EXHIBIT 10.13
GAS SALES AGREEMENT
(Swing)
between
K N MARKETING, L.P.
as "Seller"
and
ENERGAS COMPANY,
a division of Atmos Energy Corporation
as "Buyer"
Dated: January 1, 0000
Xxxxx xx XXXXX
INDEX
ARTICLE TITLE PAGE
1 Definitions......................................... 1
II Quantity............................................ 3
III Delivery Points..................................... 3
IV Price and Taxes..................................... 3
V Term................................................ 6
VI Notices............................................. 8
VII Measuring Equipment and Testing..................... 8
VIII Measuring Specifications............................ 8
IX Quality............................................. 9
X Delivery Pressure................................... 9
XI Billing, Payment and Audit.......................... 9
XII Notification of Curtailment......................... 10
XIII Possession and Responsibility for Gas............... 10
XIV Title............................................... 11
XV Force Majeure....................................... 11
XVI Financial Responsibility............................ 12
XVII Government Regulations.............................. 12
XVIII Entire Agreement.................................... 14
XIX Confidentiality..................................... 15
XX Successors and Assigns.............................. 15
XXI Maintenance of Facilities........................... 15
XXII Indemnification..................................... 16
XXIII Third Party Transportation.......................... 16
XXIV Headings............................................ 16
XXV Waiver.............................................. 16
XXVI Amendments.......................................... 16
XXVII Remedies Upon Material Default...................... 17
XXVIII Miscellaneous....................................... 17
Signatures.......................................... 18
Exhibit "A" - Exemption Certificate................. A-1
GAS SALES AGREEMENT
(Swing)
THIS AGREEMENT, dated and effective this 1st day of January, 1996, (the
"Effective Date") by and between K N MARKETING, a Texas Limited Partnership,
hereinafter called "Seller", and ENERGAS COMPANY, a division of Atmos Energy
Corporation, a Texas Corporation, hereinafter called "Buyer";
WITNESSETH
WHEREAS, Seller is the owner of a supply of firm 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 certain of its distribution facilities in the state of Texas
where Seller sells gas to Buyer as of December 31, 1995, including Amarillo
Supplemental Requirements ("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.
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 (60) degrees Fahrenheit and
an absolute pressure of fourteen and sixty-five hundredths pounds per square
inch (14.65 psia).
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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 (153 million MMBtu per calendar year as set forth in the Base Load
Agreement between the Parties dated January 1, 1996.
Section 8. "Swing Load Requirements" means the quantity of gas required by
Buyer in excess of Buyer's Base Load Requirements' up to Buyer's total system
requirements.
Section 9. "Btu" means the amount of heat required to raise the temperature
of one avoirdupois pound of pure water from fifty-eight and five tenths (58.5)
degrees Fahrenheit to fifty-nine and five tenths (59.5) degrees Fahrenheit at a
constant pressure of fourteen and sixty-five hundredths (14.65) pounds per
square inch absolute.
Section 10. "MMBtu" means one million (1,000,000) Btu.
Section 11. "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.
Section 12. "No-Notice Load Requirements' means Swing Load Requirements
required by Buyer which exceeds a daily "Threshold Level". The Threshold Lever
is 135,000 MMBtu per day. The Threshold Level may be reviewed annually by both
Parties and adjusted upward or downward by mutual agreement to compensate for
changes in Buyer's Swing Load Requirements. Seller will estimate the No-Notice
Load Requirements on a daily basis by subtracting the Threshold Level from
Buyer's total estimated Swing Load Requirements sales. At the end of each month
Buyer's estimated No-Notice Load Requirements will be actualized by adjusting
the daily estimated volumes proportionally to Buyer's measured monthly Swing
Load Requirements sales.
Buyer's estimated Swing Load Requirements volume will be calculated daily
by deducting from Seller's estimate of the combined total daily sales and
transported volumes for Buyer and Buyer's affiliates EnerMart Trust (Enermart),
and Egasco, Inc., (Egasco) in the following manner:
A. The daily average volume of Buyer's Baseload Requirements purchased
from Seller.
B. Enermart industrial volumes will be deducted as an average daily
volume of the total monthly sales by Seller to or transportation for
Enermart for the applicable month; plus
C. Enermart's and Egasco's irrigation volumes will be deducted as
follows:
1. For the months of November through February, irrigation volumes be
deducted as an average daily volume of the actual total sales made
by Seller to Enermart and Egasco for the applicable month;
2. For the months of March through October, irrigation volumes will be
deducted according to Enermart's and Egasco's daily irrigation
forecasted volumes, which will be adjusted proportionally, so that
the sum of the daily forecast will be equal to the total actual
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irrigation sales made by Seller for the month.
