Boston Gas 10-K
10.9.2
Amendment to Exhibit 10.9, Gas Sales Contract between the Company and Esso
Resources (now Imperial Oil of Canada), dated as of November 12, 1997 and Bridge
Agreement dated as of October 23, 1997, executed pursuant to Master Agreement
dated as of November 1, 1997.
NATURAL GAS SALES - AMENDING AGREEMENT
--------------------------------------
THIS AGREEMENT, made as of the Effective Date,
BETWEEN:
IMPERIAL OIL RESOURCES, an Alberta limited partnership,
with its principal place of business in Calgary, Alberta ("Seller")
and
BOSTON GAS COMPANY, a Massachusetts Corporation with
its principal place of business in Boston, Massachusetts ("Buyer").
WHEREAS the parties desire to amend the Gas Contract to reflect the new supply,
transportation, and pricing arrangements set forth in this Agreement;
WHEREAS the Western Canada gas supply and the transportation on the NOVA, TCPL,
Iroquois and Tennessee pipeline systems associated with the Gas Contract shall
be replaced by SOEP gas supply and related transportation;
WHEREAS the timing and details of these restructured supply and transportation
arrangements are as set out herein and will apply prior to and following the
commercial start-up of SOEP gas production and the operation of a pipeline
system(s) allowing deliveries from the SOEP gas plant located at or near
Goldboro, Nova Scotia to Dracut, Massachusetts;
AND WHEREAS it is the intention of the parties that, upon MDPU Approval, the
Amended Gas Contract will be given full force and effect thereby providing
certainty and predictability of the commercial arrangements provided for therein
for its full term.
NOW, THEREFORE in consideration of the premises and mutual covenants herein
contained, the parties agree as follows:
1. DEFINITIONS
-----------
1.1 Capitalized terms used in this Agreement which are not defined herein shall
have the meanings given to them in the Gas Contract.
1.2 The following definitions, contained in the Gas Contract, are deleted:
Section 1.1(c)(i), (ii) and (iii) "Base Gas"; Section 1.1(j) "Commodity
Charge"; Section 1.1(k) "Consumption
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Market"; Section 1.1(m) "Contract Year"; Section 1.1(p) "Daily
Underdelivery"; Section 1.1(r) "Demand Charge" or 'Demand Charge
Components" or "Canadian Monthly Demand Charge"; Section 1.1(u) "Excused
Performance"; Section 1.1(v) "Firm Consumption Market"; Section 1.1(w)
"Firm Direct Sale"; Section 1.1(ff) "Maximum Daily Quantity" or "MDQ";
Section 1.1(gg) "Minimum Quarterly Quantity"; Section 1.1(hh) "Minimum Take
Deficiency"; Section 1.1(mm) "Non-Excused Performance"; Section 1.1(kk)
"New Base Price"; Section 1.1(oo)(i), (ii) and (iii) "Offset Demand
Charges"; Section 1.1(pp) "Performance Calculation"; Section 1.1(uu)
"Replacement Gas Supply"; Section 1.1(yy) "Spare Capacity"; Section
1.1(ddd) "Total Usage"; Section 1.1(eee) "Transportation Charge"; Section
1.1(fff) "Unit Cost Difference"; and Section 1.1(ggg)(i), (ii), (iii), (iv)
and (v) "Unpurchased Gas".
1.3 Section 1.1(g) "Canadian Transporter(s)" of the Gas Contract is amended by
adding "or M&NP" to the end of the section.
1.4 The definition of "Commencement of Firm Deliveries" in Section 1.1(i) of
the Gas Contract is deleted and replaced with "Commencement of Firm
Deliveries means the first date on which commercial deliveries of Seller's
Gas from SOEP are received at Dracut, Massachusetts".
1.5 Section 1.1(I) "Contract Amount" is amended by deleting the phrase "and
shall be comprised of the Transportation Charge and the Commodity Charge".
1.6 The definition of "Point of Delivery" in Section 1.1(qq) of the Gas
Contract is deleted and replaced with the following:
(i) Until the Commencement of Firm Deliveries there is no point of
delivery as Seller will have no natural gas supply obligations prior
to this date.
(ii) Following the Commencement of Firm Deliveries point of delivery will
be the point of interconnection between the outlet of the SOEP
process plant located at or near Goldboro, Nova Scotia and the inlet
to the M&NP pipeline system, through which Gas will be transported to
Dracut, Massachusetts.
1.7 Section 1.1(hhh) "United States Transporter(s)" of the Gas Contract is
amended by deleting the phrase "on the pipeline system of Champlain or
other pipelines".
1.8 The following defined terms are added:
(i) "Agreement" means this amending agreement.
(ii) "Amended Gas Contract" means the Gas Contract as amended by this
Agreement.
(iii) "Billing Month" has the meaning set forth in Section 8.4 below.
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(iv) "Daily Contract Quantity" or "DCQ" means the daily volume of Gas,
from any source, delivered to Buyer by Seller at the Point of
Delivery following the Commencement of Firm Deliveries. The DCQ
shall not be less than Seller's share as it exists from time to
time of Seller's daily SOEP Gas production, but in no circumstances
shall the DCQ be greater than the Max DCQ. To the extent there is a
Shortfall on any Day, Buyer has the right to purchase the Shortfall
from a third party.
(v) "Daily Undispatched Quantity" has the meaning set forth in Section
5.4 below.
(vi) "Deficiency Quantity" has the meaning set forth in Section 5.5
below.
(vii) "Effective Date" means the later of November 1, 1997, or, the first
Day of the month following MDPU Approval.
(viii) "Force Majeure" has the meaning set forth in Section 6.2 below.
(ix) "Gas Contract" means the existing natural gas sales agreement
between the parties, or their predecessors, entered into on May 1,
1989, as amended on October 30, 1992 and by amendment dated October
28, 1997.
(x) "Max DCQ" means the maximum level of the DCQ, corresponding to the
SOEP Interest, as determined in accordance with Schedule "B",
attached hereto and forming part of this Agreement.
(xi) "M&NP" means Maritimes and Northeast Pipeline, L.L.C., a limited
liability company formed under the laws of the state of Delaware,
or Maritimes & Northeast Pipeline Limited Partnership, a limited
partnership formed under the laws of the province of New Brunswick,
or both of them.
(xii) "MDPU" means the Massachusetts Department of Public Utilities.
(xiii) "MDPU Approval" means approval of this Agreement by the MDPU in
form and substance acceptable to both parties, such acceptability
to be communicated by each party to the other within five (5)
business days following receipt of such approval.
(xiv) "Price Difference" means the difference between CP2 and the volume
weighted average price received by Seller for the Daily
Undispatched Quantity or the Deficiency Quantity, as applicable.
(xv) "SOEP" means the Sable Offshore Energy Project comprising the
project lands set out in Schedule A, attached hereto and forming
part of this Agreement.
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(xvi) "Shortfall"" means the positive difference, if any, resulting from
subtracting the DCQ from the Max DCQ, on any Day.
(xvii) "SOEP Interest" means Seller's, or its Affiliates', actual working
interest in SOEP, as provided for, upon the execution of the
ownership and operating agreements currently being negotiated among
the SOEP Owners.
(xviii) "SOEP Market Price" has the meaning set forth in Section 7.6(ii)
below.
(xix) "SOEP Owners" means the owners of SOEP as they may exist from time
to time, including assigns and successors. As of the date of
execution of this Agreement the SOEP Owners are Seller, or its
Affiliate, Mobil Oil Canada Properties, Shell Canada Limited, and
Nova Scotia Resources (Ventures) Limited, and if applicable,
Xxxxxxxxx Operating Ltd.
(xx) "Straddle Plant" has the meaning set forth in subsection 11.3.1
below.
(xxi) "Third Party" has the meaning set forth in Section 11.3 below.
2. INTENTIONS OF THE PARTIES
-------------------------
2.1 Article II of the Gas Contract is deleted and replaced with Articles 2 and
3 of this Agreement.
2.2 Except for matters concerning the enforcement of the Amended Gas Contract,
Buyer and Seller agree to not initiate, support or voluntarily participate,
directly or indirectly, in any processes or activities which could
reasonably be anticipated to threaten, obstruct or otherwise interfere with
the performance of the Amended Gas Contract, throughout its term.
3. REGULATORY
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3.1 Buyer will, in good faith, proceed diligently and expeditiously in taking
all steps as are reasonably necessary to obtain MDPU Approval of this
Agreement.
3.2 Notwithstanding anything in the Gas Contract or this Agreement, except
Sections 3.1 and 3.4 herein, this Agreement is subject to MDPU Approval. If
MDPU Approval is not received, the Gas Contract will continue to remain in
full force and effect for the duration of its term, unaltered by this
Agreement. Buyer and Seller further agree that if MDPU Approval is not
received, such non-approval shall not be, or be deemed to be, an Order, as
defined in Section 16.2(a) of the Gas Contract, for the purposes of Section
6.7(b) of the Gas Contract.
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3.3 Following MDPU Approval, Buyer and Seller agree:
(i) to proceed in good faith in performing their respective obligations
as set out or contemplated in the Amended Gas Contract, throughout
its term;
(ii) that Seller will take all steps as are reasonably necessary to amend
or rescind, as appropriate, the existing export license and removal
permit; and,
(iii) subsequently to jointly apply for and hold any new NEB export license
and removal permit, as may be required.
3.4 Buyer and Seller agree that each of them shall diligently and expeditiously
take all steps and do such things as are reasonably necessary in applying
for and obtaining any and all license and/or regulatory amendments,
revisions, permits, approvals or authorizations as may be required to give
effect to the provisions of this Article 3, and the parties agree to
cooperate with, and support, each other in this regard.
4. TERM OF AGREEMENT
-----------------
4.1 Article III of the Gas Contract is deleted and replaced by this Article 4.
4.2 The Amended Gas Contract becomes effective on the Effective Date.
4.3 The Amended Gas Contract expires on March 31, 2007.
5. QUANTITY
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5.1 Articles IV and V of the Gas Contract are deleted and replaced by the
provisions of this Article 5.
5.2 During the term of the Amended Gas Contract prior to the Commencement of
Firm Deliveries, Seller shall have no natural gas supply or transportation
obligations under the Amended Gas Contract. Notwithstanding the above,
during this period Buyer shall pay Seller on deemed delivered volumes in
accordance with the terms of Section 7.2 below.
5.3 Subject to the provisions of this Article 5, effective with the
Commencement of Firm Deliveries, Seller shall deliver and sell and Buyer
shall receive and purchase the DCQ at the Point of Delivery.
5.3.1 if Seller cannot deliver any portion of the DCQ due to an event of
Force Majeure, Seller shall so notify Buyer in accordance with the
provisions of Section 6.3 below.
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5.3.2 Subject to the provisions of subsection 5.3.3 below, to the extent
Seller is aware that the DCQ will be less than the Max DCQ, Seller
shall notify Buyer of expected Shortfall as soon as is reasonably
practicable.
5.3.3 On those Days when third party purchases by Seller constitute a
portion of the DCQ, and to the extent the DCQ is still expected to
be below the Max DCQ, Seller shall notify Buyer of the expected
Shortfall no less than five (5) business days prior to the Day in
which the Shortfall is expected to occur.
5.4 To accommodate Buyer's least cost economic dispatch requirements, Buyer has
the right on any Day to purchase quantities of Gas below the DCQ subject to
the conditions outlined in subsection 5.4.1 through 5.4.3 below. The
difference between the DCQ and the volume actually taken by Buyer each Day
is the "Daily Undispatched Quantity".
5.4.1 On each and every day that a Daily Undispatched Quantity occurs,
Buyer shall make available to Seller, Buyer's transportation from
the Point of Delivery to Buyer's distribution system at no cost to
Seller for the purpose of disposing of the Daily Undispatched
Quantity. Seller shall use reasonable efforts to sell the Daily
Undispatched Quantity at the most favourable price available to
Seller using the Buyer's transportation as required.
5.4.2 In the event the volume weighted average price realized by the
Seller at the Point of Delivery in selling the Daily Undispatched
Quantity is less than CP2, as defined in Section 7.6 below, during a
month, Buyer shall pay Seller for that month an amount equal to the
sum of the products of:
(a) the Daily Undispatched Quantity in each Day of the month; and,
(b) the Price Difference.
5.4.3 In the event the volume weighted average price realized by the
Seller at the Point of Delivery in selling the Daily Undispatched
Quantity is greater than CP2, as defined in Section 7.6 below,
during a month, Seller shall pay Buyer for that month an amount
equal to the sum of the products of:
(a) the Daily Undispatched Quantity in each Day of the month; and,
(b) the Price Difference.
5.5 If Buyer purchases on any Day a daily quantity of Gas less than the DCQ
pursuant to Section 5.3 above for any reasons other than Force Majeure, as
defined in Section 6.2 below, or Buyer's economic dispatch requirements
pursuant to Section 5.4 above, then Buyer shall pay Seller for that month
an amount equal to the sum of the products of:
(i) the difference between the DCQ, and the volume actually taken
("Deficiency Quantity") in each Day of the month; and,
(ii) the Price Difference.
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5.6 For the purposes of Sections 5.4 and 5.5:
(i) Seller shall use all reasonable efforts to mitigate the Price
Difference; and,
(ii) Buyer shall pay Seller for any incremental expenses reasonably
incurred by Seller in selling the Daily Undispatched Quantity or the
Deficiency Quantity, as applicable.
6. FORCE MAJEURE
-------------
6.1 Article XV of the Gas Contract is deleted and replaced with the following
provisions.
