas that is the difference
between the IDQ and the MDQ shall be established on a monthly basis by
negotiation between Buyer and Seller.
5.07 GAS TAKE LEVELS
If, during any Contract Year, Buyer does not purchase at least eighty percent
(80%) of the then applicable ACQ, a "Shortfall Year" will exist. The
difference between eighty percent (80%) of the then applicable ACQ and the
amount actually taken by the Buyer will be the "Shortfall Amount". Within
ninety (90) Days of the commencement of the Contract Year following the end
of the Shortfall Year (the "Make-up Year"), Seller may elect to provide
notice to Buyer stating the Shortfall Amount and the proportionate reduction
in the ACQ and MDQ that will be in effect at the commencement of the Contract
Year following the Make-up Year. Subject to the limitation created by the MDQ
and ACQ applicable during the Make-up Year, buyer may elect to avoid all or
part of this reduction by first purchasing eighty percent (80%) of the
applicable ACQ in the Make-up Year and then purchasing all or a portion of
the Shortfall Amount prior to the end of the Make-up Year. The Commodity
Charge for the Shortfall Amount will be the applicable rate (depending upon
whether the Shortfall Amount being purchased represents Tier I Gas or Tier II
Gas) in effect during the Make-up Year.
The ACQ and MDQ in the Contract Year following the Make-up Year will be
proportionately reduced by the remaining Shortfall Amount, unpurchased, if
any, at the end of the Make-up Year.
5.08 NOMINATIONS
Buyer or Buyer's nominee shall nominate to Seller or Seller's nominee, by
written telecommunication each and every Day by 1200 hours MST, Buyer's daily
requirements for Gas for the following Day. Failure to so nominate to Seller
shall cause continuation of the last received nomination.
5.09 FAILURE TO TAKE NOMINATION
In the event that Buyer nominates quantities and Seller delivers such
quantities into the NOVA pipeline system and Buyer is unable or unwilling for
whatever reason to take delivery of such quantities at the Delivery Point,
then Buyer shall pay the price calculated on a per MMBtu on a 100% Load
Factor basis for such volumes so nominated and delivered to NOVA, including
the actual associated transportation and inventory penalty incurred by Seller
for such quantities of Gas, provided that Seller makes reasonable efforts to
mitigate such transportation penalties.
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5.10 FAILURE TO DELIVER
If Seller is unable to meet Buyer's nomination, Seller shall promptly notify
Buyer of Seller's inability to deliver Gas, whether or not such inability
covers all or part of Buyer's nomination. Seller shall use its reasonable
efforts to obtain and supply from other sources the volumes of Gas that
Seller is obligated but unable to deliver to Buyer at the Delivery Point
("Replacement Gas"). Seller shall endeavor to arrange for delivery of
Replacement Gas, to the Delivery Point on the same Day at a price which shall
not exceed the delivered cost to Buyer of Gas that Seller was obligated to
deliver in accordance with Buyer's nomination ("Buyer's Cost of Gas").
Notwithstanding the foregoing, if Seller is unable to deliver Replacement Gas
hereunder, Buyer may purchase Replacement Gas and Seller shall reimburse
Buyer for any unabsorbed demand charges incurred on the Montana Power Company
system and the price of Replacement Gas, in excess of the price hereunder,
that Buyer is required to pay to any other producer or local distribution
company as a result of Seller's failure to deliver Gas nominated by Buyer,
adjusted for transportation, if applicable. Buyer shall make reasonable
efforts to mitigate the cost of Replacement Gas. Seller's sole liability and
Buyer's sole remedy with respect to Seller's failure to supply Gas shall be
limited to such cost of Replacement Gas. In no event shall Seller, it's
directors, trustees, agents, officers or employees be liable to Buyer, it's
directors, trustees, agents, officers or employees for any incidental,
special, indirect or consequential damages of any nature including without
limitation any claims of customers of Buyer, connected with or resulting from
Seller's failure to supply Gas under this Agreement.
ARTICLE VI - TERM AND PRICE
6.01 TERM
(a) Subject to the satisfaction or waiver of the conditions precedent set
forth in section 2.01, deliveries of Gas under this Agreement shall
commence on November 1, 1992 ("Commencement Date") and shall except as
otherwise specifically provided for herein continue for a term of
fifteen (15) Contract Years after November 1, 1992.
(b) The Term of the Agreement shall consist of three (3) segments of five
(5) Contract Year periods as follows:
Segment 1 November 1, 1992 - October 31, 1997;
Segment 2 November 1, 1997 - October 31, 2002;
Segment 3 November 1, 2002 - October 31, 2007.
(c) Unless either Party gives notice to the other Party at least
twenty-seven (27) Months prior to the end of Segment 1 specifying its
intention to terminate this Agreement at the end of Segment 1 the term
shall continue into Segment 2.
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(d) Anytime on or after August 1, 1995, either Party may give notice to the
other Party of at least twenty-seven (27) Months to terminate this
Agreement prior to the end of the Term.
6.02 PRICE
The Price to be paid by Buyer to Seller for Gas purchased and sold and the
service provided hereunder for the period of time commencing with the
Commencement Date will consist of the sum of the four (4) components identified
hereunder. The Price will be in U.S. dollars.
(a) Each Month, Buyer shall pay Seller a "Demand Charge" equal to Seller's
actual cost for that Month of reserving the firm transportation
required to transport the MDQ on NOVA to the Delivery Point.
(b) Each Month, Buyer shall pay Seller a "Reservation Charge" equal to the
product of the MDQ times the number of days in the Month times the
Reservation Charge. The Reservation Charge for the first two years of
this Agreement shall be $0.06 U.S./MMBtu.
(c) Each Month, Buyer shall pay Seller for each MMBtu of Tier I Gas
delivered and received at the Delivery Point, a "Commodity Charge"
equal to a per MMBtu price fixed for at least one year by agreement of
the Parties in advance. The Commodity Charge for Tier I Gas for the
first two Years of this Agreement shall be $1.31 U.S./MMBtu on a dry
basis.
(d) Commencing with the completion of Tier I Gas purchases in each Contract
Year, the Commodity Charge for Tier II Gas will be negotiated and
agreed to by the Parties prior to the end of each previous Month. The
Parties will take into consideration the prepaid Demand Charge when
arriving at the Commodity Charge for the following month. Failing
agreement by the Parties, the Commodity Charge for the applicable Month
will equal the price published by NATURAL GAS WEEK in their Canadian
Price Report Section, under the Empress Border - Contract Subsection.
In the event that such price is no longer published or such publication
is no longer published then, failing agreement by the parties, the
Commodity Charge or a method of determining it shall be determined by
arbitration pursuant to Article X hereof. The prepaid Demand Charge
will be subtracted from the published price to arrive at the Commodity
Charge. Each Month Buyer shall pay Seller for each MMBtu of Tier II Gas
delivered and received at the Delivery Point, the above applicable
Commodity Charge.
If Buyer elects not to take gas during a Tier II Gas Month, Seller will be
allowed to sell that gas on an interruptible basis to third party purchasers.
The Demand Charge and the Reservation Charge shall be paid each Month
regardless of the quantity of Gas purchased and sold hereunder, except to the
extent that Seller fails to deliver Gas nominated.
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6.03 FUTURE PRICE DETERMINATION
(a) The Parties agree that they will meet from time to time to negotiate
the Tier I Commodity Charge and Reservation Charge components of the
Price payable hereunder for subsequent Contract Years. In any such
negotiations or resulting arbitration with respect to Price during the
Term of this Agreement only the Tier I Commodity Charge and Reservation
Charge components of the Price shall be redetermined and the Demand
Charge component of the Price shall not be subject to redetermination.
