EXHIBIT 10.4
PROPANE SALES AGREEMENT
This agreement dated as of April 1, 1994 by and between BP
Exploration & Oil Inc. an Ohio Corporation, ("BP") and Ferrellgas
L.P., a Delaware Limited Partnership dba Ferrell North America
("Ferrell").
In consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:
1.0 PURCHASE
Subject to the provisions of paragraphs 5.1, 5.2 and 23.0 below,
BP agrees to sell and Ferrell agrees to purchase 100% of the
propane produced and recovered at BP's refineries located at
Lima, Ohio, and Toledo, Ohio. It is estimated that the propane
available to Ferrell in 1994 shall be as set forth in Exhibit A,
but BP has no obligation to provide Ferrell with any minimum
quantity of propane.
2.0 PRODUCT
The product to be sold and purchased hereunder is HD-5 Propane,
specifications as set forth in Exhibit D. (sometimes referred to
herein as "product").
3.0 SPECIFICATIONS / PRICING SOURCE
3.1 All propane sold hereunder shall meet the Gas Processors
Association ("GPA") specification for HD-5 propane in effect at
the time of delivery. In addition, odorant will be added as set
forth in paragraph 11.0 hereof. THERE ARE NO OTHER ORAL OR
WRITTEN GUARANTEES OR WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING
WITHOUT LIMITATION ANY GUARANTY OR WARRANTY OF MERCHANTABILITY,
FITNESS, OR SUITABILITY OF THE PETROLEUM PRODUCT FOR ANY
PARTICULAR PURPOSE.
3.2 Unless otherwise set forth in the terms of this agreement,
for the purpose of determining price, all quotations shall be
based on the average mean TET Propane, basis Mt. Belvieu, TX as
published in O.P.I.S. Petroscan.
4.0 TERMS
4.1 Minimum Three Year Agreement
Subject to the provisions of paragraph 4.2 below, this agreement
shall be in effect for a minimum period of three 3 years
commencing April 1, 1994 and extending through March 31, 1997.
It shall then continue for two years thereafter should neither
party terminate this agreement in writing by October 31, 1996.
Either BP or Ferrell shall have the independent right to
terminate this agreement as of March 31, 1997 by providing
written notice to the other party by October 31, 1996, as set
forth in paragraph 32.0.
4.2 Termination By BP
In addition to any other rights of termination that BP may have
in this agreement, BP reserves the right to terminate this
agreement at any time upon prior written notice of 180 days
should BP (i) elect to engage in the retail marketing of propane
in an area that will be supplied with propane from the Lima and
Toledo refineries, whether such marketing is through the purchase
of an existing company or otherwise, or (ii) determine that sales
between Ferrell and any of its affiliated companies, such as
Ferrellgas L.P., do not conform to the requirements of paragraph
9.4 (iii) hereof.
5.0 ALTERNATE USES
5.1 Burn Value
BP will provide Ferrell, at the intervals described in paragraph
16.0, with the value ("burn value") to BP of burning the propane
at each of its Lima and Toledo, refineries and the volume of such
propane that can be burned at that value at each such refinery.
Should this burn value exceed Ferrell's expected price netted
back to the refinery gate, it is understood that such volume of
propane will be burned at the refinery, provided, however, that
Ferrell may nevertheless elect to purchase all or any portion of
such propane rather than allow it to be burned, in which event it
will pay BP the burn value for the amount of such propane so
purchased.
The formula for calculating the burn value of a liquid gallon of
propane is: BP's price paid for refinery fuel gas at its Lima or
Toledo refinery, as applicable, expressed at the time such
refinery fuel is used in dollars per million BTU (Gross)
multiplied by 0.0931 million BTU per liquid gallon.
5.2 Alternate Fuels
If alternate refinery fuels are unavailable to BP, BP reserves
the right to burn as much propane produced at its Lima or Toledo
refineries as may be necessary to maintain refinery operations.
In addition, BP shall have the right to withhold and divert as
much propane from sale to Ferrell under this agreement as may be
necessary to maintain sufficient quantities of alternate fuel in
the propane (burn) cavern at BP's Toledo refinery to provide
adequate alternate fuel to operate the refinery in the event that
other sources of fuel to that refinery are interrupted. The
amount of such alternate fuel is approximately 40,000 barrels.
BP and Ferrell will consult with each other as to the time when
any such diversion should occur.
6.0 DELIVERY
Deliveries shall be made within BP's usual business hours and at
such times as may be required by Ferrell, provided that BP may
require reasonable advance notice of each delivery to be given by
Ferrell. At the time of giving notice, Ferrell shall furnish BP
necessary shipping instructions. BP shall prepare and furnish
Ferrell with copies of bills of lading and other shipping papers.
6.1 Tank Truck
Any transport tank truck deliveries shall be effected F.O.B. into
the transport tank trucks at loading racks of BP's Lima and
Toledo refineries.
