Exhibit 10.1


 


LNG SALES AGREEMENT


 


DATED AS OF JULY 1, 2008


 


between


 


WILLIAMS FOUR CORNERS LLC


 


and


 


CLEAN ENERGY FUELS CORP.


 

















 


THIS LNG
SALES AGREEMENT (“Sales Agreement”) is made and entered into
and effective the 1st day of July 2008 by and between WILLIAMS FOUR
CORNERS LLC (“Williams”) and Clean Energy Fuels Corp. (“Clean Energy”).
Williams and Clean Energy are hereinafter individually referred to as a “Party”
and collectively as the “Parties”.


 


RECITALS


 


A.           Clean
Energy desires to purchase Liquefied Natural Gas (“LNG”) from Williams at
Williams’ Ignacio Plant in Colorado, and


 


B.             Williams
desires to sell such LNG to Clean Energy.


 


C.             The
Parties desire to set forth the terms and conditions under which Williams will
sell and Clean Energy shall purchase LNG from Williams’ Ignacio Plant in
Colorado.


 


NOW,
THEREFORE, in consideration of the premises and mutual
covenants set forth herein, the Parties agree as follows:


 


1.     FEES


 


                        1.1     Fees.  In
consideration of Williams selling LNG to Clean Energy, Clean Energy shall pay
to Williams the Commodity Fee and Liquefaction Fee.


 


                        1.2     Commodity
Fee.  The Commodity Fee will be the [***]
as shown in the first publication of the month of product delivery as reported
in the Platts Inside FERC’s Gas Market Report
published by The McGraw-Hill Companies, Inc. plus [***].  The Commodity Fee will be stated in U.S.
dollars per Million Btu (“MMBtu”).  The
Commodity Fee will be applied to the MMBtu equivalent of all delivered LNG.


 


1.3               Liquefaction Fee. 
Clean Energy shall pay Williams a Liquefaction Fee of [***]. By [***],
Clean Energy shall prepay the estimated Liquefaction Fee in the amount of [***].


 


1.4               Annual Adjustment of Fees. Commencing July 1, 2009 and
every July 1 thereafter for the duration of the Sales Agreement, the Liquefaction Fee shall be increased by
the percentage increase, if any, in the Gross Domestic Product Chain-type Price
Index (“GDPCP Index”).  This percentage
increase shall be calculated based upon the most recent quarterly publication
of the GDPCP Index published and available and shall be compared to the
quarterly publication of the GDPCP Index for the same quarter of the prior
calendar year.  If the GDPCP Index ceases
to be published, then it shall be replaced with the Implicit Price Deflator
Index (“IPD Index”).  If both the GDPCP
Index and the IPD Index cease to be published, then the Parties shall within
thirty (30) Days of written notice thereof from Williams negotiate a
replacement index.


 






[***]  Confidential portions of
this document have been redacted and filed separately with the Commission.


 


2

















 


2.     SERVICE OBLIGATIONS


 


2.1               Firm Service. 
Williams and Clean Energy have agreed to Firm Service. Williams will be
obligated to sell to Clean Energy and Clean Energy shall be obligated to
purchase from Williams the minimum number of loads agreed to in Section 2.2
for the term of the LNG Agreement.


 


2.2               Volume Commitment. 
Williams will make available and Clean Energy shall purchase on a “take
or pay basis” a minimum quantity of LNG of four (4) Loads per Day from July 1,
2008 until December 31, 2008 and two (2) Loads per Day from January 1,
2009 until June 30, 2011 (“Volume Commitment”).  Williams will have fifteen (15) days during
each Contract Year when the Volume Commitment is waived for maintenance (“Scheduled
Maintenance Day”).  For a Day to be
considered a Scheduled Maintenance Day, Williams must give Clean Energy
forty-eight (48) hours notice.  Each
Month the total Loads delivered will be reconciled to the Volume Commitment
times the number of Days in that Month less the Scheduled Maintenance Days.


 


Clean Energy will have a one time option to purchase
an additional 2 Loads per Day for the January 1, 2009 to June 30,
2011 period, which would increase the Volume Commitment to four (4) Loads
per Day for that period.  Such option
must be exercised in writing to Williams by December 1, 2008.


 


2.3               Extra Loads. 
On a monthly basis, Clean Energy will have the option to purchase
additional LNG Loads and Williams will have the option to produce additional
LNG Loads in excess of the Volume Commitment (“Extra Loads”).  Each Month by the 20th Day of the
Month, Clean Energy shall give a written notice to Williams advising whether or
not Clean Energy requests Extra Loads for the next Month.  Williams will have 5 Business Days after the
20th of the Month to notify Clean Energy if Williams will produce
the requested Extra Loads.  If Williams
does not respond within 5 Business Days, then Williams shall be deemed to have
rejected Clean Energy’s request for Extra Loads.  If the Parties agree to Extra Loads, then
Clean Energy shall purchase the Extra Loads at the Liquefaction Fee and
Commodity Fee and Williams shall be obligated to produce such Extra Loads.  If Williams requires a different Liquefaction
Fee to produce Extra Loads, the parties can negotiate a different Liquefaction
Fee to supply Extra Loads.  Extra Loads
will be added to the Volume Commitment each Month that the Parties agree to
Extra Loads.


 


If Clean Energy takes
Delivery of more than five (5) Loads for the month over the Volume
Commitment during such Month, the Parties shall negotiate in good faith an
agreeable Liquefaction Fee for every Load over the Volume Commitment.  If the Parties do not agree within ten (10) days,
the Liquefaction Fee shall be increased to [***].


 


2.4               Volume Commitment Reduction.  If Clean Energy
takes Delivery of more Loads than the Volume Commitment during any twenty-four
hour period, then for the following twenty-four hour period, Williams shall
have the right to reduce the Volume Commitment by the number of Loads over the
Volume Commitment from the preceding twenty-four hour period.


 






[***]  Confidential portions of
this document have been redacted and filed separately with the Commission.


 


3

















 


2.5               Negative
Ethane Margin.  In the
event a Negative Ethane Margin exists and Williams decides not to recover
ethane at the Plant, Williams shall give Clean Energy twenty-four (24) hours
notice that Williams will not produce the Volume Commitment for the next Day (“Ethane
Rejection Option”).