(b) Subject to 6.03 (a) The Parties agree, to establish a new Price for the
next Contract Year at least one hundred and twenty (120) Days prior to
the termination date of the current Contract Year and the Parties will
commence procedures for such redetermination no later than one hundred
and eighty (180) Days prior to the termination date of the current
Contract Year by either Party giving fifteen (15) Days written notice
to the other, to meet and negotiate. Such Price, and the various
components making up that Price, will be effective for a period of
time, as then agreed to, and will become effective on the commencement
of the next Contract Year. If neither Party has given written notice
to the other to renegotiate at least one hundred and eighty (180) Days
prior to the termination date of the current Contract Year, then the
Price for the current Contract Year shall continue in effect for the
next Contract Year.
6.04 FAILURE TO REACH AGREEMENT ON PRICE
In the event that the Parties are unable to reach agreement on the Price, or
the Price components at least one hundred and twenty (120) Days prior to the
termination date of the current Contract Year, as provided pursuant to
section 6.03 herein, either Party may, upon not less than fifteen (15) days
written notice to the other Party, have the Price determined pursuant to the
Arbitration provisions contained in Article X herein and exclusively in
accordance with the principles set forth in section 6.05 herein. Should no
notice for Arbitration be given at least ninety (90) days prior to the
termination date of the current Contract Year, the Price for the next
Contract Year shall continue to be the Price in effect for the current
Contract Year.
6.05 PRICING PRINCIPLES
For each Contract Year subsequent to the Contract Year for which the Price of
Gas to be sold and purchased hereunder has been established and specified,
the Parties agree to determine Price by negotiation or by arbitration. If the
Price for Gas delivered in any Contract Year is to be determined by
arbitration, the arbitrators shall determine a Price that, under the
prevailing market circumstances for long term firm Gas Supply and in the
opinion of the arbitrators, is fair and reasonable to both Buyer and Seller.
In making such determination, the arbitrators shall limit
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their consideration to the evidence which is presented by the Parties, and to
the extent that evidence is presented, shall base their determination upon
and shall give due consideration to each of the following criteria:
(i) The weighted average cost of gas paid by Buyer during the next
Contract Year for firm gas supplies with a term of two (2) years
or more;
(ii) The prices being paid during the next Contract Year for other firm
gas supplies by local distribution companies with a term of two
(2) years or more in the state of Montana; and,
(iii) The prices being paid during the next Contract Year for other
firm gas supplies by local distribution companies with a term
of two (2) years or more in the province of Alberta;
provided that the arbitrators shall consider the above matters in light of the
following:
(a) To the extent that evidence with respect to Prices for the next
Contract Year is not available or is insufficient, prices for the
current Contract Year will be considered;
(b) The times at which the prices were agreed to between the respective
buyers and sellers;
(c) Differences in transportation costs relevant to establishing a point of
comparison at the Delivery Point;
(d) The similarities and dissimilarities between the service provided
hereunder and the sales and transportation arrangements under which
other gas is being sold for consumption in Buyer's market area and in
Alberta, including in particular but not limited to the similarities
and dissimilarities between the quality of service and the security of
supply provided hereunder and provided under such other arrangements;
and,
(e) Any other considerations in respect of which relevant evidence is
adduced by the Parties and which is relevant to the determination of
such matters.
In the event that a negotiated or arbitrated Price is determined for a
Contract Year after commencement thereof, Seller shall retroactively adjust
its invoices to Buyer to the first Day of that Contract Year, to take into
account the revised Price. Until a new Price is concluded and retroactively
implemented, the previous Price shall remain in effect. If the Price
settlement date exceeds sixty (60) Days past the Contract Year commencement,
the retroactive invoice shall be adjusted for interest at the prime rate
pursuant to section 7.04.
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6.06 REGULATORY INTERVENTION
If Canadian Regulatory Authorities or U.S. Regulatory Authorities take action
by rule, order or other official means which materially and fundamentally
alters the operation of this Article VI such that Gas cannot be sold and
purchased hereunder at a market based price for long term firm Gas supply,
then either Buyer or Seller may notify the other Party by the means
identified in Article XII hereof of its intention to terminate this Agreement
This Agreement shall then terminate in all respects one hundred and eighty
(180) days after the provision of such notice unless within such one hundred
and eighty (180) day period the regulatory action has been modified or
revoked such that the operation of Article VI has been restored. The Parties
shall use due diligence and exercise all reasonable efforts to oppose any
regulatory action which might trigger the operation of this section 6.06.
ARTICLE VII - PAYMENT
7.01 MONTHLY BILLING
Once service or deliveries of Gas have commenced hereunder, Seller shall send
by facsimile to Buyer on or before the fifteenth (15th) Day of each Month
(the "Billing Month") with the original to follow by mail:
(a) A statement for the preceding Month showing the daily and total amount
of Gas delivered hereunder or, if such information is not available by
that Day, an estimate of such daily and total amounts; and,
(b) A bill in U.S. dollars with respect to the preceding Month together
with information sufficient to explain and support the amount billed.
7.02 PAYMENT DATE
Buyer shall pay Seller in U.S. dollars by direct electronic transfer to the
account of Seller designated herein, within ten (10) Days of receipt of
Seller's bill, the amount due to Seller with regard to Gas sold or reasonably
estimated to have been sold hereunder and service provided in the preceding
Month in accordance with the provisions of this Agreement as follows:
The Chase Manhattan Bank, N.Y.
Fedwire #0210-0002-1
Account: 001-1-146305
Bank of Montreal, Montreal
For Transfer to: Calgary Main Office
For Credit Account: 00109-4604-211
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In addition, Buyer shall send a copy of payment record by facsimile to
Seller. In the event that the tenth (10th) Day after receipt of Seller's bill
is not a Business Day, then Buyer shall pay Seller as aforesaid on or before
the Business Day immediately before such tenth (10th) Day. If Seller's bill
for any Month is based on an estimate of the Gas sold in the previous Month,
then the Parties shall make all necessary adjustments in the Month following
the billing Month to reflect the actual volumes of Gas Sold.
7.03 EXAMINATION OF RECORDS
Subject to the confidentiality provisions of this Agreement, Seller and Buyer
shall have the right, at any reasonable time and from time to time during the
term of this Agreement, to examine the books, records and accounts of the
other to the extent reasonably necessary to verify the accuracy of any
statement, billing, computation or procedure made under or pursuant to the
provisions of this Agreement.
7.04 REMEDIES FOR NON-PAYMENT
(a) Should Buyer fail to pay all of the amount of the bill as herein
provided when such amount is due, then commencing on the date such
payment is due, late payment charges shall accrue daily on the unpaid
part of such bill and be paid at a rate of interest per annum which is
equal to the prime rate charged from time to time by The Chase
Manhattan Bank of New York for loans to commercial borrowers, plus 1%
compounded monthly until paid. All such late payment charges shall be
payable on demand by Buyer to Seller. If either principal or late
payment interest charges are due, any payments thereafter received
shall first be applied to late payment charges due, then to the
previously outstanding principal due and lastly, to the most current
principal due.