6.2 Pipeline
Any pipeline deliveries shall be effected F.O.B. out of BP's
Lima, OH refinery into the Texas Eastern Product Pipeline
Company's (TEPPCO) Todhunter terminal near Dayton, Ohio (the
"Todhunter Terminal") subject to mutual agreement by BP, the
pipeline companies used to ship the propane to the Todhunter
Terminal and the operator of the Todhunter Terminal, presently
TEPPCO. In the event Ferrell is no longer given access to the
Todhunter Terminal as a distribution location for Lima
production, this will be deemed a fundamental change in the
market and an event to initiate negotiations as discussed in
paragraph 20.0.
6.3 Tank Car
Any railroad tank car deliveries shall be made F.O.B the railroad
tank cars at the loading area at BP's Lima Refinery. In the
event that Ferrell requires railroad tank car loading. Since BP
has limited railroad tank car loading capability, BP shall supply
the railroad tank cars on a best efforts loading basis. The
terms which apply to the railroad tank car deliveries shall be
pursuant to the Trip Lease as set forth in Exhibit E.
7.0 TITLE, LIABILITY, RISK OF LOSS
Liability of BP shall cease and title to and responsibility for
the product delivered hereunder, including risk of loss, shall
pass to and rest in Ferrell as follows;
7.1 Tank Truck
For delivery into tank trucks, as product is loaded into
transport trucks at the point of delivery, which shall be at BP's
Lima or Toledo refineries.
7.2 Pipeline
For delivery into pipelines, as product passes the flange between
the pipeline, that delivers the product and the Todhunter
Terminal.
7.3 Tank Car
For delivery into tank cars, as product is loaded into the tank
car at the point of delivery, which shall be at BP's Lima
refinery.
8.0 MEASUREMENTS
The volume of propane obtained by measurement hereunder shall be
adjusted to a temperature of 60 Degrees F. using "GPA Standard
Factors for Volume Correction and Specific Gravity Conversion of
Liquified Petroleum Gases," GPA Publication No. 2142 in effect on
the date of delivery.
8.1 Transport Truck
Transport truck delivery quantities will be determined: (i) by
liquid metering devices (or such other method as the parties may
hereafter agree in writing) at BP's propane loading facility at
BP's Lima refinery and (ii) by weight at BP's Toledo refinery.
All quantities shall be based on the transport bills of lading.
8.2 Tank Cars
Tank car delivery quantities will be determined by standard
calibrated tank car tables for the tank cars used.
8.3 Pipeline
Pipeline delivery quantities will be determined by calibrated
meters, or if calibrated meters are not available, by the
measurement of the delivery tanks before and after delivery on
the basis of mutually agreed upon gauge tables.
9.0 PRICE
9.1 Settlement Price
Except as otherwise provided in this agreement, Ferrell will pay
BP the "Settlement Price". The Settlement Price shall consist of
a "Minimum Price" (as defined below) plus a sharing revenue above the
Minimum Price as provided for in paragraph 9.1 (ii).
i.) The "Minimum Price" per gallon shall be equal to the average
of all of the daily spot high/low average prices for Mont Belvieu
T.E.T. propane as published in O.P.I.S. Petroscan for each month,
plus an additional $0.0300 per gallon.
ii.) BP and Ferrell will share equally the difference between
Ferrell's average sales price netted back to refinery gate and
the Minimum Price for all product sold during such term. This
amount will then be added to the "Minimum Price" to determine the
"Settlement Price." An example illustrating the Settlement Price
calculation for the first term shall be as set forth in Exhibit
B.
Any product sold by Ferrell pursuant to paragraphs 5.1 above and
18.0 below will not be included when calculating Ferrell's
average sales price for the term.
9.2 Alternate Minimum Price
i.) If the average of the high/low average prices for Conway
propane averages more than $0.0200 per gallon below the average
of the high/low average prices for Mont Belvieu T.E.T. propane
during a month, the "Minimum Price" will be calculated as fifty
percent (50%) of the average of all of the daily spot high/low
average prices for Mont Belvieu TET propane plus fifty percent
(50%) of the average of all of the daily spot high/low average
prices for Conway/Group 140 propane as published in O.P.I.S.
Petroscan, for each month, plus $0.0300 per gallon.
ii.) For pricing terms corresponding to the first and fourth
Quarters of a calendar year (January through March or October
through December), if the average of the high/low average prices
for Conway propane averages $0.0300 per gallon or more over the
average of the high/low average prices for Mont Belvieu T.E.T.
propane, the "Minimum Price" will become the high/low average
price for Mont Belvieu T.E.T. propane plus $0.0350 per gallon for
that pricing month.
9.3 Invoicing
i) For invoicing purposes, Ferrell will pay BP the previous
month's settlement price for each gallon sold by truck or tank
car at BP' s Lima and Toledo, Ohio refineries. Along with each
payment, Ferrell shall provide BP a detailed account which
substantiates the payment amount. At the end of each month.
payment of any difference between the Settlement Price and the
provisional invoice price will be made between BP and Ferrell,
the Parties shall reconcile any overpayment or underpayment. In
the event Ferrell has overpaid, BP shall refund the overpayment
amount to Ferrell on the next Banking Day after the overpayment
amount is determined. In the event Buyer has underpaid, Seller
shall invoice Buyer for the underpayment amount with payment due
one Banking Day after Buyer's receipt of Seller's adjusted
invoice. By mutual agreement, an adjustment will be made if it
is found large cash reconciliations are being made at the end of
each term.
ii.) Invoices for pipeline sales will be generated upon
completion of arrival of propane at the Todhunter Terminal at a
price equal to the previous month's settlement price.
