EXHIBIT 10.10
GAS SALES AGREEMENT
(Base Load)
between
K N MARKETING, L.P.
as "Seller"
and
ENERGAS COMPANY,
a division of Atmos Energy Corporation
as "Buyer"
Dated: January 1, ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇
INDEX
ARTICLE TITLE PAGE
I Definitions.................................... 1
II Quantity....................................... 2
III Delivery Points................................ 3
IV Price and Taxes................................ 4
V Term........................................... 6
VI Notices........................................ 6
VII Measuring Equipment and Testing................ 7
VIII Measurement Specifications..................... 7
IX Quality........................................ 7
X Delivery Pressure.............................. 8
XI Billing, Payment and Audit..................... 8
XII Notification of Curtailment.................... 9
XIII Possession and Responsibility for Gas.......... 9
XIV Title.......................................... 10
XV Force Majeure.................................. 10
XVI Financial Responsibility....................... 11
XVII Governmental Regulations....................... 12
XVIII Entire Agreement............................... 13
XIX Confidentiality................................ 13
XX Successors and Assigns......................... 14
XXI Maintenance of Facilities...................... 14
XXII Indemnification................................ 14
XXIII Third Party Transportation..................... 15
XXIV Headings....................................... 15
XXV Waiver......................................... 15
XXVI Amendments..................................... 15
XXVII Remedies Upon Material Default................. 16
XXVIII Miscellaneous.................................. 16
Signatures..................................... 17
Exhibit "A" - Exemption Certificate............ A-1
GAS SALES AGREEMENT
(Base Load)
THIS AGREEMENT, dated and effective this 1st day of January, 1996, (the
"Effective Date") by and between K N MARKETING, L.P., a Texas Limited
Partnership, hereinafter called "Seller", and ENERGAS COMPANY, a division of
Atmos Energy Corporation, a Texas Corporation, hereinafter called "Buyer";
W I T N E S S E T H
WHEREAS, Seller is the owner of a firm supply of natural gas from which
Seller will have available for sale certain volumes of natural gas and Seller
desires to sell such firm supplies of gas to Buyer; and
WHEREAS, Seller has made certain transportation arrangements with pipeline
companies which operate natural gas transmission systems ("Transporter(s)"); and
WHEREAS, Buyer desires to purchase from Seller volumes of firm natural gas
for resale through Buyer's natural gas distribution facilities in the state of
Texas where Seller sells gas to Buyer as of December 31, 1995 ("Buyer's
Facilities") in accordance with the terms and conditions of this Agreement; and
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1. "Buyer" means the Party who is purchasing and receiving gas
volumes under this Agreement.
Section 2. "Seller" means the Party who is selling and delivering gas
volumes under this Agreement.
Section 3. "Party" or "Parties" means Buyer and/or Seller hereunder, acting
by and through duly authorized representatives.
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Section 4. "Day" means the period of twenty-four consecutive hours
commencing at 7:00 a.m. Central Time (CT) on one calendar day and ending at 7:00
a.m. CT on the following calendar day. The reference date for any day should be
the calendar date upon which such twenty-four (24) hour period began.
Section 5. "Month" means the period commencing at 7:00 a.m. CT on the first
day of a calendar month and ending at 7:00 a.m. CT on the first day of the
following calendar month.
Section 6. "Mcf" means the quantity of gas occupying a volume of one
thousand (1000) cubic feet at a temperature of sixty degrees (60 degrees)
Fahrenheit and an absolute pressure of fourteen and sixty-five hundredths pounds
per square inch (14.65 psia).
Section 7. "Base Load Requirements" means the firm gas purchase or firm
transportation requirements of Buyer up to and including a total quantity of
fifteen (15) million MMBtu per calendar year to serve Buyer's customers through
Buyer's Facilities during each calendar year of this Agreement.
Section 8. "Btu" means the amount of heat required to raise the temperature
of one avoirdupois pound of pure water from fifty-eight and five tenths degrees
(58.5 degrees) Fahrenheit at a constant pressure of fourteen and sixty-five
hundredths (14.65) pounds per square inch absolute ("psia").
Section 9. "MMBtu" means one million (1,000,000) Btu.
