EXHIBIT 10.11
THE UNITED ILLUMINATING COMPANY
AND
BAYWAY REFINING COMPANY
FUEL OIL SUPPLY
AND MANAGEMENT AGREEMENT
AS OF OCTOBER 1, 1995
THE UNITED ILLUMINATING COMPANY AND BAYWAY REFINING COMPANY
FUEL OIL SUPPLY AND MANAGEMENT AGREEMENT
CONTENTS PAGE
-------- ----
I. TERM 1
II. DEFINITIONS 1
III. COMMODITY CONTRACT
A. CONTRACT VOLUME 2
B. QUALITY SPECIFICATIONS 2
C. SALE PRICE 3
D. BTU GUARANTEE & CREDIT ADJUSTMENT 4
E. NOMINATION PROCEDURE & DELIVERY 4
F. TANK TRANSFERS & VESSEL DELIVERIES:
QUANTITY & QUALITY DETERMINATION 4
G. BARRELS CONSUMED 5
H. TITLE AND RISK OF LOSS 5
I. EMERGENCY SUPPLY 5
IV. INVENTORY MANAGEMENT
A. DESCRIPTION OF INVENTORY MANAGEMENT
SERVICE 6
B. NOTIFICATION REQUIREMENTS 7
C. SERVICE FEE 7
D. OPENING INVENTORY & TRANSITION
SERVICE FEE 7
V. INVENTORY FINANCING
A. SERVICE CHARGE 7
VI. RECORDKEEPING, INVOICING & PAYMENT TERMS
A. RECORDKEEPING 8
B. INVOICING & PAYMENT TERMS 9
C. FINANCIAL RESPONSIBILITY 9
VII. FIXED PRICE, FUEL PROCESSING & THIRD PARTY
TRANSACTIONS 9
VIII. OTHER PROVISIONS
A. INSURANCE 9
B. CONTACTS 9
C. UCC FILING 10
D. TAXES & FEES ON SELLER'S PRODUCT 10
E. TERMINATION OF AGREEMENT 10
F. GOVERNING LAW 11
G. CONFIDENTIALITY 11
H. ASSIGNMENT 11
I. FORCE MAJEURE 11
2
THE UNITED ILLUMINATING COMPANY AND BAYWAY REFINING COMPANY
FUEL OIL SUPPLY AND MANAGEMENT AGREEMENT
CONTENTS
IX. ATTACHMENTS
A. DISCOUNT FORMULAS FOR ASH & WATER BY DISTILLATION
B. NO. 6 FUEL OIL INVENTORY & CONSUMPTION REPORT
SAMPLE
C. INVOICE & STATEMENT FORMAT SAMPLES
3
FUEL OIL SUPPLY AND MANAGEMENT AGREEMENT
THIS AGREEMENT IS MADE AS OF OCTOBER 1, 1995 BETWEEN THE
UNITED ILLUMINATING COMPANY (THE "BUYER"), A CONNECTICUT
CORPORATION, WITH ITS PRINCIPAL PLACE OF BUSINESS AT 000 XXXXXX
XXXXXX, XXX XXXXX, XXXXXXXXXXX, AND BAYWAY REFINING COMPANY (THE
"SELLER"), A DELAWARE CORPORATION, HAVING ITS PRINCIPAL PLACE OF
BUSINESS AT 0000 XXXX XXXXXX, XXXXXX, XXX XXXXXX.
WHEREAS, BUYER AND SELLER WISH TO ENTER INTO AN AGREEMENT
FOR THE PURCHASE/SALE OF NO. 6 FUEL OIL (THE "PRODUCT"), AND THE
MANAGEMENT AND FINANCING OF BUYER'S NO. 6 FUEL OIL INVENTORY;
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES, MUTUAL
COVENANTS, PROMISES AND REPRESENTATIONS CONTAINED HEREIN, AND
OTHER VALUABLE CONSIDERATIONS, THE RECEIPT OF WHICH IS HEREBY
ACKNOWLEDGED BY THE RESPECTIVE PARTIES HERETO, BUYER AND SELLER
AGREE AS FOLLOWS:
I. TERM
THE TERM OF THIS AGREEMENT SHALL BE FOR ONE YEAR COMMENCING ON
OCTOBER 1, 1995 AND EXPIRING ON SEPTEMBER 30, 1996. THIS
AGREEMENT MAY BE EXTENDED FOR ADDITIONAL ONE-YEAR PERIODS
PROVIDED BOTH BUYER AND SELLER AGREE TO SUCH AN EXTENSION NOT
LATER THAN SIXTY CALENDAR DAYS PRIOR TO THE EXPIRATION DATE. IF
BUYER AND SELLER DO NOT AGREE TO EXTEND THIS AGREEMENT, THE
PROVISIONS OF SECTION VIII.E. (TERMINATION OF AGREEMENT) SHALL
APPLY.
II. DEFINITIONS
A. PRODUCT: NO. 6 FUEL OIL CONFORMING TO THE
SPECIFICATIONS CONTAINED IN SECTION III.B.
B. OPERATING TANK: DESIGNATED TANK AT RELEVANT
LOCATION (AS DEFINED IN SECTION III.A.) INTO WHICH
SELLER PUMPS PRODUCT FROM WHICH BUYER SHALL DRAW FOR
CONSUMPTION.
C. SELLER'S LEASED TANKAGE: DESIGNATED TANKS AT
RELEVANT LOCATION INTO WHICH SELLER SHALL STORE PRODUCT
PURSUANT TO SELLER'S STORAGE TANK LEASE & TERMINAL
SERVICES AGREEMENT DATED AS OF OCTOBER 1, 1995.
D. DELIVERY MONTH: CALENDAR MONTH DURING WHICH
SELLER SHALL DELIVER AND BUYER SHALL CONSUME PRODUCT.
