SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
For the fiscal year ended September 30, 1996
Commission File Number 0-234
Mobile Gas Service Corporation
(Exact name of registrant as specified in its charter)
Alabama 63-0142930
- --------------------------------- ------------------
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2828 Dauphin Street, Mobile, Alabama 36606
- ----------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (334) 476-2720
--------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock ($2.50 par value)
------------------------------
(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. / /
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
----- -----
The aggregate market value of Common Stock, Par Value $2.50 per share, held by
non-affiliates (based upon the average of the high and low prices as reported
by NASDAQ on November 30, 1996) was approximately $79,629,500.
As of November 30, 1996, there were 3,225,499 shares of Common Stock, Par
Value $2.50 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the Annual Meeting of
Stockholders on January 31, 1996 are incorporated by reference into Part III.
PAGE 1 OF 30 PAGES
EXHIBIT INDEX ON PAGE 3
<PAGE>
The Registrant files this Amendment No. 1 to its Annual Report on Form
10-K for the fiscal year ended September 30, 1996 to amend Item 14 thereof to
replace certain previously-filed exhibits.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a), (d) Financial Statements and Financial Statement Schedules
(1) See "Mobile Gas Service Corporation and Subsidiaries Index
to Financial Statements and Schedules" at page F-1, which
follows Part IV hereof.*
(2) See "Mobile Gas Service Corporation and Subsidiaries Index
to Financial Statements and Schedules" at page F-1, which
follows Part IV hereof.*
(3) Exhibits - See Exhibit Index on pages E-1 through E-5.
(b) No reports on Form 8-K were filed during the last quarter of the
fiscal year ended September 30, 1996.
(c) Exhibits filed with this Amendment No. 1 are attached hereto.
__________________________
* Filed on December 24, 1996 as part of the Company's Annual Report on
Form 10-K for the fiscal year-ended September 30, 1996.
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 to
be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 10, 1997
Registrant
MOBILE GAS SERVICE CORPORATION
By: /s/ Charles P. Huffman
Charles P. Huffman, Vice
President, Chief Financial
Officer and Treasurer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description PAGE
- ----------- ----------- ----
3(a) Restated Articles of Incorporation (incorporated by
reference to Exhibit 3(i)-C to Form 8-K Current Report
dated January 26, 1996)
3(b) By-laws, adopted January 27, 1995 (incorporated
by reference to Exhibit 3(b) to Form 8-K Current
Report dated January 27, 1995)
4(a)-1 Indenture of Mortgage and Deed of Trust of the Company
dated as of December 1, 1941 (incorporated by
reference to Exhibit B-a to Registration Statement No.
2-4887)
Supplemental
Indenture
Dated as of File Reference Exhibit
----------- -------------- -------
4(a)-2 10/1/44 Reg. No. 2-5493 7-6
4(a)-3 7/1/52 Form 10-K for fiscal year ended 4(a)-3
September 30, 1985
4(a)-4 6/1/54 " 4(a)-4
4(a)-5 4/1/57 " 4(a)-5
4(a)-6 7/1/61 " 4(a)-6
4(a)-7 6/1/63 " 4(a)-7
4(a)-8 10/1/64 " 4(a)-8
4(a)-9 7/1/72 " 4(a)-9
4(a)-10 8/1/75 " 4(a)-10
4(a)-11 7/1/79 " 4(a)-11
4(a)-12 7/1/82 " 4(a)-12
4(a)-13 7/1/86 Form 10-K for fiscal year ended 4(a)-13
September 30, 1986
4(a)-14 10/1/88 Form 10-K for fiscal year ended 4(a)-14
September 30, 1989
4(a)-15 7/1/92 Form 10-K for fiscal year 4(a)-15
ended September 30, 1992
4(a)-16 7/1/93 Form 10-K for fiscal year 4(a)-16
ended September 30, 1993
4(a)-17 12/3/93 Form 10-K for fiscal year 4(a)-17
ended September 30, 1993
4(b) Southern Gas Transmission Company Indenture
(incorporated by reference to Exhibit 4(b) to Form
10-K for fiscal year ended September 30, 1992).
4(c)-1 Bay Gas Indenture dated as of October 1, 1992 (incorporated
by reference to Exhibit 4(c) to Form 10-K for fiscal year
ended September 30, 1992).
4(c)-2 First Supplemental Indenture dated as of October 1, 1994
supplemental to Bay Gas Indenture (incorporated by reference
to Exhibit 4(c)-2 to Form 10-K for fiscal year ended
September 30, 1995).
4(d) Promissory Note to the Utilities Board of the Town of
Citronelle dated May 13, 1993 (incorporated by
reference to Exhibit 4(d) to Form 10-K for fiscal year
ended September 30, 1993).
10(d)-2 Settlement Agreement with Koch Gateway Pipeline Company
dated September 21, 1993 (incorporated by reference to
Exhibit 10(d)-2 to Form 10-K for fiscal year ended September
30, 1993).
10(d)-3 No Notice Service Agreements between Koch Gateway Pipeline
Company and Mobile Gas Service Corporation dated November 1,
1993 (incorporated by reference to Form S-1, Registration
Statement No. 33-82498).
10(d)-4 Gas Supply Agreement between Mobile Gas Service Corporation
and Koch Gas Services Company made as of the 1st day of
April, 1994 (incorporated by reference to Form S-1,
Registration Statement No. 33-82498).
10(e)-1 Gas Sale and Purchase Contract between Shell Gas Trading
Company as Seller and Mobile Gas Service Corporation as
Buyer dated January 1, 1992 (incorporated by reference to
Exhibit 10(e) to Form 10-K for year ended September 30,
1992).
10(e)-2 Amendment dated December 1, 1993 to Gas Sale and Purchase
Contract with Shell (incorporated by reference to Exhibit
10(e)-2 to Form 10-K for fiscal year ended September 30,
1993).
10(f)-1***Agreement for Sale and Purchase of Gas - Mobile Plant 07
dated August 10, 1995 between Mobil Natural Gas Inc. and
Mobile Gas Service (replaces Exhibit Exhibit 10(f) filed as
exhibit to Form 10-K for fiscal year ended September 30,
1995).
10(f)-2* Letter dated June 26, 1996 with consent dated July 31, 1996
to assignment of Agreement for Sale and Purchase of Gas -
Mobile Plant to PanEnergy Trading and Market Services,
L.L.C.
10(g) Deferred Compensation Agreement with John S. Davis
dated January 26, 1996 (incorporated by reference to
Exhibit 10(g) to Form 8-K Current Report dated
February 7, 1996).
10(i) Mobile Gas Service Corporation/Bay Gas Storage
Company, Ltd. Gas Storage Agreement dated February 26,
1992 (incorporated by reference to Exhibit 10(i) to
Form 10-K for fiscal year ended September 30, 1992).
10(j) Directors/Officers Indemnification Agreement
(incorporated by reference to Exhibit 10(j) to Form
10-K for fiscal year ended September 30, 1992).
10(k)-1** Amended and Restated Supplemental Deferred Compensation
Agreement with Walter L. Hovell, dated December 11, 1992
(incorporated by reference to Exhibit 10(k) to Form 10-K for
fiscal year ended September 30, 1992).
10(k)-2** Amendment to Amended and Restated Supplemental Deferred
Compensation Agreement dated January 27, 1995 between the
Company and Walter L. Hovell (incorporated by reference to
Exhibit 10(k)-2 to Form 8-K Current Report dated January 27,
1995).
10(l)-1 Bay Gas Agreement by and among Mobile Gas Service
Corporation, MGS Storage Services, Inc., MGS Energy
Services, Inc. and Olin Corporation, dated December 5, 1991
(incorporated by reference to Exhibit 10(l) to Form 10-K for
fiscal year ended September 30, 1992).
10(m)-1 Limited Partnership Agreement between MGS Storage Services,
Inc., as General Partner, and MGS Energy Services, Inc., as
Limited Partner (forming Bay Gas Storage Company, Ltd.),
dated December 5, 1991 (incorporated by reference to Exhibit
10(m) to Form 10-K for fiscal year ended September 30,
1992).
10(m)-2 First Amendment to Limited Partnership Agreement dated as of
April 6, 1992 and Second Amendment to Limited Partnership
Agreement dated as of September 12, 1994 (incorporated by
reference to Exhibit 10(m)-2 to Form 10-K for fiscal year
ended September 30, 1994).