Section 10. "Operating Agreement" means the agreement between Westar
Transmission Company ("Westar") and Energas Company, dated December 1, 1996
covering measurement equipment and testing, measurement specifications,
pressures, quality, maintenance of facilities, and other operational matters.
ARTICLE II
QUANTITY
Section 1. Seller will sell and deliver and Buyer will purchase and/or
transport Buyer's Base Load Requirements during
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each calendar year of this Agreement as set forth below. Quantities of gas
comprising the Base Load Requirements will be counted as the first gas
quantities delivered by Seller through each of the Delivery Point(s) to Buyer
each month. Buyer shall purchase under this Agreement a minimum quantity of
natural gas of ten (10) million MMBtu during 1996. In the event the City of
Odessa elects to supply the requirements for the City of Odessa and part of the
Odessa environs for the months of November and December of 1996, then Buyer's
purchase requirements of the Base Load Requirements shall be reduced in the
month of November, 1996 by an amount of one hundred and thirty-five thousand
(135,000) MMBtu and in the month of December, 1996 by an amount of two hundred
and twenty-five thousand (225,000) MMBtu. Buyer shall purchase under this
Agreement a minimum quantity of natural gas of four and one half (4.5) million
MMBtu during 1997. In the event any other of Buyer's municipality markets during
1997 elect to supply the natural gas requirements for such municipality markets,
then Buyer's purchase requirements of the Base Load Requirements will be reduced
by an amount equal to the amount supplied by such municipality markets. If Buyer
does not take the quantity of gas Buyer elected to purchase during any month(s)
in 1996 and 1997, then the quantity which Buyer has the right to transport in
the next calendar year under this Agreement will be reduced by a quantity equal
to the difference in the quantity nominated and the quantity actually taken
during the applicable month. Buyer shall transport under either one of those
certain Gas Service Agreements between Buyer and KN Westex Gas Services Company
dated January 1, 1996 or between Buyer and Westar Transmission Company dated
January 1 , 1996 (collectively referred to hereafter as "Service Agreement"),
that portion of Buyer's Base Load Requirements that Buyer elects not to purchase
from Seller hereunder.
Section 2. It is expressly understood and agreed that all gas sold to
Buyer is to be used by Buyer to serve only those end use customers who are
served by Buyer's Facilities, and any other use of the gas ("Other Use Gas") by
Buyer will constitute a
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material breach of this Agreement, in which case, without limiting any other
remedies available to Seller, Seller may immediately cease delivering Other Use
Gas to Buyer at the Delivery Point(s).
ARTICLE III
DELIVERY POINT(S)
Section 1. The delivery of gas hereunder shall be subject to the
Operating Agreement and shall be at the outlet flange of Transporter(s)'
Facilities, at all points of interconnection between Transporter(s) facilities
and Buyer, where Buyer receives natural gas from Seller as of December 31, 1995,
or subsequently at any other mutually agreed to point(s) to be agreed to in
writing by the Parties ("Delivery Point(s)").
ARTICLE IV
PRICE AND TAXES
Section 1. The price of gas purchased and sold under this Agreement,
delivered to Buyer at the Delivery Point(s), shall be as follows:
A.
1. For the period January 1, 1996 through July 31, 1996, the price
shall be calculated on an Mcf basis and for each Mcf of gas will be
equal to the "First Index Basket" (defined below), plus $0.59 per
Mcf.
2. The "First Index Basket" referred to in subsection A.1) shall be
equal to the arithmetic average of the "prices" stated in dollars
per MMBtu in each publication for the delivery month as reported in
(i) Natural Gas Week, published by Oil Daily Company in the table
titled "Gas Price Report", in the column labeled "Delivered to
Pipeline", "This Week" for Texas West Spot, and
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(ii) Inside F.E.R.C.'s Gas Market Report, published by ▇▇▇▇▇▇-▇▇▇▇,
Inc. for Panhandle Eastern Pipeline Co., Texas, Oklahoma (Mainline)
under the heading "Prices of Spot Gas Delivered to Pipeline" (per
MMBtu) under the category labeled "Index".
