Exhibit 10.39
GAS RESOURCE PORTFOLIO MANAGEMENT
AND
GAS SALES AGREEMENT
BETWEEN
BOSTON GAS COMPANY
COLONIAL GAS COMPANY
AND
ESSEX GAS COMPANY
AS BUYER
AND
ENTERGY-XXXX TRADING, LP
AS SELLER
TABLE OF CONTENTS
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ARTICLE HEADING PAGE
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I. Definitions............................................................................................3
II. Quantity and Nominations...............................................................................6
III. Price..................................................................................................8
IV. Additional Capacity Management........................................................................11
V. Transportation and Underground Storage Assignments....................................................11
VI. Term of Agreement.....................................................................................13
VII. Title and Taxes.......................................................................................16
VIII. Quality and Pressure..................................................................................17
IX. Measurement and Tests.................................................................................17
X. Billing and Payment...................................................................................17
XI. Regulatory Bodies.....................................................................................18
XII. Force Majeure.........................................................................................19
XIII. Miscellaneous.........................................................................................21
Signature Page........................................................................................25
2
AGREEMENT
THIS AGREEMENT made and entered into this 29th day of October, 2002, by and
between BOSTON GAS COMPANY, a Massachusetts corporation, ESSEX GAS COMPANY, a
Massachusetts corporation and COLONIAL GAS COMPANY a Massachusetts corporation,
all d/b/a KeySpan Energy Delivery New England hereinafter jointly referred to as
"Buyer" or the "KeySpan Parties", and ENTERGY-XXXX TRADING, LP a Delaware
limited partnership, hereinafter referred to as "Seller" or "EKT."
W I T N E S S E T H T H A T :
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WHEREAS, Buyer desires to retain a manager for certain of its natural Gas
resource portfolio under the terms and conditions of this Agreement; and
WHEREAS, Buyer desires to purchase natural Gas from Seller under the terms
and conditions of this Agreement; and
WHEREAS, Seller desires to provide portfolio management services under the
terms and conditions of this Agreement; and
WHEREAS, Seller desires to sell natural Gas to Buyer under the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and benefits to be
derived hereunder, Buyer and Seller agree as follows:
ARTICLE I
DEFINITIONS
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Unless expressly stated otherwise, the following terms as used in this
Agreement shall mean:
1.1 The term "Algonquin" shall mean the Algonquin Gas Transmission Company.
1.2 The term "Btu" shall mean British Thermal Unit(s) which shall mean that
amount of heat energy required to raise the temperature of one avoirdupois
pound of water from fifty-nine-degrees Fahrenheit to sixty-degrees
Fahrenheit at standard atmospheric pressure, as determined on a dry basis.
All prices and charges paid hereunder shall be computed on a "dry" Btu
basis.
3
1.3 The term "Buyer's Unbundling Program" shall mean the methodology by which
Buyer, each Month, implements the mandatory assignment of a pro-rata share
of its pipeline and underground storage resources and certain Gas supplies
to third party suppliers on behalf of existing transportation customers and
customers converting from sales to transportation service.
1.4 The term "Canadian Index" shall mean the price charged to Buyer directly
from the respective Supplier, not EKT. Buyer is responsible for nominating
and scheduling those volumes reflected in Appendix 1 and identified as
Canadian Supply under the heading Gas Commodity Contract Volumes. Both
Buyer and Seller understand that these volumes are subject to change each
Month during the Term of this Agreement as a direct result of Buyer's
Unbundling Program.
1.5 The term "Day" shall mean the period of time beginning at 9:00 a.m.,
Central Clock Time, on a calendar day and ending at 9:00 a.m., Central
Clock Time, on the following calendar day.
1.6 The term "Delivery Points" shall mean those city gate meter stations
connected to the Tennessee Gas Pipeline and Algonquin Gas Transmission
system as listed in Appendix 1.
1.7 The term "DTE" shall mean the Massachusetts Department of
Telecommunications and Energy.
1.8 The term "Ending Underground Storage Balance" means the quantity of Gas
that is physically in Buyer's total underground storage accounts as of and
including March 31, 2003.
1.9 The term "FERC" shall mean the Federal Energy Regulatory Commission.
1.11 The term "Force Majeure" shall mean an event as defined in section 11.3 of
this Agreement.
1.12 The term "Gas" shall mean quality Gas as defined in the FERC Gas Tariffs of
Texas Eastern Transmission, Texas Gas Transmission, Tennessee Gas Pipeline,
Transcontinental Pipeline, CNG Transmission, National Fuel Gas Supply,
Iroquois Gas Transmission, Honeoye Storage Company, Algonquin Gas
Transmission and Maritimes and Northeast Pipeline L.L.C.