 


In the event a Negative
Ethane Margin exists and Williams decides not to recover ethane and Clean
Energy obtains a Third Party Volume (as defined below) , Williams shall give
Clean Energy a [***] credit for every Load not delivered up to the Volume
Commitment (“Negative Ethane Credit”). 
The total annual Negative Ethane Credit to Clean Energy because of
Negative Ethane Margin shall not exceed [***] during a Contract Year.


 


In the event that
Williams has exercised the Ethane Rejection Option and Clean Energy is unable
to find a secondary LNG supply source, Clean Energy has the right to request
that Williams supply LNG to Clean Energy at a negotiated Liquefaction Fee.  In the event Clean Energy and Williams
negotiate a different rate in order to supply Clean Energy with LNG during a
Negative Ethane Margin situation, the Negative Ethane Credit will not apply and
Clean Energy will pay the negotiated rate for the Loads delivered.  The Volume Commitment will still apply during
these circumstances.


 


2.6               Unplanned
Outage.  If Williams fails to provide
Clean Energy with forty-eight (48) hours notice for an LNG Plant outage (“Unplanned
Outage”) and the Unplanned Outage prevents Clean Energy from loading the Volume
Commitment described in Section 2.2, then Williams shall provide Clean
Energy with a credit of [***] per Load below
the Volume Commitment delivered.


 


2.7               Deficient
Month.  In the event that Williams
makes the Volume Commitment available and Clean Energy fails to pull the Volume
Commitment during the month (“Deficient Month”), Williams will invoice Clean
Energy for the deficient Loads.  Any
Loads missed due to a Scheduled Maintenance Day or an Unplanned Outage will reduce
the Volume Commitment and will not be considered deficient Loads.  The monthly deficiency payment will be
calculated as follows: [***]


 


2.8               Truck
Loading Station.  During the term of this Agreement, Clean
Energy shall have a one time option to require that Williams construct a Truck
Loading Station at the Delivery Point for fueling Trucks.  In the event Williams constructs the Truck
Loading Station, Clean Energy shall reimburse Williams for the actual costs of
installation of the Truck Loading Station within thirty (30) days after receipt
of an invoice from Williams.  Clean
Energy shall pay the Commodity Fee and Liquefaction Fee for all LNG Delivered
into the Truck for fuel for such Truck. 
The LNG Delivered through the Truck Loading Station shall be measured in
accordance with Section A.4.1 below. 
The Truck Loading Station shall be owned, operated, and maintained by
Williams.


 






[***]  Confidential portions of
this document have been redacted and filed separately with the Commission.


 


4

















 


3.              TERM


 


3.1               Term.  This LNG Sales
Agreement shall be effective commencing on July 1, 2008 and shall continue
through June 30, 2011, unless terminated earlier as provided herein.


 


4.              PLANT


 


4.1               Plant.  The Plant for
all purposes herein shall be Williams’ Ignacio Colorado Plant located in
Durango, Colorado at the following address:


 


Williams Four
Corners LLC


3746 County Road
307


Durango, CO  81303


 


4.2               Time Periods for Delivery. 
During any Day, the Volume
Commitment shall be available at any time and on a consecutive basis. If Clean
Energy requests Loads over the Volume Commitment during any Day, then the
delivery time for the Loads must be approved by Williams.   The Parties recognize that production of one
Load takes approximately four to six hours.


 


5.     QUALITY


 


5.1               LNG Quality.  LNG produced at the Plant shall contain no
more than [***].  Williams shall provide
gas quality reports to Clean Energy upon Clean Energy’s Request.


 


6.              VEHICULAR
USE WARRANTY


 


6.1               Warranty of Vehicular Use. 
Clean Energy represents and warrants that the LNG delivered to Clean
Energy pursuant to this Sales Agreement is used solely for vehicular purposes.


 


7.              FINANCIAL
RESPONSIBILITY.


 


7.1               Clean Energy
Financial Responsibility.  Clean
Energy shall establish and maintain credit satisfactory to Williams during the
term of this Sales Agreement.  If Clean
Energy fails to maintain satisfactory credit, Williams may suspend further
performance until satisfactory credit is reestablished.  When reasonable grounds for insecurity of
payment arise, Williams may demand in writing adequate assurance of
performance, and in the absence of such assurance from Clean Energy within five
(5) business days, suspend further performance and terminate this Sales
Agreement.  Adequate assurance shall mean
sufficient security in the form and for the term reasonably specified by
Williams, including but not limited to, a standby irrevocable letter of credit
from a bank acceptable to Williams, a prepayment, a security interest in an asset
acceptable to Williams or a performance bond or guarantee by a creditworthy
entity.  In the event Clean Energy shall (i) make
an assignment or any general arrangement for the benefit of creditors; (ii) file
a petition or otherwise commence, authorize or acquiesce in the commencement of
a proceeding or cause under any bankruptcy or similar law for the protection of
creditors or have such petition filed or proceeding commenced against it; (iii) otherwise
become 


 






[***]  Confidential portions of this document have
been redacted and filed separately with the Commission.


 


5

















 


bankrupt or
insolvent ( however evidenced); or (iv) be unable to pay its debts as they
fall due; then Williams shall have the right to either withhold and/or suspend
deliveries, net and /or set off all transactions outstanding between the
parties, use all rights, counterclaims and other defenses which it is or may be
entitled to at law or arising from this Agreement, and/or immediately terminate
this Agreement without prior notice. If Clean Energy becomes subject to
Bankruptcy Code proceedings, it is understood and agreed that Williams shall be
entitled to exercise its contractual right to liquidate as a forward contract
merchant under Section 556 of the U. S. Bankruptcy Code.


 


8.     STANDARD
TERMS AND CONDITIONS


 


This Sales Agreement in
all respects shall be subject to the Standard Terms and Conditions, which are
attached hereto as Exhibit “A” and incorporated and made part of this
Sales Agreement by this reference.


 


 


IN
WITNESS WHEREOF, the parties hereto have executed two (2) duplicate
originals of this Sales Agreement as of the date and year first written above.


