Contract No. 19032
CONTRACT FOR SALE AND
PURCHASE OF LIQUID HELIUM
between
KEYES HELIUM COMPANY, LLC
and
AIR PRODUCTS HELIUM, INC.
amended and restated as of
1 January 1999
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TABLE OF CONTENTS
ARTICLE Page
I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 2
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II
FACILITY. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . .7
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III TERM. . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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IV SALE
AND PURCHASE OF HELIUM. . . . . . . . . . . . . . . .. . . . . .
8
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V
PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 10
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VI
TOLLING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 14
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VII QUALITY. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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VIII MEASUREMENT. . .
. . . . . . . . . . . . . . . . . . . . . . . . . . 17
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IX
PREPARATION AND DELIVERY. . . . . . . . . . . . . . . . .. . . . .
. 17
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X
BILLING AND PAYMENT. . . . . . . . . . . . . . . . . . . . . . . .
. 19
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XI
FORCE MAJEURE. . . . . . . . . . . . . . . . . . . . . . . . . . .
. 20
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XII
REGULATION: WAIVER OF DEFAULT. . . . . . . . . . . . . . . . . . .
. 21
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XIII WARRANTY. . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .21
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XIV GENERAL. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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XV
NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 23
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XVI GOVERNING
LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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<PAGE>
CONTRACT FOR SALE AND PURCHASE OF LIQUID HELIUM
-----------------------------------------------
AS AMENDED AND
RESTATED
----------------------
THIS AGREEMENT
is made and entered into, as amended and restated, as of the
1st day of January 1999, by and between
KEYES HELIUM
COMPANY, LLC, a Colorado
limited liability company ("KHC" or "Seller") and
AIR PRODUCTS HELIUM,
INC., a
Delaware corporation, ("Buyer").
W I T N E S S E T H:
--------------------
WHEREAS, Seller
has access to sources of natural gas containing Helium, and
is able to supply Liquid Helium from Seller's purification and liquefaction
facility located in Cimarron County,
Oklahoma;
WHEREAS,
Seller desires to sell to Buyer,
and Buyer desires to purchase
from Seller, the Liquid Helium production
from Seller's facility; and
WHEREAS,
Buyer has Crude Helium
available for Tolling in Seller's Facility
on the terms set forth herein.
NOW,
THEREFORE,
in consideration of the premises and the agreements
contained herein, Seller and Buyer mutually
covenant and agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
------------
Unless the
context otherwise requires, and in addition to the terms
defined
above, the following terms shall have the
following respective
meanings, all
definitions being equally applicable to
both the singular and plural forms.
"Additional
Volumes" means any volumes of Helium owned by Seller, which are
produced or which Seller expects to produce at a facility
other than
Seller's
Facility, and which are not subject to
Seller's obligations
to third parties
predating this Agreement.
"Adjustment
Period" means: (a) for purposes of the Tier I volume
price
adjustment provided for in Section 5.2, the
12 Month period commencing 1 October
1994 and ending 30 September 1995 and each
12 Month period
thereafter; and
(b)
for purposes of the Tier II volume price
adjustment provided for in Section 5.2,
the 12 Month period commencing 1 October 1995 and
ending 30 September
1996 and
each 12 Month period thereafter.
"Affiliate"
means, with respect to a person, any other person who is
directly or indirectly, controlling, controlled by, or under common control
with, the person.
"Article" means
an Article of this Agreement, unless otherwise noted.
"Base Period"
means: (a) for purposes of the Tier I volume price adjustment
2
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provided for in
Section 5.2, Buyer's
1994 fiscal year, 1 October 1993 - 30
September 1994; and (b) for purposes of the Tier II volume
price adjustment
provided for in Section 5.2, Buyer's 1995 fiscal year, 1 October 1994 - 30
September 1995.
"Buyer" means
Air Products Helium, Inc., a Delaware corporation, and, for
purposes of Section 5.2, its
Affiliates.
"Commencement
Date" means the first day of the month in which
the first
delivery of Liquid Helium to Buyer under this Agreement occurs, namely, 1
January 1999.
"Contract Year"
means each period of 12 consecutive Months beginning on the
1 January after the Commencement Date and
each succeeding 1 January.