1.13 The term "Gas Commodity Contract Volumes" means Buyer's Gas supply contract
volumes as identified on Appendix 1.
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1.14 The term "Initial Underground Storage Balance" shall mean that quantity of
Gas that is physically in Buyer's total underground storage accounts as of
November 1, 2002.
1.15 The term "MMBtu" shall mean one million (1,000,000) Btus.
1.16 The term "Month" shall mean the period of time beginning on the first Day
of each calendar month and ending on the first Day of the following
calendar month.
1.17 The term "Net Profits" shall be defined as the sales revenues (or losses)
realized by EKT under this Agreement less purchases and all other variable
costs incurred by EKT less the Total Guaranty Payment. Variable costs do
not include any direct overhead costs from EKT but shall include variable
costs such as (without limitation) cost of interest to finance costs of gas
in storage, transportation and storage variable charges and hedging costs
1.18 The term "NYMEX" shall mean the New York Mercantile Exchange for Natural
Gas Futures Contracts.
1.19 The term Baseload Index shall mean the weighted average Gas price as
reflected in Inside FERC First of the Month's Pricing Report for Gas
Delivered to Pipelines for the applicable Month for the applicable supply
area capacity associated with the transportation contracts listed in
Appendix 1 not allocated to the Canadian Index.
1.20 The term Swing Index shall mean the weighted average Gas price as reflected
in Pasha's Gas Daily Pricing Report for the applicable supply capacity
associated with the transportation contracts listed in Appendix 1 not
allocated to the Canadian Index.
1.21 The term "Storage WACOG" shall mean the Buyer's weighted average cost of
underground storage Gas.
1.22 The term "Tennessee" shall mean the Tennessee Gas Pipeline Company.
1.23 The term "Term" shall mean the period commencing on November 1, 2002 and
ending on March 31, 2003.
1.24 The term "Transporters" shall mean any of the following: Texas Eastern
Transmission, Texas Gas Transmission, Tennessee Gas Pipeline,
Transcontinental Gas Pipeline, CNG Transmission, National Fuel Gas Supply,
Iroquois Gas Transmission, Honeoye Storage Company, Algonquin Gas
Transmission Company and Maritimes and Northeast Pipeline L.L.C.
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1.25 The term "Variable Charges" shall mean all applicable Transporter
transportation commodity and fuel charges and all Transporter storage
injection, withdrawal and fuel charges and any other surcharges associated
with delivery of Buyer's Gas to the Delivery Points, based upon the pricing
hierarchy as reflected in Section 3.1.
ARTICLE II
QUANTITY AND NOMINATIONS
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2.1 Nominated Quantity. Subject to the terms and conditions of this Agreement,
Buyer will nominate, purchase and receive and Seller will sell and deliver
on a firm basis on each Day of the Term hereof, a quantity of Gas up to the
MDQ as defined in section 2.2 below.
2.2 Maximum Daily Quantity ("MDQ"). Notwithstanding anything to the contrary
herein, the MDQ of Gas that Buyer is entitled to purchase and receive and
that Seller is obligated to sell and deliver on each Day of the Term
hereof, shall be 630,883 MMBtus. Both Buyer and Seller understand that the
MDQ shall be adjusted Monthly and or Daily to reflect Buyer's Unbundling
Program.
2.2.1Quantities in Excess of the MDQ. From time to time during the term of this
Agreement, Seller may sell and Buyer may purchase quantities in excess of
the MDQ, provided that both Buyer and Seller agree to such quantities and
to the price and terms of such excess sales prior to delivery. Nothing
contained in this section 2.2.1 shall prevent Buyer from purchasing
quantities of Gas in excess of the MDQ from a third party(s) other than
Seller.
2.3 Nomination and Delivery Requirements.
2.3.1Monthly Nomination. On or before 12:00 Noon Central Time and three
business Days prior to the last day of trading of the NYMEX natural gas
contract for the following Month, Buyer will provide Seller with a
nomination specifying the total daily quantity of Gas to be purchased and
received under this Agreement for each Day during the following Month,
("Daily Nominated Quantity"). Such nomination by Buyer shall include the
volumes indicated as Baseload Index volumes pursuant to section 3.1.1
below.
2.3.2Daily Adjustments. On or before 9:00 AM C.S.T. prior to the next delivery
Day, Buyer may adjust its Daily Nominated Quantity prospectively for any
Day during the remainder of that Month.