E. TANK TRANSFER: MOVING PRODUCT FROM ONE TANK TO
ANOTHER TANK VIA PUMPOVER.
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F. VESSEL DELIVERY: PRODUCT DELIVERED TO BUYER'S
OPERATING TANK DIRECTLY FROM A BARGE OR TANKER.
G. BARRELS: ALL BARRELS REFERRED TO HEREIN ARE
CORRECTED TO 60 DEGREES F.
H. BARRELS CONSUMED: QUANTITY OF PRODUCT USED BY
BUYER IN A DELIVERY MONTH WILL BE DETERMINED BY OPENING
OPERATING TANK(S) INVENTORY FIGURES PLUS PRODUCT
TRANSFERRED OR DELIVERED INTO OPERATING TANK(S) MINUS
CLOSING INVENTORY FIGURES. DAILY AND WEEKLY REPORTS OF
BARRELS CONSUMED WILL BE BASED ON BRIDGEPORT AND NEW
HAVEN HARBOR STATION READINGS.
I. CONTRACT QUARTER: THE THREE MONTH PERIODS ENDING
DECEMBER 31, MARCH 31, JUNE 30, AND SEPTEMBER 30.
J. DELIVERY LOCATIONS: THE LOCATIONS TO WHICH SELLER
SHALL DELIVER PRODUCT SHALL BE BUYER'S BRIDGEPORT
HARBOR STATION AND BUYER'S NEW HAVEN HARBOR STATION.
III. COMMODITY CONTRACT
A. CONTRACT VOLUME:
SELLER AGREES TO SELL AND DELIVER TO BUYER, AND
BUYER AGREES TO PURCHASE FROM SELLER, __% OF BUYER'S
NO. 6 FUEL OIL REQUIREMENTS DURING THE TERM OF THIS
AGREEMENT. BUYER'S ESTIMATED ANNUAL REQUIREMENTS FOR
BRIDGEPORT HARBOR STATION AND NEW HAVEN HARBOR STATION
("THE LOCATIONS") ARE ___ MILLION BARRELS.
B. QUALITY SPECIFICATIONS:
PRODUCT DELIVERED BY SELLER TO BUYER HEREUNDER
SHALL BE COMMERCIALLY ACCEPTABLE AND NOT CONTAIN ANY
HAZARDOUS MATERIALS. PRODUCT MUST NOT CONTAIN
PETROCHEMICAL WASTES, PETROCHEMICAL RESIDUES OR SPENT
CHEMICALS, INCLUDING, BUT NOT LIMITED TO CAUSTICS AND
ACIDS, PRODUCT MUST HAVE A MARKETABLE ODOR
CHARACTERISTIC OF RESIDUAL FUEL OIL AND COMPLY WITH THE
FOLLOWING QUALITY SPECIFICATIONS:
SPECIFICATION TABLE:
SPECIFICATION ASTM/IP MIN. MAX.
------------- ------- ---- ----
(1) API GRAVITY ("API") D-287 8.0 --
FLASH POINT, DEG. F D-93 150 --
POUR POINT, DEG. F D-97 -- 115
(2) VIS. SFS @ 122 DEG.F D-445/D-2161 15 300
SULFUR, WT. % D-4294 -- 1.0
SEDIMENT BY EXTRAC. WT.% D-473 -- 0.25
WATER BY DISTILL. VOL.% D-95 -- 0.5
ASH, WT. % D-482 -- 0.15
5
VANADIUM, PPM D-1548 -- 200
ALUMINUM, PPM PER SHIPMENT IP-377 -- 175
PER MONTH -- 125
SILICON, PPM PER SHIPMENT IP-377 -- 175
PER MONTH -- 000
XXXXXXXXXXX % PER SHIPMENT IP-143 -- 15.0
6-MONTH WEIGHTED AVG -- 8.0
BTU PER GALLON @ 60 DEG. F D-240 145,000 --
(BTU CONTENT BELOW THIS LEVEL WILL CREATE OPERATIONAL
PROBLEMS. NOT TO BE CONFUSED WITH BTU GUARANTEE IN SECTION
III.D.)
NOTE 1: API GRAVITY BELOW THE 8.0 MINIMUM MAY BE ACCEPTED
IF COMPATIBILITY TEST RESULTS (ASTM D-4740) ARE LESS THAN
3.0.
NOTE 2: ASTM D-2161 SHALL BE USED TO CONVERT KINEMATIC
VISCOSITY TEST RESULTS (ASTM D-445) TO SAYBOLT FUROL
VISCOSITY.
OIL LOADING OR DISCHARGE TEMPERATURE SHALL BE THE GREATER OF
110 DEGREES FAHRENHEIT OR 30 DEGREES FAHRENHEIT ABOVE POUR
POINT.
AN INDEPENDENT PETROLEUM INSPECTOR'S REPORT AS TO QUALITY
MUST BE PROVIDED TO BUYER PRIOR TO ANY TANK TRANSFER OR
VESSEL DISCHARGE INTO BUYER'S OPERATING TANK(S). IF THE
INSPECTOR CERTIFIES THAT THE RESULTS FAIL TO MEET ANY OF THE
PRECEDING QUALITY CHARACTERISTICS, BUYER MAY REFUSE TO
ACCEPT DELIVERY. IF BUYER ELECTS TO ACCEPT THE NON-
CONFORMING FUEL OIL, SELLER WILL PROVIDE A SALE PRICE
DISCOUNT TO BUYER. THE FORMULAS FOR DETERMINING DISCOUNTS
FOR FAILURE TO MEET ASH OR WATER BY DISTILLATION
SPECIFICATIONS ARE PROVIDED IN ATTACHMENT A. THE DISCOUNT
FOR FAILURE TO MEET ANY OTHER SPECIFICATIONS WILL BE
NEGOTIATED BETWEEN BUYER AND SELLER.
