Exhibit 10.3


 


Execution
Version


 


SERVICES
AGREEMENT


 


This Services Agreement (this “Agreement”),
effective as of March 5, 2010 (the “Effective Date”),
is entered into by and between Niska GS Holdings US, L.P. a Delaware limited
partnership (“Niska US”), Niska GS Holdings
Canada, L.P., a Delaware limited partnership (“Niska
Canada” and, together with Niska US, the “Partnerships”)
and AECO Gas Storage Partnership, a partnership formed in the Canadian province
of Alberta (the “Service Provider” and,
together with the Partnerships, the “Parties”).  The Parties desire to set forth the terms and
conditions upon which Service Provider will provide certain services to the
Partnerships and hereby agree as follows:


 


WHEREAS, Niska US, through its wholly owned subsidiaries,
Starks Gas Storage L.L.C. and Coastal Bend Gas Storage, LLC, owns the right to
build a potential salt-dome cavern gas storage facility in Louisiana and a
potential depleted reservoir gas storage facility in southern Texas and may in
the future desire to engage in the evaluation and development of other storage
facilities and related operations (together the “Niska
US Development Projects”);


 


WHEREAS, Niska Canada may in the future desire to
engage in the evaluation and development of natural gas storage facilities and
related operations (together the “Niska Canada Development
Projects” and,  together
with the Niska US Development Projects, the “Development
Projects”);


 


WHEREAS, the Partnerships desire that the Service
Provider provide certain management services in connection with the potential
evaluation, development and operation of the Development Projects, upon the
terms and conditions set forth herein.


 


NOW, THEREFORE, in consideration of the mutual
covenants and obligations set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties hereby agree as set forth below.


 


ARTICLE I




SERVICES


 


Section 1.1             Services
to Be Provided.  Service Provider agrees to provide services
(the “Services”) in order to
coordinate and assist with the evaluation, development and operation of the
Development Projects.  The scope of the
Services shall consist of any services related to the Development Projects that
the Parties may agree from time to time Service Provider is to perform.


 


Section 1.2             Performance
of the Services.  Service Provider may provide the Services
itself or through one or more of its affiliates that it may from time to time
designate to perform the Services at Service Provider’s sole discretion.


 


Section 1.3             Records
and Auditing Rights.  Service Provider shall at all times maintain
adequate books and records to verify the accounts and transactions under this
Agreement.  Such 


 

















 


records shall be
retained and kept available for inspection and audit by the Partnerships and
their representatives on days Service Provider is open for business during
normal working hours and upon reasonable notice to Service Provider.


 


Section 1.4             Access
to Information.  The Partnerships shall provide Service
Provider and its representatives with such access to the Partnerships’
facilities, records and personnel, wherever located, as is reasonably necessary
in order for Service Provider to discharge its responsibilities under this
Agreement.  All records and materials
furnished to Service Provider and its representatives shall at all times remain
the property of the Partnerships.


 


ARTICLE II




SERVICE FEES


 


Section 2.1             Service
Fees.  The Partnerships shall pay to Service
Provider fees for receipt of such Services in amounts as agreed upon by the
Parties from time to time.


 


Section 2.2             Payments.  Service Provider shall prepare and submit to
the Partnerships a quarterly invoice of all fees for each fiscal quarter (each
a “Quarterly Invoice”).  Quarterly Invoices shall be paid within 30
days of the date of such Quarterly Invoice. 
Any amount set forth in a Quarterly Invoice that remains due and owing
after the applicable due date, shall incur interest thereon until the date paid
at a rate equal to the lesser of (a) a varying rate per annum equal to the
sum of (i) the “Prime Rate” of interest as quoted by The Wall Street
Journal or any successor newspaper, plus 2%, and (b) the maximum rate
permitted by law (the “Default Rate”).


 


ARTICLE III




TERM


 


Section 3.1             Initial
Term.  This Agreement shall have an initial term
commencing on the Effective Date and continuing until March 31, 2011,
unless earlier terminated pursuant to the terms hereof.


 


Section 3.2             Renewal.  Upon the expiration of the Initial Term and
each subsequent Renewal Term thereafter, this Agreement shall be renewed
automatically for an additional one year term (each such term being a “Renewal Term”) unless any party hereto provides written
notice to the other of its intent not to renew this Agreement at least 30 days
prior to the expiration of the then-applicable Initial Term or Renewal Term.