(b) In the event of any such failure to pay, Seller may, in addition to any
other remedies that it may have under the terms of this Agreement, upon
10 Days written notice via facsimile and courier to Buyer, suspend
further delivery of Gas hereunder until such amount is paid. During the
period of any such suspension, Buyer shall continue to be liable to
Seller for the amounts set forth in section 6.02 with respect to the
Reservation Charge and Demand Charge attributable to such suspended
deliveries and such suspended deliveries shall not be considered to be
a failure by Seller to deliver gas under section 5.10
(c) Notwithstanding the foregoing, if Buyer shall in good faith dispute the
amount of any such bill or any part thereof, if Buyer shall pay to
Seller such amounts as it concedes to be correct and if Buyer at any
time within ten (10) Days after a demand made upon it by Seller for a
letter of credit with respect to the amount in dispute shall furnish
security by way of a letter of credit in a form reasonably satisfactory
to Seller assuring payment to Seller of the amount ultimately found to
be due to Seller upon such bill by agreement or
- 14 -
by a decision of a court of competent jurisdiction, as the case may be,
then Seller shall not be entitled to suspend further delivery of Gas
hereunder as a result of any such nonpayment unless and until a default
occurs in relation to the conditions of any such letter of credit or
any renewal thereof. If it is determined that Buyer owes Seller the
disputed amount, Buyer shall pay Seller the disputed amount within five
(5) Days of the determination thereof.
(d) Notwithstanding the provisions of subsection 7.04 (b), if Buyer does
not in good faith dispute the payment of the amount of any such bill
or any part thereof not paid, Seller, in addition to any other remedies
that it may have under the terms of this Agreement, at law or in
equity, may on written notice of at least thirty (30) Days, elect to
terminate this Agreement. Such notice may only be given after the
suspension of Gas deliveries referred to in subsection 7.04 (b) has
commenced.
7.05 ADJUSTMENTS
Subject to the provisions of section 7.02, if it shall be found that at any
time Buyer has been overcharged by Seller in relation to this Agreement and
Buyer shall have actually paid the bills containing such overcharge, then
within thirty (30) Days after the final determination thereof, Seller shall
refund the amount of any such overcharge and if such overcharge was the
result of Seller's error, then interest shall be paid by Seller on the amount
in question on the same basis as interest is charged under the provisions of
section 7.04 from the date the overcharge was paid to the date Buyer is
reimbursed for the overcharge. If any such overcharge is not a result of an
error on the part of Seller, then no interest shall be charged to Seller.
Similarly, if it shall be found that at any time Buyer has been undercharged
under the provisions of this Agreement, then within thirty (30) Days after
the final determination thereof, Buyer shall pay the amount undercharged. No
interest shall be payable by Buyer on the amount of any undercharge unless
Buyer shall fail to pay the amount thereof within such thirty (30) Day
period, in which event interest shall be calculated and payable thereon on
the same basis as is described in section 7.04 from the first Day after such
thirty (30) Day period to the date of payment of the undercharge by Buyer.
7.06 EXTENSION OF TIME FOR PAYMENT WHEN BILL DELAYED
If presentation of the bill to Buyer is delayed after the fifteenth (15th)
Day of the billing Month, then the time of payment shall be extended
accordingly unless Buyer is responsible for such delay.
7.07 DISPUTES
Notwithstanding anything herein contained to the contrary, neither Party
hereto shall be entitled to dispute the volume of Gas delivered, or the
amount paid or payable with respect thereto, unless such dispute is raised by
notice to the other Party within two years after the end of the Month in
question.
- 15 -
7.08 CREDIT APPROVAL
Upon Seller's request at any time prior to commencement of Gas deliveries or
during the Term of this Agreement, Buyer shall provide Seller with evidence
satisfactory to Seller of Buyer's ability to perform its financial
obligations under this Agreement. If Seller is not so satisfied, Seller may,
acting reasonably, having provided Buyer written notice of suspension in
accordance with section 7.04(b), suspend deliveries of Gas hereunder. During
the period of any such suspension, Buyer shall continue to be liable to
Seller for the amounts set forth in section 6.02 with respect to the
Reservation Charge and Demand Charge attributable to such suspended
deliveries and such suspended deliveries shall not be considered to be a
failure by Seller to deliver Gas under section 5.10. Deliveries shall
recommence upon Buyer providing to Seller an irrevocable stand-by letter of
credit from a banking institution which is satisfactory to Seller. The letter
of credit shall be a dollar amount reasonably specified by Seller which will
cover the full Price for two (2) Months worth of Gas purchases at the MDQ or
such other assurance as is acceptable to Seller. The letter of credit shall
provide that it will be automatically renewed every twelve (12) Months unless
notice of the issuer's intent to cancel the letter of credit as of any
anniversary date of the issuance thereof is received by Seller no later than
sixty (60) Days prior to such proposed expiration date.
ARTICLE VIII - FORCE MAJEURE
8.01 SUSPENSION
Subject to section 8.03 hereof, to the extent that either Party to this
Agreement fails to observe or perform any of the covenants or obligations
herein imposed upon it and such failure shall have been solely caused by
Force Majeure, then such failure shall be deemed not to be a breach of such
covenants or obligations and such covenants and obligations to the extent
affected by such Force Majeure shall be suspended during the continuance of
the event of Force Majeure.
8.02 FORCE MAJEURE
(a) For the purposes of this Agreement, the term "Force Majeure" shall mean
any acts of God, lightning, earthquakes, storms, strikes, lockouts or
other industrial disturbances, acts of the Queen's or country's
enemies, sabotage, wars, blockades, insurrections, riots, epidemics,
landslides, floods, fires, washouts, arrests and restraints of
governments and people, civil disturbances, explosions, breakages of or
accidents to machinery or lines of pipe, interruptions in
transportation service on any of the pipeline facilities required for
delivery of Gas not reasonably within the control of Seller or Buyer,
the orders of any court or government authority, agency or tribunal, or
any other extraordinary cause, whether of the kind herein enumerated or
otherwise, not within the reasonable control of the Party claiming
suspension and which, by the exercise of due diligence, such Party
could not have prevented or is unable to overcome.
- 16 -
(b) For the purposes of this Agreement, the term "Force Majeure" shall also
mean any action not caused by and beyond the reasonable control of
either Party hereto which results in the interruption of deliveries or
which prevents totally or partially the exportation of Gas from Canada
by Seller or the importation of Gas into the U.S. by Buyer, or its
transportation by NOVA or Montana Power Company, provided however, that
where the exportation, importation or transportation is only partially
prevented by the action, the parties' obligations hereunder shall be
suspended only to the extent prevented by such action.
8.03 NO RELIEF
(a) Neither Party shall be entitled to the benefit of the provisions of
section 8.01 under any of the following circumstances:
(i) to the extent that the failure was caused by the negligence
or contributory negligence of the Party claiming suspension;
(ii) to the extent that the failure was caused by the Party
claiming suspension having not made reasonable efforts to
remedy the condition and remove the cause or circumstances of
Force Majeure in an adequate manner, or having failed to
resume with all reasonable dispatch the performance of such
covenants or obligations;
(iii) if the event of Force Majeure was caused by lack of finances
or was related to the payment of any amount or amounts due
hereunder;
(iv) to the extent that the failure was caused by the
insufficiency of Seller's Gas supply as opposed to an event
of the nature described in section 8.02;
(v) to the extent that the failure was caused by the failure of
Buyer or Buyer's market to require Gas;
(vi) unless as soon as reasonably possible after the happening of
the occurrence relied upon, or as soon as possible after
determining that the occurrence was in the nature of Force
Majeure and would affect the claiming Party's ability to
observe or perform any of its covenants or obligations under
this Agreement, the Party claiming suspension shall have
given to the other Party hereto notice to the effect that by
reason of Force Majeure (the nature whereof shall be therein
specified) the claiming Party is unable to perform the
particular covenants or obligations.