10(n) Cavity Development and Storage Agreement between Olin
Corporation and Bay Gas Storage Company, Ltd., dated
January 14, 1992 (incorporated by reference to Exhibit
10(n) to Form 10-K for fiscal year ended September 30,
1992).
10(o)-1***Transportation Agreement between Mobile Gas Service 13
Corporation and Tuscaloosa Steel Corporation dated as of May
15, 1995 (replaces Exhibit 10(o) filed as exhibit to Form
10-K for fiscal year ended September 30, 1995).
10(o)-2***Amendment dated August 23, 1996 to Transportation 28
Agreement between Mobile Gas Service Corporation and
Tuscaloosa Steel Corporation
10(p) Note Guaranty Agreement between Mobile Gas Service
Corporation and AmSouth Bank of Alabama, Trustee,
dated as of January 1, 1992, relating to Indenture of
Southern Gas Transmission Company (incorporated by
reference to Exhibit 10(p) to Form 10-K for fiscal
year ended September 30, 1992).
10(q) Guaranty Agreement by Mobile Gas Service Corporation,
dated as of October 1, 1992, relating to Indenture of
Bay Gas Storage Company, Ltd. (incorporated by
reference to Exhibit 10(q) to Form 10-K for fiscal
year ended September 30, 1992).
10(r)** Mobile Gas Service Corporation 1992 Stock Option Plan
incorporated by reference to Exhibit A to definitive proxy
statement dated December 21, 1992).
10(s)** Mobile Gas Service Corporation Incentive Compensation Plan
incorporated by reference to Exhibit B to definitive proxy
statement dated December 21, 1992).
10(t) Agreement for Purchase and Sale of Assets by and
between The Utilities Board of the Town of Citronelle
and Mobile Gas Service Corporation dated January 28,
1993 (incorporated by reference to Exhibit 10(t) to
Form 10-K for fiscal year ended September 30, 1993).
10(u)-1 Revolving Credit Agreement dated July 17, 1995 by and among
Mobile Gas Service Corporation as Borrower, AmSouth Bank of
as Agent, and AmSouth Bank of Alabama, First Alabama Bank,
Whitney Bank of Alabama, Bank of Mobile, SouthTrust Bank of
Alabama, N.A., and Commonwealth National Bank as Lenders
incorporated by reference to Exhibit 10(u) to Form 10-K for
fiscal year ended September 30, 1995).
10(u)-2* Amendment dated July 15, 1996 to Revolving Credit Agreement
by and among Mobile Gas Service Corporation as Borrower,
AmSouth Bank of Alabama as Agent, and AmSouth Bank of
Alabama, First Alabama Bank, Whitney Bank of Alabama, Bank
of Mobile, SouthTrust Bank of Alabama, N.A., and
Commonwealth National Bank as Lenders.
10(x)** Letter dated October 7, 1994 from Mobile Gas Service
Corporation to John S. Davis confirming terms of employment
(incorporated by reference to Exhibit A to Form 8-K current
report filed November 2, 1994).
10(y)** Consulting Agreement dated January 27, 1995 between the
Company and Walter L. Hovell (incorporated by reference to
Exhibit 10(y) to Form 8-K Current Report dated January 27,
1995).
10(z)** Mobile Gas Service Corporation Non-Employee Directors
Deferred Fee Plan (incorporated by reference to Exhibit
10(z) to Form 8-K Current Report dated January 27, 1995).
11* Statement Re Computation of Per Share Earnings.
21* Subsidiaries of Registrant and Partnerships in which
Registrant Owns an Interest.
23* Consent of Deloitte & Touche.
27* Financial Data Schedule.
_________________________
* Filed on December 24, 1996 as part of the Company's Annual Report on
Form 10-K for the fiscal year-ended September 30, 1996.
** Management contract or compensatory plan or arrangement.
*** Filed with this amendment. Confidential portions of this exhibit
have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential
treatment made in accordance with Rule 24b-2 promulgated under
the Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT 10(f)-1
PORTIONS OF THIS EXHIBIT IDENTIFIED BY "***" HAVE BEEN DELETED PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, AND THE FREEDOM OF INFORMATION ACT.
MOBIL NATURAL GAS INC.
12450 GREENSPOINT DRIVE
HOUSTON, TEXAS 77060-1991
August 10, 1995
CONFIDENTIAL
Mr. J. Harris Oswalt
Mobile Gas Service Corporation
P. 0. Box 2248
2828 Dauphin St.
Mobile, Alabama 36652
AGREEMENT FOR SALE AND
PURCHASE OF GAS
MOBILE PLANT
S-6650
Ladies and Gentlemen:
This letter shall confirm the agreement between Mobil Natural Gas Inc.
("Mobil") and Mobile Gas Service Corporation ("Buyer") for the sale and
purchase of gas for a *** year price renegotiation and term extension through
close of *** , in accordance with provisions of the Letter Agreement dated
November 1, 1991. When executed by both parties, this Letter Agreement shall
constitute a binding agreement between Mobil and Buyer.
Mobil agrees to sell, and Buyer agrees to purchase, natural gas during the
term hereof in accordance with the following provisions and the terms and
provisions of Appendices A, B, C, and D, attached to and made part of this
letter Agreement:
1. NATURE OF SALE: Warranty. Mobil warrants that it will deliver gas in
accordance with Section 4 of Appendix B, or pay damages, pursuant to Section 5
thereof, for its failure to deliver such quantity, except to the extent of
any gas which Mobil is unable to deliver pursuant to Section 9, Force
Majeure, of Appendix B.
2. QUANTITY: The Maximum Contract Quantity (MCQ) for each day during the term
of this Agreement shall be the quantity set out on Appendix A.
3. SALES POINT(S): Title to and possession of gas delivered shall pass from
Mobil to Buyer at the Sales Point(s) listed on Appendix A.
<PAGE>
Mobile Gas Service Corporation
August 10, 1995
Page 2
4. COMMODITY CHARGE: Buyer agrees to pay Mobil the Commodity Charge indicated
on Appendix A for each MMBtu of gas nominated by Buyer with adjustment to
actuals to follow.
5. RESERVATION CHARGE: Regardless of the amount of gas actually taken by
Buyer in any month, Buyer agrees to pay Mobil the Reservation Charge
indicated on Appendix A in consideration for Mobil's agreement to make a
quantity of gas, up to the MCQ, available each day.
This Letter Agreement, and Appendices A, B, C, and D constitute the parties'
entire agreement as to the matters covered hereby.
If the foregoing correctly reflects your understanding of our agreement,
please execute both of the enclosed originals of this Letter Agreement and
return one fully executed original to the undersigned.
Very truly yours,
MOBIL NATURAL GAS INC.
/s/ Daryl T. Landry
Daryl T. Landry
Area Sales Manager
ACCEPTED AND AGREED TO
This 14th day of September 1995
BUYER: MOBILE GAS SERVICE CORPORATION
By: /s/ Gerald S. Keen
Name (Printed): Gerald S. Keen
Title: Vice President
<PAGE>
APPENDIX A
WARRANTY LETTER AGREEMENT
Attached to and forming part of the Letter Agreement dated November 1, 1991
between Mobil Natural Gas Inc. and Mobile Gas Service Corporation.
PART I
MCQ SALES POINT(S)
-------------------------------
EFFECTIVE PERIOD (MMBtu/D) Location Meter No.
- --------------------- ------- -------- ----------
*** ***
Mobil Mobile Bay
Alternate: Koch Gateway 2460
Pipeline Co.
At Whistler
PART II
COMMODITY CHARGE MMBtu (Dry)1 RESERVATION CHARGE
- ------------------------------- ---------------------
Arithmetic Average of Calculated monthly, according to the
Inside FERC Indexes 2 formula R = *** , where P equals
the commodity Charge; MCQ
***3 equals the Maximum Contract Quantity
( *** MMBTU/D); and D equals the
number of gas days in the month.
AGREED AND ACCEPTED this 14th day of September, 1995.
BUYER: SELLER:
MOBILE GAS SERVICES CORPORATION MOBIL NATURAL GAS INC.
By: /S/ Gerald S. Keen By: /S/ Daryl T.
