IROQUOIS GAS TRANSMISSION SYSTEM
AMENDED AND RESTATED
OPERATING AGREEMENT
TABLE OF CONTENTS
Page
1. Definitions 2
1.1 Completion Date 2
1.2 Day 2
1.3 Month 2
1.4 Year 2
1.5 Party 3
1.6 Partnership 3
1.7 Operator 3
2. Relationship of the Parties 3
2.1 Appointment as Operator 3
2.2 Operator's Authority to Execute Contracts 3
3. Operator's Design, Construction, Operation, Maintenance, and Administration Responsibilities 4
3.1 Operator's Responsibilities 4
3.2 Operator's Authority to Construct Certain Facilities 10
3.3 Operator's Authority to Perform Unbudgeted Maintenance and 10
Repairs
3.4 Operator's Right to Request Instructions From Management 11
Committee
3.5 Operator's Subcontract 11
4. Employees, Consultants and Subcontractors 13
4.1 Operator's Employees, Consultants and Contractors 13
4.2 Affiliates of Operator or Partners 14
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4.3 Standards for Operator and its Employees 14
4.4 Non-Discrimination 15
5. Financial and Accounting 15
5.1 Accounting and Compensation 15
5.2 Budgets 16
5.3 Disputed Charges 17
5.4 Rate Reviews 18
5.5 Audit and Examination 18
6. Agent 20
6.1 Agent 20
7. Intellectual Property 20
7.1 Inventions and Copyrights 20
7.2 Confidentiality 20
7.3 License to Operator 21
8. Indemnification, Claims, Insurance and Liability 22
8.1 Operator's Indemnity 22
8.2 Claims 22
8.3 Insurance 24
8.4 Limitation of Liability 26
9. Term 26
9.1 Term 26
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10. Termination 27
10.1 Removal of Operator 27
10.2 Continuing Default by Partnership 28
10.3 Additional Events of Termination 28
10.4 Operator's Costs, Expenses and Actions Upon Termination 30
11. Survival of Obligations 30
12. Accounting and Taxes 31
12.1 Consistent with Partnership Agreement 31
13. Law of the Contract and Arbitration 31
13.1 Law of the Contract 31
13.2 Arbitration 32
14. Force Majeure 34
14.1 Effect of Force Majeure 34
14.2 Nature of Force Majeure 34
14.3 Non-Force Majeure Situations 35
14.4 Resumption of Normal Performance 36
14.5 Strikes and Lockouts 36
15. General 37
15.1 Effect of Agreement 37
15.2 Notices 37
15.3 Counterparts 38
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15.4 Headings 38
15.5 Waiver 38
15.6 Assignability 39
15.7 References to Money 40
15.8 Severability 40
15.9 Third Persons 41
15.10 Laws and Regulatory Bodies 41
15.11 Remedies Cumulative 41
15.12 Conflicts 41
15.13 Approval of Partnership or Management Committee 41
15.14 Operator's Office 42
15.15 Section Numbers 42
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OPERATING AGREEMENT
This Agreement entered into as of the 28th day of February, 1997,
by and between Iroquois Gas Transmission System, L.P., a Delaware limited
partnership ("Partnership"), and Iroquois Pipeline Operating Company, a Delaware
corporation ("IPOC").
WITNESSETH:
WHEREAS, the Partnership and IPOC are parties to an Operating
Agreement initially entered into by their predecessors in interest as of the
10th day of January 1989, as amended by the First and Second Amendments (the
"Original Operating Agreement");
WHEREAS, the Partnership and IPOC now desire to restate the
Original Operating Agreement to incorporate the First and Second Amendments and
to further amend the Original Operating Agreement as reflected herein;
WHEREAS, the Partnership and IPOC desire to continue under this
Operating Agreement (this "Agreement") the contractual relationship established
under the Original Operating Agreement and to terminate the original Operating
Agreement as of the effective date of this Agreement;
WHEREAS, pursuant to Section 9.8 of the Iroquois Gas Transmission
System, L.P. Limited Partnership Agreement ("Partnership Agreement"), the
Partnership has designated IPOC to manage the design, construction, operation,
maintenance, and administration of the Iroquois Gas Transmission System, L.P.;
and
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WHEREAS, IPOC is willing and able to assume such responsibilities
on the terms and conditions set forth below;
NOW THEREFORE, in consideration of the representations, covenants
and premises hereinafter set forth, the Parties agree as follows:
1. Definitions.
As used in this Agreement, the definitions used in the Partnership
Agreement shall, except as specifically provided herein, have the same meanings
in this Agreement. In addition, the following words and terms shall have the
meanings set forth herein:
1.1 Completion Date. The date on which the construction of the
Facilities is completed.
1.2 Day. A period of twenty-four (24) consecutive hours
commencing at 8:00 a.m. Eastern Standard Time.
1.3 Month. A period of time beginning on the first Day of a
calendar month and ending at the same time on the first Day
of the next succeeding calendar month.
1.4 Year. Each twelve (12) Month period beginning on the first
Day of a calendar year and ending on the first Day of the
next calendar year, provided that the last contract year
shall end at the end of the term
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provided in Section 9.1 of this Agreement, unless extended
by mutual agreement between Partnership and Operator.
1.5 Party. Partnership or Operator and "Parties" shall mean both
Partnership and Operator.
1.6 Partnership. The Iroquois Gas Transmission System, L.P. and
any successor entities thereto.
1.7 Operator. Iroquois Pipeline Operating Company and any
successor entities thereto.
2. Relationship of the Parties.
2.1 Appointment as Operator. Upon and subject to the terms and
conditions of this Agreement, Partnership has appointed
Iroquois Pipeline Operating Company as the Operator of
Partnership to act as Operator hereunder, and Iroquois
Pipeline Operating Company has accepted such appointment and
agreed to act pursuant to the provisions of the Partnership
Agreement, the terms of which are incorporated herein by
reference.