"Crude Helium"
means the gaseous product extracted from natural gas,
which
product is comprised of Helium together with other constituents of natural gas
and which is acceptable for storage in the
BLM System.
"Force
Majeure" means act of god, strike, lockout or other industrial
disturbance, act of public enemy, war,
blockade,
insurrection, riot,
epidemic,
landslide, lightning, earthquake, fire, storm, flood, washout, arrest and
restraint of rulers and peoples, civil disturbance, explosion, breakage or
accident to machinery or equipment, or
lines of pipe, freezing of wells or lines
of pipe, partial or entire failure of gas
wells or pressure
3
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protection devices, machinery or equipment
breakdown, scheduled
and unscheduled
maintenance of equipment, inability to obtain materials,
supplies, or
permits,
and any laws, orders, rules, regulations, acts or restraints of any
government
or governmental body of authority whether civil or military, and any other
cause, whether similar or dissimilar to any of the causes or
categories
of
causes described above, not within the
reasonable control of
the Party claiming
suspension and which by the exercise of due
diligence such Party is unable to
avoid.
"Helium" is an
element with unique
properties such as the second lightest,
next to hydrogen, inert to chemical reaction, high
thermal conductivity and the
lowest boiling point, 4.2(degree)K, of any
known element.
"Liquid Helium"
means Helium in the liquid state.
"MCF" means one
thousand SCF, and "MMCF" means one million SCF.
"Merchant
Helium" means all sales of refined Helium sold by Buyer to
unrelated third parties on other than a
wholesale or swap basis.
"Month"
means a period of time beginning at 8:00 a.m. local time at
Seller's Facility on the first day of a calendar
Month an ending at
8:00 a.m.
local time at Seller's Facility on the
first day of the next succeeding calendar
Month.
4
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"Notice" means a
written notice, and "Notify" means the giving of a Notice,
in accordance with Section 15.1.
"Party" or
"Parties" means KHC and/or Air Products Helium, Inc., and their
successors or assigns.
"Required
Volumes" has the meaning identified in Section 4.1.
"Sales
Value" means the proceeds of the Total Volume sold for delivery
during the Base Period or the applicable
Adjustment Period in
the United States
of America. Sales Value shall not include
amounts that Buyer charges customers
for equipment, freight and service
charges.
"Sales
Volumes" means all volumes of Helium owned by Seller which are
produced at Seller's Facility (including
any expansion of Seller's Facility).
"SCF" means the
volume of Helium
contained in one cubic foot of space at a
temperature of 70(degree) F and at an absolute pressure of 14.7 pounds per
square inch. As used with reference to
Helium, SCF means the
quantity of liquid
which in the vapor phase at the above
conditions
of temperature and pressure
will occupy one cubic foot of space.
One pound of Helium is
equivalent to 96.71
SCF.
"Section" means
a Section of this Agreement, unless otherwise noted.
5
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"Seller" means
KHC, its successors and assigns and, for purposes of Section
4.2 only, CIG Resources Company, an
Affiliate of KHC.
"Seller's
Facility" means
Seller's Helium
purification and
liquefaction
plant located in Cimarron County,
Oklahoma.
"Supply Period"
means the period
beginning on the
Commencement Date,
and
continuing for a period of 252 consecutive
Months after the
Commencement Date,
unless extended thereafter by mutual
consent.
"Taxes"
means any tax, assessment, excise or duty applicable to the
transactions contemplated hereby.
"Toll Price"
means the price per
MCF for Tolling Tolled
Volumes, as set
forth in Article VI.
"Tolled
Volumes" means volumes of Crude Helium
Buyer Tolls
pursuant to
Article VI.
"Tolling"
or "Tolls(s)" means the refining of Buyer's Crude Helium at
Seller's Facility for the Toll Price.
"Total Volume"
means the volume of Merchant Helium sold by Buyer and its
6
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Affiliates in the United States of America in arms-length sales to unrelated
third parties expressed in MCF.
"Unit" means
Helium tankers or containers.
"Unit Price"
means the price per
MCF (per volume tier) sold and purchased
hereunder, as set forth in Article V.
"BLM" means the
United States Bureau of Land Management.
"BLM System"
means the BLM Storage and Pipeline System.