Landry
1 The Commodity charge includes all taxes, transportation charges, and other
add-ons, aftributable to the gas prior to delivery, excluding only sales,
use, and gross receipts taxes arising at the time of delivery and/or title
passage. Buyer shall pay all sales, use, and gross receipts taxes unless
Buyer is exempt, by law, from such taxes. Buyer agrees to provide Seller
copies of any applicable exemption certificates.
2 The Inside FERC Index shall be determined monthly by calculating the
arithmetic average of the 30 day spot prices for gas delivered into the
following pipeline systems at the identified supply areas: *** , as reported
in the publication "Inside FERC's Gas Market Report (McGraw Hill) under the
heading of "Index", for the first Day of the Month or the earliest Day in that
Month for which such prices are reported.
3 Should implications of FERC Order 636 change the value of the commodity,
both parties agree to attempt to renegotiate said commodity for the remaining
term of the contract.
<PAGE>
APPENDIX B
TERMS & CONDITIONS
WARRANTY LETTER AGREEMENT
1. DEFINITIONS:
a. MMBtu: The unit of measurement shall be one million British Thermal Units
(MMBtu), determined on the basis of gross heating value (determined at
60degreesF when saturated with water vapor at an absolute pressure of 14.73
psia, adjusted for water content as delivered).
b. Day: A period from 7:00 A.M. at the Sales Points until 7:00 A.M. on the
following day.
c. Month: A period from 7:00 A.M. on the first Day of the calendar month and
ending at 7:00 A.M. on the first Day of the following month.
2. DECONTROL: Buyer and Seller agree, to the extent they are legally
empowered to do so, that gas sold under this Agreement shall not be subject to
control by any governmental agency. Instead, the parties intend to have their
negotiated price govern.
3. BUYER'S OBLIGATIONS: Buyer will notify Mobil, in writing, on or before the
20th Day of each Month, of the quantity of gas Buyer willt purchase each Day
during the next Month (Purchase Quantity). Buyer may request any quantity,
including zero, up to the MCQ. Except to the extent prevented by Force
Majeure, it is Buyer's intention to take each day at least 80% of all gas
nominated at the Sales Point(s). As to any failure to take at least 80% of
the monthly nominated quantity at the delivery point, or take during any month
at least 80% of the nominated quantity at the delivery point, Buyer shall pay
Seller, in addition to the commodity price set forth on Appendix A, the
difference between 80% of the nominated quantity and the quantities actually
delivered multiplied by 20% of the commodity price.
4. SELLER'S OBLIGATIONS: Mobil agrees to deliver each Day at the Sales
Point(s) a quantity of gas within +-10% of the Purchase Quantity (Daily
Operating Tolerance), up to the MCQ. Mobil's obligation to deliver gas during
any Month shall be met by deliveries within +-5% (Monthly Operating Tolerance)
of the Monthly Purchase Quantity (the sum of the Purchase Quantities in effect
each Day during such Month).
5. DAMAGES: If Mobil tenders a quantity of gas which is less than the
Purchase Quantity and outside the Daily Operating Tolerance and is not
excused by Mobil's force majeure or an act or omission of Buyer or Buyer's
transporter, Mobil shall pay damages for such failure in an amount equal to
the increased costs which Buyer demonstrates it paid for replacement Gas.
Such increased costs, if any, shall be measured by comparing:(i) the total
costs paid by Buyer for the replacement gas and Buyer's costs to have such
gas delivered to the Sales Point(s) to (ii) the total costs which would
otherwise have been paid by Buyer to purchase gas hereunder and have such gas
delivered to its facilities, provided that it is understood that Buyer will
purchase the least expensive replacement gas consistent with consideration of
reliability of supply. If, however, any such shortfall does not result in
Buyer receiving less gas at its facilities than required, but rather
results in an imbalance under Buyer's transportation agreement(s), Mobil shall
have no obligation to pay damages for such shortfall; provided that Mobil,
upon written demand and after having failed to make-up such imbalance within
the maximum period prescribed in Buyer's transportation agreement(s), shall
reimburse Buyer for any imbalance penalties caused by Mobil's shortfall and
paid by Buyer under its transportation agreement(s). Buyer's written demand
for damages or reimbursement for imbalance penalties must be received within
sixty (60) Days after the end of the Month for which damages or imbalance
penalties are claimed or Buyer shalt be deemed to have waived any right to
seek damages or reimbursement for imbalance penalties for such Month.
6. BILLING & PAYMENT: Mobil will provide Buyer an invoice by the 10th Day of
each Month showing the quantity of gas tendered at the Sales Points during the
preceding Month and the amount due therefor. If actual measurement data is
not available, Mobil will estimate the volume delivered using the best
information available. Payment shall be made by electronic transmission of
funds, or other means agreeable to the parties, within ten (10) Days of the
date of the date of Mobil's posting its invoice in the U.S. mails or other
delivery mechanism or service. A revised invoice will be prepared as soon as
actual data is available, and any additional payment, or refund, will be made
within 10 days after the posting of Mobil's invoice in the U.S. mails or
other delivery mechanism or service. Buyer's obligation to pay for gas
received will not be excused for force majeure, and will survive the
termination hereof. If Buyer fails to pay any amount when due,
interest thereon shat I accrue at the lesser of the average prime commercial
rate being charged during the period of delinquency by Citibank, N.A., New
York, N.Y. or the effective maximum legal rate. Each party has the right, at
its expense and during business hours, to examine the pertinent records and
books of the other to verify the accuracy of any invoice, charge, or
computation.
7. MEASUREMENT, QUALITY & PRESSURE: The parties will agree which, as between
them, is responsible for measurement. Measurement requirements will be those
in effect on the pipeline system through which gas is transported to the Sales
Point(s). Gas tendered by Mobil will meet the quality and pressure
specifications of the pipeline and/or facilities at the Sales Point(s) into
which gas is delivered.
8. WARRANTY OF TITLE: Mobil warrants, at the time of delivery, Mobil's title
to all gas delivered, and that such gas will be free from liens, claims or
encumbrances. Mobil indemnifies Buyer against any direct loss, damage or
expense Buyer may sustain from a claim involving gas hereunder prior to
delivery at the Sales Point(s). Buyer agrees to indemnify Mobil against any
direct loss, damage, or expense Mobil may sustain from a claim involving gas
hereunder at or after delivery at the Sales Point(s). Neither party shall be
liable to the other for indirect, consequential, or special damages.
9. FORCE MAJEURE: Non-performance of any obligation hereunder, other than the
obligation to pay for gas taken, shall be excused if prevented by an
occurrence of force maieure, but only for so long as performance is prevented
by such force majeure. The party claiming excuse shall promptly advise the
other party of such force majeure event and shall, with reasonable efforts,
seek to remedy the occurrence. Force majeure as used herein shall mean any
event beyond the reasonable control of the party in question which prevents,
in whole or part, that party's performance of obligations hereunder, and shall
include, without limitation: floods, hurricanes, breakage or accident to
machinery, plants or pipelines, failure or inability of Mobil's or Buyer's
transporter(s) to transport gas made available hereunder, and the operation of
governmental authority (except at the request of the party claiming force
majeure), but shall not include Buyer's loss of markets or Mobil's inability
to secure gas at prices satisfactory to Mobil.
10. PROCESSING: Mobil reserves the right to process gas after delivery at the
Sales Point(s), and agrees to indemnify Buyer for any Btu losses and
transportation charges incurred by Buyer as a result of Mobil's processing.
11. NOTICE: All notices will be in writing and will be deemed delivered when
mailed by U.S. Mail to the address of the other party. Notice by telecopier
shall be effective when received provided a copy is mailed by the U.S. Mail
within two (2) working days.
12. MISCELLANEOUS: This Agreement may not be assigned, except to an affiliate
of the assigning party, without the prior written consent of the other party,
and shall be governed by the laws of the State of Texas without recourse to
the rules for conflicts of Laws.
13. ALABAMA PUBLIC COMMISSION APPROVAL: It is understood that Buyer will seek
approval of the Alabama Public Commission of this contract. If the Alabama
Public Commission issues an order disapproving this contract, or otherwise
indicates its disapproval, then Buyer may terminate this contract by giving 30
days prior written notice. Should Buyer not so terminate the contract, the
terms and provisions of this contract shall remain in full force and effect
for the remaining term. In the event of any such termination, Mobil shall not
be obligated to refund any amounts received by Mobil for gas delivered under
this contract prior to termination.