2.2 Operator's Authority to Execute Contracts. Subject to any
procedures established and approved by the Management
Committee and to the prior approval of the Management
Committee with respect to those
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matters enumerated in Sections 9.2.6 and 9.2.7 of the
Partnership Agreement, contracts relating to Partnership
business may be executed by Operator on behalf of
Partnership. Copies of all contracts entered into by
Operator which affect the Partnership or the Facilities
shall be provided to Partnership. Operator shall have the
authority to execute, on behalf of the Partnership and
without further approval of the Management Committee, (i)
Gas Transportation Contracts for Firm Reserved Service for a
term not to exceed one year that do not require for their
performance the construction of an Incremental Expansion but
will instead be performed using otherwise existing and
available capacity; (ii) Gas Transportation Contracts for
Interruptible Service; (iii) Capacity Release Agreements;
(iv) Gas Transportation Contracts with Replacement Shipper;
and (v) Park and Loan Service Contracts, in each case
conforming to the pro forma contracts set forth in the
tariff approved by FERC for the Partnership's Facilities.
3. Operator's Design, Construction, Operation, Maintenance, and
Administration Responsibilities.
3.1 Operator's Responsibilities. Section 9.2.6(h) of the
Partnership Agreement permits Partnership to change the
authority and responsibility delegated to the Operator under
this Section 3 of this Agreement. It is understood and
agreed that any such change made by
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the Partnership pursuant to such Section 9.2.6(h) of the
Partnership Agreement shall be effective and binding on the
Operator under this Agreement thirty (30) days after notice
of such change is given to the Operator provided, however,
that all costs, expenses and liabilities incurred by
Operator in implementing, or as a result of, such change
shall be reimbursable costs under Section 5 of this
Agreement. Subject to (i) the prior approval of the
Management Committee with respect to those matters
enumerated in Sections 9.2.6 and 9.2.7 of the Partnership
Agreement (unless otherwise specifically provided therein),
and (ii) prior budget authorizations by the Management
Committee pursuant to Section 5.2 of this Agreement, the
Operator shall have the general responsibility for the
day-to-day management of the design, construction,
operation, maintenance, and administration of the Facilities
as set forth herein:
3.1.1 Provide the day-to-day management, supervision,
operating and maintenance services, administrative
liaison and related services to Partnership,
including but not limited to legal, accounting,
engineering, construction, repair, replacement,
operational planning, budgeting, technical services,
insurance administration, tax services, and
regulatory matters.
3.1.2 Prepare, file and prosecute applications for
regulatory and governmental authority required by the
Partnership, make
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periodic filings required of the Partnership by
governmental or regulatory agencies having
jurisdiction. Operator shall have the authority to
prepare, file and prosecute, on behalf of the
Partnership and without further approval of the
Management Committee, tariff compliance filings and
to accept regulatory approvals if the terms of such
approvals do not vary materially from the
authorization(s) sought in the related regulatory
applications.
3.1.3 Prepare financing plans for the Partnership (but not
for the individual Partners) and negotiate for
Financing Commitments, if any, to be entered into by
the Partnership for the construction of the
Facilities; provided, however, that each Partner
shall be entitled to be present and to participate in
such negotiations.
3.1.4 Maintain accurate and itemized accounting records in
accordance with Required Accounting Practice for
design, planning, construction, operation and
maintenance of the Facilities, together with any
information reasonably required by Partnership
relating to such records.
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3.1.5 Prepare proposed budgets and schedules for the review
and approval of Partnership pursuant to Section 5.2
of this Agreement.
3.1.6 Prepare the financial statements set forth in Section
8.5 of the Partnership Agreement.
3.1.7 Cause the Facilities to be designed and constructed
in accordance with the requirements of all federal,
state, or other governmental agencies having
jurisdiction, including but not limited to the
requirements of the United States Department of
Transportation set forth in 49 CFR Part 192, and in
accordance with sound and prudent natural gas
pipeline industry practices and provide or cause to
be provided such appropriate supervisory, audit,
administrative, technical and other services as may
be required.
3.1.8 Prepare tax returns required of the Partnership and
pay such taxes as are required and approved to be
paid by Partnership.
3.1.9 Maintain custody of such funds, notes, drafts,
acceptances, commercial paper and other securities
belonging to Partnership; keep funds belonging to
Partnership on deposit in one or more banking
institutions selected by the Management Committee as
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provided in Section 8.9 of the Partnership Agreement;
and disburse such funds.
3.1.10 Recommend to the Partnership and negotiate service
agreements with counsel, Certified Public
Accountants, and financial and other consultants to
be retained by the Partnership. The General Counsel
of the Operator shall, upon advice to the Chairman of
the Management Committee and without further approval
of the Management Committee, be authorized to retain
counsel for services to be performed at a cost of no
more than $50,000 annually.
3.1.11 Supervise and administer Gas Transportation Contracts
in accordance with Partnership's service agreements
and tariff, including, but not limited to,
preparation and collection of all bills for services
rendered thereunder.
3.1.12 As soon as practicable after the end of each month
subsequent to the Completion Date, Operator shall
furnish Partnership with a statement showing total
volumes and Btu content of the gas delivered into and
from the Facilities during the preceding month, the
volumes and Btu content of gas consumed or lost in
operations during the preceding month, and each
Shipper's
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proportionate share of all such volumes, together
with all applicable gas volume statements and Btu
analyses.
3.1.13 Make reports to and consult with the Management
Committee regarding all duties, responsibilities and
actions of the Operator under this Agreement in the
form and at the times reasonably requested by the
Management Committee.
3.1.14 Except as otherwise provided by applicable laws or
governmental regulations or as otherwise directed by
the Partnership, retain all charts, records, books of
account, Partnership tax returns, plans, designs,
studies and reports and other documents related to
the design, construction, operation, maintenance and
administration of the Facilities for a period of
three (3) years from the date of completion of the
activity to which such records relate.