9.4 Determination of Price Netted Back To The Refinery Gate
i.) For all propane sold into tank trucks and tank cars F.O.B.
the Lima and Toledo refinery loading racks, the price netted back
to the refinery gate will be defined as the price at which the
product is sold by Ferrell.
ii.) Except as provided in Paragraph 9.4 iii), for all product
sold by Ferrell other than F.O.B. the Lima and Toledo refineries,
the price netted back to the refinery gate will be defined as the
price at which the product is sold by Ferrell minus the
applicable transportation costs and charges incurred in
delivering the product to the point of sale by Ferrell. These
charges may include, but are not limited to:
- - - Actual truck fees charged to Ferrell if a third party
trucking company is used. If Ferrell-owned transport trucks are
used, the truck fee will be determined using common carrier truck
rates in effect at the time of delivery for similar deliveries in
the area in which the delivery was made. An example of a common
carrier trucking company is Grammer Industries (GI) in Ohio.
- - - Actual published pipeline tariffs charged to Ferrell.
- - - Actual published railroad tariffs charged to Ferrell.
iii) During any month when Ferrell purchase product delivered
from BP's Lima refinery to Todhunter by pipeline, the price
netted back to the refinery gate shall be the average mean TET
Propane, basis Mt. Belvieu, TX as published in O.P.I.S.
Petroscan plus US$.0150 per Gallon.
iv.) The price netted back to the refinery gate for sales made on
a delivered basis by Ferrell to any affiliate of Ferrell, will be
determined as if such sale were made on an arms length basis to
any of Ferrell's other customers, and shall be based on the
alternative purchase economics report generated by any affiliate
of Ferrell, a copy of which is attached hereto as Exhibit C.
Ferrell will cause any affiliate of Ferrell to provide alternate
purchase economics upon request as part of the auditing process.
should BP determine that sales were made by Ferrell to an
affiliate at a price less than that described above, BP will be
refunded the difference. In addition, if it is determined that
such sales are deliberately made at such less price, BP shall
thereupon have the right to terminate this contract as provided
in paragraph 4.2 above.
9.5 Sales Data From Ferrell
Ferrell will provide to BP, on a daily basis within four (4) days
of date of delivery, by facsimile, telex or overnight mail, a
summary of their sales data which will include, but not be
limited to, shipping date, bill of lading number, quantity,
Ferrell price netted back to the refinery gate, and total value
of sale.
10.0 AUDITING
10.1 General Provisions
BP shall have the right, during and after any termination of this
Agreement, upon 5 business days, advance notice, to audit the
books and all records of Ferrell relating to the delivery of
propane and to place personnel in Ferrell's office for such
purpose, except that if BP reasonably believes that a shorter
notice period is necessary due to deliberate falsification of
documents or deliberate violation of the agreement to enable it
to conduct an accurate audit, it shall have the right to do so on
no less than 24 hours notice. Ferrell shall maintain such books
and records for 42 months after the date of each invoice under
this Agreement. Ferrell shall incorporate BP's right to audit
into any assignments of this contract.
BP shall have the right to assess interest on any net
underpayment at the end of each three month term that was the
result of Ferrell providing inaccurate sales data to BP as
discussed in paragraph 9.0, at the then-current thirty day U.S.
Treasury bill rate plus two (2) percent, as such rate may change
from time to time, during the period from the date of
underpayment to the date of full reimbursement. For unresolved
claims of interest or underpayment, BP reserves the right to
submit the claim(s) to binding arbitration, with the cost shared
equally by BP and Ferrell.
10.2 Records Retention
Ferrell shall maintain adequate books and records on its premises
in Liberty, Missouri, and/or Houston, Texas, as may be necessary
for BP to audit propane sales so as to determine Ferrell's
average sales price netted back to the refinery gate.
10.3 Right Of Customer Inquiries
BP shall have the right to contact Ferrell's customers to verify
the sales date provided, pursuant to paragraph 9.4, but only if
BP has reason to believe that such data has been deliberately
falsified.
10.4 Right Of Ferrell Supplier Inquiries
BP shall have the right to contact suppliers of propane to
Ferrell to verify alternate purchase economics as referred to in
item 9.4 (iii) above.
11.0 ODORIZATION
Unless otherwise advised in writing by Ferrell, BP will furnish
and add odorant to propane loaded into transport tank trucks at
the rate of one and one-half (1.5) pounds of ethyl mercaptan (or
other suitable odorant as my be agreed upon in writing by both
parties) per 10, 000 gallons of propane. Propane delivered into
tank cars and by pipeline will not have odorant added to it.
Presently, BP cannot odorize propane loaded into tank cars. When
and if this capability is added, the contract will be amended
accordingly.
12.0 DEMURRAGE
Demurrage shall be paid per running hour at the rate charged by
the carrier/owner for the time that loading exceeds allowed
freetime. The parties hereto shall not be liable for demurrage
caused by stoppage or restraint of labor of carrier.
