This PRECEDENT AGREEMENT FOR FIRM LNG SERVICE ("Precedent Agreement") is
made and entered into this 11th day of December, 1998, by and between
---- --------
Algonquin LNG, Inc., a Delaware corporation ("ALNG") and The Providence Gas
Company, a Rhode Island corporation ("Customer").
W I T N E S S E T H:
WHEREAS, ALNG proposes to construct, install, own, operate and maintain
certain new facilities at ALNG's existing liquefied natural gas ("LNG") storage
facility located in Providence, Rhode Island ("Project"); and
WHEREAS, Customer desires to obtain from ALNG firm storage and regasification
service which will be made available as a result of the Project;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, and intending to be legally bound, ALNG and Customer agree to the
following:
1. Subject to the terms and conditions of this Precedent Agreement,
ALNG shall proceed with due diligence to obtain from all governmental and
regulatory authorities having competent jurisdiction over the premises the
authorizations and/or exemptions ALNG determines are necessary: (i) for ALNG to
construct, own, operate, and maintain the ALNG facilities necessary to provide
the firm LNG service contemplated herein; (ii) for ALNG to make the necessary
revisions and/or modifications to its FERC Gas Tariff to reflect the firm LNG
service contemplated herein; and (iii) for ALNG to perform its obligations as
contemplated in this Precedent Agreement. ALNG reserves the right to file and
prosecute any and all applications for such authorizations and/or exemptions,
any supplements or amendments thereto, and, if necessary, any court review, in a
manner it deems to be in its best interest. Customer expressly agrees to
support and cooperate with, and to not oppose, obstruct or otherwise interfere
with in any manner whatsoever, the efforts of ALNG to obtain all authorizations
and/or exemptions and supplements and amendments thereto necessary for ALNG to
provide the firm LNG service contemplated in this Precedent Agreement and to
perform its obligations as contemplated by this Precedent Agreement.
2. Within thirty (30) days after execution of this Precedent Agreement,
Customer will advise ALNG in writing of: (i) any facilities which Customer must
construct, or cause to be constructed, in order for Customer to utilize the firm
LNG service contemplated in this Precedent Agreement; and (ii) any necessary
authorizations, approvals and/or exemptions (governmental, internal or
otherwise) for Customer to execute and/or utilize the Service Agreement
contemplated in Paragraph 4 of this Precedent Agreement and/or to construct or
cause to be constructed any facilities necessary for Customer to utilize the
firm LNG service contemplated in this Precedent Agreement.
2
3. Subject to the terms and conditions of this Precedent Agreement,
Customer shall proceed with due diligence to obtain on a timely basis all
necessary internal and third party authorizations and all necessary governmental
and regulatory authorizations and/or exemptions for customer: (i) to construct
and operate, or cause to be constructed and operated, any facilities necessary
to enable Customer to fully utilize the firm LNG service contemplated in this
Precedent Agreement; (ii) to execute the Service Agreement contemplated in
Paragraph 4 of this Precedent Agreement; and (iii) to perform its obligations as
contemplated in this Precedent Agreement. Customer reserves the right to file
and prosecute applications for such authorizations and/or exemptions, any
supplements or amendments thereto, and, if necessary, any court review, in a
manner it deems to be in its best interest; provided, however, Customer shall
pursue such authorizations and/or exemptions and any supplements and amendments
thereto in a manner designed to implement the firm LNG service contemplated
herein in a timely manner and Customer shall in no event take any action that
would obstruct, interfere with or delay ALNG's receipt of the authorizations
and/or exemptions and any supplements and amendments thereto contemplated
hereunder or otherwise jeopardize implementation of the firm LNG service
contemplated in this Precedent Agreement. ALNG agrees to use reasonable efforts
to assist Customer in obtaining all authorizations necessary for Customer to
utilize the firm LNG service contemplated in this Precedent Agreement. Customer
agrees to promptly notify ALNG in writing when each of the required
authorizations, approvals and/or exemptions are received, obtained, rejected or
denied.
3
Customer shall also promptly inform ALNG as to whether any such authorizations,
approvals, and/or exemptions received or obtained are acceptable to Customer.