 


 


	
  CLEAN ENERGY FUELS CORP.

  	
   

  	
  WILLIAMS FOUR CORNERS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
   /s/ Mitchell W.
  Pratt

  	
   

  	
  By:

  	
     /s/
  Alan S. Armstrong

  
	
   

  	
   

  	
   

  
	
  Name: 

  	
     Mitchell
  W. Pratt

  	
   

  	
  Name: 

  	
      Alan
  S. Armstrong

  
	
   

  	
   

  	
   

  
	
  Title: 

  	
    SVP and
  Corporate Secretary

  	
   

  	
  Title:

  	
  Sr. Vice
  President & General Manager

  
									



 


6

















 


EXHIBIT
“A”


TO THE LNG SALES AGREEMENT


DATED JULY 1, 2008


BETWEEN


WILLIAMS
FOUR CORNERS LLC


And


CLEAN ENERGY FUELS CORP.


 


STANDARD TERMS AND CONDITIONS


 


INDEX


 


	
  SECTION

  	
   

  	
  TITLE

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.1

  	
   

  	
  DEFINITIONS

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.2

  	
   

  	
  DELIVERY OF LNG

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.3

  	
   

  	
  OPERATING PROVISIONS

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.4

  	
   

  	
  BILLING AND PAYMENT

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.5

  	
   

  	
  LIABILITY AND
  WARRANTIES

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.6

  	
   

  	
  NOTICE

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.7

  	
   

  	
  TAXES

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.8

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  15

  



 


7

















 


A.1    DEFINITIONS


 


Section A.1.1                               “Btu” shall have the meaning provided in the American Gas
Association Report No. 3 as revised from time to time.


 


Section A.1.2                               “Business Day” shall mean a Day, exclusive of a Saturday,
Sunday, or a public holiday observed by Williams at its headquarters in Tulsa,
Oklahoma.


 


Section A.1.3                               “Commodity Fee” shall mean the fee Clean Energy shall pay
Williams for the purchase of LNG under this Sales Agreement.


 


Section A.1.4                               “Contract Year” shall mean each consecutive twelve (12)
Month period beginning with the Effective Date hereof or, if the Effective Date
is not the first day of a month, then with the first day of the Month following
the Effective Date.


 


Section A.1.5                               “Day” shall mean a period of twenty-four (24) consecutive
hours beginning at 7:00 AM Mountain Standard Time on any calendar day and
ending at 7:00 AM Mountain Standard Time on the following calendar day.


 


Section A.1.6                               “Deliver” or “Delivery”
shall mean the loading of LNG into a Truck, which shall be deemed to occur as
that amount of LNG passes the inlet flange of a Truck.


 


Section A.1.7                               “Delivered” shall mean LNG that has been loaded into a Truck
which shall be deemed to occur as that amount of LNG is transferred from the
Plant into a Truck.


 


Section A.1.8                               “Delivery Point” shall mean the Truck loading facility at
the Plant.


 


Section A.1.9                               “Delivery Quantity” shall mean the quantity of LNG delivered
at a certain date and time as set forth in the LNG bill of lading.


 


Section A.1.10                         “Effective Date” shall mean July 1, 2008.


 


Section A.1.11                         “Feedstock Gas” shall mean the unprocessed gas that enters
the Plant for processing and liquefaction.


 


Section A.1.12                         “Firm Service” shall mean that Clean Energy is obligated to
purchase LNG in a certain amount and for a certain time and Williams is
obligated to provide such LNG for such amount and time, subject only to Force
Majeure and Normal and Routine Maintenance.


 


Section A.1.13                         “Gallon” shall be equal to [***].


 


Section A.1.14                         “Gross Heating Value” shall mean the calculated total Btu
content of a standard cubic foot of natural gas on a dry basis as determined by
chromatographic analysis of a sample of LNG using physical properties of gases
at 14.73 psia and 60 degrees Fahrenheit in the manner then prescribed by the
American Gas Association.


 


Section A.1.15                         “Load” shall mean a fully loaded Truck with approximately
9000 to 10,000 Gallons.


 


Section A.1.16                         “LNG” shall mean any liquefied natural gas produced at the
Plant.


 






[***]  Confidential portions of this document have
been redacted and filed separately with the Commission.


 


8

















 


Section A.1.17                         “LNG Load Schedule” shall mean the schedule of when Trucks
will arrive at the Plant for Delivery.


 


Section A.1.18                         “Month” shall mean a calendar month.


 


Section A.1.19                         “Negative Ethane Margin” shall be [***].


 


Section A.1.20                         “Normal and Routine Maintenance” shall mean such
maintenance, tests, alterations, modifications, enlargements, and repairs of
the Plant as would normally be performed by a prudent operator.


 


Section A.1.21                         “Person” shall mean any natural person, corporation,
partnership, joint venture, association, cooperative, or other entity.


 


Section A.1.22                         “Plant” shall mean Williams’ Ignacio Plant near Durango,
Colorado.


 


Section A.1.23                         “Pound” shall mean the unit of weight of one (1) United
States pound.


 


Section A.1.24                         “Receipt Point” shall mean the inlet to the Plant.


 


Section A.1.25                         “Tax” shall mean any sales or excise taxes, fees, charges,
or other assessment(s) (and any penalties and interest thereon) levied by
any authority having jurisdiction, which shall be applicable to the sale of
LNG, Williams’ services, or any transactions contemplated hereunder (including,
but not limited to, the production, Delivery, sale, and use and/or consumption
of LNG, or the privilege of doing the same), as such Taxes shall exist or may
in the future be constituted.


 


Section A.1.26                         “Third Party Volume” shall mean the number of Loads Clean
Energy has obtained from a third party LNG plant due to a Negative Ethane
Margin not to exceed the Volume Commitment.


 


Section A.1.27                         “Truck” shall mean a cryogenic transport truck operated by a
carrier of LNG as approved by the U.S. Department of Transportation or its
successor.


 


Section A.1.28                         “Truck Loading Station” shall mean the equipment at the
Delivery Point used to Deliver LNG to a Truck for fuel usage in the Truck.