<PAGE>
APPENDIX C
During a month, Buyer may request on 24 hours notice a change in the Purchase
Quantity for the portion of such Month remaining after the date of such a
request, upward by *** percent ( *** %) of the MCQ not to exceed the MCQ, or
downward by *** percent( ***%) of the MCQ, not less than zero, by notifying
Seller verbally (followed by written confirmation within 24 hours) of its
desire for such a change. This swing option is available on a *** month
basis ( *** ). If the swing option is not utilized in any given month, that
option becomes null and void and is not available to be carried forward for
use in future months (i.e., there is no accumulation of unused monthly swing
options).
<PAGE>
APPENDIX D
STAND-BY SERVICE
Stand-by Service
Mobil will provide an additional volume of gas up to *** MMBtu/D delivered
into Mobile Gas Service if unsold gas is available or if gas becomes
available through the curtailment of *** on the Mobile Gas Service System, in
the event of an emergency shutdown at ***. A service fee equal to *** will be
added to the commodity cost then in effect.
<PAGE>
EXHIBIT 10(o)-1
PORTIONS OF THIS EXHIBIT IDENTIFIED BY "***" HAVE BEEN DELETED PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, AND THE FREEDOM OF INFORMATION ACT.
MOBILE GAS SERVICE CORPORATION
TRANSPORTATION AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as of this 15th day
of May, 1995 by and between MOBILE GAS SERVICE CORPORATION, an Alabama
corporation with a mailing address of P. O. Box 2248, Mobile, Alabama 36652,
herein called "Mobile Gas," and TUSCALOOSA STEEL CORPORATION, an Alabama
corporation with a mailing address of 1700 Holt Road, N.E., Tuscaloosa,
Alabama 35404-1000, herein called "Customer."
WHEREAS, Customer desires to use natural gas for the operation of Customer's
planned direct iron reduction units and associated plant equipment to be
located at Customer's proposed plant on its "McDuffie Island" site in Mobile,
Alabama (the "Plant"); and
WHEREAS, Mobile Gas operates a system for the distribution of natural gas from
natural gas transmission pipelines and processing plants, through which Mobile
Gas can transport to the Plant gas purchased by Customer or its agents from
third parties ("Customer's Shippers") and delivered by Customer's Shippers to
Mobile Gas, and the parties desire that Mobile Gas provide such
transportation services to Customer and construct certain pipeline facilities
for such purpose.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
ARTICLE I - TERM OF AGREEMENT
1.1 The term of this Agreement shall be fifteen Contract Years, beginning on
the Commencement Date, as defined in Article IV. "Contract Years" shall mean
the consecutive twelve-month calendar periods commencing with the first day of
the month beginning after the Commencement Date (provided that if the
Commencement Date is the first day of a month, the first Contract Year shall
commence on such date, and if the Commencement Date is not the first day of a
month, the first Contract Year shall also include the period from the
Commencement Date to the first day of the month beginning after the
Commencement Date).
1.2 So long as Customer is not in default hereunder at the expiration of the
initial term hereof, as the same may be extended pursuant to Section 9.3 (the
"Expiration Date"), either Customer or Mobile Gas may extend this Agreement
for an additional term of fifteen Contract Years immediately following the
Expiration Date (the "Renewal Term") by notifying the other of its intent to
so extend not less than 90 days prior to the Expiration Date. The Rate for
such Renewal Term is set forth on Exhibit "A."
1.3 Notwithstanding the provisions of Section 1.1, this Agreement shall become
effective as of the date hereof with respect to the obligations of the parties
specified in ARTICLE III hereof, and payment obligations arising prior to
expiration or termination of this Agreement shall remain in effect after the
term of this Agreement.
1.4 This Agreement may only be terminated prior to the expiration of the
initial term or the Renewal Term hereof, if any, as the case may be:
(a) by Mobile Gas
(i) in accordance with Section 8.4,
(ii) in accordance with Section 9.4(b), or
(iii) after occurrence of any material breach by Customer in
the performance of its obligations hereunder and the continuance of such
breach 90 days after notice by Mobile Gas to Customer of such breach and
demand by Mobile Gas that Customer cure same;
(b) by Customer
(i) in accordance with Section 9.4(a), or
(ii) in accordance with Exhibit A, or
(iii) after occurrence of any material breach by Mobile Gas
in the performance of its obligations hereunder and the continuance of such
breach 90 days after notice by Customer to Mobile Gas of such breach and
demand by Customer that Mobile Gas cure same. In the event of termination by
Customer under this clause (iii), Customer shall not owe any further minimum
bill payments or termination payments in lieu thereof as provided for in
Exhibit A.
ARTICLE II - TRANSPORTATION SERVICE
2.1 Mobile Gas will transport up to a volume of *** MMBtu per day, not to
exceed *** MMBtu per hour ("Contract Demand Volume") to the Point of
Redelivery, as hereinafter defined, for use at the Plant. Customer will pay
Mobile Gas for all gas transported by Mobile Gas to the Plant and agrees to
accept transportation service from Mobile Gas subject to the terms and
conditions hereof. As used herein the term "MMBtu" shall mean 1,000,000
British Thermal Units (which means the amount of heat required to raise the
temperature of one pound of distilled water one degree Fahrenheit at 60
degrees Fahrenheit at a constant pressure of 14.73 pounds per square inch
absolute).
2.2 The effective Rates for the initial term, and any renewal term, if any,
and certain other terms pertaining to such transportation service are
specified in Exhibit "A" which is attached hereto and made part of this
Agreement. Customer agrees that Mobile Gas shall be the sole transporter of
natural gas to the Plant during the term of this Agreement.
2.3 If this Agreement is renewed for a Renewal Term, if at any time and from
time to time during Contract Years *** through *** the volume transported
pursuant to this Agreement is less than an average volume of *** MMBtu per day
for any consecutive *** -month period (with force majeure days excluded from
the calculation), then Mobile Gas may, by not less than 30 days' written
notice to Customer, reduce the Contract Demand Volume to a Contract Demand
Volume equal to *** of such average daily volume during such *** -month
period. Such reduction shall not affect the applicable Rate or the minimum
bill provisions set forth in Exhibit "A".
2.4 If this Agreement is renewed for a Renewal Term, if during any Contract
Year during the Renewal Term the average volume of gas transported is below
*** MMBtu per day (with force majeure days and up to two weeks of Customer
scheduled maintenance excluded from the calculation), Mobile Gas may, by not
less than 30 days' written notice to Customer, cause the Rate for
transportation of gas to thereafter be the rate set forth in the T-1 Tariff of
Mobile Gas, or any tariff which is a successor thereto, and such Rate shall
remain in effect during the remainder of the Renewal Term. Any such rate
change shall not affect the minimum bill provisions set forth in Exhibit "A".
2.5 During Contract Years *** through *** , Customer may, by not less than 30
days' written notice to Mobile Gas, elect once to reduce the Contract Demand
Volume to *** MMBtu, and in such event, the annual minimum bill amount for the
following Contract Years shall be reduced to *** through the end of Contract
Year ***. In such event, such reduced Contract Demand Volume would remain
in effect during any Renewal Term, and the minimum bill during such Renewal
Term would be as specified in Exhibit "A".
ARTICLE III - ACTIONS PRIOR TO COMMENCEMENT DATE; NOTICE OF FACILITIES
COMPLETION
3.1 Customer shall be responsible for construction of its pipeline from the
Point of Redelivery to the Plant, and for construction of the Plant. Promptly
after the execution of this Agreement, Customer shall provide to Mobile Gas an
easement in form reasonably acceptable to Mobile Gas for construction of that
portion, if any, of the Facilities, as hereinafter defined, as shall cross
property owned or leased by Customer, as well as for construction and
maintenance of a metering station on the Plant premises.
3.2 Promptly after the execution of this Agreement and receipt of all required
regulatory approvals, easements and rights-of-way as may be required, Mobile
Gas shall begin construction of the facilities necessary to deliver natural
gas to the Point of Redelivery specified herein (the "Facilities"). Mobile
Gas will proceed with reasonable dispatch to obtain required regulatory
approvals, easements and rights of way as may be required hereunder. Mobile
Gas shall at its expense complete such construction of the Facilities as is
required to enable Mobile Gas to deliver gas to Customer at the Point of
Redelivery at the Contract Demand Volume ("Facilities Completion") not later
than 18 months after the execution of this Agreement. Not more than 60 nor
less than 20 days prior to such Facilities Completion, Mobile Gas shall
provide notice to Customer of the date that Facilities Completion will occur.