C. SALE PRICE:
THE SALE PRICE PER BARREL SHALL BE THE ARITHMETIC
AVERAGE OF_____________________________________________
EFFECTIVE POSTING FOR 1.0% SULFUR NO. 6 FUEL OIL
PUBLISHED DURING ______________________ ROUNDED TO
THREE DECIMAL PLACES AND ANY CORRECTIONS TO SUCH
PUBLISHED PRICES _________ PER BARREL, DELIVERED TO
BUYER'S BURNER TIP AT THE LOCATIONS.
THE SALE PRICE INCLUDES TRANSPORTATION AND ALL
APPLICABLE TAXES CURRENTLY IN EFFECT INCLUDING IMPORT
DUTY, SUPERFUND, CUSTOMS FEES, HARBOR MAINTENANCE FEE,
FEDERAL OIL SPILL TAX, NEW YORK AND NEW JERSEY SPILL
TAX, AND OPA 90 SPILL COVERAGE. THE CONNECTICUT GROSS
RECEIPTS TAX ON PETROLEUM PRODUCTS IS NOT INCLUDED IN
THE SALE PRICE AND BUYER SHALL BE CHARGED THEREFOR,
MONTHLY.
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D. BTU GUARANTEE & CREDIT ADJUSTMENT:
THE GUARANTEED WEIGHTED AVERAGE OF THE BTU CONTENT
OF FUEL CONSUMED HEREUNDER DURING EACH CONTRACT QUARTER
SHALL BE _______ BTU PER GALLON. IN THE EVENT THAT THE
WEIGHTED AVERAGE BTU CONTENT IS NOT MET DURING A
CONTRACT QUARTER, THE BUYER WILL BE ENTITLED TO A
CREDIT DETERMINED AS FOLLOWS:
IF THE ACTUAL WEIGHTED AVERAGE BTU/GALLON FOR THE
CONTRACT QUARTER WHEN DIVIDED BY THE GUARANTEE IS LESS
THAN 1.0, THE DIFFERENCE FROM 1.0 WILL BE MULTIPLIED
TIMES THE WEIGHTED AVERAGE SALE PRICE (PER SECTION
III.C.) OF THE FUEL OIL FOR THE SAME CONTRACT QUARTER.
THIS RESULT WILL THEN BE MULTIPLIED BY THE VOLUME OF
FUEL OIL CONSUMED DURING THAT CONTRACT QUARTER TO
DETERMINE THE TOTAL CREDIT DUE THE BUYER. ANY AND ALL
CREDITS DUE BUYER WILL BE REFLECTED ON THE NEXT MONTHLY
INVOICE TO BUYER AFTER THE END OF THE CONTRACT QUARTER.
E. NOMINATION PROCEDURE AND DELIVERY:
ON THE LAST BUSINESS DAY OF EACH WEEK, BUYER WILL
PROVIDE SELLER WITH WRITTEN NOTIFICATION OF ACTUAL
BARRELS CONSUMED FOR THE PREVIOUS TEN DAYS AND A SIXTY-
DAY PROJECTION OF ITS ANTICIPATED CONSUMPTION FOR EACH
OF THE LOCATIONS. SEE ATTACHMENT B FOR SAMPLE FORMAT.
WITHIN TWO BUSINESS DAYS OF RECEIVING BUYER'S
PROJECTIONS, SELLER SHALL PROVIDE WRITTEN NOTIFICATION
TO BUYER OF ITS PLANS TO SUPPLY PRODUCT TO MEET BUYER'S
PROJECTIONS IN ACCORDANCE WITH THE MINIMUM INVENTORY
REQUIREMENTS DESCRIBED IN SECTION IV. BUYER SHALL MAKE
BEST EFFORTS TO PROMPTLY ADVISE SELLER OF ANY CHANGES
TO ITS IMMEDIATE FUEL OIL REQUIREMENTS AND ANY
SCHEDULED OR UNSCHEDULED MAINTENANCE OF THE LOCATIONS.
SELLER SHALL DELIVER PRODUCT TO THE BUYER'S BURNER
TIP VIA THE BUYER'S OPERATING TANK AT THE LOCATIONS.
F. TANK TRANSFERS & VESSEL DELIVERIES: QUANTITY AND
QUALITY DETERMINATION:
1. TANK TRANSFERS: THE QUANTITY FOR TANK
TRANSFERS INTO BUYER'S OPERATING TANK WILL BE
BASED ON SHORE TANK MEASUREMENTS OF SELLER'S
LEASED TANKAGE PRIOR TO AND AFTER PUMPOVER TO
BUYER'S OPERATING TANK. QUALITY WILL BE BASED ON
COMPOSITE SAMPLES OF THE SHORE TANK(S) DESIGNATED
BY SELLER TAKEN PRIOR TO PUMPOVER TO BUYER'S
OPERATING TANK.
2. VESSEL DELIVERIES: THE QUANTITY FOR
VESSEL DELIVERIES INTO BUYER'S ACTIVE OPERATING
TANK WILL BE DETERMINED BY VESSEL TANK
MEASUREMENTS TAKEN PRIOR TO AND AFTER DISCHARGE OF
THE VESSEL. THIS
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VOLUME WILL BE CORRECTED BY THE VESSEL
EXPERIENCE FACTOR (VEF). THE QUANTITY FOR VESSEL
DELIVERIES INTO BUYER'S INACTIVE OPERATING TANK
WILL BE BASED ON SHORE TANK MEASUREMENTS OF
OPERATING TANK TAKEN PRIOR TO AND AFTER VESSEL
DISCHARGE. QUALITY WILL BE BASED ON A COMPOSITE
OF SAMPLES TAKEN FROM EACH OF THE VESSEL'S HOLDS
DISCHARGED INTO THE OPERATING TANK.