(b) (i) Buyer's obligation to pay the Demand Charge and Reservation
Charge as set forth in section 6.02, shall be suspended in
the event and to the extent that a claim of Force Majeure by
Seller hereunder reduces the quantity of Gas delivered
- 17 -
hereunder by Seller, however, in the event of a claim of
Force Majeure by Buyer hereunder, Buyer's Demand Charge and
Reservation Charge payment obligation shall not be suspended
but shall remain its responsibility and obligation provided
that it shall be reduced to the extent of any reduction in
the actual demand charges paid by Seller.
(ii) In the event of a claim of Force Majeure hereunder by Seller,
Seller shall not be liable for Replacement Gas costs or
unabsorbed demand charges as described in section 5.10,
provided however, that Seller will use reasonable efforts to
locate replacement natural gas supplies for the quantity of
Gas not delivered hereunder as a result of Seller's Force
Majeure, which replacement natural gas, upon and subject to
the negotiation and agreement between Seller and Buyer as to
the terms and conditions of the sale thereof from Seller to
Buyer, shall be sold and delivered by Seller and purchased by
Buyer.
(iii) In the event of and during a claim of Force Majeure hereunder
by Seller, Buyer shall have the right to locate an
alternative supply of gas and direct Seller to use on Buyer's
behalf Seller's firm NOVA transportation covered by this
Agreement to move such gas, to the extent of any reduction in
the quantity of Gas and/or replacement natural gas pursuant
to subsection 8.03(b)(ii), delivered by Seller under this
Agreement, which reduction results from Seller's Force
Majeure. Notwithstanding subsection 8.03(b)(i) hereof, to the
extent that Seller uses any such NOVA transportation on
Buyer's behalf, Buyer shall pay the Demand Charge relating
thereto.
8.04 END OF SUSPENSION
The party claiming suspension by reason of Force Majeure shall give notice to
the other Party, as soon as possible after the event of Force Majeure shall
have been remedied, to the effect that the same has been remedied and that
such Party has resumed, or is then in a position to resume, the performance
of the suspended covenants or obligations under this Agreement.
8.05 STRIKES OR LOCKOUTS
Notwithstanding anything to the contrary in this Article VIII expressed or
implied, the settlement of strikes, lockouts and other industrial
disturbances shall be entirely within the discretion of the Party involved
therein and such Party may make settlement thereof at such time and on such
terms and conditions as it may deem to be advisable and no delay in making
such settlement shall deprive such Party of the benefit of section 8.01.
- 18 -
8.06 LIMITATION ON SUSPENSION OF OBLIGATIONS
If at any time during the Term hereof, either Buyer or Seller (the "Party
Claiming Force Majeure") has claimed Force Majeure and (i) such Force Majeure
remains in effect for at least one hundred and eighty (180) consecutive Days
or (ii) such Force Majeure remains in effect for at least thirty (30)
consecutive Days during which time such Party fails to deliver or take at
least 10% of the Maximum Daily Quantity as a daily average over such thirty
(30) day period, then so long as the Force Majeure event is still continuing,
the other party hereto may by notice to the Party Claiming Force Majeure,
terminate this Agreement effective as of the date of such notice. The Party
Claiming Force Majeure shall not manipulate its performance under this
Agreement in order to avoid the application of this section 8.06.
ARTICLE IX - COVENANTS, WARRANTIES AND INDEMNITIES BY SELLER
9.01 WARRANTIES
With respect to the Gas sold hereunder, Seller hereby covenants, warrants and
represents to Buyer that:
(i) Seller shall at the Delivery Point have good right or title
to all Gas delivered hereunder, free and clear of all liens
and adverse claims whatsoever, except those being contested
in good faith by Seller, and,
(ii) Seller shall at the Delivery Point have the right to sell the
Gas delivered or tendered for delivery hereunder.
9.02 INDEMNITY
Seller shall indemnify Buyer and hereby agrees to save Buyer harmless from
and in respect of all suits, actions, debts, accounts, damages, costs, losses
and expenses of every nature and kind whatsoever arising from or in
connection with any adverse claims of any or all persons to the Gas or to
royalties, taxes, license fees or charges thereon, which are applicable
before the title to the Gas passes to Buyer at the Delivery Point. In the
event that any such adverse claim is prosecuted against Buyer in respect of
any of the Gas as aforesaid, Buyer may retain the Price thereof up to the
amount of such claim, until such claim has been finally determined, as
security for the performance of Seller's obligations hereunder with respect
to such claim or until Seller shall have furnished a surety bond or other
form of security satisfactory to Buyer in connection with the subject claim.
Buyer shall invest any amount withheld from Seller at any short term rate of
interest available to the Buyer, acting reasonably, until the amount withheld
is released to the Seller, at which time all interest earned thereon shall be
paid to Seller.
- 19 -
9.03 PAYMENTS BY SELLER
Seller shall at all times pay all fees, rentals and royalties due and
payments due to all mineral and all royalty owners and all amounts due under
all documents, as may appear of record or otherwise to be binding upon
Seller, and shall pay all other persons having any interests in the Gas sold
and delivered hereunder, which interests arise prior to the Delivery Point.
ARTICLE X - ARBITRATION
10.01 PRICING DISPUTES
All disputes arising out of or in connection with the determination of the
Price for Gas sold hereunder shall be referred to and finally resolved in a
manner which shall be final and binding on the Parties hereto, by an
arbitration pursuant to the principles outlined herein and subject to the
criteria set forth in section 6.05 and pursuant to the International
Commercial Arbitration Act, of the Province of Alberta, except to the extent
that the provisions of such Act are contrary to the principles outlined
herein.
10.02 APPOINTMENT OF ARBITRATORS
The Party hereto initiating the arbitration (the "Initiating Party") shall in
its written notice of request to arbitrate, which notice shall be sent to the
other Party hereto (the "Receiving Party"), name one arbitrator. Within
twenty-one (21) Days after receipt of such notice, the Receiving Party shall
serve notice on the Initiating Party, which notice shall contain the name of
a second arbitrator.
10.03 ARBITRATION BOARD
If the Receiving Party fails to name a second arbitrator, then the Initiating
Party's arbitrator shall function as a single arbitrator. In the event that
both Parties appoint their own arbitrator, the two arbitrators so appointed
shall name a third arbitrator, or, if they fail to do so within ten (10) Days
of the second arbitrator's appointment, the Parties hereto shall promptly
meet and attempt to agree upon and appoint such third arbitrator. If the
parties hereto are unable to agree within ten (10) Days on the choice of the
third arbitrator, then, on the request of either Party hereto, the third
arbitrator shall be appointed by the consulting firm of Stone & Webster
Engineering Corporation. If for any reason the third arbitrator is not
appointed by the Consulting Firm or otherwise agreed upon by the Parties or
the two arbitrators within thirty (30) Days of the second arbitrator's
appointment then on the request of either Party hereto the third arbitrator
shall be appointed by any Justice of the Court of Queen's Bench of Alberta.
- 20 -
10.04 QUALIFICATIONS OF ARBITRATORS
The single arbitrator (the "Arbitrator") or the three arbitrators (the
"Board") appointed hereunder shall be qualified by education or experience to
decide the particular pricing matters in dispute, and shall not be employees
or agents of either Party hereto or any of their affiliates.
10.05 PROCEDURE
The Arbitrator or the Board shall proceed immediately to hear and determine
the pricing question or questions in dispute. The decision of the Arbitrator
shall be made within forty-five (45) Days after his or her appointment,
subject to any reasonable delay due to unforeseen circumstances. The decision
of the Board, or the majority thereof, shall be made within forty-five (45)
Days after the appointment of the third arbitrator, subject to any reasonable
delay due to unforeseen circumstances. Notwithstanding the foregoing, in the
event the Arbitrator fails to make a decision within sixty (60) Days after
his or her appointment or if the Board, or the majority thereof, fails to
make a decision within sixty (60) Days after the appointment of the third
arbitrator then either Party may elect to have a new Arbitrator or Board
chosen in like manner as if none had previously been selected.