4. To effectuate the firm LNG service contemplated herein, Customer and
ALNG are contemporaneously executing a service agreement under ALNG's Rate
Schedule FST-LG ("Service Agreement"). Effective with the commencement of
service under the Service Agreement, the Service Agreement will supersede and
cancel the service agreement between Customer and ALNG included as part of
ALNG's FERC Gas Tariff, Fourth Revised Volume No. 2, as Rate Schedule X-4. Such
Service Agreement will: (i) specify a Contract Storage Quantity ("CSQ") of
600,000 dekatherms ("Dth"), exclusive of fuel requirements; (ii) specify a
maximum daily vaporization quantity of 95,000 Dth per day; (iii) specify a
primary term commencing on the date of execution of the Service Agreement and
continuing in full force and effect until and including May 1, 2009, provided,
however, that subject to twelve months prior written notice, Customer shall have
the right to extend the term of Service Agreement through and including May 1,
2019; (iv) provide for ALNG to receive Customer's LNG, in liquid phase at
ALNG's Providence, Rhode Island storage facility and store and redeliver, either
in liquid or gaseous phase, LNG to Customer, or for Customer's account; and (v)
be subject to ALNG's system rates, in effect from time to time, plus Boiloff, as
provided for in ALNG's FERC Gas Tariff. Service under the Service Agreement
will commence on the date specified by ALNG in its written notice to Customer
pursuant to Paragraph 5 of this Precedent Agreement.
4
5. Prior to commencement of service under the Service Agreement, ALNG
shall notify Customer in writing that all of the conditions precedent set forth
in Paragraph 8 of this Precedent Agreement have been satisfied, or waived by the
party for whose benefit the condition was imposed, and that service under the
Service Agreement will commence on a date certain, which date will be the later
of: (i) November 1, 1999; or (ii) the date that all of the conditions precedent
set forth in Paragraph 8 of this Precedent Agreement have been satisfied, or
waived by the party for whose benefit the condition was imposed, and ALNG is
ready and able to commence such firm LNG service. As of the commencement of
service under the Service Agreement, ALNG will stand ready to provide firm LNG
service for Customer pursuant to the terms of the Service Agreement and Customer
will pay ALNG for all applicable charges associated with the Service Agreement.
6. ALNG will undertake the design of facilities and any other
preparatory actions necessary for ALNG to complete and file its certificate
application(s) with the Commission. Upon satisfaction of the conditions
precedent set forth in Paragraph 8 (a) (i), 8 (a)(ii), 8 (a)(iv), 8 (a)(v), 8
(b)(i), 8 (b)(ii), and 8 (b)(iii) of this Precedent Agreement, or waiver of the
same by the party for whose benefit the condition is imposed, ALNG may proceed
(subject to the continuing commitments of all customers executing precedent
agreements for service utilizing the firm LNG storage capacity to be made
available by the facilities contemplated in this Precedent Agreement) with the
5
necessary design of facilities, acquisition of materials, supplies, properties,
rights-of-way and any other necessary preparations to implement the firm LNG
service under the Service Agreement as contemplated in this Precedent Agreement.
7. Upon satisfaction of the conditions precedent set forth in Paragraph 8
(a) (i), 8 (a)(ii), 8 (a)(iii), 8 (a)(iv), 8 (a)(v), 8 (b)(i), 8 (b)(ii), and 8
(b)(iii) of this Precedent Agreement, or waiver of the same by the party for
whose benefit the conditions are imposed, ALNG shall proceed (subject to the
continuing commitments of all customers executing precedent agreements for
service utilizing the firm LNG capacity to be made available by the facilities
contemplated in this Precedent Agreement) with due diligence to construct the
authorized ALNG facilities and to implement the firm LNG service contemplated in
this Precedent Agreement on or about November 1, 1999. Notwithstanding ALNG's
due diligence, if ALNG is unable to commence the firm LNG service for Customer
as contemplated herein by November 1, 1999, ALNG will continue to proceed with
due diligence to complete arrangements for such firm LNG service, and commence
the firm LNG service for Customer at the earliest practicable date thereafter.