ALL QUANTITY AND QUALITY MEASUREMENTS
SHALL BE CARRIED OUT BY A MUTUALLY ACCEPTABLE
INDEPENDENT LICENSED AND CERTIFIED PETROLEUM
INSPECTION COMPANY WHOSE FINDINGS SHALL BE FINAL
AND BINDING ON THE PARTIES. THE COST OF THESE
INSPECTIONS WILL BE SHARED EQUALLY BETWEEN BUYER
AND SELLER.
THE INSPECTOR'S REPORT AS TO QUALITY
MUST BE PROVIDED TO BUYER PRIOR TO TANK TRANSFER
OR VESSEL DISCHARGE. IF THE INSPECTOR CERTIFIES
THAT THE RESULTS FAIL TO MEET ANY OF THE QUALITY
CHARACTERISTICS SPECIFIED IN SECTION III.B., BUYER
MAY REFUSE TO ACCEPT DELIVERY. IF BUYER ELECTS TO
ACCEPT THE NON-CONFORMING FUEL OIL, THE DISCOUNT
PROVISIONS CONTAINED IN SECTION III.B. WILL APPLY.
G. BARRELS CONSUMED:
BARRELS CONSUMED BY BUYER WILL BE DETERMINED BY
OPENING OPERATING TANK(S) INVENTORY FIGURES PLUS
PRODUCT TRANSFERRED OR DELIVERED INTO OPERATING TANK(S)
MINUS CLOSING INVENTORY FIGURES. ALL INVENTORY, TANK
TRANSFER AND DELIVERY VOLUMES WILL BE CERTIFIED BY A
MUTUALLY ACCEPTABLE INDEPENDENT LICENSED AND CERTIFIED
PETROLEUM INSPECTION COMPANY. CLOSING INVENTORIES WILL
BE MEASURED AT MIDNIGHT ON THE LAST CALENDAR DAY OF THE
MONTH AND SERVE AS THE BASIS FOR THE FOLLOWING MONTH'S
OPENING INVENTORY. THE COST OF THESE INSPECTIONS WILL
BE SHARED EQUALLY BETWEEN BUYER AND SELLER.
H. TITLE AND RISK OF LOSS:
TITLE AND RISK OF LOSS WILL PASS FROM SELLER TO
BUYER AT THE BUYER'S BURNER TIP AT THE LOCATIONS. FOR
DETERMINING THE BARRELS PURCHASED BY BUYER AT THE
BURNER TIP, THE PARTIES SHALL USE THE FORMULA DEFINING
BARRELS CONSUMED IN SECTION II.H.
I. EMERGENCY SUPPLY:
IN THE EVENT THAT BUYER REQUIRES AN EMERGENCY
SUPPLY OF PRODUCT TO MEET UNANTICIPATED FUEL NEEDS AT
ITS ELECTRIC GENERATING STATIONS, SELLER AGREES THAT IT
WILL SUPPLY SUCH PRODUCT WITHIN FOUR DAYS OF NOTICE.
EMERGENCY SUPPLY REQUIREMENTS UNDER THIS PROVISION MAY
NOT EXCEED _______BARRELS DURING EACH CONTRACT QUARTER.
THE PRICE OF SUCH ADDITIONAL SUPPLY SHALL BE DETERMINED
IN
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ACCORDANCE WITH SECTION III.C. OF THIS AGREEMENT,
PLUS OTHER SUCH DOCUMENTED COSTS INCURRED BY SELLER TO
RESPOND TO BUYER'S EMERGENCY DEMAND.
IV. INVENTORY MANAGEMENT:
A. DESCRIPTION OF INVENTORY MANAGEMENT SERVICE:
SELLER WILL MANAGE BUYER'S REQUIREMENTS FOR NO. 6
FUEL OIL AT THE LOCATIONS FOR THE SERVICE FEE DESCRIBED
IN SECTION IV.C., HEREAFTER. SELLER GUARANTEES TO
MAINTAIN MINIMUM INVENTORIES OF PRODUCT IN BUYER'S
STORAGE FACILITIES AT THE LOCATIONS AT ALL TIMES DURING
THE TERM OF THIS AGREEMENT. THE MINIMUM AGGREGATE
AMOUNT OF NO. 6 FUEL OIL WHICH THE SELLER SHALL
MAINTAIN IN THE OPERATING TANKS AND SELLER'S LEASED
TANKAGE AT BRIDGEPORT HARBOR AND NEW HAVEN HARBOR
STATIONS IS _______BARRELS. SELLER FURTHER AGREES TO
MAINTAIN NO LESS THAN A ________SUPPLY IN THE
DESIGNATED OPERATING TANK AT EACH LOCATION IN
ACCORDANCE WITH THE FOLLOWING:
BRIDGEPORT NEW HAVEN
---------- ---------
MINIMUM __-DAY INVENTORY _______BBLS ______BBLS
IN THE EVENT THAT BRIDGEPORT HARBOR STATION UNIT
#3 SWITCHES FROM COAL TO OIL DURING THE TERM OF THIS
AGREEMENT, BUYER WILL HAVE THE OPTION OF INCREASING THE
MINIMUM INVENTORY LEVELS TO ACCOMMODATE ITS ADDITIONAL
SUPPLY REQUIREMENTS.
BUYER WILL MONITOR SELLER'S INVENTORY LEVELS AND
PROVIDE WRITTEN NOTIFICATION OF ACTUAL INVENTORY
LEVELS, ACTUAL BARRELS CONSUMED AND A SIXTY-DAY
PROJECTION OF ANTICIPATED CONSUMPTION FOR EACH LOCATION
ON THE LAST BUSINESS DAY OF EACH WEEK. SEE ATTACHMENT
B FOR SAMPLE FORMAT.
IF INVENTORY LEVELS FALL BELOW ANY OF THE MINIMUM
LEVELS DESIGNATED ABOVE DURING ANY MONTH, SELLER WILL
FORFEIT THE SERVICE FEE DESCRIBED IN SECTION IV.C. FOR
THAT MONTH AND THE SERVICE CHARGE UNDER SECTION V.A.