10.06 BINDING DECISION
The decision of the Arbitrator or the decision of the Board, or the majority
thereof, shall be drawn up in writing and signed by the Arbitrator or by the
Board members, or the majority thereof, and shall adopt the last position put
forward in writing by Seller or Buyer in the negotiations preceding the
request for arbitration and shall be final and binding upon the Parties
hereto as to any pricing question or questions so submitted to arbitration,
and the Parties shall be bound by such decision and perform the terms and
conditions thereof.
10.07 COMPENSATION OF ARBITRATORS
Each Party shall pay the compensation and expenses of the Arbitrator
appointed by that Party and the compensation and expenses of the third
Arbitrator (unless otherwise determined by the Arbitrator or the Board) shall
be paid in equal proportions by Buyer and Seller.
10.08 PLACE OF ARBITRATION
The place of arbitration shall be determined by the Arbitrator or the Board.
10.09 PRICING CRITERIA
Notwithstanding anything to the contrary contained in this Agreement, in any
pricing arbitration the Arbitrator or the Board, as the case may be, shall
use the criteria contained in section 6.05 in making a determination of the
Price along with such other criteria, if any, as may then be agreed upon by
Seller and Buyer and submitted to the Arbitrator or the Board.
- 21 -
10.10 OPERATIONS CONTINUED
Whenever there is an arbitration proceeding, operations under this Agreement
shall continue in the same fashion as they were conducted before the
arbitration proceeding was commenced, without prejudice to either Party,
pending a decision in the arbitration proceeding.
ARTICLE XI - DEFAULT AND REMEDIES
11.01 EVENT OF DEFAULT
An Event of Default under this Agreement shall be deemed to exist upon the
occurrence of any one or more of the following events:
(a) Failure by either Party to make payment of any amounts due to the other
Party under this Agreement, and that failure continues for a period of
thirty (30) days after written notice of non-payment; or
(b) Failure by either Party to perform fully any other material provision
of this Agreement, and (i) such failure continues for a period of
thirty (30) days after written notice of such non-performance from the
other Party is received, or (ii) if within such thirty (30) day period
the non-performing Party commences and proceeds with due diligence to
cure the failure and the failure is not cured within ninety (90) days
after written notice of nonperformance from the other Party is received
or such longer period of time agreed to by the Parties in writing as
being necessary for the Party to cure the failure with all due
diligence; or
(c) If by order of a court of competent jurisdiction, a receiver or
liquidator or trustee of either Party or of all or any of the property
of either Party shall be appointed, and such receiver or liquidator or
trustee shall not have been discharged within a period of sixty (60)
days after its appointment; or if by decree of such a court, either
Party shall be adjudicated bankrupt or insolvent or any substantial
part of the property of such Party shall have been sequestered, or such
decree shall have continued undischarged and unstayed for a period of
sixty (60) days after the entry thereof; or if a petition to declare
bankruptcy or to reorganize Buyer or Seller pursuant to any of the
provisions of any Canadian or United States federal, provincial or
state bankruptcy law shall be filed against such Party and shall not be
dismissed within sixty (60) days after such filing; or
(d) If either Party shall file a voluntary petition in bankruptcy under any
provision of any Canadian or United States federal, provincial or state
bankruptcy law or shall consent to the filing of any bankruptcy or
reorganization petition against it under any similar law; or if either
Party shall make an assignment for the benefit of its creditors; or if
either Party
- 22 -
shall admit in writing its inability to pay its debts generally as they
become due; or if either Party shall consent to the appointment of a
receiver or receivers, or trustee or trustees, or liquidator or
liquidators of it or of all or of any part of its property.
11.02 TERMINATION
Upon the occurrence and during the continuance of an Event of Default, the
Party not in default shall have the right to terminate this Agreement upon
ten (10) days' written notice to the defaulting Party.
ARTICLE XII - GENERAL PROVISIONS
12.01 NOTICES
Any notice, request, consent, direction, demand, waiver of condition, invoice
or other instrument required or permitted to be given under the provisions of
this Agreement shall be in writing. Written communications as aforesaid may
be given by delivering same in person or by prepaid courier or sending same
by facsimile, in each case addressed as follows:
TO BUYER: GREAT FALLS GAS COMPANY
(i) General P.O. Box 2229
Great Falls, Montana 59403 or,
#1 First Avenue South
Great Falls, Montana 59401
Attention: Director, Gas Supply
and Industrial Marketing
Facsimile: (406) 791-7560
Telephone: (406) 791-7504
(ii) Nominations GREAT FALLS GAS COMPANY
P.O. Box 2229
Great Falls, Montana 59403
Attention: Director, Gas Supply and Industrial
Marketing
Facsimile: (406) 791-7560
Telephone: (406) 791-7504
(iii) Billings GREAT FALLS GAS COMPANY
P.O. Box 2229
Great Falls, Montana 59403
Attention: Director, Accounting
Facsimile: (406) 791-7560
Telephone: (406) 791-5206
- 23 -
TO SELLER: SHELL CANADA LIMITED
(i) General Natural Gas Business Centre
400 - 4th Avenue S.W.
Calgary, Alberta
T2P 0J4
Attention: Manager, Direct Marketing
Facsimile: (403) 269-7818
Telephone: (403) 691-3189
(ii) Billings 400 - 4th Avenue S.W.
Calgary, Alberta
T2P 0J4
Attention: Supervisor, Natural Gas Accounting
Facsimile: (403) 269-7818
Telephone: (403) 691-4069
(iii) Nominations 400 - 4th Avenue S.W.
Calgary, Alberta
T2P 0J4
Attention: Operations Analyst
Facsimile: (403) 269-7818
Telephone: (403) 691 -3044 or (403) 691-3878
Any written communication as aforesaid, if delivered in person or SENT BY
facsimile, shall be deemed to have been given or made on the Business Day on
which it was received as aforesaid, and, if delivered by prepaid courier,
shall be deemed to have been given or made on the second Business Day
following the Day on which it is so received. Any Party may give written
notice of change of address in the same manner, in which event any written
communication as aforesaid shall thereafter be given to it as above provided
at such changed address.
12.02 FURTHER ASSURANCES
Each Party shall from time to time and at all times hereafter upon reasonable
written request so to do, make, do, execute and deliver, or cause to be made,
done, executed and delivered all such further acts, deeds, assurances and
things as may be reasonably required for more effectually implementing and
carrying out the true intent and meaning of this Agreement.
12.03 MORTGAGES
Notwithstanding anything to the contrary contained in this Agreement, either
Party shall have the right to mortgage, pledge, hypothecate or otherwise
encumber its interest in and to this Agreement as security for its
indebtedness to any other person.
- 24 -
12.04 WAIVERS
Either Party hereto in its sole discretion may waive, without thereby
prejudicing such Party's right to rely on any other conditions inserted
herein for such Party's sole benefit, a breach or default of any covenant or
condition inserted herein for the benefit or protection of such Party. No
such waiver, however, shall operate as a waiver of any future breach or
default, whether of a like or different character.
12.05 INTERPRETATIONS
In the event that Buyer or Seller are in disagreement as to the
interpretation to be placed on any term, condition, covenant or agreement
contained in this Agreement or the performance or satisfaction thereof by any
such Party, or any such Party asserts that the other Party has committed a
breach of this Agreement, Buyer or Seller, as the case may be, may give
written notice of such disagreement or asserted breach to the other such
Party. If Buyer and Seller are unable to settle the controversy or claim
within (thirty) 30 Days of the delivery of such notice, the Parties may then
agree to submit with all reasonable dispatch, such disagreement or asserted
breach to a competent court of law for determination.