ARTICLE IV - COMMENCEMENT DATE
4.1 The "Commencement Date" shall be the earlier of (i) the date Customer
first takes natural gas from the Facilities into the Plant, or (ii) 30 days
after the date of Facilities Completion, provided that the Commencement Date
pursuant to this subsection 4.1(ii) shall not be earlier than 18 months after
the execution of this Agreement.
ARTICLE V - QUALITY
5.1 The volumes of natural gas delivered by Customer's Shippers and
redelivered by Mobile Gas hereunder shall be measured at an equivalent
pressure base of 14.73 pounds per square inch absolute ("psia") and an assumed
atmospheric pressure of 14.7 psia, and at a temperature base of 60 degrees
Fahrenheit. The volume of natural gas determined hereunder shall be adjusted
to give effect to Boyle's Law in accordance with standard procedure.
5.2 The quality of the gas delivered by Customer's Shippers to Mobile Gas and
redelivered by Mobile Gas to Customer shall be pipeline quality, and:
(a) Shall be dehydrated and shall in no event have a water content in
excess of seven (7) pounds of water per million (1,000,000) cubic feet of gas
measured at a pressure base of 14.73 psia and at a temperature base of 60
degrees Fahrenheit, as determined by dew point or other moisture measuring
equipment in general use in the industry.
(b) Shall not contain more than one (1) grain of hydrogen sulfide per one
hundred (100) cubic feet as determined by quantitative methods in general use
in the industry.
(c) Shall not contain more than twenty (20) grains of total sulphur,
including hydrogen sulfide, per one hundred (100) cubic feet as determined by
quantitative methods in general use in the industry.
(d) Shall not contain in excess of:
(i) Three percent (3.0%) by volume carbon dioxide.
(ii) Two percent (2.0%) by volume oxygen.
(iii) Three percent (3.0%) by volume nitrogen.
(e) Shall be commercially free from dust, gum, gum-forming constituents
or other liquid or solid matter which might become separate from the gas in
the course of transportation through pipelines.
(f) Shall be commercially free of water and other objectionable liquids
at the temperature and pressure at which the gas is delivered and the gas
shall not contain any hydrocarbons which might condense to free liquids in
the pipeline under normal pipeline conditions.
ARTICLE VI - POINT OF DELIVERY AND REDELIVERY
6.1 Customer's Shipper shall deliver gas (at a pressure sufficient to enter
into the interconnection at the Point of Delivery) to be transported by Mobile
Gas hereunder to Mobile Gas' presently existing interconnections with (a)
***, (b) *** , (c) ***, or (d) *** (each a "Point of Delivery"). Any
additional Point of Delivery shall only be designated by mutual written
agreement of Mobile Gas and Customer.
6.2 No more than *** MMBtu per hour, nor more than *** MMBtu per day shall be
delivered to the *** interconnection; no more than *** MMBtu per hour, nor
more than *** MMBtu per day shall be delivered to *** interconnection; and no
more than *** MMBtu per hour, nor more than *** MMBtu per day shall be
delivered to the *** interconnection. These allocations are subject to the
daily and hourly volume restrictions in Section 2.1.
6.3 Upon Customer's request, which shall include an undertaking satisfactory
to Mobile Gas that Customer will reimburse Mobile Gas for all costs reasonably
incurred (including all taxes, whether income tax or otherwise, incurred as a
result of receipt of such reimbursement), Mobile Gas shall install at any one
or more Points of Delivery additional metering capacity which will allow
Customer increased allocations at the Points of Delivery specified in Section
6.2.
6.4 In the event that the metering capacity at any Point of Delivery specified
in Section 6.2 is increased by Mobile Gas (other than as described in Section
6.3), Mobile Gas may, in its sole discretion, determine whether or not to
increase Customer's allocation at such Point of Delivery.
6.5 The Point of Redelivery of natural gas by Mobile Gas to Customer hereunder
shall be the flange outlet of the Mobile Gas metering station, which shall be
located at or near the boundary of and on the Plant premises property.
ARTICLE VII - PRESSURE AT POINT OF REDELIVERY
7.1 Mobile Gas shall deliver gas to the Point of Redelivery at the highest
operating pressure available from time to time in the Mobile Gas system for
deliveries at the point of Redelivery, but at not less than *** pounds per
square inch gauge (psig) nor more than *** pounds per square inch gauge
(psig).
ARTICLE VIII - BILLING
8.1 On or before the seventh (7th) working day of each calendar month, Mobile
Gas shall render to Customer a statement of the amount of gas transported
hereunder by Mobile Gas to Customer during the preceding calendar month (and
with respect to the first such statement, for the portion of a month, if any,
between the Commencement Date and the first full calendar month) and shall
also render a bill for all gas so transported. Customer shall make payment to
Mobile Gas at P. O. Box 2248, Mobile, Alabama 36652, or at such other address
as may be provided by Mobile Gas by notice to Customer, on or before the
twenty-fifth (25th) day of that month or 15 days after the date the bill is
rendered, whichever is later.
8.2 On or before the seventh (7th) working day after the end of each
consecutive Contract Year, Mobile Gas shall render to Customer a statement of
the amount, if any, by which the aggregate billings by Mobile Gas to Customer
during the preceding Contract Year were less than the minimum annual bill
specified on Exhibit "A" (the "Minimum Bill Balance"), and if there exists a
Minimum Bill Balance, shall also render a bill for such amount in accordance
with Section 8.1. Customer shall make payment to Mobile Gas of the Minimum
Bill Balance, if any, in accordance with Section 8.1.
8.3 In the event that Customer fails to pay any amounts due hereunder when
due, interest shall accrue on all unpaid amounts from the date due until paid
at a rate of interest equal to 2% in excess of the rate of interest reported
as the "prime rate" in the "Money Rates" section of The Wall Street Journal or
any successor thereto.
8.4 Should Customer fail to pay to Mobile Gas any amount for which a bill has
been rendered and which is due to Mobile Gas by the time specified in Section
8.1, and such failure to pay continues for an additional five days, then
Mobile Gas may suspend deliveries of gas hereunder 10 days after written
notice given on or after the last day of such additional five days to Customer
of such failure to pay. In the event Mobile Gas has given the written notice
prescribed in the preceding sentence, it will at least 72 hours prior to
suspension of deliveries of gas pursuant to this Section 8.4, send notice by
facsimile to two separate individuals designated by Customer by notice to
Mobile Gas. Mobile Gas will also endeavor to give further personal or
telephonic notice to such person or office at the Plant as Customer may
specify by notice to Mobile Gas, at least 72 hours prior to suspension
of deliveries of gas pursuant to this Section 8.4. In the event written
notice has been given as provided above, and payment has not been received for
a period of 90 days, such period commencing on the date of the written notice
described above,then Mobile Gas may, in its sole discretion, terminate this
Agreement. Such termination shall not relieve Customer from the termination
payment obligations set forth in Exhibit A(2).
8.5 In the event that Customer disputes any amount shown on a statement
issued by Mobile Gas to Customer, such disputed amount shall be paid.
Notwithstanding such payment, Customer shall have the right to claim from
Mobile Gas such disputed amount. Upon receipt by Mobile Gas of any claim
from Customer for a disputed amount, Mobile Gas and Customer shall endeavor to
amicably resolve the disputed amount prior to institution of arbitration by
Customer. The parties are not obligated to pursue amicable resolution for
more than ten (10) days.
ARTICLE IX - FORCE MAJEURE
9.1 In the event of either party hereto being rendered unable, wholly or in
part, by force majeure to carry out its obligations under this Agreement,
other than to make payments hereunder (except as provided below), the
obligations of the party, as far as they are affected by such force majeure,
shall be suspended during the continuance of any inability so caused, but for
no longer period, and such cause shall as far as possible be remedied with all
reasonable dispatch. The party so affected by such event of force majeure
shall give written notice, with reasonably full particulars of such force
majeure, including without limitation measures to be taken to alleviate such
force majeure, in writing or by fax to the other party as soon as possible
after the occurrence of the causes so relied upon.