 


Section 3.3             Termination.  Notwithstanding the provisions of Sections
3.1 and 3.2 above, the obligations of a party to this Agreement may be
terminated by such party upon 60 days’ prior written notice to the other
party.  Such termination shall not
relieve a terminating party of its obligations up to and including the date of
termination.  The Partnerships shall be
in default under this Agreement (a “Partnership Default”)
if either fails to timely pay any undisputed invoiced amount for the Services
provided pursuant to this Agreement in accordance with the provisions of Article II,
which failure continues for at least ten (15) days following receipt of written
notice to such party that the invoiced amount is past due. Upon the occurrence
of a Partnership Default, the Service Provider may, at its option, suspend all
or any portion of the 


 


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provision of the
Services hereunder, including Services for which payment is outstanding, until
such time as such Partnership Default is cured and all amounts owed to the
Service Provider under this Agreement for such suspended Services are paid in
full.  The Service Provider’s suspension
of the provision of any of the Services in accordance with this Section 3.3
shall not give rise to any default on the part of the Service Provider.  The Service Provider shall be in default
under this Agreement (a “Service Provider Default”)
if the Service Provider fails to provide a Service to the Partnerships in
accordance with the terms and conditions of this Agreement, which failure
continues for at least fifteen (15) days following receipt of written notice of
default from either Niska US or Niska Canada; provided, if the Service Provider
cannot reasonably cure such failure within such 15-day period, no Service
Provider Default shall be deemed to occur provided the Service Provider
demonstrates that it has taken steps to cure such failure within such 15-day
period and diligently prosecutes such cure to completion.  If any Service Provider Default remains
uncured twenty (20) days following Service Provider’s receipt of written notice
of default from the Partnerships, the Partnerships may terminate this Agreement
with immediate effect.


 


Section 3.4             Standard
of Care.  Service Provider shall provide the Services
with reasonable care and in a diligent, safe, timely and efficient manner in
accordance with good and prudent practices generally exercised by other
companies in similar circumstances and shall, in the conduct of providing
Services, (a) use its reasonable efforts to comply, in all material
respects, with the terms and provisions of all agreements relating to the
Partnerships’ business, operations and properties; and (b) comply, in all
material respects, with all applicable laws, ordinances and governmental rules and
regulations to which the Partnership is subject (including, without limitation,
all applicable federal, state and local environmental laws, ordinances, rules and
regulations).  It is understood and
agreed that Service Provider does not guarantee or undertake to procure any
financial, operational, accounting, legal or other outcome with respect to the
Partnerships.


 


Section 3.5             Limitation
on Powers.  Notwithstanding any other provision of this
Agreement, Service Provider shall not enter into any transaction on behalf of,
in the name of, or binding upon the Partnerships, make any agreement binding on
the Partnerships, or grant any waiver binding on the Partnerships, in each case
in connection with the Services provided under this Agreement, nor shall
Service Provider represent itself, or hold itself out, as having the authority
to do any of the foregoing.


 


Section 3.6             Relationship
of Parties.  Service Provider shall operate as, and have
the status of, an independent contractor. 
Except as specifically provided herein, none of the parties hereto shall
act on behalf of, in the name of, or represent or hold itself out as having
authority to act as an agent or partner of any other party, or in any way bind
or commit any other party to any obligation. 
Nothing contained in this Agreement shall be construed as creating a
partnership, joint venture, agency, trust or other association of any kind, each
party hereto being individually responsible only for its own obligations as set
forth in this Agreement.


 


Section 3.7             Employment
By Service Provider.  During the term of this Agreement, all
employees of Service Provider who provide services hereunder shall remain
employees of Service Provider and at no time shall the Partnership have the
right to terminate said employees’ employment with Service Provider.  All employee benefits, payroll, insurance and
tax 


 


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obligations with respect
to the employees who provide services hereunder shall be the exclusive
responsibility of Service Provider.


 


ARTICLE IV




LIMITED WARRANTY; INDEMNITY;
LIMITATION ON LIABILITY.