D. Buyer's and Enermart's and Egasco's transportation volumes will be
deducted according to the confirmed volumes nominated at the
Delivery Point(s) on Westar Transmission Company's pipeline system.
Section 13. "Amarillo Supplemental Requirements" means requirements of
Buyer's Amarillo distribution system, less the quantity of gas purchased by
Buyer from the Xxxx Plant, or other suppliers for resale in the Amarillo
distribution system and less the quantity of supplemental supplies
purchased from others.
ARTICLE II
QUANTITY
Section 1. Commencing on the Effective Date of this Agreement Seller agrees
to sell and deliver to Buyer and Buyer agrees to purchase and receive firm
quantities of natural gas on a Swing Load Requirements and a No-Notice Load
Requirements basis to satisfy all of Buyer's natural gas requirements in Buyer's
West Texas Service area and any of Buyer's Amarillo Supplemental Requirements in
excess of Buyer's Base Load Requirements.
Section 2. It is expressly understood and agreed that all gas sold to Buyer
is to be used by Buyer to serve its end use customers solely within Buyer's
Facilities, and any other use of the gas ("Other Use Gas") by Buyer will
constitute a 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 gas from Seller as of December 31, 1995, or subsequently at any
other mutually agreeable 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 hereunder as Swing Load
Requirements, delivered to Buyer at the Delivery Point(s), shall be determined
as follows:
A.
1. For the period January 1, 1996 through July 31, 1996, the price
shall be calculated on an Mcf
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basis and for each Mcf of gas will be equal to the "First Index
Basket" (defined below), plus $0.96 per Mcf.
2. The "First Index Basket" referred to in subsection 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
Gas Price Report", in the column labeled "Delivered to Pipeline",
"This Week' for Texas West Spot, and (ii) Inside F.E.R.C.'s Gas
Market Report, published by XxXxxx-Xxxx, 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.
1. For the period August 1, 1996 through December 31, 2001, the price
shall be calculated on a MMBtu basis and each MMBtu of gas
purchased and sold shall be equal to the "Index Basket" plus:
a) for 1996- $0.6742 per MMBtu plus the Westar transportation rate
of S0.2858 per Mcf.
b) for 1997- S0.6342 per MMBtu plus the Westar transportation rate
of S0.2858 per Mcf.
c) for 199S S0.6042 per MMBtu plus the Westar transportation rate
of S0.2858 per Mcf.
d) for 1999 through 2001- S0.3042 per MMBtu plus the Westar
transportation rate of S0.2858 per Mcf.
2. In the event the approved rate for transportation on the Westar
system (as that system is described in the Operating Agreement)
changes, then the S0.2858 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.
3. The "Index Basket" referred to 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 XxXxxx-Xxxx, Inc. for
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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 lndex, the "Intrastate Avg."
for the "West Texas/Permian" gas.
Section 2. The price of gas sold hereunder as No-Notice Load
Requirements delivered to Buyer at the Delivery Point(s), shall be equal to
the Swing Load Requirements price, except on those days Critical Days) when
the "Gas Daily Index Basket" as published on such days, plus $0.225 per MMBtu,
plus the Westar transportation rate of $0.2858 per Mcf (or the transportation
rate described in section B.2 above) exceeds the Swing Load Requirements price.
On Critical Days, the price for No-Notice Load Requirements shall be the
arithmetic average of the "Gas Daily Index Basket" as published on the Critical
Day and as published on the subsequent business day (business day for purposes
of this Section 2 is defined as any day on which there is a Gas Daily
Publication), plus $0.225 per MMBtu, plus the Westar transportation rate of
S0.2858 per Mcf (or the transportation rate described in section B.2)
above).
For any non-business days (days on which there is no Gas Daily Publication)
in which No-Notice Load Requirements service is provided, the No-Notice Load
Requirements price will be the Swing Load Requirements price, except when the
"Gas Daily Index Basket" as published on the subsequent business day, plus
S0.225 per MMBtu, plus the Westar transportation rate of S0.2858 per Mcf (or the
transportation rate described in section B.2) above) exceeds the Swing Load
Requirements price, in which case the No-Notice Load Requirements price will be
the "Gas Daily Index Basket" as published on such subsequent business day, plus
$0.225 per MMBtu, plus the Westar transportation rate of $0.2858 per Mcf (or the
transportation rate described in section B.2) above).