 


Section A.1.29                         “Vapor” shall mean all gaseous substances resulting from
boil-off of LNG formed in the Plant and/or in the Truck during Delivery,
excepting any Vapor, which shall remain in the Truck after Delivery.


 


Section A.1.30                         “Warm Truck” means a Truck with pressure and temperature
inside its LNG storage tank(s) greater than [***] and [***].


 






[***]  Confidential portions of this document have
been redacted and filed separately with the Commission.


 


9

















 


A.2    DELIVERY
OF LNG


 


Section A.2.1   Delivery of LNG.  Every Friday by 11:00 AM Mountain Standard
Time, Clean Energy shall provide Williams with a Truck schedule for the
following week which shall consist of the number of Loads to be picked up each
Day (“LNG Load Schedule”).  Each Day by
11:00 AM Mountain Standard Time, Clean Energy shall notify Williams of the
Trucks estimated time of arrival for the following day and the LNG Load
Schedule shall be updated accordingly. 
Such estimated time of arrival shall be a three hour window, such as
8:00 AM MST to 11:00 AM MST.  In the event Clean Energy has not provided the
LNG Load Schedule to Williams by 11:00 AM Mountain Standard Time, Williams
shall continue to provide Loads based upon the previous LNG Load Schedule.
Williams shall have the Delivery quantities of LNG ready on the date(s) and
during the time period(s) set forth in the revised LNG Load Schedule and
Clean Energy shall have an obligation to purchase and take Delivery of such
LNG.


 


In the event
Williams objects to an LNG Load Schedule on the day such LNG Load Schedule is
provided by Clean Energy, Williams shall notify Clean Energy and the Parties
shall schedule alternative date(s) and time(s) such Delivery(ies) may
be made.


 


Clean Energy shall begin taking Delivery during the time period set
forth in the LNG Load Schedule.  Clean
Energy shall not begin taking Delivery prior to, or later than the time period
set forth in the LNG Load Schedule, unless Williams determines that it can
accommodate such Delivery.  If Clean
Energy has not begun taking Delivery during the time period set forth, Clean
Energy shall either (a) wait until Williams determines that it can
accommodate such Delivery, or (b) reschedule such Delivery by providing
another LNG Load Schedule.  Clean Energy
shall complete all Deliveries in a timely manner.


 


Section A.2.2  Delivery Into a Warm
Truck.  Clean Energy shall use
good faith efforts to bring each Truck to the Delivery Point with the pressure
and temperature inside its LNG storage tank(s) not greater than [***] and [***].  If a Truck’s storage tank has a pressure
greater than [***] and [***] (“Warm Truck”) then Clean Energy shall be required
to schedule such Delivery.  When Clean
Energy desires to take Delivery of LNG with a Warm Truck, Clean Energy shall
contact Williams to agree on a date and time when Clean Energy shall take such
Delivery.  In the event that Clean Energy
arrives at the Delivery Point to take Delivery of LNG with a Warm Truck without
Williams having agreed on a date and time for such Delivery, Williams will
arrange Delivery as soon as Williams determines that it can accommodate such
Delivery.  Clean Energy shall not schedule
more than 10 Warm Trucks each Contract Year. 
Williams shall not be liable for any damage that may occur as a result
of the Delivery of LNG into a Warm Truck.


 


Section A.2.3  Component Analysis. Williams
shall perform a component analysis and shall determine the Gross Heating Value
and the composition of the LNG in a manner that shall accurately represent the
quality of the LNG Delivered, as determined by Williams.  The results of this analysis shall be
included with the bill of lading provided to the Truck operator(s) at the
time of Delivery.


 


Section A.2.4  Personal Protective
Equipment.  Clean Energy shall
ensure that, prior to taking Delivery, all Clean Energy Truck operator(s) or
agents of Clean Energy operating Trucks on behalf of Clean Energy ( for third
parties retained by Clean Energy) , shall have been provided appropriate
personal protective equipment, including, but not limited to, flame retardant
clothing fully covering the arms, legs and torso, sturdy leather work shoes
(not athletic type), apron, hard hat, gloves, splash-proof safety goggles, and
facial shield.


 






[***]  Confidential portions of this document have
been redacted and filed separately with the Commission.


 


10
















 


Clean Energy shall ensure
that, while inside the Plant, including the Delivery Point area, the Truck
operator(s) shall at all times, wear such personal protective
equipment.  Williams reserves the right
to deny Delivery to any Person observed not using all appropriate personal
protective equipment but has no obligation to ensure that all appropriate
personal protective equipment is used.


 


Section A.2.5  Training.  Clean Energy shall ensure that all Truck
operator(s) have received instruction in then effective Truck loading
procedures prior to taking Delivery of LNG at the Plant.  Clean Energy shall provide no less than one (1) Business
Day notice of the arrival of any Truck operator(s) that shall require such
instruction.  Plant personnel shall
endeavor to provide instruction in a timely manner upon arrival of the
Truck.  Pursuant to Clean Energy’s
obligations under Section A.5.7 herein, Clean Energy will provide
extensive training to the Truck operator(s) regarding the hazards of
handling LNG and the precautions to take to safely load LNG.  Clean Energy shall ensure that while inside
the Plant, including the LNG Delivery Point area, the Truck operator(s) shall
at all times act in compliance with such training and precautions.  While Williams reserves the right to deny
Delivery to any Person not using the Truck loading facilities in the proper
manner, Williams has no obligation to observe that the Truck loading facilities
are being used in the proper manner.


 


Section A.2.6  Arrangements for Taking
Delivery.  It shall be Clean
Energy’s obligation to make any required arrangements, at Clean Energy’s sole
expense, with a carrier of LNG approved by the U.S. Department of
Transportation or its successor.  Such
carrier shall act as Clean Energy’s agent to take Delivery at the Delivery
Point.  Clean Energy shall be obligated
to require that such carrier shall in all such arrangements maintain
dispatching and operating coordination with Williams, to provide access to
appropriate information and records, and to comply at all times with the
applicable provisions of this Sales Agreement.


 


Section A.2.7  Truck Loading.  While taking Delivery, the Truck engine must
remain off and the Truck operator shall monitor the Delivery at the Delivery
Point at all times.  The Truck operator
shall not leave the Delivery Point during a Delivery.