B. For the period August 1, 1996 through December 31, 1996, the price
shall be calculated on an MMBtu basis and for each MMBtu will be equal
to the "Index Basket" (defined below), plus $0.3042 per MMBtu, plus
Westar's transportation rate of $0.2858 per Mcf.
C. For 1997, the price for each MMBtu will be equal to the "Index Basket",
plus (i) if Buyer elects to purchase less than ten (10) million MMBtu,
$0.3042 per MMBtu, plus $0.2858 per Mcf (or the rate described in
subsection D below), (ii) if Buyer elects to purchase ten (10) million
MMBtu or more, but less than fifteen (15) million MMBtu, $0.1842 per
MMBtu, plus $0.2858 per Mcf (or the rate described in subsection D
below), or (iii) if Buyer elects to purchase fifteen (15) million
MMBtu, $0.1342 per MMBtu, plus $0.2858 per Mcf (or the rate described
in subsection D below).
D. In the event the approved rate for transportation on the Westar system
(as that system is described in the Operating Agreement) changes, then
the $0.2858 per Mcf rate for transportation will be replaced with the
new rate which has been approved by The Railroad Commission of Texas,
which notwithstanding the structure of such approved rate shall be the
cost of service rate expressed on a per unit of actual throughput basis
for the capacity used to provide the firm transportation service.
E. Commencing January 1, 1998, and each January 1 thereafter for the
remaining term of this Agreement, Buyer shall have the option to
purchase at a mutually agreeable price from Seller all or any portion
of
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Buyer's Base Load Requirements, and Buyer shall transport that portion
of Buyer's Base Load Requirements that Buyer elects not to purchase
from Seller hereunder during each calendar year under the Service
Agreement.
F. The "Index Basket" referred to in B. and C. above shall be equal to the
sum of the "prices" stated in dollars per MMBtu of: (i) fifty percent
(50%) of the arithmetic average of the index prices listed in each
edition of Natural Gas Week, published during the applicable calendar
month by Oil Daily Company in the table titled "Gas Price Report",
under the column labeled "Delivered to Pipeline", "This Week" for Texas
West Spot, and (ii) twenty-five percent (25%) of the first publication
in the applicable month of Inside F.E.R.C.'s Gas Market Report,
published by ▇▇▇▇▇▇-▇▇▇▇, Inc. for Panhandle Eastern Pipeline Co.,
Texas, Oklahoma (Mainline) under the heading "Prices of Spot Gas
Delivered to Pipeline" under the category labeled "Index", and (iii)
twenty-five percent (25%) of the index price published in the first
edition of the month in Natural Gas Intelligence Gas Price Index for
the applicable calendar month, identified in the table entitled "SPOT
GAS PRICES" under the column entitled "Contract Index", the "Intrastate
Avg." for the "West Texas/Permian" gas.
G. Should any of the indices or publications above become unavailable,
Buyer and Seller will use their best efforts to locate another source
of this information, or in the event that the information cannot be
obtained through another source, Buyer and Seller shall agree upon
another index to replace the index which has become unavailable.
H. For the months of October, November and December of 1996 only, in
addition to the prices specified above, Buyer shall pay Seller for the
first gas through the
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meter at the Delivery Point(s) hereunder an additional amount for the
specified volumes, as follows:
For October 1996 - 500,000 MMBtu - $0.82 per MMBtu
For November 1996 - 1, 365,000 MMBtu - $0.82 per MMBtu
For December 1996 - 1,775,000 MMBtu - $0.82 per MMBtu
Section 2. In addition to the price to be paid for gas delivered
hereunder, Buyer agrees to reimburse Seller for gross receipts taxes, sales
taxes, and other similar taxes, which are lawfully imposed on Seller because of
the sale or delivery of gas to Buyer hereunder or the gas itself. Statements
for such tax reimbursement shall be rendered and paid as provided in accordance
with the billing and payments provisions of this Agreement. All taxes levied on
such gas after delivery and lawfully imposed on Buyer shall be paid by Buyer.