12.06 APPLICABLE LAWS
This Agreement for all purposes shall be construed in accordance with and
governed by the laws of the Province of Alberta. The Courts of the Province
of Alberta shall have exclusive jurisdiction in relation to any legal
proceedings arising in connection with this Agreement. The Parties hereby
expressly and exclusively submit to the jurisdiction of the courts of the
said Province.
The Parties agree to share equally all travel and hotel expenses incurred in
connection with disputes raised under this Agreement.
12.07 INVALIDITY OF PROVISIONS
The intention of the Parties to this Agreement is to comply fully with all
applicable laws, and this Agreement shall be construed consistently with such
laws to the extent possible. If and to the extent that any court of competent
jurisdiction determines it is impossible to construe any provision of this
Agreement consistently with any applicable law and consequently holds that
provision to be invalid, such holding shall in no way affect the validity of
the other provisions of this Agreement, which shall remain in full force and
effect.
- 25 -
12.08 FULL UNDERSTANDING
The terms of this Agreement represent the full understanding between the
Parties and replaces all other contracts, agreements or representations
whether written or oral. No amendments to this Agreement shall be made or be
binding on either Party unless made in writing and signed by each Party.
12.09 GENDER AND NUMBER REFERENCES
Whenever the singular, masculine or neuter is used in this Agreement the same
shall be construed as being the plural or feminine or body corporate or vice
versa where the context or reference so require.
12.10 CONFIDENTIALITY
All data, documents and information of a confidential nature concerning the
business or assets of either Party to this Agreement which is made available
or disclosed to either other Party hereto pursuant to the terms of this
Agreement (the "Confidential Information"), shall be kept and maintained on a
confidential basis by the Party hereto which is the recipient thereof. Each
Party hereto shall implement such measures and shall take such precautions as
may be reasonably necessary to endeavor to ensure the confidentiality of all
Confidential Information. Notwithstanding the foregoing, either Party hereto
may, without consultation with or notice to the other Party hereto, from time
to time disclose Confidential Information to any court, government,
governmental agency, regulatory body or quasijudicial agency ("Regulatory
Agency") at any time and from time to time and may thereby cause the
Confidential Information to become public if and to the extent that may be
required by any Regulatory Agency or the rules, regulations, procedures,
requirements or practices of any Regulatory Agency.
12.11 REQUESTS FOR CONSENT
Whenever a request is made hereunder by one Party hereto to the other for a
consent, approval or authorization, such request shall be deemed to have been
refused or declined if it is not granted in writing within thirty (30) Days
after the request is made.
12.12 SUCCESSORS AND ASSIGNMENT
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Parties, but no assignment shall release either
Party from such Party's obligations hereunder without the written consent of
the other Party to such release, which consent shall not be unreasonably
withheld.
- 26 -
IN WITNESS WHEREOF the parties hereto have duly executed and delivered this
Agreement as of the Day and year first above written.
SHELL CANADA LIMITED GREAT FALLS GAS COMPANY
Per: /s/ illegible Per: /s/ Larry D. Geske
------------------------ ------------------------
92-07-29 8/6/92
Per: Per:
------------------------ ------------------------
[LOGO]
[LETTERHEAD]
August 23, 1993
VIA COURIER
Mr. Lynn Hardin
Director, Gas Supply and Industrial Marketing
TransEnergy
#1 First Avenue South
Great Falls, Montana
59401
Dear Mr. Hardin
RE: LETTER AGREEMENT FOR THE SHORT TERM AMENDMENT TO
SECTION 6.02 OF ARTICLE VI OF
THE NATURAL GAS SALE AND PURCHASE AGREEMENT
BETWEEN SHELL CANADA LIMITED ("SHELL") AND
GREAT FALLS GAS COMPANY ("GFG") DATED JULY 20, 1992
- --------------------------------------------------------------------------------
The parties do hereby agree to temporarily amend the referenced Agreement
pursuant to the following terms and conditions:
1. TERM
The term of this Letter Agreement shall commence on November 1,
1993 and continue until October 31, 1995.
2. DEMAND CHARGE (6.02 (a))
The Demand Charge component of the Price, as defined in section
6.02 of the referenced Agreement shall not change. The Demand
Charge shall be paid each Month regardless of the quantity of Gas
purchased and sold hereunder, except to the extent that Shell
fails to deliver Gas nominated.
3. RESERVATION CHARGE (6.02(b))
The Reservation Charge component of the Price, as defined in
section 6.02 of the referenced Agreement shall be deleted for the
term of this Letter Agreement.
Page 2 [LOGO]
August 23, 1993
4. PRICING ELECTION
On or before September 15, 1993, GFG will have the option of
choosing a fixed or variable pricing mechanism for each of the
four periods pursuant to the following paragraph 5 of this Letter
Agreement.
5. COMMODITY CHARGE (6.02(c))
The Commodity Charge component of the Price, as defined in section
6.02 of the referenced Agreement shall be deleted for the term of
this Letter Agreement and replaced with the following:
(a) For the time period commencing November 1, 1993, for the
first 755,000 MMBtus of Gas delivered:
(i) A fixed price of $2.10 US dollars per MMBtu, less the
Demand Charge on a US dollar per MMBtu basis; or
(ii) A rolling three Month "average" of the Canadian Gas
Price Reporter mid month index of "Alberta Short-Term
Spot Prices at the Alberta Border (Empress)" converted
to US dollars per MMBtu plus $0.25 US dollar per MMBtu,
less the Demand Charge on a US dollar per MMBtu basis.
(b) After the fulfillment of 5(a) hereof, for the balance of the
1993 Contract Year:
(i) A fixed price of $ 1.75 US dollar per MMBtu, less the
Demand Charge on a US dollar per MMBtu basis; or
(ii) A rolling three Month "average" of the Canadian Gas
Price Reporter mid month index of "Alberta Short-Term
Spot Prices at the Alberta Border (Empress)" converted
to US dollars per MMBtu, less the Demand Charge on a US
dollar per MMBtu basis.
(c) For the time period commencing November 1, 1994, for the
first 755,000 MMBtus of Gas delivered:
(i) A fixed price of $2.20 US dollars per MMBtu less the
Demand Charge on a US dollar per MMBtu basis; or
(ii) A rolling three Month "average" of the Canadian Gas
Price Reporter mid month index of "Alberta Short-Term
Spot Prices at the Alberta Border (Empress)" converted
to US dollars per MMBtu plus $0.25 US dollar per MMBtu,
less the Demand Charge on a US dollar per MMBtu basis.
Page 3 [LOGO]
August 23, 1993
(d) After the fulfillment of 5(c) hereof, for the balance of the
1994 Contract Year:
(i) A fixed price of S1.85 US dollars per MMBtu, less the
Demand Charge on a US dollar per MMBtu basis; or
(ii) A rolling three Month "average" of the Canadian Gas
Price Reporter mid month index of "Alberta Short-Term
Spot Prices at the Alberta Border (Empress)" converted
to US dollars per MMBtu, less the Demand Charge on a US
dollar per MMBtu basis.
6. PRICING DATA
Pursuant to paragraph 5 of the Letter Agreement, in the event that
such pricing data is no longer published or such publication is no
longer published then, failing agreement by the parties, the
Commodity Charge or a method of determining it shall be determined
by arbitration pursuant to Article X of the referenced Agreement.
7. OTHER TERMS AND CONDITIONS
All other terms and conditions of the referenced Agreement shall
remain in full force and effect.