 


SECTION A.3 – OPERATING PROVISIONS


 


Section A.3.1  Vapor.  Except as set forth in Section A.2.2,
Williams shall retain and dispose of all Vapor at its sole cost and expense.


 


Section A.3.2  Operational Control.  Williams and Clean Energy acknowledge and
agree this Sales Agreement is subject to the availability of the Plant and that
Williams has full operational control of its Plant and is at all times entitled
to schedule Deliveries and to operate its facilities in a manner which, in its
sole opinion, is consistent with Williams’ obligations and the operating
conditions, inclusive of Normal and Routine Maintenance, as they may exist from
time to time at the Plant, or which will allow it to optimize the use of such
facilities.


 


SECTION A.4 – BILLING AND PAYMENT


 


Section A.4.1  Invoice by Williams.    Williams shall provide Clean Energy an
invoice of fees owed for services performed and/or LNG Delivered in conjunction
with each Delivery.  The number of
Gallons Delivered and the date the invoice was issued shall be set forth on
this invoice.  The number of Pounds of
LNG Delivered shall be calculated by subtracting the Truck tared weight
measured in Pounds from the Truck net gross weight measured in Pounds.  Truck tare weight and net gross weight
measurements shall be made using the Truck scale at the Delivery point.


 


11

















 


Section A.4.2  Payment by Clean Energy.  No more than fifteen (15) Days after the date
of issue of each invoice, as set forth in  Section A.4.1
above, Clean Energy shall make payment to Williams for all amounts due
hereunder as set forth on such invoice by wire transfer of immediately
available funds to [***], or such other bank and account as Williams shall name
from time to time.


 


Section A.4.3  Failure to Pay .  Should Clean Energy fail to pay
all of the amount of any invoice, as set forth in Section A.4.2 above,
except as provided in Section A.4.4 below, Clean Energy shall pay
interest on the unpaid balance which shall accrue on each Day after the due
date at [***]; provided that if such rate exceeds the applicable maximum rate
permitted by law, the rate shall equal the applicable maximum rate.  Such interest shall be compounded monthly.  If such amount plus interest remains unpaid
for fifteen (15) Days after the due date, Williams shall have the right to (a) require
payment in cash in advance of each Delivery, or (b) withhold and set off
payment of any amounts of monies due or owing by Williams to Clean Energy,
whether in conjunction with this Sales Agreement or otherwise, against any and
all amounts due or owing by Clean Energy to Williams under this Sales
Agreement, or (c) suspend or discontinue services until such amount is
paid, or (d) terminate this Sales Agreement.  The exercise by Williams of any of these
options shall not preclude Williams from pursuing any other available remedy in
equity or at law.  Clean Energy agrees to
pay all costs, including but not limited to reasonable attorney’s fees, court
costs, and disbursements incurred by Williams, whether in any suit, action, or
appeal there from, or without suit, in connection with collection of any
amounts due hereunder.


 


Section A.4.4  Disputed Invoices.  In the event that Clean Energy in good faith
reasonably disputes any statement, Clean Energy shall not be obligated to pay
such amount when otherwise due, provided Clean Energy shall pay to Williams any
undisputed amount and shall notify Williams that it disputes the other amounts
within the time period for payment set out in Section A.4.3; and
provided further, Clean Energy shall provide Williams with documentation
demonstrating the basis for the dispute within sixty (60) days after providing
Williams with such notice.  In the event
the dispute is resolved in Williams’ favor, Clean Energy shall pay the disputed
amount plus interest from the original due date at a rate equal to [***],
provided in no event will the interest rate exceed the maximum lawful rate.


 


Section A.4.5  Adjustments.  No adjustment for any billing or payment
shall be made after the lapse of twenty-four (24) Months from the rendition
thereof, unless litigation has been commenced related thereto prior to such
lapse.


 


SECTION A.5 – LIABILITY AND WARRANTIES


 


Section A.5.1  Clean Energy’s Liability
for Possession and Control of LNG. 
As between Clean Energy and Williams hereto, Clean Energy shall be
deemed to be in control and possession of any LNG upon Delivery at the Delivery
Point, and will be fully responsible and liable for any and all LNG loss,
damages, claims, actions, expenses and liabilities, including reasonable
attorney’s fees caused or resulting from Clean Energy’s  equipment, facilities, loading,
transportation, or Clean Energy’s purchase, sale, distribution, or handling of
said LNG while in its control and possession, and/or after any subsequent
resale.


 


Except as set forth in Section A.5.3,
Clean Energy agrees to indemnify and hold Williams and its subsidiaries and/or
affiliates, and their respective directors, officers, employees, and agents
free and harmless with respect to this Section A.5.1.


 






[***]  Confidential portions of this document have
been redacted and filed separately with the Commission.


 


12

















 


Section A.5.2  Williams Liability for
possession and Control of Feedstock Gas and/or LNG.  As between Williams and Clean
Energy hereto, Williams shall be in control and possession of any Feedstock Gas
and/or LNG from and after the time such Feedstock Gas is received at the
Receipt Point and until the LNG is Delivered at the Delivery Point, and will be
fully responsible and liable for any and all Feedstock Gas and/or LNG loss,
damages, claims, actions, expenses and liabilities.


 


Except as set forth in Section A.5.3
Williams agrees to indemnify and hold Clean Energy, its subsidiaries and/or
affiliates and their directors, officers, employees, and agents free and
harmless with respect to this Section A.5.2.


 


Section A.5.3  Limitation of Liability.  Except when necessary to provide indemnity
against a third party claim under Section A.5.1, A.5.2, A.5.4, or
A.5.7, neither party shall be liable to the other for incidental
consequential, special, direct, punitive, or exemplary damages.


 


Section A.5.4  Warranty of Title.  Williams warrants that it will, at the time
of Delivery of LNG hereunder, have the right to Deliver said LNG free and clear
of all liens, encumbrances, and claims whatsoever.  Except as set forth in Section A.5.3,
Williams shall indemnify, save, and hold Clean Energy, its subsidiaries and/or
affiliates, and their directors, officers, employees, and agents, free and
harmless from all suits, actions, debts, accounts, damages, costs, losses, and
expenses, including reasonable attorney’s fees, arising from or out of a breach
of the warranty contained in this Section A.5.4.