6.2 Force Majeure means, except for and subject to the exclusions outlined
below, acts of God, strikes, lockouts, or industrial disputes or
disturbances, riots, civil disturbances, interruptions by government,
compliance with any court order, law, statute, ordinance or regulation
promulgated by a governmental authority having jurisdiction, the Nova
Scotia government taking its royalty share of natural gas in kind, failure
of transportation pipeline, failure of gas processing plant, failure of gas
gathering system, failure of gas production facilities, required plant
shut-downs for maintenance, or any other cause not reasonably within the
control of the party claiming Force Majeure and which by the reasonable
exercise of due diligence of such party could not have been prevented or is
unable to be overcome. Force Majeure specifically excludes:
(i) loss of markets;
(ii) increases or decreases in the market price of natural gas;
(iii) the loss, interruption, or curtailment of interruptible
transportation;
(iv) actions of Canadian or U.S. Regulatory Authorities of the types
contemplated under Article XVI of the Gas Contract; or,
(v) lack of funds.
6.3 In the event either party hereto is rendered unable by reason of Force
Majeure to carry out its obligations, upon such claiming party giving
notice to the other party with full particulars of such Force Majeure as
promptly as is reasonably practicable after the occurrence of the event,
the obligations of the claiming party occasioned by, or in connection with,
or in consequence of the Force Majeure shall be suspended for the duration
of the Force Majeure event. A party claiming Force Majeure shall attempt to
remedy the Force Majeure as soon as is reasonably possible. Nothing in this
Article 6 shall relieve a party of the obligation to make any outstanding
payments due under the Amended Gas Contract. As soon as possible after the
Force Majeure has been remedied, the party claiming suspension shall give
notice that the Force Majeure has been remedied and the party has resumed
or will resume the performance of its obligations.
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7. COMMODITY PRICE
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7.1 Sections 6.1 and 6.3 of the Gas. Contract are deleted. In addition, the
pricing provisions of subsections 6.4(a) and 6.4(b) of the Gas Contract are
deleted and replaced by the following provisions.
7.2 During the term of the Amended Gas Contract from the Effective Date and
continuing until the Commencement of Firm Deliveries, Buyer shall pay
Seller the difference between CP1 and P2 based on a deemed natural gas
volume of 38000 MMBtu/day, where
CP1 = [0.75 x P1] + [0.25 x P2], where P1 and P2 are defined as
follows:
P1 = the Xxxxx Hub first of month index as reported in Inside
------
F.E.R.C.'s Gas Market Report in units of US$/MMBtu less $
----------------------------
US/MMB tu.
P2 = the Monthly Alberta Spot Price where the Monthly Alberta Spot
Price is the price index for firm one month intra-Alberta gas
deliveries as published in the Canadian Gas Price Reporter
under the heading "AECO & N.I.T. One Month Spot" in units of
C$/G. This price shall be converted to US$/MMBtu using the
average monthly noon-day exchange rates as published by the
Royal Bank of Canada and an energy conversion factor of
1.000000 GJ/MMBtu.
7.3 Notwithstanding anything in the Amended Gas Contract except Section 3.2 of
this Agreement, the pricing and payment obligations of Buyer outlined in
Section 7.2 above shall endure and continue in force and effect
notwithstanding Seller being unable to deliver the DCQ for any one or more
of the following, or similar, reasons:
(i) project schedule delays to the commercial start-up of SOEP facilities
or the M&NP pipeline system to Dracut, Massachusetts, for any reason;
(ii) failure of any governmental or regulatory body, having jurisdiction,
to approve any required amendments to existing export or import
licenses or authorizations held pursuant to the Gas Contract;
(iii) cancellation of any export or import license or authorization, held
pursuant to the Gas Contract or the Amended Gas Contract, by any
governmental or regulatory body having jurisdiction;
(iv) failure of any governmental or regulatory body, having jurisdiction,
to approve the export or import of SOEP Gas;
(v) failure to obtain any governmental or regulatory approvals for SOEP
on terms acceptable to the SOEP Owners;
Page 9
(vi) failure to obtain any governmental or regulatory approvals of the
M&NP pipeline system(s) necessary to enable commercial delivery of
Gas from the SOEP plant gate to Dracut, Massachusetts;
(vii) the SOEP Owners determine that SOEP natural gas reserves are no
longer commercially economic to recover or produce;
(viii) failure to obtain Seller's, or its Affiliates', final management
approval to proceed with SOEP; or
(ix) subject to Sections 7.4 and 7.5 below, the divestment or transfer of
the SOEP Interest.
7.4 Subject to Section 7.5 below, if the SOEP Interest is divested or
transferred to a third party, Buyer shall have the right to elect to have
the remaining term of the Amended Gas Contract assigned to the said third
party, provided Seller is notified by Buyer of its election within fifteen
(15) days following notification by Seller to Buyer of the planned
divestment or transfer, as applicable.
7.5 If any or all of the SOEP Interest is divested or transferred, for any
reason, to one or more of the other SOEP Owners, and Buyer elects to have
the remaining term of the Amended Gas Contract assigned to the applicable
SOEP Owner(s) pursuant to Section 7.4 above, and if as a result of such
divestment or transfer Seller does not obtain sufficient consideration from
the said SOEP Owner(s) to fully compensate Seller for the full value of the
remaining term of the Amended Gas Contract, Buyer agrees to indemnify and
keep Seller whole to the full extent of the deficiency. For purposes of
this Section 7.5, full value of the remaining term of the Amended Gas
Contract shall mean the net present value, using a discount rate of six (6)
percent, of any remaining payments due from Buyer to Seller assuming full
performance under the Amended Gas Contract by both parties.
7.6 Subject to Article 10 below, from the Commencement of Firm Deliveries until
the expiration of the Amended Gas Contract, the commodity price ("CP2") of
volumes of Gas sold and purchased under the Amended Gas Contract, including
fuel gas consumed in the pipeline compressors downstream of the Point of
Delivery, shall be, in units of US$/MMBtu, the higher of:
(i) HH - BD, where HH and BD are defined as follows:
HH = Xxxxx Hub first of month index as reported in Inside F.E.R.C.'s
-----------------
Gas Market Report,
-----------------
BD = as set out in Schedule B, attached hereto and forming part of
this Agreement; or,
Page 10
(ii) the "SOEP Market Price", defined as the prevailing market price at the
SOEP plant gate as represented by the average of all first of month
price indices published for this location. In the event that no first
of month price index develops for the SOEP plant gate location then
CP2 is defined by item (i) in this Section 7.6.
7.7 In the event any one of the published price indices referenced in this
Article 7 is not available or ceases to exist, Buyer and Seller agree to
act in good faith to select a reasonable replacement price index as
required. Should the parties fail to agree on a replacement price index,
either party may, by giving written notice to the other, submit the matter
to arbitration in accordance with the arbitration provisions of Sections
6.6(b) and 6.6(c) and Article XVII of the Gas Contract and Article 10 of
this Agreement, as applicable.
8. PAYMENTS
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8.1 Any and all amounts payable arising out of the Amended Gas Contract shall
be made in accordance with the provisions of Article VII of the Gas
Contract as amended by this Article 8.
8.2 Sections 7.1 through 7.3 of the Gas Contract are deleted and replaced with
the following provisions.
8.3 Section 7.4 of the Gas Contract is amended by deleting the reference to
"Subsection 20.2" in the tenth line and replacing it with "Section 5.3 of
the Agreement".
8.4 As of the Effective Date, Seller shall, on or before the 15th Day of each
Month (a "Billing Month"), render to Buyer a statement showing the deemed
quantity of natural gas pursuant to Section 7.2 above, or the actual
quantity of Gas delivered during the preceding Month at the Point of
Delivery, pursuant to Section 5.3 above, as applicable, and the amounts
payable based on the applicable commodity prices pursuant to Article 7
herein. The statement shall also include and describe all other applicable
charges or credits, as applicable, pursuant to the Amended Gas Contract.
8.5 Buyer shall make payment within ten (10) Days following receipt of the
statement described in Section 8.4 above, or by the 25th Day of the Billing
Month, whichever is later. Any adjustments necessary to reflect actual
deliveries or otherwise shall be made in the following Monthly statement,
if possible, or within the period provided in Section 7.5 of the Gas
Contract in any event.
9. WAIVER OF FINANCIAL KEEP WHOLE PROVISIONS AND INDEMNIFICATION
-------------------------------------------------------------
9.1 Articles XIV and XX of the Gas Contract are deleted.
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9.2 As of the Effective Date, all supply assurances and associated commodity
keep whole obligations contained in the Gas Contract will terminate. For
greater certainty, under the Amended Gas Contract Seller's only natural
gas supply obligation, will be to deliver the DCQ, subject to Sections 5.3
and 7.3 above.
9.3 As of the Effective Date and prior to the Commencement of Xxxx Deliveries,
Seller shall have no obligations to pay transportation demand charges, or
transportation charges of any kind, in conjunction with the Amended Gas
Contract, except that from and after the Commencement of Firm Deliveries
Seller shall be responsible for all transportation charges necessary to
deliver the DCQ to the Point of Delivery.
9.4 Buyer shall indemnify and save Seller harmless against all third party
actions, proceedings, claims (including claims of third parties for
consequential damages), debts, demands, losses, costs, damages, expenses
and liabilities which may be brought against or suffered by Seller or
which it may sustain, pay or incur by reason of Seller not delivering Gas,
so long as Seller is in compliance with its obligations under the Amended
Gas Contract, or any reason whatsoever or by reason of personal injury or
property damage sustained after Gas is delivered to the Point of Delivery.
9.5 Damages and costs resulting from Buyer purchasing on any day a daily
quantity of gas less than the DCQ are limited to those set forth in the
Amended Gas Contract. Damages and costs for other actions or non-actions
are as specified or contemplated in the Amended Gas Contract. In no event
shall either party be liable to the other for consequential, special, or
punitive damages of the other party regardless of breach of the Amended
Gas Contract.
10. PRICE REOPENER
--------------
10.1 Section 6.6(a) of the Gas Contract is deleted and replaced by this Article
10.
10.2 In order to initiate the next and only other price renegotiation for CP1
and CP2, as applicable, Buyer shall provide notice to Seller during the
period between June 1, 2002, and June 30, 2002, with any changes pursuant
to the renegotiation to become effective on November 1, 2002. The price
renegotiation shall be completed within 60 days of receipt of such notice.
Notwithstanding the above, in no event shall this price renegotiation
cause a decrease in BD. If the parties do not agree upon a renegotiated
price within the said 60 day period, either party may, by giving written
notice to the other, prior to November 1, 2002, submit the matter to
arbitration in accordance with the provisions of the Amended Gas Contract.
10.3 Throughout Sections 6.6(b) and 6.6(c) of the Gas Contract the phrase "Gas
being purchased on a competitive basis in Massachusetts under long term
firm contracts" shall be amended to read "Gas being purchased from the
U.S. Gulf Coast supply region on a competitive basis in Massachusetts
under firm contracts of term length of one year and
Page 12
greater". In the absence of a threshold volume of 100,000 MMBtu/day of
such firm contracts of term length of one year or greater available in a
form reasonably suitable for use in the arbitration process as envisioned
by Section 6.6 of the Amended Gas Contract, the commodity price of Gulf
Coast gas supplies in Massachusetts for the purposes of the arbitration
process as envisioned by Section 6.6 of the Amended Gas Contract shall be
equal to the sum of:
(i) the arithmetic average variable transportation costs, including the
cost of fuel gas, incurred in delivering Gulf Coast gas to Boston by
way of the following routes: (a) Tennessee Gas Pipeline Company;
and, (b) Texas Eastern Transmission Corporation and Algonquin Gas
Transmission Company; and,
(ii) the arithmetic average of the first of Month indices as published in
Inside F.E.R.C.'s Gas Market Report for the following six locations:
-----------------------------------
Tennessee Gas Pipeline Company Zones 0 and 1; and the Texas Eastern
Transmission Corporation's Zones STX, ETX, WLA and ELA.
10.4 In establishing the average variable transportation costs pursuant to
subsection 10.3(i) above, the arbitrator shall take into account the
effects of differing rate designs on the SOEP and Gulf Coast pipelines.
Modified fixed variable rate designs, wherein fixed pipeline costs become
included in the commodity component of the transportation toll, should not
be compared with straight fixed variable designs, wherein fixed pipeline
charges are not included in the commodity component of the transportation
toll. This is to ensure that neither SOEP, nor Gulf Coast supply, are
unfairly disadvantaged by such rate design characteristics in the
competitive comparison contemplated under Section 6.6 of the Gas Contract.
10.5 Throughout Sections 6.6(b) and 6.6(c) of the Gas Contract, the term "New
Base Price" is amended to read "CP1 or CP2, as applicable".
11. TRANSPORTATION
--------------
11.1 Articles IX, X and XI of the Gas Contract are amended substituting "M&NP"
in place of "Nova" or "TCPL", as applicable, as required in the context of
those provisions.
11.2 Buyer is responsible for arranging and paying all costs associated with
holding capacity on the M&NP pipeline system to take delivery of the DCQ
at the Point of Delivery. The terms of such transportation arrangements
are left to the Buyer's discretion recognizing that Buyer remains liable
for the amounts pursuant to Sections 5.4, 5.5 and 5.6 above, should Buyer
be unable to take delivery of the DCQ, including as a result of Buyer not
holding the proper amount or type of transportation capacity.
11.3 Seller shall be free to release or assign the Canadian pipeline
transportation currently held by Seller in association with the Gas
Contract, and Buyer shall be free to release or assign
Page 13
the U.S. pipeline transportation currently held by Buyer in association
with the Gas Contract, with an effective release or assignment date being
as of the Effective Date, subject to the provisions of Section 11.4 below.
Seller agrees to assign the Canadian pipeline transportation currently
held by Seller in association with the Gas Contract to Buyer, or a third
party designated by Buyer ("Third Party"), at Buyer's option, subject to
tile provisions of subsections 11.3.1 and 11.3.2 below.
11.3.1 Assignment of the transportation currently held by Seller,
pursuant to Section 11.3 above, is conditional on Seller retaining
title to the natural gas associated with the NOVA delivery
capacity, as it moves through the straddle plant facilities at
Empress, or XxXxxxx (the "Straddle Plant"), and Seller capturing
all economic benefits thereby accruing. This condition will be
satisfied in accordance with the provisions of subsection 11.3.2
below. The arrangements contemplated in subsection 11.3.2 shall be
documented by Seller and Buyer in a separate agreement to take
effect on the Effective Date. To the extent it is necessary for
the Third Party to be party to such separate agreement, the Buyer
shall obtain the agreement of the Third Party.