3.1.15 Prepare and negotiate in the name of the Partnership
rights-of-way, land in fee, permits and contracts
necessary for construction, operation and maintenance
of the Facilities; resist the perfection of any
involuntary liens against Partnership property and,
to the extent permitted by law, hold Partnership
property free of all involuntary liens.
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3.1.16 Make immediate reports to Partnership of all
non-routine occurrences that the Operator determines
may have a significant adverse impact upon the
operation of the Facilities and make a follow-up
report at an appropriate time on the response to each
non-routine occurrence.
3.1.17 Perform such other duties as are reasonably requested
by the Management Committee or as are necessary or
appropriate to discharge Operator's responsibilities
under this Agreement.
3.2 Operator's Authority to Construct Certain Facilities.
Operator is authorized to develop and construct, on behalf
of the Partnership and without further approval of the
Management Committee, Incremental Expansions or other
capital facilities which (i) do not exceed in any one
instance a cost of one million dollars ($1,000,000); (ii)
will be constructed pursuant to the Partnership's blanket
certificate; and (iii) have been included in the most recent
budget approved by the Management Committee pursuant to
Section 5.2 of this Agreement.
3.3 Operator's Authority to Perform Unbudgeted Maintenance and
Repairs. Operator is authorized to perform maintenance and
repairs to the Facilities which have not been included in
the most recent budget approved by the Management Committee
pursuant to Section 5.2 of this
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Agreement, provided that the total cost of all such
unbudgeted maintenance and repairs in any of the
Partnership's fiscal years shall not exceed $100,000 or the
amount permitted under Section 5.2 of this Agreement,
whichever is greater. Operator is authorized to make
emergency maintenance and repairs to the Facilities at any
time irrespective of budget authorization. Operator shall
give prompt written notice to the Partnership of the nature,
extent and cost of such emergency maintenance and/or
repairs.
3.4 Operator's Right to Request Instructions From Management
Committee. Operator may at any time, if it reasonably deems
it to be necessary or appropriate, request instructions from
the Management Committee with respect to any matter
contemplated by this Agreement and may defer action thereon
pending the receipt of such instructions. Operator shall be
fully protected in acting in accordance with the
instructions of the Management Committee or in omitting to
act pending the receipt of such instructions, and shall have
no liability for any act in good faith in compliance
therewith, or for its good faith failure to act pending
receipt thereof.
3.5 Operator's Subcontract. Operator and Tennessee Gas Pipeline
Company ("Tennessee") have executed an Agreement with
Respect to Iroquois Gas Transmission System, L.P.
("Tennessee Subcontract"), pursuant to
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which Tennessee has assumed responsibility for performing
certain of the duties and obligations delegated by
Partnership to Operator under this Agreement. Any
replacement or substitute subcontract with Tennessee or any
other entity shall, prior to its execution and as a
condition thereto, be approved by the Management Committee.
All costs, liabilities and expenses incurred by Operator
under the Tennessee Subcontract, and all costs, liabilities
and expenses incurred by Operator under any replacement or
substitute subcontract approved by the Management Committee
("Approved Substitute Subcontract"), shall be reimbursable
costs pursuant to Section 5 of this Agreement.
Partnership further agrees that Operator shall not be liable
in any manner for any default under this Agreement which
results in whole or in part, directly or indirectly from a
default by Tennessee under the Tennessee Subcontract, or by
any substitute subcontractor under an Approved Substitute
Subcontract. In the event of a default by Operator under
this Agreement which results in whole or in part, directly
or indirectly from a default by Tennessee under the
Tennessee Subcontract, or by any substitute subcontractor
under an Approved Substitute Subcontract, Operator hereby
assigns to Partnership any rights which Operator may have
under the Tennessee Subcontract or the Approved Substitute
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Subcontract (as the case may be) to seek and receive damages
from Tennessee or the substitute subcontractor (as the case
may be) in connection with such default.
Partnership further acknowledges and consents to the
assignment by Operator to Tennessee in the Tennessee
Subcontract and/or to a substitute subcontractor in an
Approved Substitute Subcontract of certain of Operator's
rights to receive payments from Partnership under this
Agreement in the event of a default by Operator under the
Tennessee Subcontract or Approved Substitute Subcontract
which results in whole or in part, directly or indirectly
from a default by Partnership under this Agreement.
4. Employees, Consultants and Contractors.
4.1 Operator's Employees, Consultants and Contractors. Operator
shall employ or retain and have supervision over the Persons
(including consultants and professional service or other
organizations) required by Operator to perform its duties
and responsibilities hereunder in an efficient and
economically prudent manner. Operator shall pay all
reasonable expenses in connection therewith, including
compensation, salaries, wages, overhead and administrative
expense incurred by Operator and its Affiliates, and, if
applicable, social security taxes,
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workers' compensation insurance, retirement and insurance
benefits and other such expenses. The compensation for
Operator's employees shall be determined by Operator. All
authorized expenses pursuant to this Section shall be
reimbursable costs under Section 5 of this Agreement.
4.2 Affiliates of Operator or Partners. The Operator shall be
authorized to utilize, as it deems necessary, the services
of its corporate Affiliates, provided that such services are
utilized on terms materially no less favorable to the
Partnership than those prevailing at the time for comparable
services of unaffiliated independent Parties. The Operator
shall also be authorized to utilize, as it deems necessary,
the services of independent contractors, including the
services of any Partner's corporate Affiliates, provided
that the services of any such corporate Affiliate are
utilized on terms materially no less favorable to the
Partnership than those prevailing at the time for comparable
services of unaffiliated independent parties, and the
Operator shall negotiate contracts for such services and
execute the same.
4.3 Standards for Operator and its Employees. Operator shall
perform its services and carry out its responsibilities
hereunder and shall require all of its employees and
contractors, subcontractors, and materialmen furnishing
labor, material or services for the construction and
operation of the Facilities to carry out their
responsibilities, in accordance with
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sound, workmanlike and prudent practices of the gas pipeline
industry and in compliance with all relevant laws, statutes,
ordinances, safety codes, regulations and rules of
governmental authorities having jurisdiction applicable to
the Facilities.