 


Section A.5.5  Limited Warranty.  Williams warrants that the LNG Delivered
hereunder shall meet the quality specifications set forth in the applicable
bill of lading at the time of Delivery. 
ABSOLUTELY NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THOSE OF
MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE, ARE MADE HEREUNDER AND
NONE SHALL BE IMPLIED.    THE LIABILITY
OF WILLIAMS FOR ANY BREACH OF THIS SECTION A.5.5 SHALL BE LIMITED
TO THE REPLACEMENT VALUE OF ANY LNG .  IN
NO INSTANCE SHALL THE TOTAL OF ALL SUCH AMOUNTS EXCEED $10,000 PER
DELIVERY.  THE PARTIES SHALL USE
COMMERCIALLY REASONABLE EFFORTS  TO
MITIGATE DAMAGES HEREUNDER.


 


Section A.5.6  Rejection and Notice of
Breach.  Clean Energy shall
have twenty-four (24) hours after Delivery of the LNG to inspect and/or reject
such Delivery.  If Clean Energy does not
reject Delivery of the LNG with twenty-four (24) hours after Delivery, Clean
Energy shall be deemed to have irrevocably accepted such LNG.  If the LNG is rejected, notice by facsimile
must be made within twenty-four (24) hours after Delivery, followed by written
confirmation sent by certified mail.  The
notice of breach must specify the facts constituting the alleged breach of
warranty or other basis for claim.


 


Section A.5.7  Clean Energy’s Knowledge
of Product, Odorization, and Indemnity.  CLEAN
ENERGY HEREBY EXPRESSLY REPRESENTS THAT IT IS FAMILIAR WITH THE PROPERTIES OF
LNG AND NATURAL GAS, AND CLEAN ENERGY AGREES TO INFORM CLEAN ENERGY’S
CUSTOMERS, AGENTS, EMPLOYEES, 


 


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AND/OR PURCHASER(S) OF
THE SAME.  THE LNG PROVIDED HEREUNDER
WILL NOT BE STENCHED AND/OR ODORIZED BY WILLIAMS AND CLEAN ENERGY CERTIFIES,
REPRESENTS AND WARRANTS THAT ODORIZATION IS NOT REQUIRED FOR DELIVERY OF LNG TO
CLEAN ENERGY UNDER THIS SALES AGREEMENT. 
CLEAN ENERGY SHALL BE RESPONSIBLE FOR ODORIZING THE LNG AFTER DELIVERY
IN ORDER TO COMPLY WITH ANY ODOR STANDARDS CONTAINED IN APPLICABLE REGULATIONS.  AS SET FORTH ABOVE, CLEAN ENERGY SHALL BE
DEEMED TO BE IN EXCLUSIVE POSSESSION AND CONTROL OF THE LNG ONCE CLEAN ENERGY
HAS TAKEN DELIVERY AND CLEAN ENERGYASSUMES ALL RESPONSIBILITY FOR SAFE HANDLING
OF THE LNG FROM THE TIME OF SAID DELIVERY. 
CLEAN ENERGY SHALL FULLY PROTECT, INDEMNIFY, AND DEFEND WILLIAMS, AND
ITS OFFICERS, AGENTS, EMPLOYEES, INSURERS AND PARENT, AND HOLD EACH OF THEM
HARMLESS FROM ANY AND ALL CLAIMS, LOSSES, DAMAGES, DEMANDS, SUITS, CAUSES OF
ACTION AND LIABILITIES (INCLUDING ALL REASONABLE ATTORNEY FEES AND EXPENSES
INCURRED BY OR IMPOSED UPON  ARISING,
DIRECTLY OR INDIRECTLY, FROM CLEAN ENERGY’S 
FAILURE TO PROPERLY ODORIZE AND/OR TO EITHER MONITOR OR MAINTAIN
ODORIZATION AT OR ABOVE APPLICABLE ODOR STANDARDS OR SO NOTIFY CLEAN ENERGY’S  CUSTOMERS, AGENTS, AND/OR EMPLOYEES.


 


SECTION A.6 –
NOTICE


 


Section A.6.1  Notice.  Unless herein provided to the contrary, any
notice called for in this Sales Agreement shall be in writing and shall be
considered as having been given if delivered personally, by mail, by facsimile
transmission, or by express courier, postage prepaid, by either party to the
other at the appropriate address given below. 
Routine communications, including monthly statements, shall be
considered as duly delivered when mailed by ordinary mail or electronic mail
(email).


 


Section A.6.2  Notice to Williams.  Unless changed in writing by Williams, the
addresses and facsimile numbers for notice are as set forth below:


 


(a)                      Notice
of Delivery with a Warm Truck, notice of arrival of Transport Operator(s) requiring
instruction, and notice of rejection and breach under Section A.5.6:


 


Williams
Four Corners, LLC


3746
County Road 307


Durango,
CO  81301


Attention:  Plant Manager (MD IGN)


Facsimile
Number:  (970) 385-3891


 


(b)                     For
notice regarding payments or statements:


 


Williams Four
Corners LLC


c/o Williams
Midstream


One Williams
Center


P.O. Box 645


Tulsa, OK
74101-0645


Attention:
Accounting, Tony Bonicelli


Facsimile
Number:  (918) 573-9398


Email:  tony.bonicelli@williams.com


 


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(c)                      For  all other notices:


 


Williams Four
Corners LLC


One Williams
Center


P.O. Box 645


Tulsa, OK  74101-0645


Attention:  Director, Four Corners Commercial Development


Facsimile Number
(918) 573-9755


 


Section A.6.3  Notice to Clean
Energy.  Unless changed in
writing by Clean Energy, the address and facsimile numbers for notice are as
set forth below:


 


Clean Energy


3020 Old Ranch
Parkway


Suite 200


Seal Beach,
CA  90740


 


Attn:  Mr. Brian Powers


Phone:  (562) 493-2804


Fax:  (562) 546-0137


Email:bpowers@cleanenergyfuels.com


 


SECTION A.7 - TAXES


 


No fee set forth in this Sales Agreement or in any applicable invoice
shall be deemed to include any Tax. 
Clean Energy shall bear sole responsibility and liability for payment of
any Tax.  If Williams is required to pay
any Tax, Clean Energy shall reimburse Williams for same, in addition to the
other fees and charges provided for herein. 
Where applicable, Williams agrees to take receipt of such Tax and
process same with the appropriate authority. 
Clean Energy shall be required to provide Williams with proof,
satisfactory to the appropriate Tax authority, of any and all Tax exemptions
Clean Energy may claim.  Clean Energy
shall provide Williams with all records and information, satisfactory to the
appropriate Tax authority, regarding Clean Energy’s disposition of all LNG
Delivered hereunder.