Carrier/owner policy shall apply as to the allowable freetime and
demurrage rate. The party causing said excess loading time shall
be liable for payment of demurrage charges to the carrier/owner.
13.0 TERMS OF PAYMENT
For all tank car and tank truck loadings, Ferrell will pay BP by
wire transfer three times monthly, on the sixteenth (16th) of the
month for all product lifted from the first (1st) through the
tenth (10th) of the month; on the twenty sixth (26th) of the
month for all product lifted from the eleventh (11th) through the
twentieth (20th), and on the tenth (10th) of the succeeding
month, for all product lifted from the twenty first (21st)
through the end of the month. All product delivered by pipeline
will be paid for by wire transfer within two (2) days of receipt
of invoice and documentation. Once the difference between the
invoice price and settlement price has been determined at the end
of each one month term, and if money is owed BP, payment will be
due by wire transfer within (2) days of receipt of invoice and
documentation. If money is owed Ferrell, Ferrell's account with
BP will be credited. BP shall have the right to change payment
terms extended to Ferrell should Ferrell change the payment terms
it extends to its customers for sales of propane covered by this
agreement. BP shall have the right to charge and collect from
Ferrell a reasonable service charge on past due amounts at the
rate and on the terms established from time to time by BP. If
during the life of this agreement, the financial responsibility
of Ferrell becomes impaired to the extent that BP, in its
reasonable judgement has cause to believe Ferrell may be unable
to comply with the terms of payment set forth in this agreement,
it is understood and agreed that BP shall have the right to
reduce Ferrell's current credit limit and cash on delivery or
cash deposit or other satisfactory security may be required
before any further deliveries are made. Failure of Ferrell to
comply substantially with terms of payment, or failure to
maintain financial responsibility satisfactory to BP as described
in the preceding sentence, or failure to comply with BP's demand
for cash on delivery or cash deposits or other security, shall be
cause for BP to suspend further shipments and deliveries under
this agreement or to terminate this agreement without liability
for any damages occasioned by such suspension or termination.
It is the responsibility of Ferrell promptly to provide BP with
any federal, state, or local gallonage or sales tax exemptions.
Ferrell otherwise will be billed for such tax liabilities which
will become due immediately upon receipt of notification.
All payments shall be credited against the earliest dated
invoices.
14.0 EVENTS OF DEFAULT
In addition to, and not in limitation of, any provision of this
agreement or of applicable law, if any one or more of the
following Events of Default shall happen, then this agreement may
be terminated at the option of the party not in default, although
such termination shall not be deemed an election of remedies:
An "Event of Default' shall have occurred if either Party (the
"Defaulting Party") shall (i) file a petition or otherwise
commence or authorize the commencement of a proceeding or case
under any bankruptcy, insolvency, reorganization, or similar law
for the protection of creditors, or have any such petition filed
or proceeding or case commenced against it and it is not
successful in having such petition, proceeding, or case dismissed
within 60 days, or (ii) have a liquidator, administrator,
receiver or trustee appointed with respect to it or any
substantial portion of its property or assets, or
(iii) propose or make a general assignment or an arrangement
or composition with or for the benefit of its creditors, or (iv)
be dissolved.
If an Event of Default occurs, the Party other than the
Defaulting Party (the "Non-Defaulting Party") shall have the
right to liquidate this Agreement by sending a liquidation notice
to the Defaulting Party, and liquidation shall be effective upon
the date the notice is sent (the "Liquidation Date"). Such
notice shall contain the Non-Defaulting Party's commercially
reasonable determination of (i) the "Market Value" (obtained by
multiplying the then current market price for the type of crude
oil and/or petroleum product, delivery period and location
specified in this Agreement, by its respective quantity specified
in this Agreement); (ii) the "Contract Value" (obtained by
multiplying the price of the crude oil and/or petroleum product
specified in this Agreement by its respective quantity in this
Agreement); (iii) the "Liquidation Value,' (obtained by
calculating the absolute difference between the Market Value and
the Contract Value); and (iv) the "Liquidation Amount" (obtained
by discounting the Liquidation Value at the 30 day Commercial
Paper (high grade unsecured) rate as quoted in the Wall Street
Journal (Money Rates column) on the Liquidation Date, from the
the date on which payment would have otherwise been due pursuant
to this Agreement to the Liquidation Date) with the Liquidation
Amount being due to the Buyer if the Market Value exceeds the
Contract Value and to the Seller if the Contract Value exceeds
the Market Value. The Non-Defaulting Party shall set off or
aggregate, as appropriate, the Liquidation Amount, and (at the
election of the Non-Defaulting Party) any or all other amounts
due and outstanding under this Agreement or any other agreement
between the Parties so that all such amounts are aggregated
and/or netted to-a single "Liquidated Payment" payable by one
Party to the other. The Liquidated Payment shall be paid by the
owing Party no later than the next Banking Day after the
Liquidation Date.
Each Party agrees that (i) any Liquidated Payment constitutes a
reasonable determination of liquidated damages and is not a
penalty, and (ii) the Defaulting Party shall forever indemnify
and hold the Non-Defaulting Party harmless from any and all
reasonable out of pocket costs, including without limitation
attorney's fees, directly incurred by the Non-Defaulting Party in
the exercise of any of its remedies hereunder.