If Buyer claims an exemption from state sales taxes or desires to pay any
applicable sales taxes directly to the taxing authority, Buyer will execute the
"Exemption Certificate" attached hereto as Exhibit "A" or such other evidence of
exemption as may be required by Seller. Applicable rulings or orders of
governmental representatives in charge of the administration of any law or
ordinance increasing, decreasing or creating any tax shall be binding and
conclusive upon Buyer until such time as the invalidity thereof has been finally
established by the decision of a court of competent jurisdiction. Buyer shall
be entitled to reimbursement from Seller to the extent of any payments made by
it to Seller for taxes pursuant to this Article which may subsequently be
refunded to Seller by the taxing authority. Buyer shall not be obligated to
reimburse Seller for any ad valorem taxes on properties or for taxes which are
based upon or measured by the natural gasoline or other liquefied hydrocarbon
content extracted from the gas before delivery to Buyer.
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ARTICLE V
TERM
Section 1. This Agreement, regardless of when executed, is effective as
of the Effective Date, and shall continue thereafter, unless earlier terminated
pursuant to the provisions in other Sections of this Agreement, for a term
ending on December 31, 2001.
ARTICLE VI
NOTICES
Section 1. Any notice or statement (other than notices to be given under
the Price and Taxes Article of this Agreement which shall be by certified mail,
return receipt requested), to be given hereunder, unless otherwise specified
herein, shall be in writing and shall be deemed delivered as of the postmarked
date when deposited in the United States mail, postage prepaid, and addressed to
the respective Party at the following addresses or at such other addresses as a
Party may designate to the other in writing:
SELLER:
Notices: K N Marketing, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Gas Sales & T&E
Administration
Wire Transfer: K N Marketing, L.P.
Norwest Banks Colorado, N.A.
Denver, Colorado
ABA# 102 000 076
A/c# ▇▇▇-▇▇▇▇-▇▇▇
BUYER:
Notices: ENERGAS COMPANY
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Intrastate Gas Supply
Statements: ENERGAS COMPANY
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Intrastate Gas Supply
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ARTICLE VII
MEASURING EQUIPMENT AND TESTING
Section 1. Measuring equipment and testing shall be governed by the
Operating Agreement.
ARTICLE VIII
MEASUREMENT SPECIFICATIONS
Section 1. Measurement specifications shall be governed by the Operating
Agreement.
ARTICLE IX
QUALITY
Section 1. Quality shall be governed by the Operating Agreement.
ARTICLE X
DELIVERY PRESSURE
Section 1. Delivery pressure shall be governed by the Operating
Agreement.
ARTICLE XI
BILLING, PAYMENT AND AUDIT
Section 1. On or before the fifteenth (15th) day of each Month, Seller
shall render a statement to Buyer giving the total quantity of gas, expressed in
MMBtu and Mcf, delivered and sold hereunder during the preceding Month and the
monies due therefor. Such statements are to be rendered in accordance with this
Agreement, and shall include any amounts due for tax reimbursement under the
provisions of this Agreement. In the event the total amount due Seller cannot
be determined on or before the fifteenth (15th) day of the Month, Seller shall
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nevertheless invoice Buyer for the amounts that are known and/or are nominated
by Buyer, and when the information is available Seller shall invoice for actual
amounts (or refund any payment as necessary) as soon as practicable after such
amount is determined.
Section 2. Ten (10) days after the statement is received by Buyer, Buyer
shall make payment to Seller by wire transfer per the instructions set forth in
the Article titled NOTICES. If Buyer disputes the amount of any statement for
any reason, Buyer shall notify Seller of such dispute and shall be obligated to
pay only the undisputed portion of such statement on the due date. Buyer shall
pay the disputed portion of the statement which is determined to be owing to
Seller within fifteen (15) days after the date the dispute is resolved, together
with interest on such amount at the rate set forth in Section 4. below,
commencing on the original due date of the statement and continuing until paid.
If the statement shall have been paid in full and it shall be determined that
such disputed portion of the statement was paid in error, Seller shall refund
such amount to Buyer, together with interest at the rate hereinafter set forth
below over the period that Seller had possession of the money, within fifteen
(15) days after resolution of the dispute.
Section 3. All statements, bills, computations and payments shall be
subject to correction of any errors contained therein until two (2) years after
date of payment, and after such period any errors found will be deemed to be
waived by the affected Party.