ALNG will neither be liable nor will this Precedent Agreement or the Service
Agreement be subject to cancellation if ALNG is unable to complete the
construction of such authorized and necessary ALNG facilities and commence the
firm LNG service contemplated herein by November 1, 1999.
8. Commencement of service under the Service Agreement and ALNG's and
Customer's rights and obligations under the Service Agreement are expressly made
subject to satisfaction of the following conditions precedent:
(a) ALNG's
6
(i) receipt and acceptance by November 1, 2000, of all necessary
authorization(s) from the Federal Energy Regulatory
Commission ("Commission") to construct, own, operate and
maintain the facilities necessary to provide the firm LNG
service contemplated herein and in the Service Agreement, to
make all tariff modifications necessary to provide service
under the Service Agreement as contemplated in this
Precedent Agreement, and to perform its obligations under
the lease agreement, displacement agreement and boiloff
agreement referenced in Paragraphs 8 (a) and 8 (b) of this
Precedent Agreement;
(ii) receipt by January 15, 1999 of approval from its Board of
Directors to expend the capital necessary for ALNG to
construct the facilities necessary to provide the firm LNG
service contemplated herein and in the Service Agreement;
(iii) receipt of all other necessary governmental authorizations,
approvals, and permits required to construct the facilities
necessary to provide the firm LNG service contemplated
herein and in the Service Agreement;
(iv) execution of precedent agreements and service agreements
with Customer and other customer(s) for the firm LNG service
contemplated herein for storage quantities sufficient to
make the Project economically viable for ALNG;
7
(v) execution, on terms and conditions mutually agreeable to
ALNG and Customer, of a: (a) revised or new lease agreement
with Customer for the lease of real property associated with
ALNG's storage facility; and (b) LNG displacement service
agreement and boiloff agreement with Customer to effectuate
deliveries on a firm basis from ALNG's storage facility to
the interconnection of Customer's system with Algonquin Gas
Transmission Company; and
(vi) completion of construction of the necessary LNG facilities
required to render firm LNG service for Customer pursuant to
the Service Agreement and ALNG being ready and able to place
such facilities into service; and
(b) Customer's:
(i) receipt of all necessary authorizations, approvals, and/or
exemptions, of which Customer has notified ALNG in writing
pursuant to Paragraph 2 of this Precedent Agreement, for
Customer to utilize fully the firm LNG service contemplated
in this Precedent Agreement and to perform its obligations
under the lease agreement, displacement agreement and
boiloff agreement referenced in Paragraphs 8 (a) and 8 (b)
of this Precedent Agreement;
(ii) receipt by January 15, 1999 of approval from its Board of
Directors to expend the capital necessary for Customer to
construct the facilities (if any) necessary to utilize the
firm LNG service comtemplated herein and in the Service
Agreement; and
8
(iii) execution, on terms and conditions mutually agreeable to
Customer and ALNG, of a: (a) revised or new Lease Agreement
with ALNG for the lease of real property associated with
ALNG's storage facility; and (b) LNG displacement service
agreement and boiloff agreement for ALNG to effectuate
deliveries on a firm basis from ALNG's storage facility to
the interconnection of Customer's system with Algonquin Gas
Transmission Company.
All governmental permits, certificates, and other authorizations and/or
exemptions required herein must be issued in form and substance satisfactory to
the party requesting such permits, certificates, and other authorizations and/or
exemptions. All governmental approvals required by this Precedent Agreement
must be duly granted by the Commission or other governmental agency or authority
having jurisdiction, and must be final and nonappealable; but the party for
whose benefit the condition was imposed may waive the condition that such
approvals be final and nonappealable.