11.3.2 Seller shall retain the said Empress NOVA delivery capacity and
the parties agree to implement the following purchase and re-sale
arrangement. The Third Party or Buyer, as applicable, shall sell
natural gas to Seller at an intra-Alberta delivery point for a
price equal to P2 and Seller shall re-sell said natural gas to
Third Party or Buyer, as applicable, at Empress, or XxXxxxx, into
the TCPL system, for a price equal to P2 plus full NOVA tolls as
may be in effect from time to time for transportation between
intra-Alberta and Empress, or XxXxxxx, delivery points,
respectively.
11.4 In the event the NOVA delivery capacity at Empress, or XxXxxxx, and the
TCPL capacity between Empress, or XxXxxxx, and Iroquois currently held by
Seller in association with the Gas Contract is released at a discounted
rate from the rate payable by Seller under Seller's associated NOVA and
TCPL pipeline transportation agreements, Buyer agrees to indemnify and
save Seller harmless to the full extent of such difference for the full
term of tile Amended Gas Contract. These indemnification payments shall be
made monthly in accordance with the provisions of Article VII of tile
Amended Gas Contract.
12. GOODS AND SERVICES TAX
----------------------
12.1 "GST" means the goods and services tax pursuant to the Excise Tax Act
(Canada), as amended (the "Excise Tax Act").
12.2 If Buyer intends to export from Canada any of the Gas purchased under the
Amended Gas Contract and wishes to have that Gas zero-rated for GST
purposes pursuant to the Excise Tax Act at least ten (10) Days prior to
the day when Seller is obligated to deliver an
Page 14
invoice, Buyer shall advise Seller of the amount of Gas which Buyer
intends to export and represent and warrant in writing that it has
complied with all of the provisions of the Excise Tax Act required to
permit Seller to zero-rate that Gas.
12.3 Buyer shall indemnify Seller for any GST related liability incurred by
Seller which results from any breach of any of the provisions,
representations or warranties required under Section 12.2.
12.4 Notwithstanding any other provision of the Amended Gas Contract, in the
event that any amount becomes payable by a party to the Amended Gas
Contract as a result of a breach, modification or termination of the
Amended Gas Contract and Section 182 of the Excise Tax Act applies to that
amount, the amount payable shall be increased such that following the
deduction of any applicable GST, the payee shall be left with an amount
equal to the original amount payable.
13. MISCELLANEOUS
-------------
13.1 To the extent that any provisions in this Agreement conflict with those in
the Gas Contract, the provisions of this Agreement will prevail.
13.2 Each of the parties shall do all acts, including making appropriate
regulatory filings, and execute and deliver all deeds and documents as are
reasonably required in order to fully perform and carry out the terms of
this Agreement or the Amended Gas Agreement, as applicable.
13.3 Buyer and Seller agree to provide each other with any information that may
be necessary to comply with any regulatory filing requirements hereunder.
Such information shall be kept strictly confidential by the other party
and used or disclosed only to comply with said requirements or as is
otherwise required by law.
In witness whereof this Agreement is executed effective as of the day and year
first written.
IMPERIAL OIL RESOURCES BOSTON GAS COMPANY
Per: /s/ X. X. Xxxxxxx Per: /s/ X. X. Xxxxxxx
-------------------------------- -------------------------------
Name: X. X. Xxxxxxx Name: XXXXXXX X XXXXXXX
------------------------------- ------------------------------
Title: Senior Vice President Title: VICE PRESIDENT
------------------------------ -----------------------------
12 NOV 97
ENFOLIO(R) MASTER FIRM PURCHASE/SALE AGREEMENT
II
Enron Capital & Trade Resources Corp., a Delaware corporation ("Company"), and
-------
Boston Gas Company, a Massachusetts corporation ("Customer"), referred to
--------
collectively as the "Parties" enter into this Master Firm Purchase/Sale
-------
Agreement (together with all Transactions, collectively, this "Agreement")
---------
effective as of the 1st Day of November, 1997 (the "Effective Date"). The
--------------
ENFOLIO General Provisions set forth in Appendix "1" shall apply to this
------------
Agreement.
ARTICLE 1. TERM This Agreement shall govern all Transactions and be in effect
----------------
for a term of one year from the Effective Date. It shall then continue in
effect from Month to Month, unless terminated by either Party upon 30 Days prior
written notice to the other Party; provided, this Agreement shall continue to
apply to all Transactions then in effect until Transactions are completed.
Termination of this Agreement in all instances shall be subject to Section 8.4.
-----------
ARTICLE 2. SCOPE OF AGREEMENT 2.1. Scope of Agreement. Company and Customer
------------------------------ ------------------
from time to time during the term hereof may, but are not obligated to, enter
into Transactions for the firm purchase and sale of Gas to which this Agreement
shall apply. Each Transaction shall be effectuated and evidenced as set forth
in this Article 2 and shall constitute a part of this Agreement and all
---------
Transactions, together with this Agreement, shall constitute a single integrated
agreement. It is acknowledged that the Parties are relying upon the fact that
all Transactions, together with this Agreement, will form a single integrated
agreement and that the Parties would not otherwise enter into any Transactions.
Each Transaction shall be construed as one with this Agreement and any
discrepancy between this Agreement and a Transaction shall be resolved in favor
of the Transaction. Each Transaction shall provide whether the Transaction is
based upon DCQ quantity obligations or MinMQ or MinDQ and MaxDQ quantity
obligations, in which case the applicable Premative definitions and provisions
set forth in this Agreement shall apply.
2.2. Transaction Procedures. It is the intent of the Parties to facilitate
----------------------
Transactions in accordance with the agreed procedures in this Article 2 and
---------
assure that such Transactions are valid and enforceable as a result of the use
of these procedures for the mutual benefit of the Parties. Any Transaction may
be formed and effectuated (i) by a written paper-based Transaction Agreement
executed by the Parties (including by facsimile and/or counterparts) or (ii) in
a recorded telephone conversation between the Parties occurring on any Business
Day during the Pricing Hours whereby an offer and acceptance shall constitute
the agreement of the Parties to a Transaction as evidenced by the Transaction
Tape; provided, each Party may stipulate by prior notice to the other Party that
any particular contemplated Transaction may be effectuated and formed only by
means of procedure (i) above. The Parties shall be legally bound by each
Transaction from the time they agree to its terms in accordance with this
Article 2 and acknowledge that each Party will rely thereon in doing business
---------
related to the Transaction. The Transaction Tape is adopted by the Parties as a
means by which a Transaction is reduced to tangible form, and the Parties to a
Transaction are identified and authenticate a Transaction. Any Transaction
formed and effectuated pursuant to the foregoing shall be considered to be a
"writing" or "in writing" and to have been "signed" and any Transaction Tape
shall be considered to constitute an "original" document evidencing the
Transaction. Each Party consents to the recording of its employees' telephone
conversations without any further notice. Notwithstanding the other provisions
in this agreement permitting transactions to be effectuated and formed by means
of procedure (ii) above, the Parties agree that every Transaction shall be
formed and effectuated by procedure (i) above until such time as the Parties
execute an amendment to this agreement allowing the use of procedure (ii) above
to form and effectuate a Transaction hereunder.
2.3. Equipment and Transaction Tape. Company shall at its expense maintain
------------------------------
equipment necessary to regularly record Transactions on Transaction Tapes and
retain Transaction Tapes in such manner as to protect its business records from
improper access; provided, Company shall not be liable for any malfunction of
equipment or the operation thereof in respect of any Transaction WITHOUT REGARD
TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING, WITHOUT LIMITATION, THE
NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT,
OR ACTIVE OR PASSIVE. No Transaction shall be vitiated should a malfunction
occur in equipment regularly utilized for recording Transactions or retaining
Transaction Tapes or the operation thereof, and in such event, the Transaction
shall be evidenced by the written and computer records of the Parties concerning
the Transaction made contemporaneously with the telephone conversation.
2.4. Confirmations. In addition to, but not in lieu of, the foregoing, the
-------------
Parties agree that Company may confirm a recorded telephonic Transaction by
forwarding to Customer a facsimile Confirmation and that a reasonable time for
the receipt by Customer of a Confirmation is within 24 hours of the Transaction
formation. Company does hereby adopt its letterhead, including its address, as
its signature on any Confirmation as the identification of Company and
authentication by Company of the Confirmation, and such letterhead shall be
sufficient to verify that Company originated the Confirmation. The Parties
agree that any objections to the contents of the Confirmation shall be made in
writing on or before the Confirm Deadline for all purposes hereunder and at law.
Upon issuance of a Confirmation and the passage of the Confirm Deadline, if no
objection to the Confirmation has been then received, the Confirmation shall be
conclusive evidence of the Transaction made the subject matter thereof and the
final expression of all of its terms.
2.5. Enforcement of Transactions. The Parties agree not to contest or assert a
---------------------------
defense to the validity or enforceability or telephonic Transactions entered
into in accordance with this Agreement under laws relating to (i) whether
certain agreements are to be in writing or signed by the Party to be thereby
bound or (ii) the authority of any employee of the Party if the employee name
and the Identification Code of the Party are stated in the Transaction Tape.
ARTICLE 3. QUANTITY OBLIGATIONS 3.1. Seller's Sales Obligation. Seller shall
-------------------------------- -------------------------
Schedule, or cause to be Scheduled, at the Delivery Point(s) on a firm basis
each Gas Day a quantity of Gas equal to the quantity properly requested by Buyer
up to the DCQ or MaxDQ, if applicable ("Buyer's Requested Quantity"). Unless
--------------------------
otherwise agreed nothing in this Agreement, and in particular this Article 3,
---------
shall require or permit either Party to Schedule Gas at a point other than a
Delivery Point or in excess of the DCQ, Maximum Daily Delivery Point Quantity or
MaxDQ, as applicable.
3.2. Seller's Failure to Schedule. If on any Gas Day Seller fails to Schedule
----------------------------
Buyer's Requested Quantity, then such occurrence shall constitute a "Seller's
--------
Deficiency Default" and "Seller's Deficiency Quantity" shall be the numerical
------------------ ----------------------------
difference between Buyer's Requested Quantity and the amount of Gas Scheduled
for such Gas Day. In the event of a Seller's Deficiency Default, Seller shall
pay Buyer the sum of the following: (i) an amount equal to the product of the
Seller's Deficiency Quantity multiplied by the Replacement Price Differential,
plus (ii) liquidated damages equal to $0.15 multiplied by Seller's Deficiency
----
Quantity to cover Buyer's administrative and operational costs. During any
Month in which Seller's nonperformance continues for a period of five
consecutive Gas Days Buyer may elect upon notice to Seller, without liability,
not to recommence Scheduling Gas hereunder for the remainder of such Month, but
for no longer period. Subject to offset pursuant to Section 3.5, payment to
-----------
Buyer shall be made on the 25th Day of the Month in which Seller receives
Buyer's statement for same.
3.3. Buyer's Purchase Obligation. Buyer shall Schedule, or cause to be
---------------------------
Scheduled, at the Delivery Point(s) on a firm basis each Gas Day a quantity of
Gas equal to the DCQ ; provided, (i) if the MinMQ is applicable to a
Transaction, Buyer shall Schedule, or cause to be Scheduled, at the Delivery
Point(s) on a firm basis each Month a minimum quantity of Gas equal to the MinMQ
and (ii) if the MinDQ is applicable to a Transaction, Buyer shall Schedule, or
cause to be Scheduled, at the Delivery Point(s) on a firm basis each Day a
minimum quantity of Gas equal to the MinDQ.
3.4. Buyer's Failure to Schedule. If on any Gas Day Buyer fails to Schedule
---------------------------
the DCQ or MinDQ, if applicable, then such occurrence shall constitute a
"Buyer's Deficiency Default" and "Buyer's Deficiency Quantity" shall be the
-------------------------- ---------------------------
numerical difference between the DCQ or MinDQ, if applicable, and the quantity
of Gas Scheduled for such Gas Day; provided, if the MinMQ is applicable to a
Transaction, (i) the Buyer's Deficiency Default shall occur if Buyer fails to
Schedule the MinMQ for any Month and (ii) the Buyer's Deficiency Quantity shall
be the numerical difference between the MinMQ and the quantity of Gas Scheduled
for such Month. In the event of a Buyer's Deficiency Default, Buyer shall pay
Seller the sum of the following: (i) an amount equal to the product of Buyer's
Deficiency Quantity multiplied by the Replacement Price Differential, plus (ii)
----
liquidated damages equal to $0.15 multiplied by Buyer's Deficiency Quantity to
cover Seller's administrative and operational costs. With respect to DCQ and
MinDQ obligations, during any Month in which Buyer's nonperformance continues
for a period of five consecutive Gas Days Seller may elect upon notice to Buyer,
without liability, not to recommence Scheduling Gas for the remainder of such
Month, but for no longer period. Subject to offset pursuant to Section 3.5,
-----------
payment to Seller shall be made in accordance with the Financial Matters
provisions set forth in Appendix "1."
-------------
3.5. Netting. In the event that Buyer and Seller are each required to pay an
-------
amount in the same Month hereunder, then such amounts with respect to each Party
may be aggregated and the Parties may discharge their obligations to pay through
netting, in which case the Party, if any, owing the greater aggregate amount may
pay to the other Party the difference between the amounts owed.