WILL BE ADJUSTED ACCORDINGLY. IF INVENTORY LEVELS FALL
BELOW THE DESIGNATED MINIMUMS ON MORE THAN TWO
OCCASIONS, BUYER WILL HAVE THE OPTION OF TERMINATING
THIS AGREEMENT WITHOUT PRIOR NOTICE.
IN THE EVENT THAT SELLER ALLOWS INVENTORIES AT
EITHER OF BUYER'S FACILITIES TO BE DEPLETED TO THE
EXTENT THAT THE BUYER'S GENERATING PLANT MUST REDUCE
LOAD OR IS FORCED OFF-LINE, SELLER WILL REIMBURSE BUYER
FOR ________________________________. BUYER WILL ALSO
HAVE THE RIGHT TO TERMINATE THIS AGREEMENT WITHOUT
PRIOR NOTICE.
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B. NOTIFICATION REQUIREMENTS:
SELLER WILL PROVIDE BUYER'S OPERATIONS CONTACT
WITH AT LEAST 72 HOURS NOTICE FOR ANY PLANNED TANK
TRANSFER OR VESSEL DELIVERY TO BUYER'S OPERATING
TANK(S). THE ESTIMATED DAY OF TRANSFER OR DELIVERY
WILL BE PROVIDED 36 HOURS IN ADVANCE. WRITTEN
NOTIFICATION OF THE HOUR OF VESSEL ARRIVAL WILL BE
PROVIDED 12 HOURS IN ADVANCE.
C. SERVICE FEE:
THE SERVICE FEE SHALL BE A FLAT FEE OF $____ PER
BARREL ON ALL BARRELS CONSUMED DURING THE DELIVERY
MONTH. THIS FEE WILL BE INVOICED ON A MONTHLY BASIS IN
ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTION VI.
D. OPENING INVENTORY & TRANSITION SERVICE FEE:
BUYER WILL PROVIDE SELLER WITH A DETAILED
ACCOUNTING OF NO. 6 FUEL OIL INVENTORY IN ITS STORAGE
FACILITIES AT BRIDGEPORT HARBOR AND NEW HAVEN HARBOR
STATIONS AS OF OCTOBER 1, 1995. ALL FUEL OIL INVENTORY
OWNED BY BUYER WILL BE CONSUMED FIRST. SELLER'S
BEGINNING INVENTORY FOR BUYER WILL BE ZERO. DURING THE
TRANSITION PERIOD, BUYER WILL MAINTAIN RECORDS FOR TWO
SEPARATE INVENTORIES: 1) BUYER-OWNED BARRELS AND 2)
SELLER-OWNED BARRELS.
DURING THE TRANSITION PERIOD, THE SERVICE FEE
CHARGED BY SELLER IN SECTION IV.C. WILL BE PRORATED
UNTIL THE MINIMUM INVENTORY LEVELS HAVE BEEN ATTAINED
BY SELLER. SELLER'S CONTRIBUTION TOWARD THE MINIMUM
INVENTORY LEVELS WILL BE LIMITED BY BUYER-OWNED BARRELS
IN INVENTORY DURING THE TRANSITION PERIOD. FOR
EXAMPLE, IF AT THE END OF OCTOBER 1995 SELLER'S AVERAGE
CONTRIBUTION TO THE MINIMUM AGGREGATE INVENTORY LEVEL
IS 100,000 OF THE _______ BARRELS OF MINIMUM AGGREGATE
INVENTORY, SELLER WILL ONLY BE ENTITLED TO INVOICE FOR
100,000/_______ OR ____% OF THE $____ PER BARREL
SERVICE FEE, OR $_____ PER BARREL. NO SERVICE FEE WILL
BE APPLIED TO BUYER-OWNED BARRELS CONSUMED DURING THE
TRANSITION.
V. INVENTORY FINANCING:
A. SERVICE CHARGE:
SELLER SHALL CHARGE BUYER A SERVICE CHARGE FOR
MAINTAINING MINIMUM OPERATING INVENTORIES OF NO. 6 FUEL
OIL AT BUYER'S BRIDGEPORT HARBOR AND NEW HAVEN HARBOR
GENERATING STATIONS. THE MONTHLY SERVICE CHARGE HAS TWO
COMPONENTS: 1) SERVICE CHARGE ON BARRELS CONSUMED IN A
DELIVERY MONTH, AND 2) SERVICE CHARGE ON MINIMUM AGGREGATE
INVENTORY. THE RATE USED TO CALCULATE THE SERVICE CHARGE
WILL BE THE _____________________________________________
_______________________________________ AS QUOTED IN THE
WALL STREET JOURNAL ON THE FIRST BUSINESS DAY OF EACH
DELIVERY MONTH _________. THE
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SALE PRICE USED TO VALUE BARRELS CONSUMED AND MINIMUM
AGGREGATE INVENTORY WILL BE DETERMINED IN ACCORDANCE WITH
SECTION III.C.