Section 4. Any amounts due for gas delivered hereunder remaining unpaid
after the due date for such payment shall bear interest, at the lesser of the
highest lawful interest rate or the prime rate charged by Norwest Bank of Denver
plus two percent (2%), until paid.
Section 5. Each Party shall have access to and the right to audit during
regular business days and business hours, upon reasonable notice, all
measurement, billing, computation and payment records maintained by the other
Party which relate to the
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gas received under this Agreement. All records will be maintained for two (2)
years after payment has been made for the month to which the records pertain.
ARTICLE XII
NOTIFICATION OF CURTAILMENT
Section 1. Seller and Buyer agree to provide each other with as early a
notice as is reasonably practical of any curtailment or cessation of deliveries
or receipts due to force majeure or pursuant to this Article.
Section 2. Gas delivered under this Agreement shall be subject to
curtailment when necessary to protect public health and safety. Such
curtailment shall be performed by Seller and/or Transporter in accordance with
Seller's and/or Transporter(s)' applicable procedures from time to time in
effect and/or on file with the appropriate regulatory agency, and shall not be
the basis for any claim for damages sustained by any Party.
Section 3. In the event a curtailment of deliveries shall become
necessary or advisable, Seller shall notify or cause Transporter(s) to notify
Buyer as soon as possible before actual curtailment, if possible, by telephone
or other means, of the nature, extent and probable duration of such curtailment.
Buyer shall resume the taking of gas within a reasonable length of time
following notification that gas is again available.
ARTICLE XIII
POSSESSION AND RESPONSIBILITY FOR GAS
Section 1. As between the Parties hereto, Seller shall be in exclusive
control and possession of the gas delivered hereunder and responsible for any
damage or injuries caused thereby until the same shall have been delivered to
Buyer at the Delivery Point(s) (except to the extent such damages or injuries
shall have been caused by the act or omission of Buyer), after which Buyer shall
be deemed to be in exclusive control and
11
possession thereof and responsible for any such damages or injuries (except to
the extent such damages or injuries shall have been caused by the act or
omission of Seller). Each of the Parties hereto agree to indemnify, defend, and
hold the other Party harmless from and against any and all claims, liabilities,
damage, losses, costs, and expenses (including attorneys' fees) incurred by the
indemnified Party arising from or relating to any damages, losses, or injuries
for which the indemnifying Party is responsible pursuant to the foregoing
sentence.
ARTICLE XIV
TITLE
Section 1. Seller hereby warrants that (i) it has good title to all gas
delivered to Buyer hereunder, (ii) it has the right to sell such gas, and (iii)
all such gas is free from any and all liens, encumbrances, and adverse claims.
Seller agrees to indemnify, defend, and hold Buyer harmless from and against any
adverse claims asserted with respect to any gas delivered hereunder.
Section 2. Title to the gas shall pass from Seller to Buyer, upon the
delivery thereof, at the Delivery Point(s).
ARTICLE XV
FORCE MAJEURE
Section 1. In the event that either Seller or Buyer is rendered unable,
wholly or in part, by reason of an event of force majeure, to perform its
obligations under this Agreement, other than to make payment due hereunder, and
such Party has given notice and full particulars of such force majeure in
writing to the other Party as soon as possible after the occurrence of the cause
relied on, then the obligations of the Parties, insofar as they are affected by
such force majeure, shall be suspended during the continuance of such inability,
but for no longer period, and such cause shall, insofar as possible,
12
be remedied with all reasonable dispatch. The term "force majeure" as employed
herein and for all purposes relating hereto shall mean acts of God, strikes,
lockouts or other industrial disturbances, acts of the public enemy, wars,
blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes,
fires, storms, hurricane warnings, crevasses, floods, washouts, arrests and
restraints of governments and people, civil disturbances, explosions, breakages
or accident to machinery or lines of pipe, the necessity for making repairs or
alterations to machinery or lines of pipe, freezing of ▇▇▇▇▇ or lines of pipe,
partial or entire failure of ▇▇▇▇▇, inability of any Party hereto to obtain
necessary materials, supplies, or permits due to existing or future rules,
regulations, orders, laws or proclamations of governmental authorities (both
federal and state), including both civil and military, any failure due to force
majeure by any transporter(s) to deliver Seller's gas to Buyer's facilities or
thereafter to transport gas for Buyer, partial or entire failure of Seller's
source of supply, and any other causes whether of the kind herein enumerated or
otherwise, not within the control of the Party claiming suspension and which by
the exercise of due diligence such Party is unable to prevent or overcome; such
term shall likewise include (a) the inability of such Party to acquire, or the
delays on the part of such Party in acquiring, at reasonable cost and after the
exercise of due diligence, any necessary servitudes, right-of-way grants,
permits or licenses, and (b) the inability of each Party to acquire, or the
delays on the part of such Party in acquiring at reasonable cost and after the
exercise of due diligence, any necessary materials and supplies (excluding
inability due to the cost of gas or the cost of transportation of gas), permits
and permissions. It is understood and agreed that the settlement of strikes,
lockouts or other industrial disturbances shall be entirely within the
discretion of the Party or Transporter having the difficulty and that the above
requirement that any force majeure shall be remedied by the exercise of due
diligence shall not require the settlement of strikes or lockouts by acceding to
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the demands of the opposing party when such course is inadvisable in the
discretion of the Party having the difficulty.