9.2 The term "force majeure" as employed herein shall mean, without
limitation, acts of God, strikes, lockouts, or other industrial disturbances,
acts of the public enemy, sabotage, wars, blockades, insurrections, riots,
epidemics, landslides, lightning, earthquakes, floods, storms, fires,
washouts, arrests and restraints of rulers and peoples, civil disturbances,
explosions, breakage or accident to lines of pipe, hydrate obstructions of
lines of pipe, repairs, failure of adequate supply pressures to any Point of
Delivery or other operational constraints affecting the Mobile Gas system,
inability of either party to obtain necessary permits or regulatory
approvals or to obtain easements or rights of way, freezing of a well or
plant, well blowouts, craterings, and the act of any court or governmental
authority, or any other cause, whether of the kind herein enumerated or
otherwise, not within the control of the party claiming suspension or which,
by the exercise of due diligence, such party is unable to prevent or
overcome; provided however, that the settlement of strikes or lockouts shall
entirely be within the discretion of the party engaged in such labor dispute,
and the requirement that any force majeure shall be remedied with the
exercise of diligence shall not require the settlement of strikes or lockouts
by acceding to the demands of opposing parties when such course is inadvisable
in the discretion of the party engaged in such labor dispute.
9.3 In the event Mobile Gas is, due to an event of force majeure as herein
defined, unable to provide transportation services under this Agreement for a
consecutive ninety-day period, then the obligation of Customer to make payment
hereunder shall thereafter be suspended until service is again made available
hereunder, and the term of this Agreement shall be automatically extended for
a period equal to the period during which payment is so suspended.
9.4 (a) In the event a force majeure condition claimed by Mobile Gas is not
corrected within *** days, Customer may, at its discretion, elect to
terminate this Agreement upon *** days written notice, and this Agreement
shall terminate at the end of such *** day period without relieving either
party from any obligations due on the date of such termination.
(b) In the event a force majeure condition claimed by Customer is not
corrected within *** days, Mobile Gas may, at its discretion, elect to
terminate this Agreement upon *** days written notice, and this Agreement
shall terminate at the end of such *** day period without relieving either
party from any obligations due on the date of such termination, except that
Customer shall not owe any further minimum bill payments or termination
payments in lieu thereof as provided for in Exhibit "A".
ARTICLE X - CONDITIONS OF TRANSPORTATION INTERRUPTION
10.1 All nominated gas (up to the Contract Demand Volume) delivered by
Customer's Shipper to the Point of Delivery in compliance herewith shall be
considered an authorized volume of gas, and shall be transported to the Point
of Redelivery by Mobile Gas, subject to the terms hereof.
10.2 Notwithstanding any other provision of this Agreement, the transportation
service to be provided by Mobile Gas hereunder is subject to interruption in
any amount (up to and including one hundred percent interruption) at any time
if, in the exercise of its sole discretion, Mobile Gas determines such
interruption is necessary only (a) due to maintenance, improvement,
replacement or alterations to plants, lines of pipe or related facilities of
Mobile Gas, provided, however, that interruptions for such purposes shall not
exceed *** days during the initial fifteen year term of this Agreement, with
there being no such limitation associated with any renewal term hereunder,
(b) due to force majeure conditions as defined in Article IX, or
(c) pursuant to any Curtailment Plan in effect from time to time applicable to
Mobile Gas customers and approved by the Alabama Public Service Commission
("APSC").
10.3 In the event of circumstances giving rise to interruption or curtailment
under Section 10.2(a) or (c), Mobile Gas shall exert its best efforts to
provide as early a prior notice of interruption or curtailment as is
practicable under the circumstances, and shall (unless prevented by force
majeure), if reasonably possible, provide at least eight hours' notice of the
time and extent of such interruption or curtailment.
10.4 Mobile Gas shall use reasonable dispatch to restore transportation
service after an interruption pursuant to Section 10.2 of this Agreement.
10.5 Mobile Gas and Customer shall each have sole discretion in scheduling
their respective maintenance, improvements, replacements or alterations to
plants. However, the parties do agree to communicate with one another in an
effort to schedule maintenance, improvements, replacements or alterations to
plants in such a way as to minimize any interference with Customer's
operations.
ARTICLE XI - NOMINATION PROCEDURE
11.1 Customer or Customer's agents shall provide to Mobile Gas a daily
confirming nomination to match the nomination made by Customer's Shipper.
Confirmation shall be made by voice or fax prior to 3 P.M., Mobile, Alabama
time, the day before a weekday delivery to Mobile Gas and by 3 P.M., Mobile,
Alabama time, on the Friday before any weekend delivery.
ARTICLE XII - NOTICES
12.1 Whenever any notice, request, demand or statement is required or
permitted to be given under any provision of this Agreement, unless expressly
provided otherwise herein, such shall be in writing, signed by or on behalf of
the person giving the same, and shall be deemed to have been given when mailed
by first class mail, sent by Federal Express, Express Mail, or similar
overnight delivery or courier service, or delivered in person, or sent by
facsimile transmission with the transmission confirmed by the transmitting
equipment of the sender, to the address of such party as hereinafter set
forth:
Mobile Gas Service Corporation Tuscaloosa Steel Corporation
2828 Dauphin Street (36606) 1700 Holt Road, N.E.
P. O. Box 2248 Tuscaloosa, Alabama 35404-1000
Mobile, Alabama 36652
Fax: (334) 478-5817 Fax: (205) 507-3112
Telephone: (334) 476-2720 Telephone: (205)507-3107
or to such other address or facsimile number as one party may specify by
written notice to the other.
ARTICLE XIII - LAW GOVERNING
13.1 This Agreement shall be governed by and construed in accordance with the
laws of the State of Alabama.
ARTICLE XIV - ENTIRE AGREEMENT
14.1 This instrument embodies the entire Agreement and understanding between
the parties hereto. There are no Agreements, understandings, conditions,
warranties, or representations, oral or written, express or implied, with
reference to the subject matter hereof that are not merged herein or
superseded hereby.
ARTICLE XV - SPECIAL PROVISIONS
The following Special Provisions are made a part hereof:
15.1 Mobile Gas may, but shall not be obligated to, transport or provide
volumes in excess of the Contract Demand Volume if requested by Customer. If,
on any day, the Customer takes an Unauthorized Volume of gas, the Customer
shall, upon written request, pay to Mobile Gas, as damages, any costs incurred
by Mobile Gas. An "Unauthorized Volume" is a volume in excess of the
authorized volume described in Section 10.1 or any volume taken by Customer in
excess of permitted volume during a period of curtailment described in a
notice of interruption given by Mobile Gas in accordance with Section 10.2.
The payment of costs incurred by Mobile Gas for unauthorized volumes taken by
Customer shall not under any circumstances be considered as giving Customer
the right to take unauthorized volumes, nor shall such payment be considered
as a substitute for or exclusive of any other remedies available to Mobile Gas
against Customer for failure to respect its obligations to adhere to the
provisions of this Agreement.
15.2 In the event Mobile Gas incurs any cost, expense and/or penalties
resulting from Customer being over-or under-nominated for any period of time,
Customer shall, upon written request, reimburse Mobile Gas for such cost,
expenses and/or penalties.
15.3 When Mobile Gas becomes aware that costs will be incurred by Customer as
a result of the Customer's non-compliance with the provisions of Sections 15.1
or 15.2, Mobile Gas will endeavor to advise Customer as soon as practicable of
such event.
15.4 A "day" when used in this Agreement shall mean a twenty-four (24) hour
period ending at 8:00 A.M., Mobile, Alabama time.
15.5 (a) The unit of volume for measurement of gas delivered hereunder shall
be one (1) cubic foot of gas at base temperature of sixty (60) degrees
Fahrenheit and at an absolute pressure of fourteen and seventy-three
hundredths (14.73) pounds per square inch. All fundamental constants,
observations, records, and procedures involved in determining and/or verifying
the quantity and other characteristics of gas delivered hereunder shall,
unless otherwise specified herein, be in accordance with industry standards,
as exist now and may from time to time be amended or supplemented. All
measurements of gas shall be determined by calculation into terms of such
unit. All quantities given herein, unless expressly stated otherwise, are in
terms of such unit. Notwithstanding the foregoing, it is agreed that, for all
purposes, the Btu content of the gas received and delivered by Mobile Gas
hereunder shall be measured on an "as delivered" basis rather than a fully
saturated or "wet" basis.