ARTICLE 4. DEFAULTS AND REMEDIES. 4.1. Early Termination. If a Triggering Event
--------------------------------- -----------------
(defined in Section 4.2) occurs with respect to either Party at any time during
-----------
the term of this Agreement, the other Party (the "Notifying Party") may (i) upon
---------------
two Business Days written notice to the first Party, which notice shall be given
no later than 60 Days after the discovery of the occurrence of the Triggering
Event, establish a date on which any or all Transactions selected by it and this
Agreement in respect thereof will terminate ("Early Termination Date") except as
----------------------
provided in Section 8.4, and (ii) withhold any payments due in respect of such
-----------
Transactions; provided, upon the occurrence of any Triggering Event listed in
item (iv) of Section 4.2, as it may apply to any party, all Transactions and
-----------
this Agreement in respect thereof shall automatically terminate, without notice,
as if an Early Termination Date had been immediately declared except as provided
in Section 8.4. If an Early Termination Date occurs, the Notifying Party shall
-----------
in good faith calculate its damages, including its associated costs and
attorneys' fees, resulting from the termination of the terminated Transactions
(the "Termination Payment"). The Termination Payment will be determined by (i)
-------------------
comparing the value of (a) the remaining term, quantities and prices under each
such Transaction had it not been terminated to (b) the equivalent quantities and
relevant market prices for the remaining term either quoted by a bona fide third
party offer or which are reasonably expected to be available in the market under
a replacement contract for each such Transaction and (ii) ascertaining the
associated costs and attorneys' fees. To ascertain the market prices of a
replacement contract the Notifying Party may consider, among other valuations,
any or all of the settlement prices of NYMEX Gas futures contracts, quotations
from leading dealers in Gas swap contracts and other bona fide third party
offers, all adjusted for the length of the remaining term and the basis
deferential. All terminated Transactions shall be netted against each other and
upon the netting of all terminated Transactions, if the calculation of the
Termination Payment does not result in damages to the Notifying Party, the
Termination Payment shall be zero. The Notifying Party shall give the Affected
Party (defined in Section 4.2) written notice of the amount of the Termination
-----------
Payment, inclusive of a statement showing its determination. The Affected Party
shall pay the Termination Payment to the Notifying Party within 10 Days of
receipt of such notice. At the time for payment of any amount due under this
Article 4, each Party shall pay to the other Party all additional amounts
---------
payable by it pursuant to this Agreement, but all such amounts shall be netted
and aggregated with any Termination Payment payable hereunder. If the Affected
Party disagrees with the calculation of the Termination Payment, the issue shall
be submitted to arbitration pursuant to this Agreement and the resulting
Termination Payment shall be due and payable within three Days after the award.
4.2. Triggering Event shall mean, with respect to a Party (the "Affected
---------------- --------
Party"): (i) the failure by the Affected Party to make, when due, any
-----
payment required under this Agreement if such failure is not remedied
within five Business Days after written notice of such failure is given to
the Affected Party; provided, the payment is not the subject of a good
faith dispute as described in the Billing and Payment provisions or (ii)
any representation or warranty made by the Affected Party in this
Agreement shall prove to have been false or misleading in any material
respect when made or deemed to be repeated or (iii) the failure by the
Affected Party to perform any covenant set forth in this Agreement (other
than its obligations to make any payment or obligations which are
otherwise specifically covered in this Section 4.2 as a separate
-----------
Triggering Event), and such failure is not excused by Force Majeure or
-------------
cured within five Business Days after written notice thereof to the
Affected Party or (iv) the Affected Party shall (a) make an assignment or
any general arrangement for the benefit of creditors, (b) 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 against it and such proceeding
remains undismissed for 30 Days, (c) otherwise become bankrupt or
insolvent (however evidenced) or (d) be unable to pay its debts as they
fall due or (v) Seller's unexcused failure to Schedule the Buyer's
Requested Quantity requested by Buyer for a cumulative period of 30 or
more Gas Days in a 12 Month period in any one Transaction or (vi) Buyer's
unexcused failure to Schedule the DCQ or MinDQ for a cumulative period of
30 or more Gas Days in a 12 Month period in any one Transaction, or, if
applicable, the MinMQ for a cumulative period of three Months in a 12
Month period in any one Transaction, or (vii) the occurrence of a Material
Adverse Change of the Affected Party; provided, such Material Adverse
Change shall not be considered if the Affected Party; establishes, and
maintains throughout the term hereof, a Letter of Credit (naming the
Notifying Party as the beneficiary) in an amount equal to the sum of (in
---
each case rounding upwards for any fractional amount to the next $100,000)
---
(a) the Notifying Party's Termination Payment plus (b) if the Notifying
----
Party is Seller, the aggregate of the amounts Seller is entitled to
receive under each Transaction for Gas Scheduled during the 60 Day period
preceding the Material Adverse Change (the amount of said Letter of Credit
to be adjusted quarterly to reflect amounts owing at that point in time)
or (viii) the Affected Party fails to establish, maintain, extend or
increase a Letter of Credit when required pursuant to this Agreement, or
after reasonable notice fails to replace the issuing bank with another
bank acceptable to the beneficiary or (ix) with respect to Company, at any
time. Enron Corp. shall have defaulted on its indebtedness to third
parties resulting in an acceleration of obligations of Enron Corp. in
excess of $50,000,000.00, or with respect to Customer, at any time.
Customer shall have defaulted on its indebtedness to third parties,
resulting in an acceleration of obligations of Customer in excess of
$50,000,000.00.
4.3. Other Events. In the event Buyer under a Transaction is regulated by a
------------
federal, state or local regulatory body, and such body shall disallow all or any
portion of any costs incurred or yet to be incurred by Buyer under any provision
of this Agreement, such action shall not operate to excuse Buyer from
performance of any obligation nor shall such action give rise to any right of
Buyer to any refund or retroactive adjustment of the Contract Price provided in
any Transaction. Notwithstanding the foregoing, if the Affected Party's
activities hereunder become subject to regulation of any kind whatsoever under
any law (other than with respect to New Taxes) to a greater or different extent
than that existing on the Effective Date and such regulation either (i) renders
this Agreement illegal or unenforceable or (ii) materially adversely affects the
business of the Affected Party, with respect to its financial position or
otherwise, then in the case of (i) above, either Party, and in the case of (ii)
above, only the Affected Party, shall at such time have the right to declare an
Early Termination Date in accordance with the provisions hereof; provided,
notwithstanding the rights of the Parties to declare an Early Termination Date
as above stated, the Affected Party shall be liable for payment of the
2
Termination Payment calculated by the non-Affected Party as provided in Section
-------
4.1.
---
4.4. Offset. Each Party reserves to itself all rights, set-offs, counterclaims
------
and other remedies and defenses consistent with Section 8.3 (to the extent not
-----------
expressly herein waived or denied) which such Party has or may be entitled to
arising from or out of this Agreement. All outstanding Transactions and the
obligations to make payment in connection therewith or under this Agreement may
be offset against each other, set off or recouped therefrom.
ARTICLE 5. FORCE MAJEURE. This Article 5 is the sole and exclusive excuse of
------------------------- ---------
performance permitted under this Agreement and all other excuses at law or in
equity are WAIVED to the extent permitted by law. Except with respect to payment
obligations, in the event either Party is rendered unable, wholly or in part, by
Force Majeure to carry out its obligations hereunder, it is agreed that upon
-------------
such Party's giving notice and full particulars of such Force Majeure to the
-------------
other Party as soon as reasonably possible (such notice to be confirmed in
writing), the obligations of the Party giving such notice, to the extent they
are affected by such event, shall be suspended from the inception and during the
continuance of the Force Majeure for a period of up to 60 Days in the aggregate
-------------
during any 12 Month period, but for no longer period. The Party receiving notice
of Force Majeure may immediately take such action as it deems necessary at its
-------------
expense for the entire 60 Day period or any part thereof. The Parties expressly
agree that upon the expiration of the 60 Day period Force Majeure shall no
-------------
longer apply to the obligations hereunder and both Buyer and Seller shall be
obligated to perform. The cause of the Force Majeure shall be remedied with all
-------------
reasonable diligence and dispatch; provided, unless otherwise agreed no
provision herein shall require or permit Seller or Buyer to Schedule quantities
of Gas (i) in excess of the DCQ, Maximum Daily Delivery Point Quantity or MaxDQ,
as applicable, or (ii) at points other than the Delivery Point(s).
ARTICLE 6. TAXES. 6.1. Allocation of and Indemnity for Taxes. The Contract
----------------- -------------------------------------
Price includes full reimbursement for, and Seller is liable for and shall pay,
or cause to be paid, or reimburse Buyer if Buyer has paid, all Taxes applicable
to the Gas sold upstream of the Delivery Point(s). In the event Buyer is
required to remit such Tax, the amount thereof shall be deducted from any sums
becoming due to Seller hereunder. Seller shall indemnify, defend and hold
harmless Buyer from any Claims for such Taxes. The Contract Price does not
include reimbursement for, and Buyer is liable for and shall pay, cause to be
paid, or reimburse Seller if Seller has paid, all Taxes applicable to the Gas
sold downstream of or at the Delivery Point(s), including any Taxes imposed or
collected by a taxing authority with jurisdiction over Buyer. Buyer shall
indemnify, defend and hold harmless Seller from any Claims for such Taxes.
6.2. New Taxes. A. If (i) a New Tax occurs and (ii) Buyer or Seller would be
--------- ---
responsible for such New Tax if it were a Tax under Section 6.1 and (iii) such
----------- ---
New Tax is, due to and on the basis of laws, regulations and applicable
contracts of Buyer in effect as of the effective date of the New Tax, of the
type which Buyer can pass directly through to, or be reimbursed by, another
person or entity in the chain of Gas supply, such Buyer shall pay or cause to be
paid, or reimburse Seller if Seller has paid, all such New Taxes and Buyer shall
indemnify, defend and hold harmless Seller from any Claims for such Taxes;
provided, if Buyer does not identify its contracts for long-term fixed sourcing
in the ordinary course of its business and cannot identify applicable contracts,
this Paragraph A shall not apply. B. If (i) a New Tax occurs and (ii) either
----------- ---
Buyer or Seller would be responsible for such New Tax if it were a Tax under
Section 6.1, and (iii) Paragraph A does not apply, such responsible Buyer or
----------- ---
Seller (the "Taxed Party") shall be entitled to declare an Early Termination
-----------
Date in accordance with the provisions of this Agreement subject to the
following conditions; provided, prior to and including the initial Agreement
Period (below defined) invoked under this Section 6.2, New Taxes shall be
-----------
allocated as if they were Taxes as provided in Section 6.1: (a) the Taxed Party
-----------
must give the non-Taxed Party at least 30 Days prior written notice (the
"Agreement Period") of its intent to declare an Early Termination Date (and
----------------
which notice shall be given no later than 90 Days after the later of the
enactment or effective date of the relevant New Tax), and prior to the proposed
Early Termination Date Buyer and Seller shall attempt to reach a mutual
agreement as to the sharing of the New Tax, (b) if a mutual sharing agreement is
not reached, the non-Taxed Party shall have the right, but not the obligation,
upon written notice to the Taxed Party within the Agreement Period, to pay the
New Tax for any continuous period it so elects on a Month to Month basis, and in
such case the Taxed Party shall not have the right during such continuous period
to declare the Early Termination Date on the basis of the New Taxes, (c) should
the non-Taxed Party at its election agree to pay the New Tax on a Month to Month
basis, then upon 30 Days prior written notice to the Taxed Party of its election
to cease payment of such New Tax, the Taxed Party shall then be liable for the
payment of the New Tax and the Parties shall again be subject to this Section
-------
6.2 as if the New Tax had an effective date as of the date the non-Taxed Party
---
ceases payment of such New Tax, (d) if a mutual sharing agreement is not reached
and the non-Taxed Party does not elect to pay the New Tax for any period of time
within the Agreement Period, the Early Termination Date shall take effect and
all Transactions must be terminated and be subject to the same Early Termination
Date, (e) the Early Termination Date shall be effected as if a Triggering Event
had occurred and the Termination Payment calculated as set forth in Section 4.1
-----------
shall be payable; provided, both Seller and Buyer pursuant to Section 4.1 shall
-----------
calculate their respective Termination Payments resulting from the termination
of all Transactions as if they each were a Notifying Party; provided further, if
the calculation of the Termination Payments results in either the non-Taxed
Party's or the Taxed Party's having either a gain or loss (after netting its
gains against its losses), the Parties shall share equally such net gain due, or
be responsible to pay to the Party having the net loss, one-half of the
Termination Payment and (f) such Termination Payment shall be payable as
provided in Section 4.1 and its calculation shall be subject to arbitration as
-----------
provided in the ENFOLIO General Provisions.
6.3. Cooperation. Upon request, a Party shall provide a certificate of
-----------
exemption of other evidence of exemption from any Tax and each Party agrees to
cooperate with the other in obtaining an exemption and minimizing Taxes payable
in respect of all Transactions.
ARTICLE 7. TITLE, RISK OF LOSS, INDEMNITY AND BALANCING. 7.1. Title, Risk of
-------------------------------------------------------- --------------
Loss and Indemnity. As between the Parties, Seller shall be deemed to be in
------------------
exclusive control and possession of Gas Scheduled hereunder and responsible for
any damage or injury caused thereby prior to the time the same shall have been
delivered to Buyer. After delivery of Gas to Buyer at the Delivery Point(s),
Buyer shall be deemed to be in exclusive control and possession thereof and
responsible for any injury or damage caused thereby. Title to Gas Scheduled
hereunder shall pass from Seller to Buyer at the Delivery Point(s). Seller and
Buyer each assumes all liability for and shall indemnify, defend and hold
harmless the other Party from any Claims, including injury to and death of
persons, arising from any act or incident occurring when title to the Gas is
vested in the Indemnifying Party. IT IS THE INTENT OF THE PARTIES THAT THIS
INDEMNITY AND THE LIABILITY ASSUMED UNDER IT BE WITHOUT REGARD TO THE CAUSE OR
CAUSES THEREOF, INCLUDING, WITHOUT LIMITATION, THE NEGLIGENCE OF ANY INDEMNIFIED
PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR
PASSIVE; PROVIDED, NEITHER PARTY SHALL BE LIABLE IN RESPECT OF ANY CLAIM TO THE
EXTENT SAME RESULTED FROM THE GROSS NEGLIGENCE WILLFUL MISCONDUCT OR BAD FAITH
OF THE INDEMNIFIED PARTY.