 


SECTION A.8 – MISCELLANEOUS


 


Section A.8.1  Waiver.  A waiver by either Party of any
one or more defaults by the other Party hereunder shall not operate as a waiver
of any future default or defaults, whether of a like or of a different
character.


 


Section A.8.2  Governing Law.  This Sales Agreement shall be interpreted,
construed, and governed by the laws of the state of Oklahoma, without reference
to choice of law principles thereof.


 


Section A.8.3  Counterparts.  This Sales Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
an original, and such counterparts together shall constitute one instrument.


 


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Section A.8.4  Assignment.  Either Party may assign or otherwise convey
any of its right, title or interest under this Sales Agreement to an affiliate
of such party without prior approval, but with notice to the other Party.  Either Party may assign or otherwise convey
any of its right, title or interest to any third party provided it has obtained
the prior written consent of the other Party hereto, which consent shall not be
unreasonably withheld, conditioned or delayed.


 


Section A.8.5  Severability.  Should any section, paragraph, subparagraph,
or other portion of this Sales Agreement be found invalid or be required to be
modified by a court or government agency having jurisdiction, then only that
portion of this Sales Agreement shall be invalid or modified.


 


The remainder of
this Sales Agreement which is still valid and unaffected shall remain in
force.  If the absence of the part that
is held to be invalid, illegal, or unenforceable, or modification of the part
to be modified, substantially deprives a Party of the economic benefit of this
Sales Agreement, the Parties shall negotiate reasonable and valid provisions to
restore the economic benefit to the Party deprived or to balance the Parties’
obligations consistent with the intent reflected in this Sales Agreement.  If the Parties are unable to do so, either
Party may terminate this Sales Agreement by giving the other Party notice of
termination not later than sixty (60) Days after the effective date of the
order, rule, or regulation so affecting this Sales Agreement.  Williams shall also have the right to
terminate this Sales Agreement as provided above in the event either the
services performed by Williams or facilities utilized by Williams become
subject to regulation which substantially deprives Williams of the economic
benefit of this Sales Agreement.


 


Section A.8.6  Force Majeure.  Neither Williams nor Clean Energy shall be
liable to the other for any failure, whether in whole or in part, to perform or
comply with any obligation or condition of this Sales Agreement caused by any
event, occurrence or action not reasonably within the control of the Party
claiming relief hereunder and which by the exercise of due diligence such Party
is unable to prevent or overcome, including without limitation blockades;
embargoes; insurrections; riots; epidemics; flood; washouts; landslides;
mudslides; earthquakes; extreme cold or freezing weather; lightning; civil
disturbances; failure to prevent or settle any strike; fire; explosions;
breakdown or failure or accident to Plant machinery, method of transport or
line of pipe, or the order of any court or governmental authority having
jurisdiction.  The settlement of strikes
and lockouts shall be entirely within the discretion of the Party experiencing
such.


 


Such causes
preventing in whole or in part the performance under this Sales Agreement by a
Party, however, shall not relieve such Party of liability to the extent such
causes are the result of the negligence of such Party or in the event of its
failure to use due diligence to remedy the situation and to remove the cause in
an adequate manner and with all reasonable dispatch, nor shall such causes or
contingencies affecting such performance relieve either Party from its
obligations to make payments of amounts then due in respect of  LNG already delivered.  For the avoidance of doubt, should Williams
provision of services or supply of LNG depend in whole or in part upon
production from a plant which is damaged or destroyed, Williams shall not be
obliged to repair or rebuild such Plant in order to fulfill the terms of this
Sales Agreement.  The Party claiming
relief under this Section A.8.6 shall promptly notify the other
Party in writing of the event preventing its performance.


 


16

















 


Section A.8.7  Audit.  Williams and Clean Energy shall each preserve
all records pertaining to this Sales Agreement, including all test and
measurement data and charts and all test equipment calibration records for a
period of at least two (2) years, or longer as shall be required under
applicable law or regulation.  Each
Party, or its designated representative shall have access to the books and
records of the other Party relating to this Sales Agreement upon reasonable
notice during regular business hours to the extent such records are applicable
to the quality, measurement, billing, pricing, and quantities of LNG Delivered
hereunder.


 


Section A.8.8  Confidentiality.  Williams and Clean Energy and
their respective employees, agents, officers, directors, and attorneys shall
keep the terms of this Sales Agreement confidential.  However, either Party may disclose the terms
of this Sales Agreement, without prior permission of the other Party, to the
following persons in the following circumstances:


 


(a)        To
financial institutions requiring such disclosure as a condition precedent to
making or renewing a loan.


 


(b)       To
regulatory bodies, including Taxing authorities with jurisdiction over part or
all of the subject matter of this Sales Agreement, and to the other Persons to
whom disclosure is required by such regulatory bodies.


 


(c)        To
courts or other tribunals having jurisdiction and requiring such disclosure.


 


(d)       To
independent certified public accountants for purposes of obtaining a financial
audit.


 


(e)        As
required by subpoena or other legal discovery processes.


 


Under no circumstances shall any documents
memorializing the substance of this Sales Agreement be disclosed or released to
any other third parties, including any newspaper, magazine or other
publication, absent mutual agreement of Williams and Clean Energy provided that
Clean Energy may be required to file a form of the Sales Agreement with the
Securities and Exchange Commission or Nasdaq and Williams hereby consents to
such filing if required.  In such case
Clean Energy must provide Williams with a copy of such form prior to
filing.  To the extent permissible under
SEC rules and regulations, such filing shall not include any financial
terms of the Sales Agreement and such information shall be redacted from the
filed copy.