ARTICLE II
FACILITY
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2.1.
Installed Facility. Seller has constructed and placed in
operation
Seller's Facility.
2.2.
Seller's Obligation to Obtain Contracts. It is recognized by the
Parties that Seller's ability to supply
Helium to Buyer is dependent upon Seller
obtaining contracts with third parties to
supply Seller's Facility with natural
gas containing Helium. The Parties recognize, however, that Seller makes no
representation or warranty of an ability to
obtain contracts to supply Seller's
Facility natural gas containing Helium.
2.3 Seller's Facility Capability. Seller's Facility has an installed
nominal
7
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capacity of 170 MMCF of Liquid Helium per
Contract Year.
Actual capacity on a
daily operating basis is currently
approximately
150 MMCF of Liquid
Helium per
Contract Year. Seller agrees to refine, at
Seller's facility, Additional Volumes
of Crude Helium produced at any other
facility connected to
the BLM System, in
lieu of requiring Buyer to provide Tolled
Volumes pursuant to Section 6.1.
ARTICLE Ill
TERM
-----
3.1. Term. The
term of this Agreement
shall be from the
execution hereof
until terminated in accordance with the
other provisions of this Agreement.
3.2. Primary
Term. Either Party may terminate this Agreement as of December
31, 2021, or as of any anniversary date thereafter by giving not less than
24
Months prior Notice to the other Party, which Notice shall be given in
accordance with Section 15.1, subject to any extensions pursuant to Section
11.2.
ARTICLE IV
SALE AND PURCHASE OF HELIUM
---------------------------
4.1 Basic
Obligation.
During each
Contract Year during
the Supply Period
Buyer shall purchase, at the Unit Price, all of the Sales Volumes
produced at
Seller's Facility ("Required Volumes").
4.1.1 If, in any
Contract Year, Buyer fails to take all of the
Required
Volumes, Buyer shall make a payment to
Seller as determined by multiplying the
difference
8
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between: (a) the Sales Volumes actually taken by Buyer; and (b) the Required
Volumes, times the Unit Price. Such payment
shall be made within 30 days of the
end of the applicable Contract Year.
4.1.2
Buyer shall use reasonable good faith efforts to take Helium
hereunder in relatively equal monthly
quantities.
4.2 Additional
Volumes. Seller shall Notify Buyer and solicit from Buyer an
offer of purchase of any Additional Volumes other than (a) those Additional
Volumes of Crude Helium processed at
Seller's Facility and
(b) those Additional
Volumes Seller chooses to store.
If Buyer Notifies
Seller that it elects not to
purchase such Additional Volumes, or does
not respond within 90 days thereafter,
Seller may offer such Additional Volumes to third parties.
If Buyer offers to
purchase such Additional Volumes, Seller may during the next 90 days
solicit
offers of purchase from third parties,
but Seller may not
sell such
Additional
Volumes to a third party on terms more
favorable to the third party than those
offered by Buyer. If Seller has not agreed
to sell such Additional Volumes to a
third party within this period, or elected to store or not produce such
Additional Volumes, Buyer's offer shall be
deemed accepted. Buyer shall have the
rights in this Section 4.2 for such
Additional Volumes only where such rights do
not conflict with Seller's obligations
predating this Agreement or with Seller's
ability to enter into new projects
(including with Nitrotec Corporation).
9
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ARTICLE V
PRICE
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5.1 Unit Price.
The Unit Price shall
be F.O.B. the Seller's
facility and
shall be:
Volume Tier
Price
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Up to 70 MMCF (Tier I volume)
[****]
Above 70 MMCF (Tier II volume)
[****]
If in any
Contract Year the Required Volume is greater or less than
150
MMCF, then the billed amount for Tier II
volumes for such Contract Year shall be
adjusted as follows:
A. Sales Volumes > 70,000 MCF <
115,000,001
SCF shall be valued
at
[****]
B. Sales Volumes> 115,000 MCF up to the total Required Volume
shall be
valued at [****]
The sum of A + B minus the Tier II billed
value for that
Contract Year shall be
invoiced or credited to Buyer by Seller as an
adjustment
in the invoice for
January of the following Contract Year.
5.2 Price
Adjustment. The Unit
Price shall be subject to annual adj