 


Section 4.1             Limited
Warranty.  The Services shall be provided on the basis
that Service Provider does not make any representations or warranties, express
or implied, with respect to the Services save and except that the Services
shall be provided in accordance with this Agreement and all legal requirements.
 All products obtained for the
Partnerships shall be as is, where is, and with all faults.  Service Provider makes no (and hereby
disclaims and negates any and all) representations and warranties, express or
implied, including the warranties of merchantability or fitness for a
particular purpose with respect to the Services rendered or products obtained
for the Partnerships.  It is expressly
understood by the Parties that Service Provider shall have no liability for the
failure of third party contractors to perform any Services hereunder and
further that Service Provider shall have no liability whatsoever for the
Services provided by any such third party contractor unless in either event
such Services are provided in a manner that would evidence gross negligence or
intentional misconduct on the part of Service Provider.


 


Section 4.2             Partnership’s
Indemnification for Third Party Claims.  The Partnerships agree, to the fullest extent
permitted by law, to release, indemnify, defend and hold harmless the Service Provider
against and from any and all claims, demands, suits, causes of action, losses,
damages, liabilities, fines, penalties, fees, expenses and costs (including
attorneys’ fees and costs of litigation) (“Claims”)
asserted by third parties caused by or arising out of or resulting from the
provision of Services as required pursuant to this Agreement.  The Partnerships shall periodically reimburse
any person entitled to indemnity under this Section 4.2 for its legal and
other expenses incurred in connection with defending any such Claim.  The indemnity obligations for the
Partnerships pursuant to the preceding sentence shall apply to any Claim
asserted against the Service Provider in connection with or as a result of the
performance of the Services, including any Claim actually or allegedly
resulting from the sole, joint or concurrent negligence, or other fault of the
Service Provider, as well as any strict liability Claim that may be asserted or
imposed against the Service Provider; provided, however, such indemnity
obligations shall not apply to any Claim actually resulting on the account of
the willful misconduct or gross negligence of the Service Provider.


 


Section 4.3             Disclaimer
of Certain Damages.  The Partnerships agree that the remuneration
paid to Service Provider hereunder for the Services reflect the foregoing
limitations of liability and disclaimer of warranties.  In no event shall any party to this Agreement
be liable to any other party to this Agreement or any other person for any
indirect, special, or consequential damages associated with the performance of
Services or from the breach of this Agreement, regardless of the fault of such
party or any third party contractor or whether such party or the third party
contractor are wholly, concurrently, partially or solely negligent.  To the extent any third party contractor has
limited its liability to Service Provider for services under an outsourcing or
other agreement, the Partnership agrees to be bound by such limitation of
liability 


 


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for any product or
Service provided to the Partnerships by such third party provider under Service
Provider’s agreement.


 


Section 4.4             Limitation
of Liability.  In no event shall Service Provider be liable
to the Partnerships or any officer or employee thereof, for any claims or other
matters that arise out of, relate to or are otherwise attributable to, directly
or indirectly, the performance of Services, except to the extent they are
caused by the gross negligence or willful misconduct by Service Provider.


 


ARTICLE V




MISCELLANEOUS


 


Section 5.1             Notices.  Any notice, request, demand, direction or
other communication required or permitted to be given or made under this
Agreement to a party shall be (a) in writing and may be given by hand
delivery, postage prepaid first-class mail delivery, delivery by a reputable
international courier service or by facsimile (if confirmed by one of the
foregoing methods) to such party at its address noted below:


 


(i)            in the case of the Service Provider, to:


 


Suite 400, 607 8th Avenue SW


 


Calgary, Alberta


 


T2P 0A7


 


(ii)           in the case of the Niska US, to:


 


2780 West Liberty Road


 


Gridley, California 95948


 


(iii)          in the case of Niska Canada, to:


 


2780 West Liberty Road


 


Gridley, California 95948


 


(b)           at such other address of which notice may have been
given by such party in accordance with the provisions of this Section 5.1;
or (c) by electronic communication sent to the registered email address of
a designated officer.  The parties may
amend this Section 5.1 from 


 


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time to time to reflect such additional mutually
agreed upon methods of communication deemed sufficient to provide proper
notice.


 


Section 5.2             Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same
instrument.


 


Section 5.3             Amendment.  This Agreement may be amended or modified
only by a written instrument signed by each party hereto.


 


Section 5.4             Governing
law; Jurisdiction; Waiver of Jury Trial.


 


(a)           This Agreement, and any claim, controversy or dispute
arising under or related to this Agreement, or the rights, duties and
relationship of the parties hereto, shall be governed by and construed and
enforced in accordance with the substantive laws of the State of New York.