 


Section A.8.9  Relationship of the
Parties.  Williams is selling
LNG to Clean Energy.  By entering into
this Sales Agreement, the Parties do not intend to and shall not be deemed to
create an agency, partnership, joint venture, or distributorship relationship.


 


Section A.8.10  Insurance.  Except as set forth in Section A.8.11
below, Clean Energy and Williams shall maintain in force and effect throughout
the term of this Sales Agreement, insurance coverage, as described in this Section A.8.10,
with insurance companies reasonably acceptable to the other Party.  If either Party violates this provision, the
other Party may, at its option and without prejudice to its other legal rights,
terminate this Sales Agreement upon reasonable notice.  The limits set forth below are minimum limits
and shall not be construed to limit either Party’s liability.  All costs and deductible amounts will be for
the sole account of each Party for maintaining its own coverage.


 


17

















 


(a)                          Worker’s
Compensation Insurance, complying with the laws of any state having
jurisdiction over each employee, and employer’s liability insurance with limits
of $1,000,000 for each accident, $1,000,000 for each disease for each employee,
and a $1,000,000 disease policy limit. 
If any services, or any transactions contemplated hereunder (including,
but not limited to, the production, Delivery, sale, use and/or consumption of
LNG) are to be made under this Sales Agreement in the state of Nevada, North
Dakota, Ohio, Washington, Wyoming, or West Virginia, each Party shall
participate in appropriate state funds to cover all eligible employees and
shall provide a stop gap endorsement.


 


(b)                         Commercial
or comprehensive general liability insurance on an occurrence form with a
combined single limit of $1,000,000 for each occurrence, and annual aggregates
of $1,000,000 for bodily injury and property damage, including coverage for
blanket contractual liability, broad form property damage, personal injury
liability, independent contractors, products/completed operations, and the
explosion exclusion.


 


(c)                          Automobile
liability insurance with a combined single limit of $1,000,000 for each
accident for bodily injury and property damage, to include coverage for all
owned, non-owned, and hired vehicles.


 


(d)                         Excess
or umbrella liability insurance with a combined single limit of $1,000,000 for
each occurrence, and annual aggregates of $1,000,000 for bodily injury and
property damage covering the excess of employer’s liability insurance and the
insurance set forth in this Section A.8.10 (b) and (c) above.


 


In each of the policies described in this Section A.8.10,
Clean Energy agrees to waive, and will require each of its insurers to waive
any rights of subrogation or recovery it may have against Williams, its parent,
subsidiaries, or affiliated companies to the extent of the indemnity
obligations in Section A.5.1 and Section A.5.2.  Clean Energy shall name Williams  as an additional insured under the policies
described in Section A.8.10 (b) through (d) above to the extent
of the indemnity obligations in Section A.5.1 and Section A.5.2.


 


Clean Energy’s 
policies described in Section A.8.10 (b) through (d) above
will include the following amendment:  “This
insurance is primary insurance with respect to Williams, its parent,
subsidiaries and affiliated companies, and any other insurance maintained by
Williams, its parent, subsidiaries, or affiliated companies is excess and not
contributory with this insurance.”


 


Non-renewal or cancellation of policies described in
this Section A.8.10 shall be effective only after Williams shall
have received thirty (30) days prior written notice of such non-renewal or
cancellation.  Prior to the creation of
any obligation on the part of Williams to Deliver any LNG hereunder, Clean
Energy shall provide Williams with certificates of insurance on an Accord 25 or
25S form evidencing the existence of the insurance coverage required in this Section A.8.10.


 


In the event of a loss or claim arising out of or in
connection with this Sales Agreement, Clean Energy agrees, upon request of
Williams, to submit the original or a certified copy of its insurance policies
for inspection by Williams.  Williams
shall not insure or be responsible for any loss or damage of any kind,
regardless of cause, to property, including loss of use thereof, whether owned,
leased, or borrowed by Clean Energy, or its employees, servants, agents,
or  customers.


 


18

















 


Section A.8.11  Self-Insurance.  Clean Energy may self-insure for any of the
coverage requested herein provided Clean Energy has an investment grade credit
rating.  In the event of self-insurance,
the following conditions shall apply:  (1) 
Such self-insurance program shall provide levels of coverage that are
equivalent to or greater than the amounts required by this article either by
itself or in combination with any insurance policies that might be
purchased.  (2)  Coverage provided
by such self-insurance shall be as broad as or broader than the most current
ISO forms(s) issued for like or same coverage.  (3)  Clean Energy can provide reasonable
proof that it has made adequate financial arrangements to fund such
self-insurance program.  (4)  Such
self-insurance is permitted by any applicable law.  (5)  Such self-insurance shall comply
with all the “additional insured” and “waiver of subrogation or recovery” terms
and conditions in this article as if insurance policies had been issued.


 


Section A.8.12  Equal Opportunity.  This Agreement hereby incorporates by
reference to the same extent and with the same force and effect as if set forth
herein in full, the provisions of, as amended, (a)  Section A.202
of Executive order 11246 and Title 41 CFR Section 60-1.4 prohibiting
discrimination against any employee or applicant on the basis of race, color,
religion, sex or national origin; (b) 29 U.S.C. Section 701 and 41
CFR Section 60-741.4, requiring contractors to take affirmative action in
the employment and advancement of qualified handicapped individuals; (c) 38
U.S.C. Section 2021 and 41 CFR Section 60-250.4, requiring
contractors to take affirmative action in the employment and advancement of
qualified disabled veterans and veterans of the Vietnam era; and (d) Executive
Order 11625 providing for the participation of minority business enterprises in
governmental procurement at both the prime and subcontract level.


 


Section A.8.13  Agreement of the Parties.  This Sales Agreement contains the entire
agreement of Williams and Clean Energy and supersedes all prior understanding
or agreements whether oral or written between the Parties, with respect to the
matters addressed herein.  This Sales
Agreement shall be amended only by an instrument in writing signed by both
Parties hereto.


 


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