(b) Mobile Gas shall inst all, maintain and operate, or cause to be
installed, maintained and operated, the measurement facilities required
hereunder. Said measurement facilities shall be so equipped with meters,
gauges, and other instruments of standard make and design commonly acceptable
in the industry, as to accomplish the accurate measurement of gas delivered
hereunder. The calibrating and adjustment of meters shall be done by Mobile
Gas or its agent. The accuracy of Mobile Gas measuring equipment shall be
verified at appropriate intervals, for instance, orifice meters shall be
calibrated at least once in each thirty (30) day period, and turbine meters
onceeach year. Mobile Gas shall keep all meters accurate and in repair.
Mobile Gas shall give Customer reasonable notice of all tests conducted on
measuring equipment in order that, if Customer desires, Customer may have its
representative present. If either party desires a special test of any
measuring equipment, it will promptly notify the other party and the parties
shall then cooperate to secure a prompt verification of the accuracy of such
equipment. The expenses of any such special test, if requested by Customer,
shall be borne by Customer if the measuring equipment tested is found to be
accurate within the limits of plus or minus two percent (2%) of error. For
the purposes of measurement and meter calibration, the atmospheric pressure
shall be assumed to be fourteen and seventy-three hundredths (14.73) pounds
per square inch, irrespective of variations in natural atmospheric pressure
from time to time.
(c) Customer may, at its option and expense, install and operate a check
meter on its premises to check Mobile Gas's meter, but measurement of gas
delivered toCustomer for the purpose of this Agreement shall be by Mobile
Gas's operated metering only. Any check meter installed shall be of a
standard type and shall be subject at all reasonable times to inspection or
examination by Mobile Gas, but the reading, calibration and adjustment
thereof and changing of charts shall be done only by the employees or agents
of Customer.
(d) If upon any test the mete ring equipment in the aggregate is found to
be inaccurate, by more than two percent (2%), either plus or minus,
registration thereof and any payment based upon such registration shall be
corrected at the rate of such inaccuracy for any period of inaccuracy which
is definitely known or agreed upon, or if not known or agreed upon, then for a
period extending back one-half (1/2) of the time ela psed since the day of the
last calibration. Following any test, any metering equipment found to be
inaccurate to any degree shall be adjusted immediately to measure accurately;
however, if any inaccuracy is two percent (2%) or less, all prior readings and
measurements shall be deemed to be accurate and no adjustments to any prior
reading shall be made.
(e) If for any reason, any meter is out of service or out of repair so
that the quantity of gas delivered through such meter cannot be ascertained or
computed from the readings thereof, the quantity of gas so delivered during
such period shall be estimated and agreed upon by the parties hereto upon the
basis of the best available data, using the first of the following methods
which is feasible:
(i) by using the registration of any check measuring equipment, if
installed and registering accurately;
(ii) by correcting the error if the percentage of error is
ascertainable by calibration, test, or mathematical calculation; or
(iii) by estimating the quantity of gas deliveries by deliveries
during preceding periods under similar conditions when the meter was
registering accurately.
(f) The measurement hereunder shall be corrected to give effect to
Boyle's Law at the pressure and temperature under which gas is delivered
hereunder.
(g) Mobile Gas will allow Customer access to all pulses and other data
from the Mobile Gas meters installed to provide service pursuant to this
Agreement.
(h) If at any time d uring the term of this Agreement a new method or
technique is developed with respect to gas measurement, or the determination
of the factors used in such gas measurement, such new method or technique may
be substituted for any method set forth herein which meets generally accepted
industry standards and practices and is acceptable to both parties.
15.6 Mobile Gas agrees to protect, defend, indemnify, and hold harmless the
Customer, its officers, directors, agents and/or employees from and against
any claims, demands, losses, damages, suits and expenses, for damages and/or
injury to persons and/or property which may be brought against the Customer,
its officers, directors, agents and/or employees arising out of, or resulting
from, the transportation of natural gas from the Point of Delivery to the
Point of Redelivery pursuant to the terms and conditions expressed herein.
15.7 Customer agrees to protect, defend, indemnify, and hold harmless Mobile
Gas, its officers, directors, agents and/or employees from and against any
claims, demands, losses, damages, suits and expenses, for damages and/or
injury to persons and/or property which may be brought against Mobile Gas, its
officers, directors, agents and/or employees arising out of, or resulting
from, the transportation of natural gas by the Customer or its agents to the
Point of Delivery and from the Point of Redelivery to and through its plant
and facilities.
15.8 Customer warrants for itself, its successors and assigns, that it will
have at the time of delivery of gas for transportation hereunder good title or
valid right to deliver such gas hereunder; that the gas it delivers hereunder
shall be free and clear of all liens, encumbrances, or claims whatsoever; and
that it will indemnify Mobile Gas and save it harmless from all claims, suits,
actions, damages, costs and expenses arising directly or indirectly from or
with respect to the title to gas tendered to Mobile Gas hereunder.
15.9 As between Customer and Mobile Gas, Customer shall be in control and
possession of the gas transported hereunder prior to delivery to Mobile Gas at
the Point of Delivery and after delivery by Mobile Gas to Customer at the
Point of Redelivery, and Mobile Gas shall be in control and possession of the
gas after the receipt of the same at the Point of Delivery and until delivery
by Mobile Gas to Customer at the Point of Redelivery. The risk of loss for
all gas transported hereunder shall be and remain with the party having
control and possession of the gas as herein provided.
15.10 Mobile Gas agrees to transport additional volumes of gas to Customer for
a period of up to thirty (30) days beyond the termination of this Agreement in
order to bring into balance any imbalance that exists at the termination of
this Agreement.
15.11 Customer may at its sole option and from time to time appoint an Agent,
and upon such appointment notify Mobile Gas of such appointment, to represent
Customer for purposes of making nominations, delivering gas to a Delivery
Point and adjusting balances. Customer acknowledges that Mobile Gas may rely
on instructions of Customer's duly appointed Agents as if such instructions
were made by Customer until such time as Customer sends Mobile Gas a notice
requiring Mobile Gas to no longer accept instructions from such Agent.
ARTICLE XVI - MISCELLANEOUS PROVISIONS
16.1 This Agreement may not be assigned by either party hereto without the
written consent of the other party hereto, such consent not to be unreasonably
withheld or delayed. Any assignment without prior consent shall be void and
without force and effect.
16.2 The effectiveness of this Agreement is subject to approval hereof by the
APSC.
ARTICLE XVII - ARBITRATION
17.1 Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled exclusively by arbitration pursuant to
the Commercial Arbitration Rules of the American Arbitration Association.
17.2 All arbitrations pursuant to this Agreement shall be held at Mobile,
Alabama.
17.3 There shall be three arbitrators. One of the arbitrators shall be
appointed by Mobile Gas, the second by Customer, and the third shall be a
neutral arbitrator selected by these two arbitrators. Such neutral arbitrator
shall be chairman of the arbitration panel.
17.4 The arbitration shall be decided by a majority vote of the arbitration
panel. The cost of arbitration, including the fees of the arbitrators, shall
be borne by the losing party, unless the arbitrators decide otherwise.
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed
by its officer thereunto duly authorized as of the date first above written.
WITNESS: MOBILE GAS SERVICE CORPORATION
/s/ G. Edgar Downing, Jr. By: /s/ John S. Davis
--------------------------------
Its: President
--------------------------------
WITNESS:
/s/ D. W. Wilson TUSCALOOSA STEEL CORPORATION
By: /s/ D. C. Wagg
--------------------------------
Its: Vice President Finance
--------------------------------
<PAGE>
EXHIBIT '"A"
MCDUFFIE ISLAND SITE
MOBILE GAS SERVICE CORPORATION
TRANSPORTATION SERVICE CONDITIONS
1. *** Transportation Rate ***
(a) "Flat Rate" for first *** Contract *** per MMBTU for all
Years of this Agreement MMBtus transported
during the ***.
(b) "Flat Rate" for Renewal Term As specified below
of this Agreement (if renewed)
Note: The above "Flat Rates" are contingent upon Mobile Gas
receiving specified concessions from the State and/or entities as detailed in
Exhibit "B", and are subject to the provisions of Section 2.4 of this
Agreement. In the event any of such concessions are not obtained in a manner
acceptable to Mobile Gas, the Flat Rates shall be increased as set forth in
Exhibit B.