7.2. Correction of Imbalances, Cashouts and Penalties. Differences between
------------------------------------------------
Scheduled quantities and actual quantities delivered and received hereunder
("Imbalances") will be corrected or settled in cash or Gas or by offset as the
----------
Parties agree. Additionally, in the event of (i) an Imbalance on Buyer's
Transporter's system caused by Seller of Seller's Transporter's delivery of less
or more than Scheduled quantity for any Gas Day (in which case Seller shall be
the "Responsible Party") or (ii) an Imbalance on Seller's Transporter's system
-----------------
caused by Buyer or Buyer's Transporter's receipt of more or less than the
Scheduled quantity for any Gas Day (in which case Buyer shall be the
"Responsible Party"), the Responsible Party shall be liable for and reimburse to
-----------------
the other Party any associated Transporter penalties or cashout costs and
3
losses incurred by such other Party. In the event the tariff of either Buyer's
or Seller's Transporter provides for cashouts on the basis of the aggregation of
all overdeliveries and underdeliveries between such Transporter and Buyer or
Seller, respectively (the "Aggregate Transporter Imbalance"), and the nature of
-------------------------------
the Imbalance (overdelivery or underdelivery) attributable to the Responsible
party is the same as the Aggregate Transporter Imbalance (overdelivery or
underdelivery), the Responsible Party shall participate in the other Party's
cashout settlement of the Aggregate Transporter Imbalance on the basis of only
the Responsible Party's pro-rata share thereof.
ARTICLE 8. MISCELLANEOUS 8.1. Notices. All notices, including, without
------------------------ -------
limitation, consents, and communications made pursuant to this Agreement shall
be made as specified in Exhibit "A." Notices required to be in writing shall
------------
be delivered in written form by letter, facsimile or other documentary form.
Notice by facsimile or hand delivery shall be deemed to have been received by
the close of the Business Day on which it was transmitted or hand delivered
(Unless transmitted or hand delivered after close in which case it shall be
deemed received at the close of the next Business Day) or such earlier time
confirmed by the receiving Party. Notice by overnight mail or courier shall be
deemed to have been received two Business Days after it was sent or such earlier
time confirmed by the receiving Party. Any notices given hereunder in respect of
the declaration of an Early Termination Date shall be also sent to the address
of facsimile number so specified in Exhibit "A." Any Party may change its
------------
addresses by providing notice of same in accordance herewith.
8.2. Transfer. This Agreement, including, without limitation, each
--------
indemnification, shall inure to and bind the permitted successors and assigns of
the Parties: provided, neither Party shall transfer this Agreement without the
prior written approval of the other Party which may be withheld entirely at the
option of such Party; provided further, either Party may transfer its interest
to any parent or affiliate by assignment, merger or otherwise without the prior
approval of the other Party, but no such transfer shall operate to relieve the
transferor Party of its obligations hereunder. Any Party's transfer in violation
of this Section 8.2 shall be void.
-----------
8.3. Limitation of Remedies, Liability and Damages and Mitigation. THE
------------------------------------------------------------
PARTIES DO HEREBY CONFIRM THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES
PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF
ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS HEREIN
PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY. HEREUNDER, THE OBLIGOR'S LIABILITY SHALL BE LIMITED AS SET
FORTH IN SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY
ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY HEREIN PROVIDED, THE
OBLIGOR'S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT
ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY HEREUNDER AND ALL OTHER
REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN
PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL INCIDENTAL, PUNITIVE,
EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION
DAMAGES, IN TORT, CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE.
NOTWITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT, IN NO EVENT SHALL EITHER
PARTY BE LIABLE FOR ANY PENALTIES OR CHARGES ASSESSED BY ANY TRANSPORTER OR
OTHER ENTITY FOR THE UNAUTHORIZED RECEIPT OF GAS BY THE OTHER PARTY. IT IS THE
INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE
MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO,
INCLUDING, WITHOUT LIMITATION, THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH
NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY
DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE
THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OTHERWISE OBTAINING
AN ADEQUATE REMEDY IS INCONVENIENT AND THE LIQUIDATED DAMAGES CONSTITUTE A
REASONABLE APPROXIMATION OF THE HARM OR LOSS. BUYER ACKNOWLEDGES THAT IT HAS
ENTERED INTO THIS AGREEMENT AND IS CONTRACTING FOR THE GOODS TO BE SUPPLIED BY
SELLER BASED SOLELY UPON THE EXPRESS REPRESENTATIONS AND WARRANTIES HEREIN SET
FORTH (INCLUDING, WITHOUT LIMITATION, SELLER'S REPRESENTATION THAT THE GAS TO BE
DELIVERED WILL MEET OR EXCEED THE QUALITY SPECIFICATIONS OF BUYER'S TRANSPORTER)
AND SUBJECT TO SUCH REPRESENTATIONS AND WARRANTIES, ACCEPTS SUCH GOODS, "AS-IS"
AND "WITH ALL FAULTS." SELLER EXPRESSLY NEGATES ANY OTHER REPRESENTATION OR
WARRANTY, WRITTEN OR ORAL, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION,
ANY REPRESENTATION OR WARRANTY WITH RESPECT TO CONFORMITY TO MODELS OR SAMPLES,
MERCHANTABILITY, OR FITNESS FOR ANY PARTICULAR PURPOSE. The Parties acknowledge
the duty to mitigate damages hereunder. In this connection, the Parties
recognize that the ability to effectuate arrangements for the sale or purchase
of Gas is conditioned upon the volatility of Gas markets, the creditworthiness
and reliability of potential customers, the complexity and size of the
portfolios of contracts managed by each Party and the need to conduct market
business in an orderly manner. Therefore, the Parties agree that (i) three
Business Days is a commercially reasonable period to purchase or sell Gas in
respect of a Seller's or Buyer's Deficiency Default and (ii) three Business Days
after the end of the Month in which the Early Termination Date occurs is a
commercially reasonable period after the establishment of an Early Termination
Date to determine the Termination Payment; provided, notwithstanding the
foregoing, if Gas volumes made the basis of a Seller's or Buyer's Deficiency
Default or a Party's determination of the Termination Payment are in excess or
20,000 MMBtu/Gas Day, the Parties recognize that a longer period may ordinarily
be required to effectuate cover or determine the Termination Payment in an
orderly manner so as not to adversely affect the Gas market. Each Party may
utilize its discretion, with commercially reasonable foresight, to adjust the
timing and staggering of the purchases or sales of Gas volumes in its efforts to
mitigate damages. No claim that a Party failed to mitigate damages shall be
grounded solely on the basis of counter Gas market movement.
8.4. Winding Up Arrangements. Upon the expiration of the Parties' sale and
-----------------------
purchase obligations under this Agreement, any monies, penalties or other
charges due and owing Seller shall be paid, any corrections or adjustments to
payments previously made shall be determined, and any refunds due Buyer made,
within 60 Days. Any Imbalances in receipts or deliveries shall be corrected to
zero balance within 60 Days. All indemnity and confidentially obligations and
audit rights shall survive the termination of this Agreement. The Parties'
obligations provided in this Agreement shall remain in effect for the purpose of
complying herewith.
8.5. Applicable Law. THIS AGREEMENT AND EACH TRANSACTION AND THE RIGHTS AND
--------------
DUTIES OF THE PARTIES ARISING OUT OF THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE PARTIES AGREE
THAT THIS AGREEMENT AND ALL TRANSACTIONS SHALL BE ACCEPTED AND FORMED IN THE
STATE OF TEXAS ACCORDING TO THE PROCEDURES HEREIN SET FORTH.
8.6. Document Record Retention and Evidence. This Agreement, the Exhibits and
--------------------------------------
Appendices hereto, if any, and each Transaction, constitute the entire agreement
between the Parties relating to the subject matter contemplated by this
Agreement. There are no prior or contemporaneous agreements or representations
(whether oral or written) affecting the subject matter other than those herein
expressed. Other than with respect to Transactions entered into in accordance
with the procedures set forth in this Agreement and as otherwise herein
expressly stated (the "Transaction Procedures"), no amendment or modification to
----------------------
this Agreement shall be enforceable, unless reduced to writing and executed by
both Parties. The conduct of the Parties in accordance with the Transaction
Procedures shall evidence a course of dealing and a course of performance
accepted by the Parties in futherance of this Agreement and all Transactions
entered into by
4
the Parties. The provisions of this Agreement shall not impart rights
enforceable by any person, firm or organization not a Party or not bound as a
Party, or not a permitted successor or assignee of a Party bound to this
Agreement. Except as otherwise herein stated, any provision, article or section
declared or rendered unlawful by a court of law or regulatory agency with
jurisdiction over the Parties or deemed unlawful because of a statutory change
will not otherwise affect the lawful obligations that arise under this
Agreement. The headings used for the Articles herein are for convenience and
reference purposes only. All Exhibits and Appendices referenced in this
Agreement, if any, are incorporated. Any original executed Agreement or
Transaction Agreement may be photocopied and stored on computer tapes and disks
(the "Imaged Agreement"). The Imaged Agreement, if introduced as evidence on
-----------------
paper, the Confirmation, if introduced as evidence in automated facsimile form,
and the Transaction Tape, if introduced as evidence in its original form and as
transcribed onto paper, and all computer records of the foregoing, if introduced
as evidence in printed format, in any judicial, arbitration, mediation or
administrative proceedings, will be admissible as between the Parties to the
same extent and under the same conditions as other business records originated
and maintained in documentary form. Neither Party shall object to the
admissibility of the Transaction Tape, the Confirmation or the Imaged Agreement
(or photocopies of the transcription of the Transaction Tape, the Confirmation
or the Imaged Agreement) on the basis that such were not originated or
maintained in documentary form under either the hearsay rule, the best evidence
rule or other rule of evidence.
8.7. Confidentiality. Each Party shall not disclose the terms of any
---------------
Transaction to a third party (other than the Party's and its affiliates
employees, lenders, counsel, accountants or prospective purchasers of any rights
under any Transactions who have agreed to keep such terms confidential) except
in order to comply with any applicable law, order, regulation or exchange rule;
provided, each Party shall notify the other Party of any proceeding of which it
is aware which may result in disclosure and use reasonable efforts to prevent or
limit the disclosure. The provisions of the Agreement other than the terms of
any Transaction are not subject to this confidentiality obligation. The Parties
shall be entitled to all remedies available at law or in equity to enforce, or
seek relief in connection with, this confidentiality obligation; provided, all
monetary damages shall be limited in accordance with Section 8.3.
-----------
The Parties have executed this Agreement in multiple counterparts to be
construed as one effective as of the Effective Date.
ENRON CAPITAL & TRADE RESOURCES CORP.
By: /s/ [SIGNATURE ILLEGIBLE]^^
---------------------------------
Title: Vice President
------------------------------
BOSTON GAS COMPANY
By: /s/ [SIGNATURE ILLEGIBLE]^^
--------------------------------
Title: VICE PRESIDENT
----------------------------
5
APPENDIX "1"
------------
ENFOLIO GENERAL PROVISIONS
--------------------------
*Usage and Definitions. All references to Articles and Sections are to those set
---------------------
forth in this Agreement. Reference to any document means such document as
amended from time to time and reference to any Party includes any permitted
successor or assignee thereof. The following definitions and any terms defined
internally in this Agreement shall apply to this Agreement and all notices and
communications made pursuant to this Agreement.
"Btu" means the amount of energy required to raise the temperature of one
---
pound of pure water one degree Fahrenheit. The term "MMBtu" means one
-----
million Btus.
"Buyer" means the Party to a Transaction who is obligated to purchase Gas
-----
during a Period of Delivery.
"C.T." means Central Time.
----
"Claims" means all claims or actions, threatened or filed and whether
------
groundless, false or fraudulent, that directly or indirectly relate to the
subject matters of the indemnity, and the resulting losses, damages,
expenses, attorneys' fees and court costs, whether incurred by settlement
or otherwise, and whether such claims or actions are threatened or filed
prior to or after the termination of this Agreement.
"Confirmation" means a written notice confirming the specific terms of a
------------
Transaction which may be in any form adequate at law; an example of a
Confirmation which may be utilized hereunder is shown in "Exhibit B."
---------
"Confirm Deadline" means 24 hours after a Party receives a Confirmation:
----------------
provided, if the Confirmation is not received during a Business Day it
shall be deemed received at the open of the next Business Day.
"Contract Price" means the price for the purchase or sale of Gas pursuant
--------------
to a Transaction.
"Daily Contract Quantity" ("DCQ") means the quantity of Gas to be Scheduled
--------------------------------
each Gas Day pursuant to a Transaction.
"Day" means a period of 24 consecutive hours, beginning at midnight C.T. on
---
any calendar Day. "Business Day" means a Day on which Federal Reserve
------------
member banks in New York City are open for business and a Business Day
shall open at 8:00 a.m. and close at 5:00 p.m. local time.
"Gas Day" means a period of 24 consecutive hours beginning at the time of
-------
the applicable Transporter's gas day.
"Delivery Points(s)" means the agreed point(s) of delivery pursuant to a
------------------
Transaction.
"Force Majeure" means an event not anticipated as of the Effective Date,
-------------
which is not within the reasonable control of the Party, or in the case of
third party obligations or facilities, the third party, claiming
suspension, and which by the exercise of due diligence such Party, or third
party, is unable to overcome or obtain or cause to be obtained a
commercially reasonable substitute performance therefor; provided, neither
(i) the loss of Buyer's markets nor Buyer's inability economically to use
or resell Gas purchased hereunder nor (ii) the loss or failure of Seller's
Gas supply, including, without limitation, depletion of reserves or other
failure of production, nor Seller's ability to sell Gas to a market at a
more advantageous price, shall constitute an event of Force Majeure. "Force
------------- -----
Majeure" shall include an event of Force Majeure occurring with respect to
------- -------------
the facilities or services of Buyer's or Seller's Transporter.
"GAAP" means generally accepted accounting principles, consistently
----
applied.
"Gas" means methane and other gaseous hydrocarbons meeting the quality
---
standards and specifications of Buyer's Transporter.