ARTICLE XVI
FINANCIAL RESPONSIBILITY
Section 1. If, during the term of this Agreement, Seller, in good faith,
determines that the financial responsibility of Buyer has become impaired or
unsatisfactory, advance cash payment or other satisfactory security will be
given by Buyer upon demand by Seller, and delivery of gas may be withheld until
such payment or assurance is received. If such payment or assurance is not
received within fifteen (15) days of demand, Seller may terminate this Agreement
at any time effective upon the dispatch of written notice. Additionally, if
there are instituted by or against either Party hereunder proceedings in
bankruptcy or under any insolvency law, the other Party may terminate this
Agreement at any time.
Section 2. If, during the term of this Agreement, Buyer, in good faith,
determines that the financial responsibility of Seller has become impaired or
unsatisfactory, a corporate warranty or other satisfactory security will be
given by Seller upon demand by Buyer. If such assurance is not received within
fifteen (15) days of demand, Buyer may terminate this Agreement at any time
effective upon the dispatch of written notice.
ARTICLE XVII
GOVERNMENTAL REGULATIONS
Section 1. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS, EXCEPT ANY RULE OR
PRINCIPLE OF THE LAWS OF THE STATE OF TEXAS WHICH WOULD REFER THE CONSTRUCTION
OF THIS AGREEMENT TO THE LAWS OF ANOTHER STATE. This Agreement shall be subject
to all valid laws, regulations or orders of duly constituted governmental
authorities having jurisdiction which are applicable
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to the subject matter hereof and effective from time to time. Seller and Buyer
agree to obtain, if possible, whatever authority is necessary, if any, to
effectuate the purchase or sale of gas hereunder in the event this Agreement and
the purchase or sale of gas hereunder for any reason becomes subject to the
jurisdiction of any governmental authority, which at the present time does not
have such jurisdiction.
Section 2. Notwithstanding any other provision of this Agreement,
if at any time during the term of this Agreement, any federal or state law or
any rule, order, opinion, enactment or regulation of any governmental authority
or of any court, prevents Buyer from including in its cost of service for
ratemaking purposes to its customers the full amount of any cost incurred under
this Agreement which Buyer has agreed to pay Seller hereunder, Buyer shall
immediately notify Seller in writing of the price that it is allowed to include
in its cost of service for ratemaking purposes for gas purchased under this
Agreement. Upon receiving such notification, Seller, at its sole discretion,
may choose to either amend the Agreement so that the Buyer can include in its
cost of service for ratemaking purposes the full price for gas sold under the
Agreement or terminate the Agreement. Seller shall notify Buyer of its choice
in writing within twenty-four (24) hours of receiving Buyer's notice.