 


(b)           The parties hereto agree that the appropriate,
exclusive and convenient forum for any disputes between any of the parties
hereto arising out of this Agreement shall be in any state or federal court in
New York and each of the parties hereto irrevocably submits to the jurisdiction
of such courts solely in respect of any legal proceeding arising out of or
related to this Agreement.


 


(c)           EACH PARTY TO THIS AGREEMENT
HEREBY KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY
COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR
ANY ANCILLARY AGREEMENT OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION
OR ENFORCEMENT THEREOF.


 


Section 5.5             Assignment;
Binding Effect.  Except for (a) the ability of Service
Provider to cause one or more of the Services to be performed by a third party
provider (subject to the terms of this Agreement) and (b) the right of the
Service Provider to assign this Agreement to an affiliate other than the
Service Provider, no party shall have the right to assign its rights or
obligations under this Agreement without the prior written consent of the other
party and any such assignment that is made without such consent shall be void
and of no force and effect.  No permitted
assignment shall release any party from any of its obligations under this
Agreement that have accrued prior to such permitted assignment.  All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective successors and permitted assignees.


 


Section 5.6             Force
Majeure.  Service Provider shall have no obligation to
perform or cause the Services to be performed if its failure to do so is caused
by or results from (a) an act of God, (b) a strike, lockout, labor
difficulty or other industrial disturbance, (c) an act of a public enemy,
war, blockade, insurrection or public riot, (d) lightning, fire, storm,
flood or explosion, (e) governmental action, delay, restraint or inaction,
(f) judicial order or injunction or (g) any other cause or event,
whether of the kind specifically enumerated above or otherwise, that is not
reasonably within the control of Service Provider or third party providers of
Services to Service Provider (an “Event of Force Majeure”).  Service Provider shall promptly notify the
Partnerships of any Event of Force Majeure.


 


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Section 5.7             Severability.  If any term or provision of this Agreement is
invalid, illegal or incapable of being enforced by law or public policy, all
other terms and provisions hereof shall nevertheless remain in full force and
effect so long as the legal and economic substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party.  Upon such determination that any
term or provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.


 


Section 5.8             Construction.  Each of Partnerships and Service Provider has
had the opportunity to exercise business discretion in relation to the
negotiation of the details of the transaction contemplated hereby.  This Agreement is the result of arm’s length
negotiations from equal bargaining positions. 
It is expressly agreed that this Agreement shall not be construed
against any party, and no consideration shall be given or presumption made, on
the basis of who drafted this Agreement or any particular positive provision
thereof.


 


Section 5.9             Entire
Agreement.  This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof,
superseding any and all prior negotiations, discussions, agreements and
understandings, whether oral or written, relating to such subject matter.


 


Section 5.10           No
Third Party Beneficiaries.  The provisions of this Agreement are
enforceable solely by the parties to the Agreement and no other person or
entity shall have the right, separate and apart from the parties hereto, to
enforce any provisions of this Agreement or to compel any party to this
Agreement to comply with the terms of this Agreement.


 


Section 5.11           Captions.  The captions of the sections and paragraphs
of this Agreement are for convenience and reference only and in no way define,
limit or describe the scope of intent of this Agreement.


 


[Signature Page Follows]


 


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IN WITNESS WHEREOF, the parties have caused this
Services Agreement to be duly executed as of the date first written above.


 


 


	
   

  	
  NISKA GS HOLDINGS CANADA, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jason A. Dubchak

  
	
   

  	
   

  	
  Name:

  	
  Jason A. Dubchak

  
	
   

  	
   

  	
  Title:

  	
  Authorized Person

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NISKA GS HOLDINGS US, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jason A. Dubchak

  
	
   

  	
   

  	
  Name:

  	
  Jason A. Dubchak

  
	
   

  	
   

  	
  Title:

  	
  Authorized Person

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AECO GAS STORAGE PARTNERSHIP

  
	
   

  	
  By:

  	
  Niska Gas Storage ULC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jason A Dubchak

  
	
   

  	
   

  	
  Name:

  	
  Jason A. Dubchak

  
	
   

  	
   

  	
  Title:

  	
  Vice President, General
  Counsel and

  
	
   

  	
   

  	
   

  	
  Corporate Secretary

  



 


SERVICES
AGREEMENT


SIGNATURE
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