15.0 DAMAGES
BP and Ferrell expressly agree that neither party shall be liable
for indirect, special or consequential damages, except for said
damages as may arise from BP's failure to make available to
Ferrell the quantities of propane required to be made available
under the terms and provisions of this agreement.
16.0 INFORMATION
BP agrees to provide to Ferrell, a minimum of once per month,
production, inventory and propane burn capability information.
This information will include, but is not limited to, propane
production forecasts, propane burn values, propane burn volume
forecasts, propane burn capability, Lima propane cavern
inventory, and prior month production rates.
17.0 STORAGE
Ferrell will have access to 200,000 barrels of storage at BP's
Lima refinery for strategic inventory management. of this amount,
it is understood that 40,000 is unable to be retrieved from the
cavern because it is below the minimum suction height for the
pump in service. At the Toledo refinery, Ferrell will have
access to a minimum of five (5) and a maximum of ten (10) 600 -
barrel propane storage bullets. The total number of bullets
available is depended upon whether BP is burning propane and/or
moving other gas liquid products out of the Toledo refinery
through these bullets.
18.0 TAKE OR PAY
Except to the extent that Ferrell may be excused by force
majeure, as provided in Paragraph 23.0 hereof, if Ferrell fails
to take delivery of any product meeting the paragraph 3.0
specifications above, in the quantities, at the times and under
the conditions herein provided, BP shall have the right, after
full utilization of the storage facilities BP is making available
to Ferrell for product not so taken, to dispose of any quantities
of any of said product not so taken either by sale to third
parties in good faith and in a commercially reasonable manner, or
by burning as refinery fuel and/or flaring such product. In such
event, Ferrell shall pay BP for the quantity of product so
disposed of at the price specified below. Ferrell will pay BP
the difference between the daily spot high/low average price for
Mont Belvieu T.E.T. propane as published O.P.I.S. Petroscan plus
$0.040 per gallon on the day the product is disposed of by BP and
the value BP receives in disposing of the product. Should
Ferrell find it necessary to move product to outside storage,
Ferrell will pay for such product the daily spot high/low average
price for Mont Belvieu T.E.T. propane plus $0.030 per gallon on
the date of delivery of such product by BP to Ferrell.
19.0 MUTUAL INTENTION AS TO TERMINATION
The parties hereby agree that under any "freeze" of
supplier/purchaser relationships imposed under Department of
Energy Regulations or any other federal, state, or local
governmental statute or regulation that may be promulgated, which
requires the consent of either or both parties to the termination
of such relationships, such consent shall be given by either
party at the request of the other should this agreement terminate
or be terminated in whole or in part in accordance with the
provisions hereof. The parties agree to execute such
documentation as may be necessary from time to time to effectuate
such termination.
20.0 MARKET INFLUENCES
BP and Ferrell realize that there may be influences on this
propane market, which, over time, may affect the spirit of this
agreement. A key influence is the Conway propane market's
relationship to the Mt. Belvieu propane market, which
historically has typically ranged 0.0 to 3.0 cents per gallon
above Mont Belvieu prices. The local market itself or the
elimination of the Todhunter Terminal as a distribution location
as discussed in paragraph 6.2 may significantly alter the
economic benefit the parties hereto expect to receive under this
agreement. Should significant market changes occur, which affect
the spirit of this agreement or the expected economic benefits to
either party hereunder, the parties hereto agree promptly to
negotiate in good faith to add, change or delete the terms and
conditions of this agreement, including without limitation,
adjustment of the Settlement Price, as may be reasonably
necessary to preserve the spirit of this agreement and the
expected economic benefit hereunder. In addition to an other
rights of termination either party hereto may have in this
agreement, if the parties are unable to negotiate mutually
satisfactory additions, changes, or deletions as provided above,
each party hereto shall have the right to terminate this
agreement upon 180 days prior written notice to the other party,
which notice may be given at any time after the occurrence of the
aforesaid significant market change This is expected to be an
exceptional occurrence; fundamentals in this market do not change
frequently.
21.0 OWNERSHIP OR OPERATION OF REFINERIES
Nothing in this agreement shall be deemed to require BP to
continue to own or operate its Toledo or Lima refineries if, in
its sole discretion, BP elects not to do so; provided, however,
that BP shall cause each transferee of the Toledo or Lima
refineries, or both, as the case may be, to assume this agreement
and agree to perform all of the obligations, terms, conditions,
duties and liabilities to be performed by BP hereunder for not
less than one calendar year after such transfer.
22.0 CLAIMS
Claims on account of quantity or quality of product, except
claims caused by a failure by BP to add odorant as required by
paragraph 11 . 0 hereof, shall be waived unless made in writing
within sixty (60) days after delivery. Ferrell will notify BP
within fifteen (15) days of any claims against Ferrell relating
to propane delivered by BP hereunder that arises out of an
alleged failure to add odorant as required by paragraph 11. 0
hereof.