"The Gas Daily Index Basket" is equal to the arithmetic average of the mid
point prices stated in dollars per MMBtu, as reported in Gas Daily, published by
Pasha Publications Inc. the Houston edition, in the table titled "Daily Price
Survey", in the category labeled "Permian Basin Area" in the column for the
"Daily Midpoint" under the heading "Delivery In" for "Tex intras, Waha area" and
the category labeled "North-Texas Panhandle" in the column for the "Daily
Midpoint" under the heading "Delivery In" for "Northern (Mid 10)".
The No-Notice Load Requirements pricing method shall remain in effect
through December 31, 1998. After that date that price will be subject to
renegotiation of both parties for the 1999 contract year and each contract year
through the remainder of the term. In the event the parties cannot agree on a
new
5
pricing method for the applicable contract year, each party shall submit to
the other in writing the name of an individual to serve as an "arbitrator".
Such persons shall have at least fifteen (15) years of experience in the natural
gas business and shall not be employees or affiliates of the Buyer or Seller.
With fifteen (15) days of the selection of the two arbitrators, the two
arbitrators shall select a third arbitrator who shall have at least fifteen
(15) years of experience in the natural gas business and shall not be employees
or affiliates of the Buyer or Seller. If the two arbitrators are unable to
agree on a third arbitrator, the selection of the remaining arbitrator shall be
conducted pursuant to the rules of the American Arbitration Association
governing the selection of arbitrators when the parties have failed to do so.
Both parties may submit whatever information they wish to the three arbitrators
who shall set a meeting for the parties to present their respective arguments to
the arbitrators within thirty (30) days after the selection of the third
arbitrator. On or before fifteen days after the meeting the arbitrators shall
set the pricing method for the sale of gas as No-Notice Load Requirements for
the applicable contract year, and notify the parties orally followed by written
confirmation. The decision of the arbitrators shall be final and binding upon
the parties.
Section 3. 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.
Section 4. In addition to the price to be paid for gas delivered
hereunder, 8uyer 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 payment 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 liquifiable
6
hydrocarbon content extracted from the gas before delivery to Buyer.
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.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Gas Sales & T&E
Administration
Wire Transfer: K N Marketing, L P.
Norwest Banks Colorado, N.A.
Denver, CO
ABA# 102 000 076
A/c# 000 -000 X000
XXXXX:
Notices: ENERGAS COMPANY
X.X. Xxx 000000
Xxxxxx, XX 00000-0000
Attn: Intrastate Gas Supply
Statements: ENERGAS COMPANY
X.X. Xxx 000000
Xxxxxx, XX 00000-0000
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 Xl
B1LLING. 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 amount due Seller cannot be
determined on or before the fifteenth (15th) day of the Month, Seller shall
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 instruction 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.
8
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 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 Xll
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 following
notification that gas is again available.
ARTICLE XlII
POSSESSION AND RESPONSIBILITY FOR GAS
Section 1. As between the Parties hereto, Seller shall be in exclusive
control and possession of the gas delivered
9
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
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 agrees to indemnify, defend, and
hold the other Party harmless from and against any and all claims, liabilities,
damages, losses, costs, and expenses (including attorneys' fees) incurred by the
indemnified Party arising from or relating to any damages, losses, or injuries
for which 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 fight 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, 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 wamings, 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 xxxxx or lines of pipe, partial or
entire failure of xxxxx, inability of
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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) 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 any 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 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.
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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 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,
sale or transportation of gas hereunder in the event this Agreement and the
purchase, sale or transportation of gas hereunder for any reason become 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, 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
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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 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 any of its obligations under this Agreement.
Section 2. Either Party may assign its rights, We, 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
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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.
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 third party 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 of 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 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 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 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.
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ARTICLE XXVIII
MISCELLANEOUS
Section 1. This Agreement shall be deemed drafted and prepared equally
jointly regardless of which Party prepared or submitted the Agreement to the
other.
Section 2. 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, KN MARKETING, L.P.
a division of By its Managing
Atmos Energy Corporation General Partner
American Pipeline Company
By: By:
------------------------------ -------------------
Name: Name:
------------------------------ -------------------
Title: Title:
------------------------------ -------------------
16
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. ("Seller")
To ENERGAS COMPANY ("Buyer")
Buyer's Direct Payment Permit Number:
-------------------------
Buyer's Address: X.X. Xxx 000000, Xxxxxx, Xxxxx 00000-0000
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 dab 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 .
----- ----------------- -----
By:
-------------------------
Signature
Name:
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Type /Print
Title:
-------------------------
A-1