The Flat Rate for all Therms transported during any month in the
Renewal Term shall be equal to *** by the "Percentage Increase", if any. The
"Percentage Increase", if any, shall be calculated as follows:
First, there shall be determined a percentage equal to a fraction,
the numerator of which shall be the Index for the *** month of the ***
Contract Year less the Base Index, and the denominator of which shall be the
Base Index (such percentage being referred to herein as the "unadjusted
Percentage"). As used herein:
(i) the "Index" means the Consumer Price Index for All Urban
Consumers (1982-1984=100) specified for All Items for the United States issued
by the Bureau of Labor Statistics of the U.S. Department of Labor. If the
Index shall hereafter be converted to a different standard reference base or
otherwise revised, the determination of the Percentage Increase shall be made
with the use of such conversion factor, formula or Table for converting the
Index as may be published by such Bureau of Labor Statistics. If the Index
shall cease to be published, then for purposes of computing thE Percentage
Exhibit "A" - Page 1
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Increase, there shall be substituted for such Index such alternative index as
the parties hereto may mutually agree upon, and if they are unable to so agree
within 90 days after the Index ceases to be published, such matter shall be
determined by arbitration in accordance with the terms hereof.
(ii) the "Base Index" shall mean the Index for the ***
immediately preceding the *** in which the *** occurs.
Second, the Percentage Increase, if any, shall be determined as
follows:
***
2. Minimum Billing
(a) Contract Years *** through ***.
(i) The minimum bill during *** shall be *** , and the
minimum bill for each of Contract Years *** through *** shall be ***,
subject to the provisions of clause (iii) below and the provisions of
Sections 1.4(b), 2.5 and 9.4(b).
(ii) Customer may terminate this Agreement *** .
Subject to the provisions of clause (iii) below and the provisions of
Section 1.4(b) and 9.4(b), in consideration of ***, the minimum annual bill
amounts set forth in clause (i) above shall be ***, provided that (a) in the
event of termination of this Agreement *** during *** , and (b) in the event
of termination of this Agreement *** during ***
Exhibit "A" - Page 2
<PAGE>
(iii) if at any time during Contract Years *** through ***, Customer
shall have made *** payments pursuant to this Exhibit "A" equal to or
exceeding ***, ***.
(b) Contract Years *** through ***.
The minimum bill for each of Contract Years *** through *** shall
be *** per year. *** may terminate this Agreement without penalty during
Contract Years *** through *** by giving *** advance written notice of such
termination to ***.
3. Effective Date
The effective date of the Rate for the initial term of this Agreement is
the Commencement Date.
4. Taxes
This Special Transportation Rate is inclusive of current business license
taxes and state inspection supervision fees. This Rate shall be adjusted to
take into account any future increase or decrease in such taxes and fees, as
well as any additional fees or taxes which may be imposed on Mobile Gas with
respect to the services rendered hereunder.
Exhibit "A" - Page 3
<PAGE>
EXHIBIT "B"
MCDUFFIE ISLAND SITE
MOBILE GAS SERVICE CORPORATION
TRANSPORTATION SERVICE CONDITIONS
*** Construction in a Manner
Acceptable to Mobile Gas
***
1. Open cutting the Duval Street crossing of I-10. ***
2. Routing pipeline along South service road between ***
Duval Street and Washington Avenue. Mobile Gas is
provided an easement in the area provided by the
appropriate entity.
3. Mobile Gas is allowed to buy its pipeline directly across ***
Washington Avenue without a casing, with Mobile Gas
either boring or open trenching based on our preference.
4. State of Alabama and City of Mobile provide milling and ***
Washington Ave. repaving on:
4.1 Duval between Houston Street and Michigan Avenue.
4.2 Baker Street.
4.3 Raising manholes as required.
***
***
EXHIBIT 10(o)-2
PORTIONS OF THIS EXHIBIT IDENTIFIED BY "***" HAVE BEEN DELETED PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, AND THE FREEDOM OF INFORMATION ACT.
AMENDMENT TO GAS TRANSPORTATION AGREEMENT
This Amendment to Gas Transportation Agreement (this "Amendment") is made and
entered into as of the 23rd day of August, 1996, by and between MOBILE GAS
SERVICE CORPORATION, an Alabama corporation with a mailing address of Post
Office Box 2248, Mobile, Alabama, 36652 (herein called "Mobile Gas"), and
TUSCALOOSA STEEL CORPORATION, an Alabama corporation with a mailing address of
1700 Holt Road, N.E., Tuscaloosa, Alabama 35404-1000 (herein called
"Customer").
WHEREAS, Mobile Gas and Customer entered into a Transportation Agreement dated
as of the 15th day of May, 1995 (the "Transportation Agreement");
WHEREAS, Mobile Gas and Customer wish to amend the Transportation Agreement as
hereinafter set forth.
NOW, THEREFORE, for valuable consideration, and in consideration of the mutual
covenants herein contained, the parties do hereby amend the Transportation
Agreement, as follows:
1. Section 3.2 is amended by deleting the words "18 months after the
execution of this Agreement" appearing in the third sentence, and substituting
in lieu thereof the words "August 1, 1997."
2. Section 4.1 is amended to read in its entirety as follows:
4.1 The "Commencement Date" shall be the earlier of (i) the date Customer
first takes natural gas from the Facilities into the Plant, or (ii) August 1,
1997.
3. An ARTICLE XVIII is added, as follows:
ARTICLE XVIII - FORCED RELOCATION
18.1 If at any time during the initial term of this Agreement being fifteen
Contract Years, Mobile Gas is required by the Federal Highway Administration,
the State of Alabama or one of its political subdivisions, or any other
governmental entity having jurisdiction to relocate any pipeline (i) located
on an Interstate Highway right-of-way and (ii) installed by it for the purpose
of providing service pursuant to this Agreement, to the extent that Mobile Gas
is not otherwise reimbursed for the cost of such relocation after Mobile Gas
has made all reasonable efforts to obtain such reimbursement, Customer shall
reimburse Mobile Gas up to a maximum of ***. The cost of such pipeline
relocation to be reimbursed by Customer shall only include costs directly
related to the relocation of the pipeline and shall not include loss of
revenue or other consequential costs incurred as a result of the relocation
of the pipeline.
18.2 If Mobile Gas seeks reimbursement from Customer pursuant to Section 18.1,
Mobile Gas shall supply Customer with reasonable details and documentation
relating to its unreimbursed costs, and the first of the monthly installments
specified in Section 18.3 shall be payable not later than 60 days after such
information is supplied to Customer.
18.3 All unreimbursed costs due from Customer to Mobile Gas pursuant to
Section 18.1 shall be paid by Customer to Mobile Gas in monthly installments
over a period being the shorter of 60 months or the remaining full months of
the initial term of the Agreement, and the unpaid balance thereof outstanding
from time to time shall bear interest at a rate equal to the "prime rate" in
the "Money Rates" section of The Wall Street Journal, or any successor
thereto, on the last business day preceding the first monthly installment
payment from Customer to Mobile Gas.
4. Exhibit "A" to the agreement is amended by deleting therefrom the
following language which appears on the first page thereof:
Note: The above "Flat Rates" are contingent upon Mobile Gas receiving
specified concessions from the State and/or entities as detailed in Exhibit
"B", and are subject to the provisions of Section 2.4 of this Agreement. In
the event any of such concessions are not obtained in a manner acceptable to
Mobile Gas, the Flat Rates shall be increased as set forth in Exhibit "B".
5. Exhibit "B" to the Transportation Agreement is deleted in its entirety.
6. Except as specifically amended or modified by this Amendment, all of the
terms and provisions of the Transportation Agreement remain in full force and
effect.
IN WITNESS WHEREOF, each party hereto has caused this Amendment to the
Transportation Agreement to be executed by its officer thereunto duly
authorized as of the date first above written.
WITNESS: MOBILE GAS SERVICE CORPORATION
/s/ G. Edgar Downing, Jr. By: /s/ John S. Davis
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Its: President
WITNESS: TUSCALOOSA STEEL CORPORATION
/s/ R. L. Humphrey, Jr. By: /s/ D. C. Wagg
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Its: Vice President