1) THE SERVICE CHARGE ON BARRELS CONSUMED IN A
DELIVERY MONTH WILL BE CALCULATED AS FOLLOWS:
((BARRELS CONSUMED*SALE PRICE*RATE)/360 DAYS) *___DAYS)
2) THE SERVICE CHARGE ON MINIMUM AGGREGATE
INVENTORY WILL BE:
((MIN.INVEN.BARRELS*SALE PRICE*RATE)/360 DAYS)*___DAYS)
DURING THE TRANSITION PERIOD, THE SERVICE CHARGE
ON MINIMUM AGGREGATE INVENTORY WILL BE PRORATED UNTIL
THE MINIMUM INVENTORY LEVELS HAVE BEEN ATTAINED BY
SELLER. SELLER'S CONTRIBUTION TOWARD THE MINIMUM
INVENTORY LEVELS WILL BE LIMITED BY BUYER-OWNED BARRELS
IN INVENTORY DURING THE TRANSITION PERIOD. FOR
EXAMPLE, IF AT THE END OF OCTOBER 1995 SELLER'S AVERAGE
CONTRIBUTION TO THE MINIMUM AGGREGATE INVENTORY LEVEL
IS 100,000 OF THE _______ BARRELS OF MINIMUM AGGREGATE
INVENTORY, THE SERVICE CHARGE COMPUTATION WILL BE BASED
ON THE SELLER'S AVERAGE CONTRIBUTION TOWARD THE MINIMUM
INVENTORY LEVELS FOR THE MONTH. NO SERVICE CHARGE WILL
BE APPLIED TO BUYER-OWNED BARRELS CONSUMED DURING THE
TRANSITION PERIOD.
VI. RECORDKEEPING, INVOICING & PAYMENT TERMS:
A. RECORDKEEPING:
BUYER WILL MAINTAIN DETAILED RECORDS OF DAILY
INVENTORY LEVELS, TANK TRANSFERS, VESSEL DELIVERIES AND
BARRELS CONSUMED FOR EACH LOCATION. SEE ATTACHMENT B
FOR SAMPLE FORMAT. BOTH BUYER AND SELLER WILL RECEIVE
COPIES OF ALL INDEPENDENT PETROLEUM INSPECTOR'S REPORTS
WITH RESPECT TO QUALITY AND QUANTITY OF TANK TRANSFERS
AND VESSEL DELIVERIES.
SELLER SHALL HAVE THE RIGHT TO AUDIT ALL BUYER'S
RECORDS RELATED TO THIS AGREEMENT AT ANY TIME, UPON
REASONABLE NOTICE TO BUYER.
SELLER WILL MAINTAIN DETAILED RECORDS OF THE DAILY
XXXXX'X POSTINGS USED TO DETERMINE THE SALE PRICE IN
ACCORDANCE WITH SECTION III.C. A DETAILED RECORD WILL
BE PROVIDED WITH EACH MONTHLY STATEMENT. SELLER WILL
ALSO MAINTAIN A RECORD OF THE ________________
________________ RATE USED IN THE COMPUTATION OF THE
SERVICE CHARGE UNDER SECTION V.A. SEE ATTACHMENT C FOR
SAMPLE INVOICE AND STATEMENT FORMATS.
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B. INVOICING & PAYMENT TERMS:
ON THE FIRST BUSINESS DAY FOLLOWING THE END OF A
DELIVERY MONTH, BUYER WILL PROVIDE SELLER WITH WRITTEN
DOCUMENTATION OF BARRELS CONSUMED AT EACH LOCATION. BY
THE SECOND BUSINESS DAY FOLLOWING THE END OF A DELIVERY
MONTH, SELLER SHALL INVOICE BUYER FOR THE FULL VOLUME OF
FUEL OIL CONSUMED DURING THE DELIVERY MONTH PLUS SERVICE
FEE AND SERVICE CHARGE DESCRIBED IN SECTIONS IV.C. AND
V.A. SEE ATTACHMENT C FOR SAMPLE INVOICE AND STATEMENT
FORMATS. PAYMENT SHALL BE MADE VIA AUTOMATIC CLEARING
HOUSE FUNDS (ACH) FOR AVAILABILITY ON ________________
___________________________ FOLLOWING PRESENTATION OF
THE INVOICE AND INSPECTOR'S REPORTS OF QUANTITY AND QUALITY.
IN THE EVENT THAT THE BUYER FAILS TO MAKE FUNDS
AVAILABLE ON OR BEFORE THE DUE DATE, BUYER SHALL BE
OBLIGATED TO PAY INTEREST AT THE RATE OF CHASE MANHATTAN
BANK PRIME RATE PERCENT AS QUOTED ON THE DAY(S) PAYMENT IS
LATE, BUT NOT TO EXCEED THE MAXIMUM RATE PERMITTED BY LAW.
C. FINANCIAL RESPONSIBILITY:
IN THE EVENT SELLER OR BUYER REASONABLY DOCUMENTS
THAT THE OTHER PARTY'S CREDITWORTHINESS HAS DETERIORATED,
BOTH SELLER AND BUYER WILL AGREE IN A COMMERCIALLY
REASONABLE MANNER TO SATISFY SELLER'S OR BUYER'S CONCERNS.
VII. FIXED PRICE, FUEL PROCESSING & THIRD PARTY TRANSACTIONS:
FROM TIME TO TIME, BUYER AND SELLER MAY MUTUALLY AGREE TO ENTER
INTO A FIXED PRICE, FUEL OIL PROCESSING OR THIRD PARTY
TRANSACTION IN WHICH PRODUCT PRICING AND TERMS OF PURCHASE/SALE
MAY DEVIATE FROM THE TERMS CONTAINED IN THIS AGREEMENT. THE
TERMS, PRICING AND FEES APPLICABLE TO SUCH TRANSACTION WILL BE
NEGOTIATED BETWEEN THE BUYER AND THE SELLER AND MAY, IF BOTH
PARTIES AGREE, BE INCLUDED UNDER THE INVENTORY MANAGEMENT AND
FINANCING PROVISIONS OF THIS AGREEMENT.
VIII. OTHER PROVISIONS:
A. INSURANCE:
SELLER SHALL BE RESPONSIBLE FOR INSURING PRODUCT UP
TO THE BUYER'S BURNER TIP IN ACCORDANCE WITH INDUSTRY
PRACTICE. THE COST OF THIS INSURANCE WILL BE BORNE BY THE
SELLER.