Section 3. Notwithstanding any other provision of this Agreement, if at
any time during the term of this Agreement, any federal or state law or any
rule, order, opinion, enactment or regulation of any governmental authority or
of any court, prevents Seller from recovering from Buyer the full price for gas,
which Buyer has agreed to pay Seller hereunder, inclusive of any charges
assessed as a result of Buyer's failure to take gas, as set forth herein, then
Seller shall be excused from delivering gas, effective prospectively from the
date that Buyer receives written notice from Seller of the pertinent rule,
order, opinion, enactment or regulation. Each time that Seller invokes this
right to be excused from taking or delivering gas pursuant to this paragraph,
the Parties may renegotiate an acceptable price, or,
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at any time during renegotiation or in lieu of renegotiation, terminate this
Agreement immediately.
Section 4. In addition, if any federal or state law, rule, order,
opinion, enactment or regulation of any governmental authority or of any court,
prevents either Party from receiving the full benefits as bargained for under
this Agreement and in any way prevents either Party from exercising its right to
terminate or cease deliveries under this Agreement, this Agreement shall be
deemed to have terminated one (1) day prior to the attempted implementation of
such governmental action unless the Party whose benefit is diminished agrees to
waive this clause in writing in which case the Agreement shall be deemed to be
reinstated.
ARTICLE XVIII
ENTIRE AGREEMENT
Section 1. This Agreement contains the entire agreement of the Parties
with respect to the matters covered. No other agreement, statement or promise
not contained herein shall be binding or valid.
ARTICLE XIX
CONFIDENTIALITY
Section 1. The terms of this Agreement, including but not limited to the
price paid for gas, the identified transporting pipelines and cost of
transportation, the quantities of gas purchased and sold and all other material
terms shall be kept confidential by the Parties, except to the extent that any
information must be disclosed to a third Party as required by federal, state or
local law, regulation or governmental process, or for the purpose of
effectuating transportation of the gas hereunder or for obtaining regulatory
orders pertaining to the delivery or utilization of gas sold hereunder or for
regulatory filings or reports, or except to the extent that any information
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is in the public domain, or which, through no breach by either Party of its
obligations herein, ceases to be confidential.
ARTICLE XX
SUCCESSORS AND ASSIGNS
Section 1. This Agreement may not be assigned by either Party without the
consent of the other Party, which consent shall not be unreasonably withheld,
unless assigned to an affiliate or subsidiary of a Party. Such assignment shall
not relieve the assigning Party of its obligations under this Agreement.
Section 2. Either Party may assign its rights, title, and interest in,
to, and under this Agreement to a trustee or trustees, individual or corporate,
as security for bonds or other obligations or securities, without such trustee
or trustees assuming or becoming in any respect obligated to perform the
obligations of the assignor under this Agreement, and, if any such trustee be a
corporation, without its being required to qualify to do business in any state
in which any performance of this Agreement may occur. However, such assignment
for security purposes shall not relieve the assigning Party of any of its
obligations under this Agreement.
Section 3. This Agreement shall be binding upon and shall inure to the
benefit of and be enforceable by the Parties hereto and their respective
successors and assigns, and is intended solely for the benefit of Seller and
Buyer and their respective successors and assigns, and not for the benefit of
any other person or entity not a Party hereto.
ARTICLE XXI
MAINTENANCE OF FACILITIES
Section 1. Maintenance of facilities shall be governed by the Operating
Agreement.
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ARTICLE XXII
INDEMNIFICATION
Section 1. Buyer and Seller shall each indemnify, defend, and save
harmless the other including their employees and agents from and against any and
all loss, damage, injury, liability, and claims for injury to or death of
persons (including any employee of Buyer or Seller), or for loss or damage to
property (including the property of Buyer or Seller), to the extent that such
losses, damages, injuries, or claims result from the negligence of the
indemnifying Party in its performance of its obligations arising pursuant to
this Agreement (including the installation, maintenance, and operation of
property, equipment, and facilities) or any other operations under this
Agreement.
ARTICLE XXIII
THIRD-PARTY TRANSPORTATION
Section 1. Buyer and Seller acknowledge that Seller will be obtaining
transportation from third parties in order to have the gas covered hereby
delivered to the Delivery Point(s). In the event such transportation is
interrupted or terminated by an event of force majeure as defined in Article XV,
Seller shall be fully excused for its failure to deliver gas hereunder.
ARTICLE XXIV
HEADINGS
Section 1. The descriptive headings of the provisions of this Agreement
are formulated and used for convenience only and shall not be deemed to affect
the meaning or construction of any such provisions.