23.0 FORCE MAJEURE
Except for payments due hereunder, each party shall be excused
from performance under this agreement when and to the extent that
such performance is delayed or prevented by reason of any cause
beyond the control of the party, including, but not limited to,
acts of God; acts of enemies of the United States; perils of
navigation; floods; storms; fire; strikes; lockouts; labor
disturbances; riots civic commotion; hostilities; war (declared
or undeclared); governmental restrictions and prohibitions;
compliance (voluntary or involuntary) with any order or request
of any governmental agency or authority; accidents; breakdown,
slowdown or stoppage of refining or transportation or delivery
facilities; and shortages of supply of fuel, crude oil, other raw
materials or petroleum products. In addition, planned slowdowns
or shutdowns of refinery facilities for periodic or unforeseen
maintenance shall excuse BP from performance hereunder.
Notwithstanding the foregoing, settlement of strikes or
differences with workers shall be entirely within the discretion
of the party having such difficulty. Any party excused from
performance pursuant to this paragraph shall be excused only to
the extent such performance is delayed or prevented by the Force
Majeure, and promptly after the cessation of the Force Majeure
this agreement shall continue in full force and effect.
24.0 TAXES
In addition to the prices for propane specified in this
agreement, Ferrell agrees to pay BP the amount of any taxes,
fees, duties, or other charges not already included in the price
which may be imposed directly or indirectly by any municipal,
state or Federal law or governmental authority upon the sale,
use, storage, delivery or handling of propane purchased hereunder
or otherwise resulting from or measured by the purchase of
propane hereunder if BP is required to pay or collect such
amounts.
25.0 FERRELL'S BUSINESS - INDEMNITY
The business conducted by Ferrell in marketing products purchased
hereunder is the independent business of Ferrell, and this
agreement shall not be construed as reserving to or conferring
upon BP any right to direct or control any of Ferrell's employees
or the manner in which the business operations of Ferrell shall
be conducted. Ferrell agrees to comply with all federal, state
and local laws, ordinances, rules, orders and regulations
relating to Ferrell's business and the sale, handling and
distribution of propane. Ferrell agrees to indemnify and hold
BP, its agents and employees, harmless from and against any and
all expense, liability, claims, and causes of action except as
may be attributed to the negligent acts or omissions of BP, its
agents or employees, directly or indirectly resulting from,
arising out of or connected with any accident or anything
whatever occurring from any cause in connection with the
operation or conduct of Ferrell's business.
26.0 ASSIGNMENT
This agreement shall inure to the benefit of and be binding upon
each of the parties and their respective successors and assigns,
but neither the rights nor the duties of Ferrell under this
agreement may be voluntarily assigned or delegated without the
prior written consent of BP, which shall not be unreasonably
withheld. Notwithstanding the foregoing sentence to the
contrary, the prior written consent of BP shall not be required
for the assignment or delegation by Ferrell to any individual or
entity who now or hereafter controls, is controlled by, or under
common control with Ferrell, including without limitation, the
parent company of Ferrell, any subsidiary of Ferrell, an
affiliate of Ferrell, or any subsidiary of said parent, provided
that any such assignment or delegation shall not relieve Ferrell
of its obligation under this agreement in the event that such
assignee or delegee fails to perform such obligations.
27.0 SECTION HEADINGS AND CAPTIONS
All section headings and captions used in this agreement are for
convenience of reference and shall not affect the interpretation
of this agreement.
28.0 EXHIBITS
All exhibits described in this agreement shall be deemed to be
incorporated in and made a part of this agreement, except that if
there is any inconsistency between this agreement and the
provisions of any exhibit, the provisions of this agreement shall
control.
29.0 AMENDMENTS
Except as otherwise provided, this agreement shall not be
modified except by written agreement signed on behalf of BP and
Ferrell by their respective authorized representatives.
30.0 NO WAIVER
The failure of either party any time to require performance by
the other of any provision of this agreement shall in no way
affect that party's right to enforce such provision, or shall the
waiver by either party of any breach of any provision of this
agreement be taken or held to be a waiver of any further breach
of the same or any other provision.
31.0 AFFILIATE DEFINED
For purposes of this agreement, an affiliate of Ferrell shall be
defined as any person, company or other entity that owns a
majority of all classes of the stock of Ferrell or of which
Ferrell owns a majority of all classes of the stock (or other
equity interest) or a majority of all classes of the stock or
other equity interest of which is under common ownership with a
majority of all classes of the stock of Ferrell.
32.0 NOTICES
Except as otherwise provided in this Agreement, all written
notices shall be sent by U.S. mail, private courier (overnite
next day delivery), telex or telefax to the address listed below,
and the effective date of a notice shall be the date of receipt
by the addressee. A Party shall promptly notify the other Party
of any address change.
If to BP:
BP Exploration & Oil Inc.