9. If Customer: (i) terminates this Precedent Agreement for any reason
other than (a) the inability of ALNG to obtain Commission authorizations and/or
exemptions in form and substance substantially as requested or (b) on the basis
that any of the conditions precedent contained in Paragraph 8(b) herein are not
satisfied; (ii) otherwise
9
fails to perform, in whole or in material part, its duties and obligations
hereunder; or (iii) interferes with or obstructs the receipt by ALNG of the
authorizations and/or exemptions contemplated by this Precedent Agreement as
requested by ALNG and ALNG does not receive the authorizations and/or exemptions
in form and substance as requested by ALNG or does not receive such
authorizations and/or exemptions at all, then Customer shall, at the option and
election of ALNG, reimburse ALNG for Customer's proportionate share (as prorated
based on initial CSQs among all customers taking actions described in this
Paragraph 9) of ALNG's costs incurred, accrued, allocated to, or for which ALNG
is contractually obligated to pay in conjunction with its efforts, from the date
this Precedent Agreement is executed through the date on which the events stated
in (i), (ii), or (iii) above occur, to satisfy its obligations under this
Precedent Agreement ("Pre-service Costs"). Pre-service Costs will include, but
will not be limited to, those expenditures and/or costs incurred, accrued,
allocated to, or for which ALNG is contractually obligated to pay associated
with engineering, construction, environmental, regulatory, and/or legal
activities, and internal overhead and administration and any other costs related
to the firm service contemplated in this Precedent Agreement incurred in
furtherance of ALNG's efforts to satisfy its obligations under this Precedent
Agreement.
10. ALNG and Customer expressly agree that the execution of this Precedent
Agreement and the performance of the LNG service contemplated in this Precedent
Agreement is without prejudice to any rights or obligations the parties have to
each other under separate and distinct agreements.
10
11. If the conditions precedent set forth in Paragraph 8 of this Precedent
Agreement have not been fully satisfied, or waived by the party for whose
benefit the condition was imposed, by the applicable dates specified therein and
this Precedent Agreement has not been terminated under Paragraphs 12, 13 or 14
of this Precedent Agreement, then either ALNG or Customer may thereafter
terminate this Precedent Agreement and the related Service Agreement by giving
ninety (90) days prior written notice of its intention to terminate to the non-
terminating party; provided, however, if the conditions precedent are satisfied,
or waived by the party for whose benefit the conditions are imposed, within such
ninety (90) day notice period, then termination will not be effective.
12. In addition to the provisions of Paragraph 11 of this Precedent
Agreement, in the event that all conditions precedent set forth in Paragraph 8,
excluding the condition precedent set forth in Paragraph 8 (a)(vi), have not
been fully satisfied, or waived by the party for whose benefit the condition was
imposed, by November 1, 2000, and this Precedent Agreement has not been
terminated under Paragraphs 13 or 14 of this Precedent Agreement, then either
ALNG or Customer may thereafter terminate this Precedent Agreement and the
related Service Agreement by giving ninety (90) days prior written notice of its
intention to terminate to the non-terminating party; providing, however, if such
conditions precedent are satisfied, or waived by the party for whose benefit the
conditions are imposed, within such ninety (90) day notice period, then
termination will not be effective.
11
13. In addition, and notwithstanding the provisions of Paragraphs 11 and
12 of this Precedent Agreement, ALNG may terminate this Precedent Agreement at
any time upon fifteen (15) days prior written notice given to the other party
hereto if termination by customer(s), other than by reason of commencement of
service, of other precedent agreements and service agreements for the firm LNG
service contemplated in this Precedent Agreement causes the Project contemplated
herein to become economically unviable, as determined by ALNG, or if all of the
other precedent agreements, service agreements or other contractual arrangements
for the firm LNG service contemplated in this Precedent Agreement are
terminated, other than by reason of commencement of service.
14. If this Precedent Agreement is not terminated pursuant to Paragraphs
11, 12, or 13 of this Precedent Agreement, then this Precedent Agreement will
terminate by its express terms on the date of commencement of service under the
Service Agreement pursuant to Paragraph 5 of this Precedent Agreement, and
thereafter ALNG's and Customer's rights and obligations related to the LNG
transaction contemplated herein shall be determined pursuant to the terms and
conditions of such Service Agreement and ALNG's FERC Gas Tariff, as effective
from time to time.
15. This Precedent Agreement may not be modified or amended unless the
parties execute written agreements to that effect.