8. REGULATORY APPROVALS
This Letter Agreement is subject to all applicable American and
Canadian federal, provincial and state regulatory approvals.
If you are in agreement with the foregoing, please indicate your acceptance in
the space provided below and return one copy of this Letter Agreement to our
office.
Yours truly,
/s/ S. MacCulloch
- ------------------------
S. D. (Sandy) MacCulloch
Coordinator, Market Development
GREAT FALLS GAS COMPANY
Accepted and Agreed to this day of , 1993
---- ------------
Per: /s/ Larry D. Geske
------------------------------------------------
Title: President
-----------------------------------------------
AMENDING AGREEMENT
BETWEEN:
SHELL CANADA LIMITED ("SELLER")
AND
GREAT FALLS GAS COMPANY ("BUYER")
- 2 -
THIS AMENDING AGREEMENT is made effective as of November 1, 1994.
WHEREAS, Seller and Buyer are parties to a Natural Gas Sale and
Purchase Agreement dated July 20, 1992 (the "Contract"), as temporarily
amended by a Letter Agreement dated August 23, 1993, (the "Letter Agreement")
regarding the long term firm supply of Canadian natural Gas from Seller to
Buyer, and
WHEREAS, Seller and Buyer wish to further amend the Contract and
Letter Agreement so as to provide for a different pricing mechanism under the
Contract effective November 1, 1994.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, Seller and Buyer agree as follows:
1. All words and phases as used in this Amending Agreement shall have
the same meaning as attributed to them in the Contract.
2. The Letter Agreement is hereby amended so as to reduce the term
thereof to a one (1) year period by deleting from Article 1 thereof the words
"October 31, 1995" and replacing them with the words "November 1, 1994", and
by deleting paragraphs 5(c) and 5(d) thereof.
3. The Contract is amended by adding thereto the following definition;
"Pricing Period" means that period of time as set forth in Schedule "A"
hereto for which a Price has been agreed to or otherwise established, and
which shall not be less than one (1) Contract Year.
4. The Contract is amended by deleting in their entirety Sections 5.03,
5.04 and 5.05, without changing the numbering of any other Sections of the
Contract.
5. The Contract is hereby amended by deleting from the second last line
of paragraph 1 in Section 5.07 the words "(depending upon whether the
Shortfall Amount being purchased represents Tier I Gas or Tier II Gas)".
6. Article VI of the Contract is amended by deleting therefrom Sections
6.02, 6.03, 6.04 and 6.05 in their entirety and replacing them with the
following:
"6.02 PRICE
The price to be paid by Buyer to Seller for Gas purchased and sold
and the service provided hereunder for the period of time commencing with the
Commencement Date will consist of the sum of the three (3) components
identified hereunder. The Price will be in U.S. dollars.
(a) Each Month, Buyer shall pay Seller a "Demand Charge" equal to
Seller's actual cost for that Month of reserving the firm
transportation required to transport the MDQ on NOVA to the Delivery
Point.
- 3 -
(b) Each Month, Buyer shall pay Seller a "Reservation Charge" equal to the
product of the MDQ times the number of days in the Month times the
Reservation Charge. The Reservation Charge shall be as set forth from
time to time in Schedule "A" hereto.
(c) Each Month, Buyer shall pay Seller for each MMBtu of Gas delivered and
received at the Delivery Point, a "Commodity Charge" equal to a per
MMBtu price on a dry basis as set forth from time to time in Schedule
"A" hereto.
In the event the parties utilize index data in determining the
Commodity Charge component and such index data is no longer
ascertainable, for whatever reason, then, failing agreement between
Seller and Buyer on a new Commodity Charge within forty-five (45) days
of such event, the new Commodity Charge shall be determined by
arbitration pursuant to Article X hereof. Until a new Commodity Charge
has been determined the parties agree to use the last ascertainable
Commodity Charge. The new Commodity Charge shall be retroactive to the
date the index data became unascertainable and any necessary
adjustments shall be dealt with in accordance with Section 7.05 hereof.
If Buyer elects not to take Gas during any Month, Seller will be allowed to
sell that gas on an interruptible basis to third party purchasers.
The Demand Charge and the Reservation Charge shall be paid each Month
regardless of the quantity of Gas purchased and sold hereunder, except to the
extent that Seller fails to deliver Gas nominated.
6.03 FUTURE PRICE DETERMINATION
(a) The Parties agree that they will meet from time to time to
negotiate the Commodity Charge and Reservation Charge components
of the Price payable hereunder for subsequent Pricing Periods.
In any such negotiations or resulting arbitration with respect to
Price during the Term of this Agreement only the Commodity Charge
and Reservation Charge components of the Price shall be
redetermined and the Demand Charge component of the Price shall
not be subject to redetermination.
(b) Subject to 6.03 (a), the Parties agree to establish a new Price
for the next Pricing Period at least one hundred and twenty (120)
Days prior to the termination date of the current Pricing Period
and the Parties will commence procedures for such redetermination
no later than one hundred and eighty (180) Days prior to the
termination date of the current Pricing Period by either Party
giving fifteen (15) Days written notice to the other, to meet and
negotiate. Such Price, and the various components making up that
Price, will be effective for a period of time, as then agreed to,
and will become effective on the commencement of the next Pricing
Period. If neither Party has given written notice to the other to
renegotiate at least one hundred and eighty (180) Days prior to
the termination date of the current Pricing Period, then the LAST
Price in effect for the current Pricing Period shall continue in
effect for the next one year period which shall then become the
next Pricing Period.
- 4 -
6.04 FAILURE TO REACH AGREEMENT ON PRICE
In the event that the Parties are unable to reach agreement on the
Price, or the Price components at least one hundred and twenty (120) Days
prior to the termination date of the current pricing period, as provided
pursuant to section 6.03 herein, either Party may, upon not less than fifteen
(15) days written notice to the other Party, have the Price determined
pursuant to the Arbitration provisions contained in Article X herein and
exclusively in accordance with the principles set forth in section 6.05
herein. Should no notice for Arbitration be given at least ninety (90) days
prior to the termination date of the current Pricing Period, the Price for
the next one year period, which shall then become the next Pricing Period,
shall continue to be the last Price in effect for the current Pricing Period.
6.05 PRICING PRINCIPLES
For each Pricing Period subsequent to the Pricing Period for which
the price of gas to be sold and purchased hereunder has been established and
specified, the Parties agree to determine Price by negotiation or, if
unsuccessful, by arbitration. If the Price for Gas delivered in any Pricing
Period is to be determined by arbitration, the arbitrators shall determine a
Price that, under the prevailing market circumstances for long term firm Gas
Supply and in the opinion of the arbitrators, is fair and reasonable to both
Buyer and Seller. In making such determination, the arbitrators shall limit
their consideration to the evidence which is presented by the Parties, and to
the extent that evidence is presented, shall base their determination upon
and shall give due consideration to each of the following criteria:
(i) The weighted average cost of gas paid by Buyer during the
next one year period for firm gas supplies with a term of two
(2) years or more;
(ii) The prices being paid during the next one year period for
other firm gas supplies by local distribution companies with
a term of two (2) years or more in the state of Montana; and,
(iii) The prices being paid during the next one year period for
other firm gas supplies by local distribution companies with
a term of two (2) years or more in the province of Alberta;
provided that the arbitrators shall consider the above matters in light of
the following:
(a) To the extent that evidence with respect to Prices for the next one
year period is not available or is insufficient, prices for the current
Pricing Period will be considered;
(b) The times at which the prices were agreed to between the respective
buyers and sellers;
(c) Differences in transportation costs relevant to establishing a point of
comparison at the Delivery Point;
(d) The similarities and dissimilarities between the service provided
hereunder and the sales and transportation arrangements under which
other gas is being sold for consumption in Buyer's market area and in
Alberta, including in particular but not limited to the similarities
and
- 5 -
dissimilarities between the quality of service and the security of
supply provided hereunder and provided under such other arrangements;
and,
(e) Any other considerations in respect of which relevant evidence is
adduced by the Parties and which is relevant to the determination of
such matters.