ATTN: LPG Trader/Distribution Coordinator
200 Public Square, 5B-4655
Cleveland, OH 44114
telefax 216-586-5243
telex 62917760 (preferred mode of communication)
If to Ferrell:
Ferrellgas L.P.,
dba Ferrell North America
Attention: Director of Trading & Marketing
P.O. Box 4644
Houston, TX 77210
FAX 7138765567
33.0 GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF OHIO U.S.A. (WITHOUT REFERENCE TO
ANY CONFLICT OF LAW RULES). EACH PARTY EXPRESSLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE STATE OF OHIO, U.S.A. AND TO THE
VENUE OF FEDERAL AND STATE COURTS SITUATED IN THE CITY OF
CLEVELAND, COUNTY OF CUYAHOGA, STATE OF OHIO, AND AGREES TO
ACCEPT SERVICE OF PROCESS BY REGISTERED MAIL. EACH PARTY
IRREVOCABLY WAIVES ANY OBJECTION IT MIGHT OTHERWISE HAVE TO SUCH
VENUE, ANY RIGHT TO REMOVE OR TRANSFER JURISDICTION TO ANY OTHER
FORUM, AND ANY RIGHT OF SOVEREIGN IMMUNITY.
34.0 ENTIRETY
This agreement constitutes the entire agreement and understanding
between BP and Ferrell concerning the subject matter hereof,
merging and superseding all prior agreements and understandings,
whether oral, written, expressed or implied between Ferrell and
BP. All prior agreements between Ferrell and BP concerning the
subject matter hereof are hereby terminated.
In witness whereof, the parties have caused this Agreement to be
executed as of the date first above written.
Ferrellgas L.P.,
dba Ferrell North America
By: /s/ James E. Ferrell
Title: Chairman/Chief Executive Officer
BP Exploration & Oil, Inc.
By: /s/ Michael W. Press
Title: Senior Vice President
EXHIBIT A
1994 LIMA/TOLEDO BUDGET
PRODUCTION VOLUMES
MBD
LIMA TOLEDO TOTAL
JANUARY 4.6 1.1 5.7
FEBRUARY 5.4 1.1 6.5
MARCH 5.4 1.2 6.6
APRIL 5.4 1.2 6.6
MAY 5.4 1.1 6.5
JUNE 5.4 1.1 6.5
JULY 5.4 1.1 6.5
AUGUST 4.2 1.1 5.3
SEPTEMBER 3.4 1.1 4.5
OCTOBER 5.0 1.2 6.2
NOVEMBER 5.5 1.0 6.5
DECEMBER 5.5 1.0 6.5
AVERAGE 5.0 1.1 6.1
TOTAL (MILLION GAL) 76.7 16.9 93.6
EXHIBIT C
FERRELLGAS LOCATIONS
ASHLAND ASHLAND MARKWEST TET TET SOHIO SOHIO AMOCO AMOCO A
CATLETTSBURG CANTON SILOAM TODHUNTER COSCHOCTON TOLEDO LIMA G. SPRINGS MILFORD HUN
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
COST COST COST COST COST COST COST COST COST
---- ---- ---- ---- ---- ---- ---- ---- ----
PRICE ADJUSTMENT
CHILLICOTHE OH 3.5 0.0 0.0 0.0 0.0 0.0 4.8 0.0 0.0
DAYTON OH 5.9 0.0 4.8 2.8 5.5 5.5 3.1 0.0 0.0
GREENFIELD OH 4.2 0.0 0.0 0.0 0.0 0.0 4.5 0.0 0.0
GROVE CITY OH 4.8 0.0 3.7 3.9 3.1 5.2 3.9 4.2 0.0
HEBRON OH 5.2 0.0 4.2 4.5 2.4 5.9 4.5 4.5 0.0
LEBANON OH 5.9 0.0 0.0 0.0 0.0 0.0 4.2 0.0 0.0
LOGAN OH 3.5 0.0 0.0 0.0 0.0 0.0 5.2 0.0 0.0
MANSFIELD OH 7.8 0.0 5.9 5.5 3.1 3.6 3.5 2.6 0.0
MILFORD OH 5.2 0.0 0.0 0.0 0.0 0.0 4.8 0.0 0.0
NORVALK OH 0.0 0.0 0.0 6.3 3.9 2.3 3.7 0.0 0.0
ONTARIO OH 7.3 0.0 5.9 5.5 3.3 3.1 3.3 2.6 0.0
RADNOR OH 5.9 0.0 4.8 4.2 3.5 3.9 2.9 0.0 0.0
SPRINGFIELD OH 5.9 0.0 4.5 2.6 4.5 4.8 2.9 0.0 0.0
BARNESVILLE OH 0.0 3.1 6.7 0.0 3.1 0.0 0.0 0.0 0.0
DOVER OH 0.0 1.7 7.8 0.0 0.0 5.5 5.5 0.0 0.0
NEWTON FALLS OH 0.0 2.3 0.0 0.0 0.0 5.9 7.0 0.0 0.0
WINCHESTER OH 0.0 0.0 0.0 0.0 0.0 0.0 5.5 0.0 0.0
MASSILON OH 0.0 0.0 0.0 0.0 0.0 0.0 5.5 0.0 0.0
Exhibit D
SOHIO OIL MANUFACTURING SPECIFICATIONS Spec. No. MA-6
Page 1
- LIMA REFINERY LPG PROPANE
- TOLEDO REFINERY
CONFIDENTIAL Issued: 1/25/89
Replaced:12/l/88
I. SPECIFICATIONS
TEST LPG
METHOD PROPANE NOTES
4
Vapor Pressure, psig @ 100 degrees F D 2598 Max. 208
95% Evap., Temp., degrees F D 1837 Max. -37
-or-
Butane and Heavier, vol. % D 2163 Max. 2.5
Sulfur, gr/100 ft3 D 3246 Max. 10
Corrosion, Copper Strip D 1838 Max. 1 1
Residual Matter D 1258
Residue on evaporation, ml Max. 0.05
Oil Stain Observation (0.3 mls.) No stain
Valve Freeze, Minutes D 2713 Min. 3 2
Stench, Ethyl Mercaptan,
1b/10,000 gals. 1.5 5
Propylene Content, vol. % D 2163 Max. 5
Propane Content, vol. % D 2163 Min. 90
Specific Gravity D 2598 .500-.510 3
Volatile Chlorides, ppm D 2384 Max. 15 3
Hydrogen Sulfide Content D 2420 Pass 6
Free Water Content Max. None 7
<FN>
NOTES:
1. Rokon is not permitted in order to meet corrosion.
2. Not required on pipline movements.
3. Only required on deliveries to TET Todhunter terminal.
4. These specs conform to GPA 2140-80 specs for both Commercial
Propane and HD 5 propane, to ASTM D 1835 specs for
Commercial Propane, to ASTM D 2154 specs for Special Duty
Propane and to TET HD 5.
5. Not applicable to pipeline shipments.
6. An acceptable product shall not show a distinct coloration
on moist lead acetate paper.
7. The presence or absence of water shall be determined by
visual inspection.
</FN>
EXHIBIT B
EXAMPLE OF SETTLEMENT PRICE CALCULATION
ASSUMPTIONS
Average of Mont Belvieu TET Propane for one month term 22.000
Daily Spot High/Low Average Prices (cent/gal)
Ferrell Average Sales Price 27.000
Netted Back to the Refinery Gate (cent/gal)
CALCULATION
Minimum Price (cent/Gal) 22.000 + 3.00 = 25.000
Netback Sharing (cent/Gal) 27.000 - 25.000 x .50 = 1.000
Settlement Price (cent/Gal) 25.000 + 1.000 = 26.000
RAIL CAR TRIP LEASE PROVISIONS
1. Seller hereby sub-leases (subject and subordinate to Seller'
s rights under its primary lease) to Buyer its "Railcar(s)", sent
by Seller to Buyer, s designated location ("Destination"), and
Buyer accepts such Railcars under the terms set forth herein.
Railcars shall be sub-leased hereunder from the time of departure
at Seller's point of shipment until the Railcar is returned empty
to the railroad at Buyer's Destination according to the routing
instructions given by Seller (the "Return Point").
2. Buyer may use the Railcars only for the transfer and
discharge of petroleum product at Destination. Buyer is allowed
"Freetime" of 7 consecutive calendar days after arrival of the
Railcar at Destination. Freetime shall commence at 12:01 am
local time on the day following the day Railcar arrives at
Destination. Buyer shall pay Seller, upon receipt of Seller's
invoice, a rental fee of US$50.00 per day per Railcar, for each
day or partial day in excess of Freetime until Buyer returns the
Railcar to the railroad. Buyer shall also pay Seller, upon
receipt of Seller's invoice, for any demurrage or storage charges
levied by any third party transportation company as a result of
Buyer not returning Railcars to railroad within said Freetime.
3. Each Railcar shall be returned to the Return Point empty,
clean, in a safe condition, and in the same good repair as when
received by Buyer. Buyer shall report promptly to Seller all
loss or damage sustained by any Railcar. If Buyer makes minor
repairs thereto, Buyer shall notify Seller of the nature of such
repairs no later than the close of business on the day following
the day of completion of the repair, unless otherwise directed by
Seller. The cost of repair and/or replacement, including but not
limited to parts and labor, for any or all damage to any Railcar
that occurs while in Buyer's possession, except ordinary wear or
tear in normal operation, shall be at Buyer's expense, and Buyer
shall reimburse Seller for all sums expended by Seller for such
repairs and/or replacement, provided, however that that this
undertaking shall not be construed to make Buyer responsible for
damages to any Railcar arising from an Act of God, the Public
Enemy, Fire, Flood, or other similar causes or caused by the sole
negligence of either Seller or railroad.
4. Buyer agrees to indemnify and hold Seller harmless from and
against all loss, damage, or claim for injury or death to any
employee of Buyer or to any other person and for damage to any
property whatsoever (real or personal, including any Railcar
leased hereunder and commodities loaded, contained in, or shipped
therein) that may result proximately or indirectly from the lease
of any Railcar to Buyer except while such Railcar is in the
custody of a railroad which is a subscriber to the Code of
Interchange Rules, provided however, that Buyer shall not be
required to indemnify or hold Seller harmless from any losses,
damages, or claims to the proportionate extent damages from such
claims result from the negligent acts of Seller, its employees,
or agents.
5. Any mileage credits allowed by the railroad carriers shall
accrue to and be collected by Seller. If Buyer relinquishes
railroad tankcar mileage credits which should otherwise accrue on
a movement of Buyer's product in Seller's Railcar, then Buyer
shall pay to Seller, upon receipt of Seller's invoice, an amount
equal to such relinquished credits.
6. This lease shall continue in full force and effect for the
same term as the Agreement.