B. CONTACTS:
SELLER'S ADDRESS: BAYWAY REFINING COMPANY
0000 XXXX XXXXXX
XXXXXX, XXX XXXXXX 00000
TELEPHONE: TELEFAX:
---------- --------
OPERATIONS: XXX XXXXXXX 000-000-0000 000-000-0000
12
(PAGER:0-000-000-0000)
INVOICING: XXXX XXXXXXXX 000-000-0000 000-000-0000
FINANCIAL: XXXXX XXXXXX 000-000-0000 000-000-0000
CONTRACTS: XXXX XXXX 000-000-0000 000-000-0000
ALL OTHER: XXX XXXXX 000-000-0000 000-000-0000
BUYER'S ADDRESS: THE UNITED ILLUMINATING COMPANY
000 XXXXXX XXXXXX
P. O. XXX 0000
XXX XXXXX, XX 00000-0000
TELEPHONE: TELEFAX:
--------- -------
OPERATIONS:
BRIDGEPORT: XXXXX X. XXXXXXXX 000-000-0000 000-000-0000
NEW HAVEN: XXXXX X. XXXXXXX 000-000-0000 000-000-0000
INVENTORY RECORDS, INVOICING
& CONTRACTS: XXXXXX X. XXXXXXX 000-000-0000 000-000-0000
ALL OTHER: XXXXXXX X. XXXXX 000-000-0000 000-000-0000
C. UCC FILING:
BUYER AGREES TO ASSIST SELLER IN CAUSING A UCC
FILING TO BE EFFECTED TO EVIDENCE SELLER'S OWNERSHIP OF
PRODUCT IN BUYER'S TANKS. SUCH FILING SHALL REMAIN IN
EFFECT FOR THE ENTIRE TERM OF THIS AGREEMENT.
D. TAXES AND FEES ON SELLER'S PRODUCT:
SELLER WILL PAY ANY INSPECTION FEES, SALES TAXES,
AND/OR PERSONAL PROPERTY TAXES LEVIED ON ITS PRODUCT
STORED IN BUYER'S OPERATING TANK(S) OR SELLER'S LEASED
TANKAGE.
E. TERMINATION OF AGREEMENT:
IF BUYER AND SELLER HAVE NOT AGREED TO EXTEND THIS
AGREEMENT IN ACCORDANCE WITH THE PROVISIONS CONTAINED
IN SECTION I(TERM), BUYER HAS THE OPTION OF LOWERING
THE MINIMUM INVENTORY LEVELS DESCRIBED IN SECTION IV TO
ACCOMMODATE THE TRANSITION TO A NEW FUEL OIL SUPPLY AND
MANAGEMENT ARRANGEMENT. ON THE LAST DAY OF THIS
AGREEMENT, THE OPERATING TANK AT EACH LOCATION WILL BE
GAUGED AND SAMPLED AT MIDNIGHT BY AN INDEPENDENT
INSPECTOR TO DETERMINE THE CLOSING INVENTORIES AND
COMPOSITE QUALITY. BUYER WILL PURCHASE THE OPERATING
TANK INVENTORIES (INCLUDING TANK BOTTOMS) AT EACH
LOCATION AT THE TERMINATION PRICE DESCRIBED BELOW.
TERMINATION PRICE = THE AVERAGE OF ______________
_________________________ FOR 1% SULFUR NO. 6 FUEL OIL
IN EFFECT ON THE THREE BUSINESS DAYS PRECEDING THE
CONTRACT TERMINATION DATE, ROUNDED TO THREE DECIMAL
PLACES, _____________ PER BARREL, ADJUSTED FOR ACTUAL
VERSUS GUARANTEED BTU CONTENT.
13
F. GOVERNING LAW:
THIS AGREEMENT, THE TRANSACTIONS EVIDENCED HEREBY
AND THE OBLIGATIONS OF THE PARTIES HEREUNDER WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS OF THE STATE OF CONNECTICUT WITHOUT
REGARD TO ANY CONFLICT OF LAWS RULES. EACH PARTY
EXPRESSLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF CONNECTICUT AND THE FEDERAL COURT OF THE
UNITED STATES OF AMERICA LOCATED IN NEW HAVEN,
CONNECTICUT WITH RESPECT TO ANY LEGAL ACTION OR
PROCEEDING PERTAINING TO THIS AGREEMENT, THE
TRANSACTIONS EVIDENCED HEREBY OR THE OBLIGATIONS OF THE
PARTIES HEREUNDER. IN ANY SUCH ACTION OR
PROCEEDING,SERVICE OF PROCESS MAY BE MAILING BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, A COPY
OF THE SUMMONS AND COMPLAINT, OR OTHER LEGAL PROCESS IN
ANY SUCH ACTION OR PROCEEDING TO THE ADDRESS OF THE
PARTY SET FORTH IN SECTION VIII.B. OF THIS AGREEMENT.
G. CONFIDENTIALITY:
BUYER AND SELLER AGREE TO CAUSE THEIR RESPECTIVE
OFFICERS, AGENTS AND EMPLOYEES TO MAINTAIN THE
CONFIDENTIALITY OF THE TERMS AND CONDITIONS OF THIS
AGREEMENT UNLESS DISCLOSURE IS REQUIRED BY LAW. IN THE
EVENT THAT BUYER OR SELLER BECOMES LEGALLY COMPELLED TO
DISCLOSE ANY OF THE TERMS AND CONDITIONS OF THIS
AGREEMENT, THE LEGALLY COMPELLED PARTY SHALL GIVE THE
OTHER PARTY PROMPT WRITTEN NOTICE OF SUCH REQUIREMENT.
EITHER PARTY MAY SEEK A PROTECTIVE ORDER OR TAKE OTHER
APPROPRIATE ACTION.
H. ASSIGNMENT:
THIS AGREEMENT SHALL NOT BE ASSIGNED OR
TRANSFERRED BY EITHER PARTY HERETO WITHOUT THE WRITTEN
CONSENT OF BOTH PARTIES, WHICH SHALL NOT BE
UNREASONABLY WITHHELD.