In the event that a negotiated or arbitrated Price is determined for
a Pricing Period after commencement thereof, Seller shall retroactively
adjust its invoices to Buyer to the first Day of that Pricing Period, to take
into account the revised Price. Until a new Price is concluded and
retroactively implemented, the previous Price shall remain in effect. If the
Price settlement date exceeds sixty (60) Days past the Pricing Period
commencement, the retroactive invoice shall be adjusted for interest at the
prime rate pursuant to section 7.04."
7. The Contract is hereby amended by incorporating Schedule "A" attached
hereto as Schedule "A" to the Contract.
8. As amended by this Amending Agreement, the Contract is hereby
ratified and confirmed and shall continue in full force and effect.
IN WITNESS WHEREOF this Amending Agreement has been executed by the
parties hereto effective as of the day and year first above written.
SHELL CANADA LIMITED GREAT FALLS GAS COMPANY
Per: /s/ Eric Le Dain Per: /s/ Larry D. Geske
-------------------------- --------------------------
Name: ERIC LE DAIN Name: LARRY D. GESKE
------------------------- -------------------------
Title: MANAGER MARKETING - Title: PRESIDENT & CEO
------------------------ ------------------------
NE/MIDWEST U.S.
SCHEDULE A
SCHEDULE A INCORPORATED INTO AND FORMING A PART OF THAT NATURAL GAS SALE AND
PURCHASE AGREEMENT BETWEEN SHELL CANADA LIMITED ("SELLER") AND GREAT FALLS
GAS COMPANY ("BUYER") DATED THE 20TH DAY OF JULY, 1992 AS AMENDED FROM TIME
TO TIME (THE "AGREEMENT")
All words and phrases used in this Schedule "A" shall have the same meaning
as provided for in the Agreement.
PRICING PERIOD: November 1, 1994 to November 1, 1996
RESERVATION CHARGE: During this Pricing Period the Reservation Charge as
defined in Section 6.02 of the Agreement shall be set at
$0.00 US./MMBtu.
COMMODITY CHARGE:
During this Pricing Period, the Commodity Charge component of the Price, as
defined in Section 6.02 of the Agreement shall be as follows:
1. For the period November 1, 1994 to November 1, 1995:
For 50% of the volume of Gas delivered each Month up to 50% of the MDQ,
the Commodity Charge shall be $1.58 US/MMBtu on a dry basis at the
Delivery Point, less the Demand Charge calculated on a US dollar per
MMBtu basis at a 100% load factor.
For 50% of the volume of Gas delivered each Month up to 50% of the MDQ,
the Commodity Charge shall be the Average Alberta Border (Empress) Spot
(one month) Firm (100% LF) price for such Month as reported in the
Canadian Gas Price Reporter published by Canadian Enerdata Ltd. plus
$0.25 US/MMBtu for the period November 1, 1994 to April 1, 1995; and
plus $0.05 US/MMBtu for the period April 1, 1995 to November 1, 1995,
less the Demand Charge calculated on a US dollar per MMBtu basis at a
100% load factor.
2. For the period November 1, 1995 to November 1, 1996;
For 100% of the volume of Gas delivered each Month, up to the MDQ, the
Commodity Charge shall be the Average Alberta Border (Empress) Spot
(one month) Firm (100% LF) price for such Month as reported in the
Canadian Gas Price Reporter published by Canadian Enerdata Ltd. plus
$0.05 US/MMBtu, less the Demand Charge calculated on a US dollar per
MMBtu basis at a 100% load factor.
Accepted and agreed to as of the 1st day of November, 1994.
SHELL CANADA LIMITED GREAT FALLS GAS COMPANY
Per: /s/ Eric Le Dain Per: /s/ Larry D. Geske
------------------------ ---------------------------
Name: ERIC LE DAIN Name: LARRY D. GESKE
----------------------- ---------------------------
Title: MANAGER MARKETING - Title: PRESIDENT & CEO
---------------------- --------------------------
NE/MIDWEST U.S.
SCHEDULE "A"
SCHEDULE A INCORPORATED INTO AND FORMING A PART OF THAT NATURAL GAS SALE AND
PURCHASE AGREEMENT BETWEEN SHELL CANADA LIMITED ("SELLER") AND GREAT FALLS
GAS COMPANY ("BUYER") DATED THE 20TH DAY OF JULY, 1992 AS AMENDED FROM TIME
TO TIME (THE "AGREEMENT")
All words and phrases used in this Schedule "A" shall have the same meaning
as provided for in the Agreement.
PRICING PERIOD: November 1, 1996 to November 1, 1997
RESERVATION CHARGE: During this Pricing Period, the Reservation Charge as
defined in Section 6.02 of the Agreement shall be set at
$0.00 US./MMBtu.
COMMODITY CHARGE: During this Pricing Period, the Commodity Charge
component of the Price, as defined in Section 6.02 of
the Agreement shall be as follows:
$1.19 US/MMBtu on a dry basis at the Delivery Point.
FURTHER AMENDMENTS:
During the above Pricing Period, in place of the provisions dealing with
incurring a Shortfall Amount as set forth in Section 5.07 of the Agreement,
if on any Day Buyer does not purchase one hundred percent (100%) of the then
applicable MDQ, a Deficit will exist. The difference between the MDQ and the
amount actually taken by Buyer on any Day will be the Deficit for that Day.
On a Monthly basis, in accordance with Article VII of the Agreement, Buyer
shall pay Seller, at the Commodity Charge rate then in effect, for the
Deficit incurred on each Day during the preceding Month, regardless of
whether or not Buyer has been able to take, as hereinafter provided, the
Deficit Gas after it has been incurred. Buyer shall have the opportunity to
nominate and take Deficit Gas on any Day after it has been incurred, provided
however, that:
(i) Buyer shall first purchase 100% of the MDQ;
(ii) Seller's obligation to deliver Deficit Gas shall only be on
an interruptible basis;
(iii) Buyer shall pay Seller for any additional transportation
charges Seller incurs in delivering the Deficit Gas to the
Delivery Point; and
(iv) the maximum amount of Deficit Gas (or any Gas) that Seller
shall be obligated to deliver on any Day above the MDQ shall
be the IDQ limit set out in Section 5.06 of the Agreement.
If a Shortfall Amount was incurred in the Contract Year preceding the first
above referenced Pricing Period, the provisions of Section 5.07 regarding
Buyer's purchase of the Shortfall Amount in the Make-up Year shall apply in
that Pricing Period, however, subject to the same conditions as outlined
above in (i) through (iv) with respect to Deficit Gas, and further provided
that any Gas taken above the MDQ shall first be applied to Deficit Gas, then
to the Shortfall Amount and finally to any agreed upon interruptible gas
pursuant to Section 5.06 of the Agreement. The Commodity Charge for the
Shortfall Amount shall be as specified in Section 5.07 of the Agreement.
Accepted and agreed to as of the day of , 1996.
--- -----------
SHELL CANADA LIMITED GREAT FALLS GAS COMPANY
Per: /s/ James Chunn Per: /s/ Larry D. Geske
-------------------------- -------------------------
Name: James Chunn Name: LARRY D. GESKE
------------------------- ------------------------
Title: MGR. - BC & WESTERN U.S. Title: President & CEO
------------------------ ------------------------