4.6 Non-Discrimination. In performing under this Agreement,
Operator will not discriminate against any employee or
applicant for employment because of race, creed, color,
religion, sex, national origin, age or disability, or
because he or she is a disabled veteran or a veteran of the
Vietnam era, and will comply with all provisions of
Executive Order 11246 of September 24, 1965 and any
successor order thereto, to the extent that such provisions
are applicable to Operator and/or Partnership. The
provisions of this Section 4.4 shall be applicable to any
contractors, consultants and/or subcontractors retained in
connection herewith.
5. Financial and Accounting.
5.1 Accounting and Compensation.
5.1.1 Operator shall keep a full and complete account of
all costs, expenses and expenditures incurred by it
on behalf of the Partnership in connection with its
obligations hereunder.
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5.1.2 Operator shall be reimbursed by Partnership for all
reasonable and proper costs, expenses and
expenditures incurred by it on behalf of the
Partnership in accordance with the provisions of this
Agreement; provided, however, that costs incurred by
the Operator under Section 8.1 of this Agreement
shall not be reimbursed by the Partnership. It is the
intent of the Parties that Operator shall carry out
its services hereunder on a fully reimbursed basis,
pursuant to the provisions of this Agreement, without
profit or loss. To the extent that Operator incurs
such profit or loss appropriate adjustments will
promptly be made to eliminate such profit or loss.
Since Operator maintains custody of Partnership funds
and maintains the books and records of the
Partnership, the Operator's reimbursement under this
Agreement shall be made by appropriate accounting
entries and Operator shall not be required to render
bills or statements to the Partnership.
5.2 Budgets. On or before each November 1, Operator shall
prepare and submit for approval of the Management Committee
an estimate of capital expenditures and operating income and
expenses which Operator anticipates for the ensuing Year
broken down into such individual line items and including
such supporting documentation and data as the
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Management Committee may reasonably require. Except as the
Management Committee may otherwise direct, the budget
approved by the Partnership and then in effect shall
constitute authorization of Operator to incur the
expenditures contained in such budget and to incur
expenditures up to ten percent (10%) in excess of the amount
set forth for any line item in such budget, provided that
the total of all such expenditures in excess of budgeted
line item amounts shall not exceed five percent (5%) of the
total amount of such budget. Operator shall immediately
inform the Management Committee of any facts which the
Operator believes may increase or decrease any line item in
the most recent budget approved by the Management Committee
by ten percent (10%) or more or increase or decrease the
total amount of such budget by five percent (5%) or more.
5.3 Disputed Charges. Subject to the provisions of Section 3.5,
Partnership may, within twenty-four (24) months after the
expenditure, take written exception to any expenditure or
any part thereof, on the ground that the same was not a
reasonable, authorized and proper cost incurred by Operator
on behalf of the Partnership in connection with the design,
construction, operation, maintenance, or administration of
the Facilities. If the amount as to which such written
exception is taken or any part thereof is ultimately
determined in accordance with Section 13 of this
17
Agreement not to be a reasonable, authorized, and proper
expense incurred by Operator on behalf of the Partnership in
connection with the design, construction, operation,
maintenance, or administration of the Facilities, such
amount or portion thereof (as the case may be) shall be
refunded by Operator to Partnership together with interest
thereon at a rate (which in no event shall be higher than
the maximum rate permitted by applicable law) equal to the
rate designated by Xxxxxx Guaranty Trust Company from time
to time as its prime rate, plus one percent, during the
period from the date of payment by Partnership to the date
of refund by Operator.
5.4 Rate Reviews. Operator shall review from time to time the
rates and fees charged for transportation services and
recommend to Partnership revision in such rates and fees as
necessary to reflect increased or decreased costs or other
changes in the conditions of service in order to assure that
all costs are reflected in the tariffs of Partnership.
Operator shall have the authority to prepare, file and
prosecute, on behalf of the Partnership and without further
approval of the Management Committee, revisions to such
rates and fees which will not affect annual revenues by more
than $100,000.
5.5 Audit and Examination. In addition to the audit
responsibilities assigned by the Partnership Agreement to
the Audit Committee, any Partner(s),
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the Partnership or their designated representatives
(including in the case of the Partnership representatives
from each Partner), after fifteen (15) Days' notice in
writing to Operator, shall have the right during normal
business hours to audit or examine, at the expense of the
Person (Partner(s) or Partnership) conducting the audit or
examination, all books and records maintained by the
Operator as well as the relevant books of account of
Operator's contractors relating to the design, construction,
operation, maintenance, and administration of the
Facilities, provided, however, that the total number of full
audits commenced in any Year shall not exceed two. Such
right shall include the right to meet with Operator's
internal and independent auditors to discuss matters
relevant to the audit or examination. Partnership shall have
two (2) Years after the close of a Year in which to make an
audit of Operator's records for such Year; provided,
however, that any audits relating to construction costs may
be made up to twenty-four (24) Months after the Completion
Date. Absent fraud or intentional concealment or
misrepresentation by Operator or its employees, and except
for any adjustments which may arise from FERC compliance
audits, Operator shall neither be required nor permitted to
adjust any item unless a claim therefor is presented or
adjustment is initiated within two (2) Years after the close
of the Year in which the cost was incurred,
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and in the absence of such timely claims or adjustments, the
costs incurred shall be conclusively established as correct;
provided, however, this shall not prevent adjustment
resulting from physical inventory of the Facilities and
other property or audit adjustments relating to construction
costs incurred during the construction phase as set forth in
this Section 5.5.
6. Agent.
6.1 Agent. In performing services pursuant to this Agreement,
Operator shall be an agent of Partnership.
7. Intellectual Property.
7.1 Inventions and Copyrights. Any (i) inventions, whether
patentable or not, developed or invented, or (ii)
copyrightable material, developed by Operator or its
employees while engaged exclusively in the performance of
services under this Agreement shall, unless otherwise
directed, be assigned to Partnership, which shall have the
exclusive right to the exploitation thereof.