I. FORCE MAJEURE:
SELLER WILL NOT BE LIABLE FOR DAMAGES OR FAILURE OR
DELAY IN PERFORMANCE OF ANY OBLIGATION UNDER THIS
AGREEMENT WHERE SUCH FAILURE OR DELAY IS CAUSED BY FORCE
MAJEURE. FORCE MAJEURE EVENTS ARE LIMITED TO WARS OR
RESTRICTIONS IMPOSED BY ANY GOVERNMENTAL AUTHORITY.
STRIKES, SEVERE SHORTAGE OR UNAVAILABILITY OF CRUDE OIL OR
PRODUCT, REFINERY ACCIDENTS OR EXPLOSIONS, ACTS OF GOD, OR
NAVIGATIONAL ACCIDENTS ARE NOT VALID FORCE MAJEURE CLAIMS
FOR SELLER. IF FORCE MAJEURE CONTINUES FOR MORE THAN
THIRTY DAYS, EITHER PARTY MAY TERMINATE THIS AGREEMENT
UPON NOTICE TO THE OTHER.
IF BUYER IS UNABLE TO ACCEPT PRODUCT DELIVERY DUE
TO STRIKES, EQUIPMENT BREAKDOWN, ACCIDENTS, EXPLOSIONS
OR ACTS OF GOD, THEN SELLER WILL NOT BE LIABLE FOR
DAMAGES OR FAILURE OR DELAY IN PERFORMANCE OF ANY
OBLIGATION UNDER THIS AGREEMENT.
14
IN WITNESS WHEREOF, BUYER AND SELLER HAVE CAUSED THIS AGREEMENT
TO BE EXECUTED BY THEIR DULY AUTHORIZED REPRESENTATIVES AS OF THE
DATE FIRST ABOVE WRITTEN.
THE UNITED ILLUMINATING COMPANY (BUYER):
BY __________________________________
TITLE __________________________________
WITNESS:_____________________________________
BAYWAY REFINING COMPANY (SELLER):
BY __________________________________
TITLE __________________________________
WITNESS:_____________________________________
15
ATTACHMENT A
------------
DISCOUNT FORMULAS
DEFINITIONS:
-----------
SG = SPECIFIC GRAVITY = 141.5 (API OF DELIVERY + 131.5)
BD = BARRELS DELIVERED
8.34 = POUNDS PER GALLON OF WATER
PD = POUNDS DELIVERED = BD * 42 * SG * 8.34
ASH SPECIFICATION MAX. = 0.15%
---
THE DISCOUNT FOR NONCOMPLIANCE WITH THE ASH SPECIFICATION IS
INTENDED TO COMPENSATE THE BUYER FOR ADDITIONAL ASH DISPOSAL
COSTS OF $____ PER POUND.
ASH DISCOUNT $
= PD * (ASH CONTENT OF DELIVERY - 0.15%) * $
--------------------------------- -----
100
WATER BY DISTILLATION SPECIFICATION MAX. = 0.5%
---------------------
THE DISCOUNT FOR NONCOMPLIANCE WITH THE WATER BY DISTILLATION
SPECIFICATION IS INTENDED TO COMPENSATE THE BUYER FOR THE SALE
PRICE CHARGED ON VOLUMES OF WATER PURCHASED (AS OPPOSED TO NO. 6
OIL) IN EXCESS OF THE SPECIFICATION.
WATER DISCOUNT $
=(ACTUAL WATER CONTENT % - 0.5%) * BD * SALE PRICE PER BARREL
-------------------------------
100
16
ATTACHMENT C
------------
PAGE 1 OF 2
SAMPLE INVOICE FORMAT:
---------------------
INVOICE DATE: 2/1/96 PAYMENT DUE: 3/1/96
PERIOD COVERED: 1/1/96 - 1/31/96
BARRELS CONSUMED: _______
PRICE PER BARREL (1): $____________
SUBTOTAL: $____________
CT PETROLEUM PRODUCTS TAX AT 5.26% $____________
TOTAL INVOICE AMOUNT $____________
(1) CONTRACT PRICE TO BURNER TIP.
17
ATTACHMENT C
------------
PAGE 2 0F 2
SAMPLE STATEMENT FORMAT:
-----------------------
PERIOD COVERED: 1/1/96-1/31/96
SALE PRICE: $ _____ (SEE CALCULATION BELOW)
BARRELS CONSUMED: 200,000
PRICE OF BARRELS CONSUMED: $____________
MINIMUM INVENTORY BARRELS: _______
INVENTORY VALUE $____________
SERVICE CHARGES & FEES:
----------------------
ANNUAL RATE ____%
BARRELS CONSUMED AT ___DAYS $ ________
MINIMUM INVENTORY LEVEL AT ___ DAYS $ _________
SERVICE FEE ON BARRELS CONSUMED $ _________
TOTAL SERVICE CHARGES & FEES $ _________ ($____ PER BARREL
CONSUMED)
SUBTOTAL INVOICE AMOUNT $___________ ($_____ PER BARREL
CONSUMED)
CT PETROLEUM PRODUCTS TAX AT 5.26% $____________
TOTAL INVOICE AMOUNT $____________ ($______ PER BARREL
CONSUMED)
CALCULATION OF SALE PRICE:
-------------------------
_________________________
DATE DAY POSTING FOR 1% SULFUR NO. 6 FUEL OIL COMMENTS
---- --- ------------------------------------ --------
1/1/96 SUN. $ NA NO POSTING
1/2/96 MON. $15.150
1/3/96 TUE. $15.100
ETC...
SHOW CALCULATION OF AVERAGE ______________ PRICE AND ADDITION OF
$_____ FOR DETERMINATION OF SALE PRICE PER SECTION III.C.
18