12
16. Any company which succeeds by purchase, merger, or consolidation of
title to the properties, substantially as an entirety, of ALNG or Customer, will
be entitled to the rights and will be subject to the obligations of its
predecessor in title under this Precedent Agreement. Otherwise, neither
Customer nor ALNG may assign any of its rights or obligations under this
Precedent agreement without the prior written consent of the other party hereto.
17. The recitals and representations appearing first above are hereby
incorporated in and made a part of this Precedent Agreement.
18. This Precedent Agreement shall be governed by, construed, interpreted,
and performed in accordance with the laws of the State of Texas, without
recourse to any laws governing the conflict of laws.
19. Except as herein otherwise provided, any notice, request, demand,
statement, or xxxx provided for in this Precedent Agreement, or any notice which
either party desires to give o the other, must be in writing and will be
considered duly delivered when mailed by registered or certified mail to the
other party's Post Office address set forth below:
ALNG: Vice President, Marketing
0000 Xxxxxxxx Xxxxx Xxxx
Xxxxxx, XX 00000
Customer: The Providence Gas Company
Attn: Asst. Vice President, Gas Supply
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
13
or at such other address as either party designates by written notice. Routine
communications, including monthly statements, will be considered duly delivered
when mailed by either registered, certified, or ordinary mail.
IN WITNESS WHEREOF, the parties hereto have caused this Precedent Agreement
to be duly executed by their duly authorized officers as of the day and year
first above written.
Algonquin LNG, Inc. Providence Gas Company
BY: X. X. Xxxxxxxx BY: Xxxxx XxXxxxx
----------------- --------------------
TITLE: Vice President TITLE: Senior Vice President
-------------- ---------------------
14
SERVICE AGREEMENT
(Applicable to Service Under Rate Schedule FST-LG)
--------------------------------------------------
This Agreement, is made and entered into this 11th day of December, 1998, by
---- --------
and between Algonquin LNG, Inc., a Delaware corporation (hereinafter referred to
as "ALNG") and Providence Gas Company a (hereinafter referred to as "Customer"
whether one or more persons).
WHEREAS, Customer desires to obtain from ALNG firm storage service pursuant to
the terms and conditions of ALNG's Rate Schedule FST-LG; and
WHEREAS, in order for ALNG to provide the firm service Customer desires ALNG
must install certain additional facilities and in connection therewith Customer
and ALNG have entered into a precedent agreement dated December 11, 1998
-----------------
("Precedent Agreement") to provide for certain terms and conditions related to
the firm service to be provided pursuant to this Agreement; and
WHEREAS, pursuant to the terms and conditions of the Precedent Agreement and
this Agreement ALNG desires to provide firm service to customer;
In consideration of the premises and of the mutual covenants herein contained,
the parties do agree as follows:
ARTICLE I
QUANTITY OF LNG TO BE STORED
Subject to the terms, conditions and limitations hereof and of ALNG's Rate
Schedule FST-LG, ALNG agrees to:
- receive for Customer's account and inject into its storage facility
liquefied natural gas ("LNG") in liquid form;
- store up to a maximum quantity at any one time of 600,000 Dth,
to constitute Customer's Contract Storage Quantity ("CSQ"); and
- withdraw up to a Maximum Daily Withdrawal Quantity ("MDWQ") of 95,000
Dth/d of stored gas as requested by Customer and deliver it to Customer
or for Customer's account.
SERVICE AGREEMENT
(Applicable to Service Under Rate Schedule FST-LG)
--------------------------------------------------
(continued)
ARTICLE II
TERM OF AGREEMENT
2.1 This Agreement shall be effective as of the date first above written.
Service under this Agreement shall commence on the date specified by ALNG in
ALNG's written notification to Customer that all conditions precedent set forth
in the Precedent Agreement have been satisfied or waived and that all necessary
facilities are completed and available for service, which date will not be prior
to November 1, 1999. After service commences under this Agreement, this
Agreement shall continue in effect until and including May 1, 2009 ("Primary
Term") and shall remain in force from year-to-year thereafter unless terminated
by either party pursuant to Section 12 of the General Terms and Conditions;
provided, however, that subject to twelve months prior written notice, Customer
shall have the right to extend the term of this Agreement through and including
May 1, 2019. In the event that the Precedent Agreement is terminated for any
reason other than commencement of service pursuant to this Agreement, then
service under this Agreement shall not commence and this Agreement shall be null
and void.