7.2 Confidentiality. Operator and Partnership shall comply with
the provisions applicable to confidential information set
out in Section 13.12
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of the Partnership Agreement, which provisions are
incorporated herein by reference as if set out in full.
7.3 License to Operator. Each Partner which is a signatory to
this Operating Agreement hereby grants to the Operator on
behalf of the Partnership an irrevocable, royalty-free,
non-exclusive and a non-assignable license to use, during
the term of this Operating Agreement, any confidential
information provided to the Partnership or Operator by said
Partner and designated as such by the Partner, or generated
by the Partnership or Operator on behalf of said Partner or
Partnership during the term of the aforesaid Partnership
Agreement. For purposes of this Section 7.3, confidential
information shall include, but shall not be limited to,
inventions (whether patented or not) and copyrighted or
copyrightable material. As a condition precedent to the
effectiveness of the aforesaid license to use, Operator
hereby expressly agrees that it will utilize such
confidential information solely in connection with the
performance of its duties hereunder and further expressly
agrees that it will be subject to and bound by the
provisions set forth in Section 13.12 of the Partnership
Agreement as if it were a Partner, which provisions are
incorporated herein by reference as if set out in full. Upon
termination of this operating Agreement or its removal as
Operator, Operator shall return all confidential information
which has been provided to it, together with all
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reproductions thereof in the Operator's possession, pursuant
to the aforesaid license to use to the Person (Partner(s) or
the Partnership) from which it obtained such confidential
information.
8. Indemnification, Claims, Litigation, Insurance and Liability.
8.1 Operator's Indemnity. Operator shall indemnify and hold
Partnership, its employees or agents harmless from and
against:
8.1.1 all actions or failure to act by the Operator which
are not within the scope of this Operating Agreement
or any express direction of the Partnership;
8.1.2 claims for non-payment of any and all contributions,
withholding deductions or taxes measured by the
wages, salaries or compensation paid to Persons
employed by Operator in connection herewith except
for claims associated with or resulting from good
faith efforts to contest such taxes.
8.2 Claims.
8.2.1 Partnership will include in each Gas Transportation
Contract a provision requiring the Shipper, in the
absence of gross negligence or willful misconduct on
the part of Operator, its officers, employees or
agents, to waive any and all claims against
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Operator, its officers, employees or agents, arising
out of or in any way connected with (i) the quality,
use or condition of the gas after delivery from the
Iroquois system for the account of such Shipper; (ii)
any losses or shrinkage of gas during or resulting
from transportation pursuant to the Gas
Transportation Contract; and (iii) all other claims
and demands arising out of the performance of the
duties of the Operator, its officers, employees or
agents. Partnership will further include in each Gas
Transportation Contract a provision requiring the
Shipper to agree to supply Operator with a waiver of
subrogation of Shipper's insurance company for all
claims subject to the waiver set out in the first
sentence of this Section 8.2.1.
8.2.2 Any and all claims, damages or causes of action
against the Partnership in favor of anyone other than
the Partnership or the Operator arising out of the
design, construction, operation, maintenance, and
administration of the Facilities which are not
covered by insurance as per Section 8.3 of this
Agreement shall be settled or litigated and defended
by Operator in accordance with its best judgment and
discretion when either (A) (i) the amount involved is
less than $100,000, (ii) no injunctive or
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similar relief is sought, and (iii) no criminal
sanction is sought; or (B) the action is one for
which the Operator is required to provide
indemnification pursuant to Section 8.1 of this
Agreement; otherwise, such decision shall be made by
the Management Committee, and any settlement or
defense thereof by the Partnership shall be
controlled by the Management Committee.
8.3 Insurance.
8.3.1 Operator shall carry and maintain insurance which it
reasonably deems adequate to protect Operator, its
officers, agents and employees against all actions,
claims, demands, costs and liabilities arising out of
the negligence of Operator, its officers, agents and
employees in connection with their good faith acts
(or failure to act) within the scope of Operator's
authority under this Operating Agreement. Operator
shall, subject to the approval of the Management
Committee, carry and maintain such other insurance
for the benefit of the Partnership and Operator and
require contractors, subcontractors or consultants to
carry and maintain insurance deemed adequate by the
Operator, as approved by the Management Committee,
(i) to
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protect the Partnership and Operator and (ii) satisfy
any other requirement of the law.
8.3.2 Insurance maintained by the Operator pursuant to
Section 8.3.1 of this Agreement shall be a
reimbursable cost pursuant to Section 5 of this
Agreement.
8.3.3 Operator may carry and maintain such other insurance
for its own account as it may deem necessary, but in
the event other insurance is carried, unless
otherwise directed by the Partnership, Operator
agrees to waive, and agrees to undertake in good
faith to have its insurers waive, any rights of
subrogation they may have against the Partnership and
the individual Partners thereof, or the Affiliates of
any of them, and/or their directors, officers,
employees, servants or agents.
8.3.4 With respect to claims and losses for damage, injury
or destruction of property which is a part of the
Facilities, which property is covered by insurance
other than insurance provided for in Section 8.3.1 of
this Agreement, it is agreed that neither Operator
nor the Partnership or any of its Partners shall have
any rights of recovery against one another, nor
against the Affiliates of each, nor the insurers of
any of them, and their rights of
25
recovery are mutually waived. All such policies of
insurance purchased to cover the Facilities or any
part thereof, or the operation (in any respect) of
the Facilities or any part thereof, or any gas
transported or handled therein, shall be endorsed
properly to effectuate this waiver of recovery,
provided, however, that if Partnership, any of the
Partners, or Operator is unable, despite its best
efforts, to obtain such an endorsement, then the
other parties may waive or appropriately modify this
requirement.
8.4 Limitation of Liability. Partnership and Operator hereby
agree that any claim against Partnership which may arise
hereunder shall be made only against the assets of the
Partnership and that all rights to proceed against the
Partners and the assets of the Partners, other than their
interests in the Partnership, as a result of any such claim
or any obligation arising therefrom, are hereby expressly
waived.