"Identification Code" means a Party's numerical code utilized for recorded
-------------------
telephonic Transactions, as follow: Company ______ Customer _____.
"Indemnified Party" and "Indemnifying Party" mean the Party receiving and
----------------- ------------------
providing an indemnity, respectively.
"Interest Rate" means, for any date, two percent over the per annum rate of
-------------
interest announced as the "Prime Rate" from time to time for commercial
loans by Citibank. N.A. as established by the administrative body of such
bank charged with the responsibility of establishing such rate, as same may
change from time to time; provided, the Interest Rate shall never exceed
the maximum lawful rate permitted by applicable law.
"Letter of Credit" means an irrevocable standby letter of credit
----------------
established by a Party (the "Account Party") and issued or confirmed in a
-------------
form and by a commercial bank acceptable to the Party in whose favor it is
issued (the "Beneficiary Party").
-----------------
"Material Adverse Change" means (i) with respect to Customer, Customer
-----------------------
shall have long-term debt unsupported by third party credit enhancement
that is rated by Standard & Poor's Corporation below BBB- or (ii) with
respect to Company, Enron Corp. shall have long-term debt unsupported by
third party credit enhancement that is rated by Standard & Poor's
Corporation below BBB-.
"MaxDQ" means the maximum quantity of Gas that Seller is required to
-----
Schedule per Gas Day pursuant to a Transaction, if applicable.
"Maximum Daily Delivery Point Quantity" means the maximum quantity of Gas
-------------------------------------
which may be Scheduled per Gas Day at each Delivery Point where there are
multiple Delivery Points applicable to a Transaction.
"MinDQ" means the minimum quantity of Gas that Buyer is required to
-----
Schedule per Gas Day pursuant to a Transaction, if applicable.
"MinMQ" means for any Month the minimum quantity of Gas per Gas Day that
-----
Buyer is obligated to Schedule times the number of Days in the Month
pursuant to a Transaction, if applicable.
"Month" means a period of time beginning at midnight C.T. on the first Day
-----
of any calendar Month and ending at midnight C.T. on the first Day of the
following calendar Month.
"New Taxes" means (i) any Taxes enacted and effective after the Effective
---------
Date, including, without limitation, that portion of any Taxes or New Taxes
that constitutes an increase, or (ii) any law, order, rule or regulation,
or interpretation thereof, enacted and effective after the Effective Date
resulting in the application of any Taxes to a new or different class of
parties.
"Period of Delivery" means the period from the date Scheduling obligations
------------------
are to commence to the date same are to terminate under a Transaction.
"Pipeline" means a company authorized to ship Gas on behalf of itself or
--------
others on physical Gas transmission facilities.
"Pricing Hours" means the hours C.T. from 8:00 a.m. to 5:00 p.m. of each
-------------
Business Day.
"Replacement Price Differential" means (i) in the event of a Seller's
------------------------------
Deficiency Default, the positive difference, if any, obtained by
subtracting the Contract Price from the greater of (a) the cost to Buyer,
---- -------
including incremental transportation costs and other basis adjustments, to
replace Seller's Deficiency Quantity for such Gas Day or (b) the Spot Price
for the Gas Day in which Seller's Deficiency Default occurred, and (ii) in
the event of a Buyer's Deficiency Default, the positive difference, if any,
obtained subtracting the lesser of (a) the price obtained by Seller in an
------
incremental, arms-length sales(s) to a third party of a quantity equal to
Buyer's Deficiency Quantity for such Gas Day, less incremental
transportation charges to Seller, and including other basis adjustments, or
(b) the Spot Price for the Gas Day in which Buyer's Deficiency Default
occurred (or if the MinMQ is applicable, the Spot Price for the middle Gas
Day of the Month in which Buyer's Deficiency Default occurred), from the
----
Contract Price. Buyer shall use all reasonable efforts to purchase and
obtain replacement gas at a least cost basis to mitigate the costs to
Seller hereunder.
"Scheduling" or "Schedule," when used in reference to Seller, means to make
---------- ---------
Gas available, or cause Gas to be made available, at the Delivery Point(s)
for delivery to or for the account of Buyer, including making all Pipeline
nominations, and when used in reference to Buyer, means to cause Buyer's
Transporter to make available at the Delivery Point(s) transportation
capacity sufficient to permit Buyer's Transporter to receive on a firm
basis the quantities Seller has available at such Delivery Point(s),
including making all Pipeline nominations. Gas shall be deemed to have been
Scheduled when confirmed by Transporter.
"Seller" means the Party to a Transaction who is obligated to sell Gas
------
during a Period of Delivery.
"Spot Price" means the price set forth in Gas Daily(R) (Pasha Publications,
---------- ---------
Inc.), or successor publication, in the column "Daily Price Survey" under
the listing applicable to the geographic location agreed pursuant to a
Transaction for the relevant Gas Day. If there is no single price published
for that particular Gas Day, but there is published a range of prices under
the above column and listing, then the Spot Price shall be the average of
such high and low prices. In the event that no price or range of prices is
published for that particular Gas Day, then the Spot Price shall be the
average of the following: the price (determined as stated above) for each
of the first Gas Day immediately preceding and following the Gas Day in
which the default occurred for which a Spot Price can be determined.
"Taxes" means any or all ad valorem, property, occupation, severance,
-----
production, extraction, first use, conservation, Btu or energy, gathering,
transport, Pipeline, utility, gross receipts, gas or oil revenue, gas or
oil import, privilege, sales, use, consumption, excise, lease, transaction,
and other or new taxes, governmental charges, licenses, fees, permits, and
assessments, or increases therein, other than taxes based on net income or
net worth.
"Transaction" means an agreement and any amendment or modification thereof
-----------
made in accordance herewith for the purchase or sale of Gas to be performed
hereunder.
"Transaction Agreement" means a written paper-based agreement executed by
---------------------
the Parties to form and effectuate a Transaction which may be substantially
in the form set forth in Exhibit "B-1."
-------------
"Transaction Tape" means the tape recording of a recorded Transaction
----------------
effectuated in accordance with Article 2.
---------
"Transporter" means either the Pipeline delivering or receiving Gas at a
-----------
Delivery Point in a Transaction.
* Representations and Warranties. As a material inducement to entering into
------------------------------
this Agreement, including each Transaction, each Party, with respect to itself,
hereby represents and warrants to the other Party continuing throughout the term
of this Agreement as follows: (i) there are no suits, proceedings, judgments,
rulings or orders by or before any court or any governmental authority that
materially adversely affect its ability to perform this Agreement or the rights
of the other Party under this Agreement, (ii) it is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation, and it has the legal right, power and authority and is qualified to
conduct its business, and to execute and deliver this Agreement and perform its
obligations under the same and each Transaction, and all regulatory
authorizations have been maintained as necessary for it to legally perform its
obligations hereunder, (iii) the making and performance by it of this Agreement
is within its powers, has been duly authorized by all necessary action on its
part, and does not and will not violate any provision of law of any rule,
regulation, order, writ, judgment, decree or other determination presently in
effect applicable to it or its governing documents, (iv) each of this Agreement
and each Transaction when entered into constitutes a legal, valid and binding
act and obligation of it, enforceable against it in accordance with its terms,
subject to bankruptcy, insolvency, reorganization and other laws affecting
creditor's rights generally, and with regard to equitable remedies, to the
discretion of the court before which proceedings to obtain same may be pending,
(v) there are no bankruptcy, insolvency, reorganization, receivership or other
arrangement proceedings pending or being contemplated by it, or to its knowledge
threatened against it, (vi) it has assets of $5,000,000 or more according to its
most recent financial statements prepared in accordance with GAAP and knowledge
and experience in financial matters that enable it to evaluate the merits and
risks of this Agreement, and (vii) it is not in a disparate bargaining position
with the other Party.
* Operations and Delivery Scheduling Requests. Not later than two Business Days
-------------------------------------------
prior to the earlier of Buyer's or Seller's Transporter's nomination deadline
for the first Gas Day of each Month during a Period of Delivery. Buyer agrees to
provide to Seller facsimile notice of the quantities Buyer requests Seller to
Schedule for each Gas Day of such Month. Should Buyer desire to change the
requested quantities Scheduled, Buyer shall provide to Seller facsimile notice
thereof not later than one Business Day prior to the earlier of Buyers or
Seller's Transporter's nomination deadline for the applicable Gas Day. In the
event the nomination or Scheduling deadline of a Transporter conflicts with
these notification dates, Buyer and Seller agree to modify the notification
dates accordingly. Scheduling requests to Seller will be accepted at the
telephone number and shall be confirmed by facsimile as set forth in Exhibit "A"
----------
Transportation. Seller shall obtain, or cause to be obtained, transportation
--------------
to the Delivery Point, and Buyer shall obtain, or cause to be obtained,
transportation from the Delivery Point.
Gas Specifications. Seller represents that all Gas delivered hereunder shall
------------------
meet or exceed the specifications of Buyer's Transporter.
Multiple Delivery Point Utilization. In the event a Transaction shall contain
-----------------------------------
more than one Delivery Point, the Parties shall specify a Maximum Daily Delivery
Point Quantity for each Delivery Point. The Delivery Points which shall be
utilized for delivery of Gas and the quantities of Gas to be Scheduled for
delivery at such Delivery Points shall be determined by Seller in its sole
discretion within each applicable Maximum Daily Delivery Point Quantity. Seller
shall provide to Buyer a list of Delivery Points and quantities determined by it
within a period of time necessary to permit Buyer to make nominations.
Operational Flow Orders. Should either Party receive an operational flow order
-----------------------
or other order or notice from a Transporter requiring action to be taken in
connection with this Agreement or Gas flowing under this Agreement ("OFO"), such
---
Party shall immediately notify the other Party of the OFO and provide the other
Party a copy of same by facsimile. The Parties shall take all actions required
by the OFO within the time prescribed. Each Parties shall take all actions
required by the OFO within the time prescribed. Each Party shall indemnify,
defend and hold harmless the other Party from any Claims, including, without
limitation, all non-compliance penalties and attorney's fees, associated with an
OFO (i) of which the Indemnifying Party failed to give the Indemnifies Party the
notice required hereunder or (ii) under which the indemnifying Party failed to
take the action required by the OFO within the time prescribed.
* Financial Matters Billing, Invoice Date, Charges and Payment. By the 10th
------------------------------------------------------------
Day of each calendar Month following the Month in which Gas was Scheduled under
a Transaction, Seller shall provide Buyer with a written statement setting forth
Gas Scheduled during the preceding Month, and other charges due Seller,
including, without limitation, deficiency charges under Article 3. Billing and
---------
payment will be based on Scheduled quantities. Within five Business Days of the
request of either Party, the other Party shall provide, to the extent it has a
legal right of access thereto and/or such statement is then available, a copy of
the Transporter's allocation or imbalance statement applicable to Gas sold
hereunder for the requested period. The difference, if any, between Scheduled
and actual quantities delivered or accepted shall be treated as imbalances under
Article 7. Buyer shall remit any amount due on the 25th Day of the Month in
---------
which Seller's statement was received. If the due date for any payment to be
made under this Agreement is not a Business Day, the due date for such payment
shall be the following Business Day. Payment of all funds shall be made in U.S.
currency and as indicated in Exhibit "A" in such manner that funds are
-----------
immediately available to the payee on the applicable due date. Each Party shall
take all actions necessary to effect payments in accordance with process stated
in Exhibit "A." If Buyer or Seller should fail to remit any amounts in full when
------------
due hereunder, interest on the unpaid portion shall accrue from the date due at
a rate equal to the Interest Rate. Xxxxxxxx, payments and statements shall be
made to the accounts or the addresses/facsimiles specified in Exhibit "A."
------------
Suspension of Performance. If either Party fails to make a timely payment and
-------------------------
such failure is not remedied within two Business Days after such Party receives
written notice of default, the nondefaulting Party, in addition to other
remedies, may suspend the Scheduling of Gas until such amount, including
interest, is paid; provided, if the defaulting Party, in good faith, shall
dispute the amount of any such billing or part thereof and shall pay such
amounts as it concedes to be correct, no suspension shall be permitted.
Audit Rights. During the term of this Agreement and for a period of two years
------------
from the date of termination of a Transaction, Buyer or Seller or any third
party representative thereof shall have the right upon reasonable notice and at
reasonable times, to examine the books and records of the other to the extent
reasonably necessary to verify the accuracy or any billing statement, payment
demand, charge, payment or computation made under this Agreement. The records
of the Parties shall be retained in accordance with Section 8.5 for a like
-----------
period to facilitate the audit rights of the Parties.
Financial Information. If requested by Customer, Company shall deliver (i)
---------------------
within 120 Days following the end of each fiscal year, a copy of the annual
report of Enron Corp. containing consolidated financial statements for such
fiscal year certified by independent certified public accountants and (ii)
within 60 Days after the end of each of its first three fiscal quarters of each
fiscal year, a copy of the quarterly report of Enron Corp. containing unaudited
consolidated financial statements for such fiscal quarter. If requested by
Company, Customer shall deliver (i) within 120 Days following the end of each
fiscal year, a copy of its annual report containing consolidated financial
statements for such
"1"-2
fiscal year certified by independent certified public accountants and (ii)
within 60 Days after the end of each of its first three fiscal quarters of each
fiscal year, a copy of its quarterly report containing unaudited consolidated
financial statements for such fiscal quarter. In all cases the statements shall
be for the most recent accounting period and prepared in accordance with GAAP;
provided, should any such statements not be timely due to a delay in preparation
or certification, such delay shall not be considered a default so long as such
Party diligently pursues the preparation, certification and delivery of the
statements.
. Warranty of Title to Gas. Seller in any Transaction warrants that title to Gas
------------------------
to be Scheduled by Seller is free from all production burdens, liens and adverse
claims and warrants its right to sell the same. Seller agrees to indemnify,
defend and hold harmless Buyer against all Claims to or against the title of
said Gas. In the event any Claim is asserted to said Gas, Buyer, in addition to
other remedies, may suspend its obligation to pay for said Gas up to the amount
of such Claim.