ARTICLE III
RATE SCHEDULE AND ADJUSTMENTS
3.1 Customer shall pay for all services rendered hereunder and for the
availability of such service under ALNG's Rate Schedule FST-LG, as filed with
the Federal Energy Regulatory Commission, and as the same may be hereafter
revised or changed. The rate to be charged Customer for storage hereunder shall
not be more than the maximum rate under Rate Schedule FST-LG, nor less than the
minimum rate under Rate Schedule FST-LG.
Customer agrees that ALNG shall have the unilateral right to file with the
appropriate regulatory authority and make changes effective in (a) the rates and
charges applicable to service pursuant to ALNG's Rate Schedule FST-LG, (b)
ALNG's Rate Schedule FST-LG, pursuant to which service hereunder is rendered or
(c) any provision of the General Terms and Conditions applicable to Rate
Schedule FST-LG. ALNG agrees that Customer may protest or contest the
aforementioned filings, or may seek authorization from duly constituted
regulatory authorities for such adjustment of ALNG's existing FERC Gas Tariff as
may be found necessary to assure that the provisions in (a), (b), or (c) above
just and reasonable.
2
SERVICE AGREEMENT
(Applicable to Service Under Rate Schedule FST-LG)
--------------------------------------------------
(continued)
ARTICLE IV
ADDRESSES
Except as herein otherwise provided, or as provided in the General Terms
and Conditions of ALNG's FERC Gas Tariff, any notice, request, demand,
statement, xxxx or payment provided for in this Agreement, or any notice which
any party may desire to give to the other, shall be in writing and shall be
considered as duly delivered when mailed by registered, certified, or first
class mail to the post office address of the parties hereto, as the case may be
as follows:
(a) Pipeline: Algonquin LNG, Inc.
0000 Xxxxxxxxxx Xx.
Xxxxxxx, XX 00000
(b) Customer: Providence Gas Company
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
or such other address as either party shall designated by formal written notice.
ARTICLE V
RATE SCHEDULES AND GENERAL TERMS AND CONDITIONS
This Agreement and all terms and provisions contained or incorporated herein are
subject to the provisions of ALNG's applicable rate schedules and of ALNG's
General Terms and Conditions on file with the Federal Energy Regulatory
Commission, or other duly constituted authorities having jurisdiction, and as
the same may be legally amended or superseded, which rate schedules and General
Terms and Conditions are by this reference made a part hereof.
ARTICLE VI
INTERPRETATION
The interpretation and performance of this Agreement shall be in accordance with
the laws of the state of Rhode Island, excluding conflicts of law principles
that would require the application of the laws of a different jurisdiction.
3
SERVICE AGREEMENT
(Applicable to Service Under Rate Schedule FST-LG)
--------------------------------------------------
(continued)
ARTICLE VII
AGREEMENTS BEING SUPERSEDED
This Agreement shall supersede (as of the date of commencement of service
hereunder as specified ARTICLE II of this Agreement) the following agreements
between the parties hereto for the storage of natural gas by ALNG for Customer:
Rate Schedule X-4, dated October 1, 1971, included in ALNG's
FERC Gas Tariff, Fourth Revised Volume No. 2; and Rate
Schedule FST-LG service agreement dated November 1, 1993.
4
SERVICE AGREEMENT
(Applicable to Service Under Rate Schedule FST-LG)
--------------------------------------------------
(continued)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their respective agents thereunto duly authorized, the day and year first
above written.
ALGONQUIN LNG, INC.
By: X. X. Xxxxxxxx
--------------
Title: Vice President
--------------
PROVIDENCE GAS COMPANY
By: Xxxxx XxXxxxx
-------------
Title: Senior Vice President
---------------------
5