9. Term.
9.1 Term. The Original Operating Agreement shall terminate and
this Agreement shall be effective as of February 28, 1997
and, subject to the provisions of the Partnership Agreement,
shall continue until November 30, 2011, and thereafter on a
year-to-year basis subject to
26
termination by either Party upon one year's written notice
to the other Party, unless sooner terminated pursuant to
Section 10 of this Agreement.
10. Termination.
10.1 Removal of Operator.
10.1.1 The Operator may be removed as Operator as provided
in Section 9.8 of the Partnership Agreement. If the
Management Committee votes to remove the Operator in
accordance with such procedures, then this Agreement
shall terminate upon one year's notice to the
Operator after such vote and Partnership shall
reimburse Operator for any unreimbursed costs
incurred by Operator pursuant to Section 5.1 of this
Agreement.
10.1.2 In the event of a material default by Operator in the
performance of its obligations under this Agreement
which shall have continued for a period of sixty (60)
Days after written notice thereof by Partnership to
Operator, Partnership may terminate this Agreement by
written notice to Operator, provided, however, that
no termination shall occur if: (i) Operator has
initiated action to cure such material default but,
despite its best efforts, has been unable to complete
cure
27
within such sixty (60) Day period and Operator's
actions to complete cure are continuing in good faith
beyond the end of the sixty (60) Day period, or (ii)
such default results in whole or in part, directly or
indirectly, from a default by Tennessee under the
Tennessee Subcontract or by a substitute
subcontractor under an Approved Substitute
Subcontract.
10.2 Continuing Default by Partnership. In the event of a
material default by Partnership in the performance of its
obligations under this Agreement and the continuance of such
material default for a period of sixty (60) Days after
written notice thereof by Operator to Partnership, Operator
may, by written notice to Partnership, terminate this
Agreement, provided, however, that no termination shall
occur if Partnership has initiated action to cure such
material default but, despite its best efforts, has been
unable to complete such cure within such sixty (60) Day
period, and Partnership's actions to complete cure are
continuing in good faith beyond the end of the sixty (60)
Day period.
10.3 Additional Events of Termination. In addition to termination
in accordance with Sections 10.1 and 10.2, this Agreement
shall terminate when:
28
10.3.1 An Affiliate of the Operator ("Operator Affiliate")
becomes a Withdrawn Partner under the Partnership
Agreement, unless the remaining Partners vote, by 65%
or more of their Percentage Interests, to retain
Operator as Operator within thirty (30) Days of the
date that Operator Affiliate becomes a Withdrawn
Partner and Operator agrees to continue as Operator.
10.3.2 Operator Affiliate transfers all or substantially all
of its interest in the Partnership, unless such a
transfer is a transfer to an Affiliate of Operator
Affiliate permitted under Sections 11.3 and 11.4 of
the Partnership Agreement.
10.3.3 The Partnership is dissolved in accordance with
Sections 12.2 or 12.5 of the Partnership Agreement.
10.3.4 The Partnership and Operator mutually agree to
terminate this Agreement.
10.3.5 The Operator, upon one year's prior notice to the
Partnership, terminates this Agreement.
10.3.6 A court enters a decree or order for relief, unstayed
on appeal or otherwise and in effect for 90 days, in
an involuntary case under the federal bankruptcy
laws, or any such order adjudicating the
29
Operator as bankrupt or insolvent under any other
applicable bankruptcy, insolvency or liquidation law,
or the commencement by the Operator of a voluntary
case under any bankruptcy or insolvency law.
10.4 Operator's Costs, Expenses and Actions Upon Termination. In
addition to any costs for which Partnership may be obliged
to reimburse Operator pursuant to Section 5 of this
Agreement, upon any termination of this Agreement
Partnership shall pay to Operator any and all costs and
expenses reasonably incurred by Operator in connection with
the winding up of Operator's duties as Operator and the
transfer of such responsibilities and any assets of
Partnership held hereunder to Partnership or any other
entity as may be directed by Partnership. In the event of
any such termination, Operator shall, if so directed by
Partnership, transfer to Partnership, or to another entity,
any and all assets of Partnership held by Operator
hereunder, including but not limited to all permits,
licenses, contract rights and other real and personal
property, whether tangible or intangible.
11. Survival of Obligations. The termination of this Agreement shall
not discharge either Party from any obligation which it owes to
the other Party by reason of any transaction, commitment or
agreement entered into, or any loss, cost, damage, expense or
liability which shall occur or arise (or the circumstances,
30
events or basis of which shall occur or arise) prior to such
termination. It is the intent of the Parties that any obligation
owed by a Party to the other Party (whether the same shall be
known or unknown at the termination hereof, or whether the
circumstances, events or basis of the same shall be known or
unknown at the termination hereof) shall survive the termination
of this Agreement.
12. Accounting and Taxes.
12.1 Consistent with Partnership Agreement. The accounting and
tax service provided by Operator shall be consistent with
the applicable provisions of Section 8 of the Partnership
Agreement which are incorporated by reference herein as if
set forth in full. Matters of tax policy for the Partnership
shall be the responsibility of, and ultimately determined by
the Management Committee in accordance with Section 8.6 of
the Partnership Agreement.
13. Law of the Contract and Arbitration.
13.1 Law of the Contract. This Agreement shall be construed and
interpreted under the laws of the State of Delaware, without
regard to the principles of conflicts of laws.
31
13.2 Arbitration.
13.2.1 In the event that the Parties are unable to agree on
any of the matters set forth herein, either
Partnership or Operator may upon written notice prior
to the commencement of legal proceedings related to
such dispute call for submission of such matter to
arbitration. The Party requesting arbitration shall
set forth in such notice in adequate detail the
issues to be arbitrated, and within ten (10) Days
from the receipt of such notice, the other Party may
set forth in adequate detail additional related
issues to be arbitrated. If arbitration is invoked by
either Party, the decision of the arbitrators shall
be final and binding upon all parties.