. Alternate Price Redetermination. If any or all of the indices used to
-------------------------------
determine the Spot Price or the Contract Price are not available in the future,
the Parties agree to promptly negotiate a mutually satisfactory alternate index
for the Spot Price or Contract Price (each an "Alternate Price"). If the
---------------
Parties cannot agree by the end of the first Month for which the Spot Price or
Contract Price could not be determined, then Seller and Buyer shall each prepare
a prioritized list of up to five alternative published reference postings or
prices representative of spot prices for Gas delivered in the same geographic
area. Each Party shall submit its list to the other within 10 Days after the
end of the first Month for which the price could not be determined. The first
listed index appearing in Seller's list that also appears in Buyer's list shall
constitute the replacement index. If no common indices appear on the lists,
each Party shall submit a new list adding two indices within 10 Days. If either
Party fails to provide timely a list, such Party's list shall not be considered.
From and after the "Renegotiation Date" which shall be the date the Spot Price
------------------
or Contract Price is no longer available, until the Alternate Price is
determined, the Alternate Price shall be the average of the Spot Price(s) or
Contract Price(s) in effect during the 12 Months preceding the Month in which
the Renegotiation Date occurred, which price shall be effective until the
Alternate Price is determined. Upon determination of a new Alternate Price, the
Spot Price or Contract Price, as applicable, will be adjusted retroactively to
the Renegotiation Date.
. Effect of Waiver or Consent. No waiver or consent by either Party, express or
---------------------------
implied, or any one or more defaults by the other Party in the performance of
any provision of this Agreement shall operate or be construed as a waiver or
consent of any other default or defaults whether of a like or different nature.
Failure by a Party to complain of any act of the other Party or to declare the
other Party in default with respect to this Agreement, regardless of how long
that failure continues, shall not constitute a waiver by that Party of its
rights with respect to that default until the applicable statute of limitations
period has run.
. Indemnifications. With respect to each Indemnification included in this
----------------
agreement the indemnity is given to the extent authorized by law and the
following provisions shall be considered applicable. The indemnified Party shall
promptly notify the Indemnifying Party in writing of any Claim and the
Indemnifying Party shall have the right to assume the investigation and defense
thereof, including the employment of counsel, and shall be obligated to pay the
related attorneys' fees; provide, the Indemnified Party shall have the right to
employ separate counsel and participate in the defense of any Claim, however,
the attorneys' fees of such counsel shall be paid by the Indemnified Party
unless the employment of such counsel has been consented to in writing by the
Indemnifying Party or the Indemnifying Party has failed to assume the defense
and employ counsel in a timely manner, provided further, if the named parties to
any Claim include both Parties, and the Indemnified Party shall have been
advised by counsel that there may be a legal defense available to it which is
different from those available to the Indemnifying Party, the Indemnified Party
may elect to employ separate counsel at the expense of the Indemnifying Party,
in which case the Indemnifying Party shall pay all attorneys' fees of such
counsel and shall not have the right to assume the defense of the Claim on
behalf of the Indemnified Party. The Parties shall use reasonable efforts to
co-operate in the defense of any Claim. The Indemnifying Party shall not be
liable for any settlement of a Claim without its express written consent
thereto. The Indemnified Party shall reimburse the Indemnifying Party for
payments made or costs incurred in respect of an indemnity with the proceeds of
any judgement, insurance, bond, surety or other recovery made with respect to an
event covered by the indemnity.
. Arbitration Disputes to be Arbitrated. Any and all claims, demands, causes of
-------------------------------------
action, disputes, controversies, and other matters in question arising out of or
relating to this Agreement, any of its provisions, or the relationship between
the Parties created by this Agreement, whether sounding in contract, tort, or
otherwise, whether provided by statute or the common law, for damages or any
other relief, including, without limitation, all Claims (all of which are
referred to herein as "Disputes"), shall be resolved by binding arbitration
--------
pursuant to the Federal Arbitration Act. The arbitration may be initiated by
either Party by providing to the other a written notice of arbitration
specifying the Disputes to be arbitrated. If a Party refuses to honor its
obligations to arbitrate, the other Party may seek to compel arbitration in
either federal or state court. The arbitration proceeding shall be conducted in
Houston, Texas, or other location mutually agreed upon by the Parties. Within
30 Days of the notice initiating the arbitration procedure, each Party shall
designate one arbitrator, who need not be impartial. If a Party fails to
designate an arbitrator, the other Party may have an arbitrator appointed by
applying to the senior active United States District Judge for the Southern
District of Texas. The two arbitrators shall select a third arbitrator. If the
two arbitrators chosen by the Parties fail to agree upon the third arbitrator,
both or either of the Parties may apply to the senior active United States
District Judge for the Southern District of Texas for the appointment of a third
arbitrator. The third arbitrator shall take an oath of neutrality.
. Arbitration Procedures. The three arbitrators shall make all of their
----------------------
decisions by majority vote. The enforcement of this Agreement to arbitrate the
validity construction, and interpretation of this Agreement to arbitrate, and
all procedural aspects of the proceeding pursuant to this Agreement to
arbitrate, including, without limitation, the issues subject to arbitration, the
scope of the arbitrate issues, allegations of "fraud in the inducement" to enter
into this entire Agreement or to enter into this Agreement to arbitrate,
allegations of waiver, delay or defenses to arbitrability, and the rules
governing the conduct of the arbitration, shall be governed by and construed
pursuant to the Federal Arbitration Act. In deciding the substance of the
parties' Disputes, the arbitrators shall apply the substantive laws of the State
of Texas (excluding Texas choice-of-law principles that might call for the
application of some other State's law). The arbitration shall be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, except as modified in this Agreement. It is contemplated that
although the arbitration shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, the arbitration
proceeding will be self-administered by the Parties; provided, if a Party
believes the process will be enhanced if it is administered by the American
Arbitration Association, such Party shall have the right to cause the process to
become administered by the American Arbitration Association by applying to the
American Arbitration Association and, thereafter, the arbitration shall be
conducted pursuant to the administration of the American Arbitration
Association. In determining the extent of discovery, the number and length of
depositions, and all other pre-hearing matters, the arbitrators shall endeavor
to the extent possible to streamline the proceedings and minimize the time and
cost of the proceedings. There shall be no transcript of the hearing. The final
hearing shall be conducted within 120 days of the selection of the third
arbitrator. The final hearing shall not exceed 10 Business Days, with each Party
to be granted one-half of the allocated time to present its case to the
arbitrators. All proceedings conducted hereunder and the decision of the
arbitrators shall be kept confidential by the Parties.
. Arbitration Award. Only damages allowed pursuant to this Agreement may be
-----------------
awarded. It is expressly agreed that the arbitrators shall have no authority to
awards treble, exemplary or punitive damages of any type under any circumstances
regardless of whether such damages may be available under Texas law, the Parties
hereby waiving their right, if any, to recover treble, exemplary or punitive
damages in connection with any Dispute, either in arbitration or in litigation.
The arbitrators shall render their final decision within 20 Days of the
completion of the final hearing resolving all of the Disputes that are the
subject of the arbitration proceeding. The arbitrators ultimate decision after
final hearing shall be in writing. The arbitrators shall certify in their
decision that no part of their award includes any amount for treble, exemplary
or punitive damages not allowed hereunder. The arbitrators'
decision shall be final and non-appealable to the maximum extent permitted by
law. Any and all of the arbitrators' orders and decisions may be enforceable in,
and judgment upon any award rendered in the arbitration proceeding may be
confirmed and entered by, any federal or state court having jurisdiction.
Authority for Transactions Each Party represents to the other Party that each of
--------------------------
its employees has authority to enter into Transactions pursuant to this
Agreement on its behalf. Identification and authority of a Party's employee
engaging in a recorded telephonic Transaction shall be conclusively established
for all purposes by a statement on the Transaction Tape by the employee of the
employee's name and the Party's Identification Code; provided, failure to state
either the employee name or the Identification Code shall not evidence any lack
of authority of the employee to effectuate and form a Transaction.
Flexible Pricing During the Period of Delivery for a Transaction expressly
----------------
providing for "Flexible Pricing" Customer may request a price other than the
----------------
original Contract Price, being a Fixed Price, Fixed Basis Price or Floating
Basis Price (each below defined) by contacting Company during Pricing Hours
requesting any such price for a specified quantity of Gas to be Scheduled during
selected Months within the Period of Delivery; provided, such request must be
made prior to 1:30 p.m. C.T. of the third trading Day prior to the last trading
Day of the NYMEX Gas futures contract for the selected Month. The terms of this
Agreement, including, without limitation, Article 2, shall apply to Flexible
---------
Pricing in respect of any Transaction hereunder. A Confirmation may be sent by
Company to Customer confirming the Flexible Pricing agreement in accordance with
Section 2.4. "Fixed Price" means a fixed dollar amount agreed to by the Parties.
------------ -----------
"Fixed Basis Price" means a price agreed to by the Parties on the basis of NYMEX
-----------------
Gas futures contracts then trading for the applicable Month, or if no such price
is agreed prior to the last three trading Days of the applicable Month, a price
equal to the sum of the average of the settlement prices of the NYMEX Gas
futures contract for the last three trading Days of the applicable Month (the
"Average Settlement Price") plus a fixed dollar amount basis adjustment agreed
------------------------- ----
to by the Parties. "Floating Basis Price" means a price equal to the sum of a
--------------------
fixed dollar amount agreed to by the Parties plus the difference between the
----
selected reference price for the Delivery Point(s) and the Average Settlement
Price for the applicable Month. The price for all Gas for which a Flexible Price
has not been agreed by the Parties shall be the original Contract Price
applicable to the Transaction.
EXHIBIT "A"
ENFOlIO MASTER FIRM PURCHASE/SALE AGREEMENT
NOTICE/COMMUNICATION/PAYMENT
TO COMPANY:
Notices/Correspondence:
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: Documentation and Deal Clearing Desk
Facsimile No. (000)000-0000
Termination Notice Facsimile No. (000)000-0000
Invoices:
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: Client Services
Facsimile No. (000) 000-0000
Payments:
Enron Capital & Trade Resources Corp.
ABA Routing 000000000 NationsBank TX
Account 3750494099
Nominations: 0(000)000-0000/0(000)XXXXXXX
Confirmations: ECT Gas Trading 0(000)000-0000
TO CUSTOMER:
Notices/Correspondence:
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No. (000) 000-0000
Invoices:
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No. (000) 000-0000
Payments:
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Nominations: Facsimile No.(000) 000-0000
Confirmations: Facsimile No.(000) 000-0000
EXHIBIT "B"
ENFOLIO MASTER FIRM PURCHASE/SALE AGREEMENT
EXAMPLE OF CONFIRMATION ON COMPANY LETTERHEAD (INCLUDING NAME AND ADDRESS) TO
CONFIRM TELEPHONIC TRANSACTIONS UNDER
SECTION 2.4
-----------
This Confirmation shall confirm the Transaction agreed to on ___________ 19 and
binding between ____________________ ("Customer") and ("Company") regarding the
-------- -------
firm purchase and sale of Gas under the following terms and conditions.
______________________ to purchase and receive (Buyer) and _________________ to
sell and deliver (Seller). Transaction number __________________________
DAILY CONTRACT QUANTITY (DCQ): _____________________
MAXDQ (if applicable): _____________________
MINMQ (if applicable): _____________________
MINDQ (if applicable): _____________________
DELIVERY POINT(S): _____________________
CONTRACT PRICE (per MMBtu): _____________________
PERIOD OF DELIVERY: _____________________
SPOT PRICE LOCATION: _____________________
If this Confirmation relates to a NYMEX Exchange of Futures for Physicals
Transaction the Confirmation may include the following with respect to Contract
Price: The Contract Price shall be equal to the EFP Posted Price [plus] [minus]
$______ (the "Adjustment"). The "EFP Posted Price" shall be in accordance with
---------- ----------------
Rule 220.17 of the rules and regulations of the NYMEX pertaining to Gas futures
contracts for the Period of Delivery as set forth below:
Buyer agrees to exchange its long position in [# OF CONTRACTS, MONTH, YEAR]
NYMEX contracts with Seller for Sellers short position in [# OF CONTRACTS,
MONTH, YEAR] NYMEX contracts at a price of $____
[REPEAT TEXT AFTER = FOR EACH DELIVERY MONTH OF THE PERIOD OF DELIVERY FOR WHICH
THE EFP POSTED PRICE IS AGREED AS OF THE PREPARATION OF THIS CONFIRMATION]
In each Delivery Month for which an EFP Posted Price is not herein set forth,
the EFP Posted Price shall be the price at which the exchange is posted with
NYMEX in accordance with Rule 220.17. Notwithstanding anything herein, if no
posting is timely made for any Delivery Month in accordance with Rule 220.17 by
Buyer and Seller, then there shall be no EFP Transaction hereunder for such
Delivery Month. The Transaction for that Delivery Month shall be considered a
Transaction for the firm purchase and sale of Gas otherwise in accordance with
the provisions hereof at a Contract Price equal to the average of the
settlement prices occurring the last three Trading Days of the NYMEX Gas
contracts for the applicable Delivery Month [plus] [minus] the Adjustment For
purposes hereof, "Trading Day" means any Day for which a NYMEX Gas contract is
----------
determinable.)
This Confirmation is being provided pursuant to and in accordance with the
ENFOLIO Master Firm Purchase/Sale Agreement in effect between Customer and
Company (the "Agreement") and constitutes part of and is subject to all of the
----------
terms and provisions of such Agreement. All capitalized terms herein used, but
not defined, shall have the meanings set forth in the Agreement. Company does
hereby adopt its letterhead, including its address, as its signature in respect
of the identification of Company and the authentication by Company of this
Confirmation. Any objection of Customer to this Confirmation must be made by
written notice to Company prior to the Confirm Deadline, as agreed and defined
in the Agreement.