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ARTICLE XXV
WAIVER
Section 1. No waiver by either Party of any one or more defaults by the
other in the performance of the provisions of this Agreement shall operate or be
construed as a waiver of any other default or defaults, whether of a like or a
different character.
ARTICLE XXVI
AMENDMENTS
Section 1. The terms and conditions of this Agreement may not be amended
except by the written agreement of the Parties.
ARTICLE XXVII
REMEDIES UPON MATERIAL DEFAULT
Section 1. If either Party hereto shall fail to perform any material
covenant or obligation imposed upon it under this Agreement, then in such event
the non-defaulting Party may, at its option, terminate this Agreement upon
acting in accordance with the procedures hereafter set forth in this Section.
The non-defaulting Party shall cause a written notice to be served on the
defaulting Party, which notice shall state specifically the cause of terminating
this Agreement and shall declare it to be the intention of the non-defaulting
Party to terminate this Agreement if the default is not cured. The defaulting
Party shall have ten (10) days after receipt of the aforesaid notice in which to
remedy or remove the cause or causes stated in the termination notice, and, if
within such ten-day period, the defaulting Party does so remedy or remove said
cause or causes and fully indemnifies the non-defaulting Party for any and all
consequences of such breach, then such termination notice shall be withdrawn and
this Agreement shall continue in full force and effect. In the event that the
defaulting Party fails to remedy or remove the cause or causes or to indemnify
the non-defaulting Party for any and all consequences of such breach within such
ten-day period, this Agreement shall be terminated and of no
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further force or effect from and after the expiration of such ten-day period.
Section 2. Any termination of this Agreement pursuant to the provisions
of this Article shall be (i) without prejudice to the rights of Seller to
collect any amounts then due Seller for gas delivered prior to the time of
termination, (ii) without prejudice to the rights of Buyer to receive any gas
for which it has paid but not received prior to the time of termination, and
(iii) without waiver of any other remedy to which the non-defaulting Party may
be entitled.
ARTICLE XXVIII
MISCELLANEOUS
Section 1. This Agreement shall be deemed drafted and prepared equally
and jointly regardless of which Party prepared or submitted the Agreement to the
other.
Section 2. Buyer and Seller hereby cancel, supersede, and replace any and
all previous agreements between Buyer and Seller which include, cover, or
pertain in any manner to the delivery of gas to Buyer at the Delivery Points.
Section 3. Except for the Parties hereto and their successors and
assigns, no person, including without limitation any owner of a royalty or
overriding royalty interest, shall have any rights as a third Party beneficiary
or otherwise under this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed.
"BUYER" "SELLER
ENERGAS Company, a division of K N MARKETING, L.P.
Atmos Energy Corporation By its Managing General
Partner,
American Pipeline Company
By: By:
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Name: Name:
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Title: Title:
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EXHIBIT "A" to Gas Sales Agreement
dated January 1, 1996 between K N Marketing, L.P. ("Seller")
and ENERGAS COMPANY, a division of Atmos Energy Corporation
("Buyer")
EXEMPTION CERTIFICATE
For Natural Gas Delivered By
K N Marketing, L.P.
To ENERGAS COMPANY
Buyer's Direct Payment Permit Number:
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Buyer's Address: ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
The undersigned hereby claims an exemption from payment of taxes under Tax Code,
Vernon Texas Code Annotated, Chapter 151, for the purchase and delivery of
natural gas from Seller. The reason that Buyer is claiming this exemption is:
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Buyer will be liable for payment of the Limited Sales and Use Tax if Buyer uses
the natural gas in some manner other than the reason listed above, and shall pay
the tax based on the price paid for the natural gas.
This exemption is claimed for, and this exemption certificate shall apply to,
all gas delivered to Buyer by Seller on and after the date hereof, and shall be
effective until revoked by written notice to Seller by Buyer. If this exemption
is disallowed for any reason by the State for any part or all of the gas
delivered, Buyer will accrue and pay direct to the State any tax and penalty
due.
Executed this the day of , 19 .
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By:
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Signature
Name:
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Type /Print
Title:
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