13.2.2 It is the intent of the Parties that, to the extent
practicable, such binding arbitration shall be
conducted by a person knowledgeable and experienced
in the type of matter that is the subject of the
dispute. In the event the Parties are unable to agree
upon such person, then each Party shall select a
person that it believes has the qualifications set
forth above as its designated arbitrator, and such
arbitrators so designated shall mutually agree upon a
similarly qualified third person to complete the
arbitration panel, provided, however, that if one of
32
the Parties fails to select its designated arbitrator
as specified herein within thirty (30) Days of
receiving written notice from the other Party that
such other Party has selected its designated
arbitrator, then the arbitration provided for herein
shall be conducted by the one arbitrator so
designated. In the event that the persons selected by
the Parties are unable to agree on a third member of
the panel within sixty (60) Days after their
selection, such person shall be designated by the
American Arbitration Association. Upon final
selection of the entire panel, such panel shall, as
expeditiously as possible, render a decision on the
matter submitted for arbitration. The arbitration
shall be conducted in accordance with the commercial
arbitration rules of the American Arbitration
Association.
13.2.3 Upon the determination of any such dispute, the
arbitrators shall xxxx the costs attributable to such
binding arbitration to the Party whose position they
determine is farthest away from the actual decision
rendered; provided, however, that the arbitrators
shall be empowered to apportion such cost between the
Parties if they deem it appropriate.
13.2.4 It is the intent of the Parties that once arbitration
is invoked by either Party pursuant to the provisions
of this Section 13 that
33
the matters set for arbitration be decided as set
forth herein and they shall not seek to have this
Section 13 rendered unenforceable or to have such
matter decided in any other way, provided, however,
that nothing herein shall prevent the Parties from
negotiating a settlement of any issue at any time.
14. Force Majeure.
14.1 Effect of Force Majeure. In the event that either
Partnership or Operator is rendered unable, by reason of an
event of force majeure, as defined herein, to perform,
wholly or in part, any obligation or commitment set forth in
this contract, then upon such Party's giving notice and full
particulars of such event as soon as practicable after the
occurrence thereof, the obligations of both Parties, except
for unpaid financial obligations arising prior to such event
of force majeure, shall be suspended to the extent and for
the period of such force majeure condition.
14.2 Nature of Force Majeure. The term "force majeure" as
employed in this Agreement shall mean acts of God, strikes,
lockouts or industrial disputes or disturbances, civil
disturbances, arrests and restraint from rulers of people,
interruptions by government or court orders, present and
future valid orders, decisions or rulings of any government
or regulatory entity
34
having proper jurisdiction, acts of the public enemy, wars,
riots, blockades, insurrections, inability to secure labor
or inability to secure materials, including inability to
secure materials by reason of allocations promulgated by
authorized governmental agencies, epidemics, landslides,
lightning, earthquakes, fire, storms, floods, washouts,
inclement weather which necessitates extraordinary measures
and expense to construct facilities and/or maintain
operations, explosions, breakage or accident to machinery or
lines of pipe, freezing of pipelines, inability to obtain or
delays in obtaining easements or rights-of-way, the making
of repairs or alterations to pipelines or plants, or any
other cause, whether of the kind herein enumerated or
otherwise, not reasonably within the control of the Party
claiming force majeure.
14.3 Non-Force Majeure Situations. Neither Operator nor
Partnership shall be entitled to the benefit of the
provisions of Section 14.1 of this Agreement under the
following circumstances:
14.3.1 To the extent that the failure was caused by the
Party claiming suspension having failed to remedy the
condition by taking all reasonable acts, short of
litigation, if such remedy requires litigation, and
having failed to resume performance of such
commitments or obligations with reasonable dispatch;
35
14.3.2 If the failure was caused by failure of the Party
claiming suspension to request or pay necessary funds
in a timely manner, or with respect to the payment of
any amounts then due hereunder;
14.3.3 To the extent that the failure was caused or
contributed to by the gross negligence or willful
misconduct of the Party claiming suspension.
14.4 Resumption of Normal Performance. Should there be an event
of force majeure affecting performance hereunder, the
Parties shall cooperate to take all reasonable steps to
remedy such event with all reasonable dispatch to insure
resumption of normal performance.
14.5 Strikes and Lockouts. Settlement of strikes and lockouts
shall be entirely within the discretion of the party
affected, and the requirement in Sections 14.3.1 and 14.4 of
this Agreement that any event of force majeure shall be
remedied with all reasonable dispatch shall not require the
settlement of strikes or lockouts by acceding to the demands
of the parties directly or indirectly involved in such
strikes or lockouts when such course is inadvisable in the
discretion of the party having such difficulty.
36
15. General.
15.1 Effect of Agreement. This Agreement and the Partnership
Agreement reflect the whole and entire agreement among the
Parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral and
written, among the Parties with respect to the subject
matter hereof. This Agreement can be amended, restated or
supplemented only by the written agreement of the Operator
and the Partnership.
15.2 Notices. Unless otherwise specifically provided in this
Agreement, any written notice or other communication shall
be sufficiently given or shall be deemed given on the fifth
(5th) business day following the date on which the same is
mailed by registered or certified mail, postage prepaid,
addressed:
15.2.1 if to the Operator, to President, Iroquois Pipeline
Operating Company, Xxx Xxxxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx, XX 00000, or such other person and/or
address as may be designated from time to time by
written notice to Partnership.
15.2.2 if to Partnership, to each of the Partners as set
forth in Section 13.2.1 of the Partnership Agreement
or to such other Person and/or address as may be
designated from time to time by any
37
Partner by written notice to Operator. Any Partner
may request that additional copies of notices be
given to an Affiliate of such Partner at such address
as is designated by such Partner by written notice to
Operator; provided, however, that any failure to give
such notice shall not affect the validity of any
notice given to any Partner or the Partnership in
accordance with this Section 15.2. Operator agrees to
give such notice to any such Affiliate.