EXHIBIT "B-1"
ENFOLIO MASTER FIRM PURCHASE/SALE AGREEMENT
SUGGESTED FORM OF TRANSACTION AGREEMENT FOR USE WITH TRANSACTIONS FORMED UNDER
SECTION 2.2(i)
-------------
This Transaction Agreement shall form and effectuate the current proposal
between ____________________ ("Customer") and _____________ ("Company")
-------- -------
regarding the firm purchase and sale of Gas under the following terms and
conditions. ___________________ to purchase and receive (Buyer) and
________________ to sell and deliver (Seller). Transaction number
_____________________________
DAILY CONTRACT QUANTITY (DCQ): __________________________
MAXDQ (if applicable): __________________________
MINMQ (if applicable): __________________________
MINDQ (if applicable): __________________________
DELIVERY POINT(S): __________________________
CONTRACT PRICE (per MMBtu): __________________________
PERIOD OF DELIVERY: __________________________
SPOT PRICE LOCATION: __________________________
This Transaction Agreement is being provided pursuant to and in accordance with
the ENFOLIO Master Firm Purchase/Sale Agreement in effect between Customer and
Company and constitutes part of and is subject to all of the terms and
provisions of such Agreement. Please execute this Transaction Agreement and
return an executed copy to Company. Your execution should reflect the
appropriate party in your organization who has the authority to cause Customer
to enter into this Transaction. In the event Customer alters the terms of this
Transaction Agreement in any manner there will be no Transaction pursuant to
this Transaction Agreement.
SIGNATURE LINES FOR CUSTOMER AND COMPANY
[LETTERHEAD OF ENRON CAPITAL & TRADE APPEARS HERE]
October 23, 1997
Boston Gas Company
Xxx Xxxxxx Xxxxxx
XX 00000
Attn: Xx. Xxxxxxx X. Xxxxxxx
Vice President
TRANSACTION AGREEMENT
---------------------
This Transaction Agreement shall form and effectuate the current proposal
between Boston Gas Company ("Customer") and Enron Capital & Trade Resources
--------
Corp. ("Company") regarding the firm purchase and sale of Gas under the
-------
following terms and conditions. Customer to purchase and receive (Buyer) and
Company to sell and deliver (Seller). Transaction number 1.
DAILY CONTRACT QUANTITY (DCQ): 35,000 MMBtu/day; (Firm)
DELIVERY POINT(S): Boston Gas City Gate and/or Mendon, MA (as
delivered off Tennessee Gas Pipeline
Company; provided any interruption of
deliveries at the Mendon delivery point
shall be received and purchased at the
Boston Gas City Gate delivery point.
CONTRACT PRICE (per MMBtu): 1) The TETCO M-3 Index (defined below)
plus the Boston Differential (defined
below), where:
"TETCO M-3 Index" means the price for
natural gas for the applicable delivery
Month in U.S. dollars per MMBtu published
in the first issue in that Month by Inside
------
FERC Gas Market Report in the table
----------------------
entitled "Market Center Spot Gas Prices"
in the row "Texas Eastern Transmission
Corp. Xxxx X-0" in the column "Index".
"Boston Differential" means the price
differential for the applicable delivery
Month in U.S. dollars per MMBtu obtained
by subtracting (ii) from (i) where: (i) is
the price agreed to by Company and
Customer for each applicable delivery
Month for delivery of 35,000 MMBtu's per
Day of physical Gas delivered to the
Boston Gas City Gate and (ii) is the TETCO
M-3 Index for that delivery Month. If, for
any reason whatsoever, the Parties cannot
agree on the Boston Differential for any
delivery Month, the Boston Differential
for such delivery Month shall be deemed to
be equal the Indicative Boston Gas City
Gate Index (defined below) for that
delivery Month minus the TETCO M-3 Index
for that delivery Month. Company will
endeavor to submit Company's proposal as
to such Boston Differential at least 3
days prior to each delivery Month.
2) Additionally, Customer agrees to pay
Company a Monthly reservation fee for the
first fifty-six (56) months of the term of
delivery under this Transaction Agreement.
Such monthly transaction fee shall be
equal to the product of $ per MMBtu times
35,000 MMBtu times the number of days in
the Month.
PERIOD OF DELIVERY: Commencing on January 1, 1998 and
continuing thereafter through March 31,
2007. Notwithstanding the foregoing, this
Transaction Agreement shall automatically
terminate as of January 1, 1996 if ECTRC
fails to obtain signed purchase and sale
transactions with Alberta producers
(including all amendments thereto and,
with all such amendments, in form and
substance acceptable to ECTRC) for the
delivery of the DCQ plus applicable fuel
gas for the term of this Transaction, and
such Alberta producer transactions
(including all amendments thereto) are in
full force and effect.
SPOT PRICE LOCATION: Texas Eastern - Zone M3
NATURAL GAS. ELECTRICITY. ENDLESS POSSIBILITIES.
BOSTON GAS COMPANY
OCTOBER 23, 1997
Page 2
_______________
OTHER: 1) Option - Commencing November 1, 1999,
Customer has the sole right with ninety (90)
days prior written notice to reduce the DCQ
in increments of not less than 15,000
MMBtu/Day for the remaining term of this
Transaction Agreement. Additionally, if
Customer's purchases under its long term gas
purchase arrangements with Imperial Oil
Limited for gas originating from the Sable
Offshore Energy Project do not commence by
November 1, 2000 and if Company agrees to
redetermine the Contract Price hereunder,
then the Contract Price hereunder shall be
redetermined to a Contract Price that is
mutually agreeable to the Parties.
2) Repurchase Option - Company has the right
to repurchase quantities at the Boston Gas
City Gate delivery point with the consent of
Boston Gas; provided, however, that such
consent will not be unreasonably withheld and
that such quantities are otherwise not
encumbered by Customer's currently effective
capacity assignment procedures, a copy of
such capacity assignment procedures to be
provided by Customer to Company prior to
commencement of deliveries under this
Transaction Agreement. These quantities must
be designated at the first of the month, and
cannot be diverted from the Boston Gas City
Gate delivery point. Company shall purchase
such quantities at a $0.005 per MMBtu premium
to the calculated monthly price.
3) Future Boston Gas City Gate Index - If, at
any time during the Period of Delivery, there
is an established liquid market for natural
gas delivered to, and purchased at the Boston
Gas City Gate at a price Index which the
Parties have agreed in writing is acceptable
to each at the Parties, respectively in their
sole discretion (the "Approved Boston Gas
City Gate Index"), the Parties agree that,
commencing the first delivery Month after the
Month in which the Parties have agreed in
writing to the Approved Boston Gas City Gate
Index and for the reminder of the Period of
Delivery, the TETCO Boston Differential
Component of the Contract Price (defined
below) shall be replaced for all purposes
under this Confirmation Letter, including for
the determination of the Contract Price over
the remainder of the Period of Delivery, by
the Approved Boston Gas City Gate Index. For
certainty, the Parties acknowledge and agree
that, as of the date hereof and unless and
until accepted by the Parties as the Approved
Boston Gas City Gate Index as provided above,
the Indicative Boston Gas City Gate Index
(defined below) is not acceptable to the
Parties as the Approved Boston Gas City Gate
Index.
As used above:
TETCO + Boston Differential Component of the
Contract Price means the portion of the
Contract Price determined by the sum of: (i)
the TETCO M-3 Index; plus (ii) the Boston
Differential; and "Indicative Boston Gas City
Gate Index" means the price for natural gas
for each applicable delivery Month in U.S.
dollars per MMBtu published in the first
issue in that Month by Natural Gas Week in
----------------
the table entitled "City Gate Prices" in xxx
xxx "Xxxxxx, Xxxx," in the column "Bid Week"
for the applicable delivery Month.
4) True-Up Mechanism - Within Sixty Days of
each Anniversary Date (defined below), Seller
shall send Buyer a written statement showing:
(i) the monthly average of the TETCO + Boston
Differential Component of the Contract Price
for the delivery Months to which the TETCO +
Boston Differential Component of the Contract
Price is applicable (the Yearly Average
Differential Component of the Contract
Price"); and (ii) the monthly average of the
Indicative Boston Gas City Gate Index over
each of those same delivery Months (the
"Yearly Average Indicative Boston Gas City
Gate Index").
BOSTON GAS COMPANY
OCTOBER 23, 1997
Page 3
________________
If the Yearly Average Differential Component
of the Contract Price is: (i) less than 96%
of the Yearly Average Indicative Boston Gas
City Gate Index: or (ii) greater than 104% of
the Yearly Average Indicative Boston Gas City
Gate Index, the amount paid or payable by
Buyer for the total volume Gas purchased and
sold over each of those same delivery Months
shall be adjusted by an amount (the amount of
such adjustment being the "Adjustment
Amount"), payable as of the next Payment
Date, obtained by multiplying: (A) the
absolute value of the difference between the
Yearly Average Differential Component of the
Contract Price and the Adjusted Yearly
Average Indicative Boston Gas City Gate Index
(defined below); by (B) the total volume of
Gas purchased and sold over each of those
same delivery Months. In the case of an
adjustment for (i) above, the Adjustment
Amount shall be payable by Customer to
Company. In the case of an adjustment for
(ii) above, the Adjustment Amount shall be
payable by Company to Customer.
As used above:
"Adjusted Yearly Average Indicative Boston
Gas City Gate Index means: (i) if the Yearly
Average Differential Component of the
Contract Price is less than 96% of the Yearly
Average Indicative Boston Gas City Gate
Index, 96% of the Yearly Average Indicative
Boston Gas City Gate Index: or (ii) if the
Yearly Average Differential Component of the
Contract Price is more than 104% of the
Yearly Average Indicative Boston Gas City
Gate Index, 104% of the Yearly Average
Indicative Boston Gas City Gate Index; and
"Anniversary Date" means, with respect to
each Contract Year, November 1, 1998;
November 1, 1999; November 1, 2000: November
1, 2001: November 1, 2002; November 1, 2003;
November 1, 2004; November 1, 2005; November
1, 2006; and April 1, 2007.
5) Regulatory Approval - Buyer agrees to use
all reasonable efforts to obtain any
approvals, consents or authorizations
("Regulatory Approval") that may be required
from the Massachusetts Department of Public
Utilities ("MDPU" herein), to allow Buyer to
enter into this Transaction with Seller, and
Buyer has advised Seller that Buyer intends
to make a regulatory filing with the MDPU to
obtain such Regulatory Approval. Buyer agrees
that if the MDPU does not issue an order
allowing Buyer's purchase of gas under the
terms and conditions of this Transaction
("Regulatory Approval") at any time prior to
January 1, 1998, then this Transaction
Agreement shall automatically terminate.
6) Force Majeure - Notwithstanding anything
to the contrary contained in the ENFOLIO
Master Firm Purchase/Sale Agreement, any
curtailments or interruptions of firm
delivery service occurring at any point
upstream of the Boston Gas City Gate delivery
point up to and including any NOVA Inventory
Transfer delivery point on NOVA Gas
Transmission Ltd.'s gas transmission system
at Alberta, Canada shall be deemed to be an
event at Force Majeure under this
Transaction.
7) Boston Canadian Transportation
Requirements, Boston U.S. Transportation
Requirements and Export/Import Requirements -
Seller and ECTRC, on behalf of Seller, shall
use all reasonable efforts to obtain all
approvals and assignments (including, without
limitation, any approvals, consents or
authorizations required from any applicable
regulatory authorities to any such
assignments), with terms and in a form
acceptable to Seller and ECTRC, for
BOSTON GAS COMPANY
OCTOBER 23, 1997
Page 4
_____________
firm transportation agreements necessary to
transport the DCQ plus applicable fuel gas
for the period of delivery from (a) the NOVA
Inventory Transfer delivery point on NOVA Gas
Transmission Ltd.'s gas transmission system
at Alberta, Canada to the interconnection of
TransCanada Pipelines Limited ("TCPL") and
Iroquois Gas Transmission System, L.P.
("IGT") at Iroquois, Ontario and Waddington,
New York (the "Boston Canadian Transportation
Requirements") and (b) the interconnection of
TCPL and IGT at Iroquois, Ontario and
Waddington, New York to the Boston Gas City
Gate delivery point (the "Boston U.S.
Transportation Requirements"). Additionally,
Seller and ECTRC shall use all reasonable
efforts to obtain all regulatory approvals,
with terms and in a form acceptable to Seller
and ECTRC, necessary for the DCQ plus
applicable fuel gas to be removed from
Alberta, exported from Canada and imported
into the United States (collectively the
"Export/Import Requirements"). Buyer shall
cooperate with Seller and ECTRC in obtaining
the Boston Canadian Transportation
Requirements, the Boston U.S. Transportation
Requirements and the Export/Import
Requirements. If the Boston Canadian
Transportation Requirements have not been
obtained by January 1, 1998, then Seller, in
its sole discretion, may terminate this
Transaction at any time after January 1, 1998
but prior to the date the Boston Canadian
Transportation Requirements have been
obtained by giving written notice thereof to
Buyer. If the Boston U.S. Transportation
Requirements and the Export/Import
Requirements have not been obtained by
January 1, 1998, then Seller, in its sole
discretion, may terminate this Transaction at
any time after January 1, 1998 but prior to
the date the Boston U.S. Transportation
Requirements and the Export/Import
Requirements have been obtained by giving
written notice thereof to Buyer.
This Transaction Agreement is being provided pursuant to and in accordance with
the ENFOLIO Master Firm Purchase/Sale Agreement in effect between Customer and
Company and constitutes part of and is subject to all of the terms and
provisions of such Agreement. Please execute this Transaction Agreement and
return an executed copy to Company. Your execution should reflect the
appropriate party in your organization who has the authority to cause Customer
to enter into this Transaction. In the event Customer alters the terms of this
Transaction Agreement in any manner there will be no Transaction pursuant to
this Transaction Agreement.
BOSTON GAS COMPANY ENRON CAPITAL & TRADE RESOURCES CORP.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxx Xxxxx
----------------------------------- ----------------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxx Xxxxx
------------------------------ -----------------------------
Title: Vice President Title: Vice President
--------------------------- ----------------------------