15.3 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
15.4 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
15.5 Waiver. No waiver by any Party of any default by any other
Party in the performance of any provision, condition or
requirement herein shall be deemed to be a waiver of, or in
any manner release the other Party from, performance of any
other provision, condition or requirement herein, nor shall
such waiver be deemed to be a waiver of, or in any manner a
release of, the other Party from future performance of the
same
38
provision, condition or requirement. Any delay or omission
of any Party to exercise any right hereunder shall not
impair the exercise of any such right, or any like right,
accruing to it thereafter. No waiver of a right created by
this Agreement by one Party shall constitute a waiver of
such right by the other Party except as may otherwise be
required by law with respect to Persons not parties hereto.
The failure of one Party to perform its obligations
hereunder shall not release the other Party from the
performance of such obligations.
15.6 Assignability. This Agreement shall not be assigned by
either Partnership or Operator, without the written consent
of the other, which consent shall not be unreasonably
withheld by either Party, provided, however, that either
Party may assign this Agreement to a corporation which is an
Affiliate of the transferor on the same terms and conditions
specified in Section 11.3.1 of the Partnership Agreement for
a transfer by a Partner of its interest in the Partnership
Agreement, which provisions are incorporated herein by
reference as if set out in full (the Party which is not
seeking to transfer its interest in the Operating Agreement
shall determine whether the conditions set forth in Sections
11.3.1(a) and (b) have been satisfied), and further provided
that the licenses granted by the individual Partners in
Section 7.3 of this Agreement shall not be subject to
assignment. Any assignment hereunder shall be effective on
the first
39
Day of the Month following the month during which the
assignment is completed. This Agreement and all of the
obligations and rights herein established shall extend to
and be binding upon and shall inure to the benefit of the
respective successors and assigns of the respective Parties
hereto.
15.7 References to Money. All references in this Agreement to,
and transactions hereunder in, money shall be to or in
Dollars of the United States of America.
15.8 Severability. Should any provision of this Agreement be
deemed in contradiction with the laws of any jurisdiction in
which it is to be performed or unenforceable for any reason,
such provision shall be deemed null and void, but this
Agreement shall remain in force in all other respects.
Should any provision of this Agreement be or become
ineffective because of changes in applicable laws or
interpretations thereof or should this Agreement fail to
include a provision that is required as a matter of law, the
validity of the other provisions of this Agreement shall not
be affected thereby. If such circumstances arise, the
Parties hereto shall negotiate in good faith appropriate
modifications to this Agreement to reflect those changes
that are required by law.
40
15.9 Third Persons. Except as contemplated herein, nothing
herein expressed or implied is intended or shall be
construed to confer upon or to give any Person not a Party
hereto any rights or remedies under or by reason of this
Agreement.
15.10 Laws and Regulatory Bodies. This Agreement and the
obligations of the Parties hereunder are subject to all
applicable laws, rules, orders and regulations of
governmental authorities having jurisdiction and, in the
event of conflict, such laws, rules, orders and regulations
of governmental authorities having jurisdiction shall
control.
15.11 Remedies Cumulative. Remedies provided under the provisions
of this Agreement shall be cumulative and, except as to the
agreement for binding arbitration contained in Section 13
hereof, shall be in addition to the remedies provided by
law or in equity.
15.12 Conflicts. In the event there is any conflict between this
Agreement and any schedule or subsequent agreement referred
to herein, the provisions hereof shall be deemed
controlling, except in the event of a conflict with the
Partnership Agreement, in which event the Partnership
Agreement shall be deemed controlling.
15.13 Approval of Partnership or Management Committee. Unless
otherwise specified, when the approval or other action of
the Partnership is
41
required under this Agreement such requirement shall be
deemed to require approval of the Management Committee
pursuant to the provisions of Section 9 of the Partnership
Agreement, provided, however, that, if the Operator or an
Operator Affiliate is a Partner, approval of actions to be
taken by the Partnership against or with respect to the
Operator under Sections 5.3, 5.5, 10.1.2, 13.2.1, 13.2.2 of
this Agreement shall require approval by vote of 65 percent
or more of the total Percentage Interests of the Partners
(voting individually and not as members of any bloc) other
than: (i) the Operator or its Affiliate and (ii) any
Partner which is, or the Affiliate of which is, a
subcontractor of the Operator under this Agreement. It is
not intended that ownership of the Operator by the
Partnership shall cause any Partner to be deemed to be an
Affiliate of the Operator for any purpose hereunder or
otherwise. Unless otherwise specified, when approval or
other action of the Management Committee is required under
this Agreement, Section 9 of the Partnership Agreement
shall govern such approval.
15.14 Operator's Office. Operator may select the location of its
office or offices to perform its obligations hereunder.
15.15 Section Numbers. Unless otherwise indicated, references to
Section numbers are to Sections of this Agreement.
42
IN WITNESS WHEREOF, the Parties have caused this Amended and
Restated Agreement to be executed by their duly authorized representatives as of
this 28th day of February, 1997.
OPERATOR
IROQUOIS PIPELINE OPERATING COMPANY
By:
-----------------------------------
By:
-----------------------------------
IROQUOIS GAS TRANSMISSION SYSTEM, L.P.
By each of its Partners:
ALENCO IROQUOIS PIPELINES INC.
By:
-----------------------------------
NORTHEAST TRANSMISSION CO.
By:
-----------------------------------
TEN TRANSMISSION COMPANY
By:
-----------------------------------
43
NJNR PIPELINE COMPANY
By:
-----------------------------------
JMC-IROQUOIS, INC.
By:
-----------------------------------
LILCO ENERGY SYSTEMS, INC.
By:
-----------------------------------
ANR NEW ENGLAND PIPELINE COMPANY
By:
-----------------------------------
ANR IROQUOIS, INC.
By:
-----------------------------------
CNG IROQUOIS, INC.
By:
-----------------------------------
44
TRANSCANADA IROQUOIS LIMITED
By:
-----------------------------------
45