2.3.3Intra-Day Adjustments. On or before the applicable intra-Day Transporters
nomination deadline, Buyer may adjust its Daily Nominated Quantity for the
remainder of that Day. In the event that Buyer requests an intra-Day
adjustment, the Parties shall work together to utilize the intra-Day
flexibility associated with the contracts listed in Appendix 1 in making
such adjustments, as well as the intra-Day flexibilities afforded by the
respective Transporters.
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2.3.4Manner of Submitting Nominations. Buyer must provide the nominations set
forth above in this section orally and then by fax. Oral nominations shall
be made by the Buyer to EKT's Designated Representatives (as defined in the
Notice section below). The oral nominations shall be followed by written
confirmation from the Buyer within twenty-four (24) hours. By 3:30 P.M.
Eastern time each Day, Seller shall provide volume allocations by contract
and delivery point consistent with Buyer's nominations for the following
Day to Buyer's Designated Representatives (as defined in the Notice section
below).
2.3.5Points of Delivery. Seller will deliver volumes of Gas nominated by Buyer
to points designated by Buyer as provided by the applicable contracts or
such other points as the parties may mutually agree.
2.4 Remedies for Failure to Deliver.
2.4.1Seller's Failure to Deliver. Except for an event of Force Majeure, if
Seller fails to deliver to Buyer the Daily Nominated Quantity, and such
failure to deliver is not excused under this Agreement, then Seller shall
reimburse Buyer an amount, if positive, between the price Buyer pays for a
delivered substitute supply of Gas and the Commodity Price, multiplied by
the quantity of Gas Seller fails to deliver in accordance with this
section, plus $___ per MMBtu, multiplied by the quantity of Gas Seller
fails to deliver. Buyer agrees to act in good faith in purchasing such
substitute supplies of Gas so as to minimize Seller's reimbursement costs
hereunder.
2.4.2Liquidating Damages. Subject to Article XII, should Seller's failure to
deliver occur on a Day Buyer is unable, utilizing all reasonable efforts,
to obtain a delivered substitute supply, then in addition to any amounts
owed by Seller to Buyer pursuant to Section 2.4.1, Seller shall pay to
Buyer $___ per MMBtu multiplied by the quantity Seller fails to deliver.
Such amount represents Buyer's damages difficult to quantify and constitute
liquidated damages and not a penalty.
2.4.3Right to Terminate. In the event Seller fails to deliver for any
continuous period in excess of one (1) Day, Buyer may terminate this
Agreement in accordance with the provisions of section 6.2 below. The
parties acknowledge that Buyer shall not have the right to terminate if
Seller's failure to perform is excused by Force Majeure. The parties
further acknowledge that Buyer shall not have a right to terminate so long
as Seller delivers at least ninety percent (90%) of Buyer's nominated
quantity (subject to the MDQ herein) on every Day, so long as such failure
to deliver does not exceed one hundred and fifty thousand (150,000) MMBtus
over the term of the Agreement.
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2.4.4Sole and Exclusive Remedy. The remedies set forth in Sections 2.4.1, 2.4.2
and 2.4.3 shall be Buyer's sole and exclusive remedy for Seller's failure
to deliver Gas hereunder.
2.4.5Corporate Guaranty. Seller shall cause its parent corporation to execute
and maintain in effect throughout the term of this Agreement a valid and
binding guaranty of Seller's obligations under this Agreement to Boston Gas
Company in the amount of $______ substantially in the form attached hereto
as Appendix 2, or provide such other form of guaranty as may be acceptable
to Buyer in its sole discretion.
2.4.6Credit Assurance. If a party ("Reviewing Party") has reasonable grounds to
believe that one or more of the other party's ("Debtor Party")
creditworthiness or performance under this Agreements has become
unsatisfactory, the Reviewing Party will provide the Debtor Party with
written notice requesting financial assurance in a form and amount
reasonably determined by the Reviewing Party. Upon receipt of such notice,
the Debtor Party shall have three (3) business days to remedy the situation
by providing such financial assurance to the Reviewing Party. In the event
that the Debtor Party fails to provide such financial assurance acceptable
to the Reviewing Party within three (3) business days of receipt of notice,
then an Event of Default as described below will be deemed to have
occurred, and the Reviewing Party will be entitled to the remedies set
forth below. For purposes of this Section 2.4.6 a drop in EKT's credit
rating to BBB+ or below by Standard & Poor's Rating Services (or its
successor - referred to as "S&P") or to Baa1 or below by Xxxxx'x Investors
Services, Inc. (or its successor - referred to as "Moody's") shall
constitute reasonable grounds for the KeySpan Parties to request financial
assurance from EKT. A drop in Boston Gas Company's or Colonial Gas
Company's credit rating to BBB+ or below by S&P or to Baa1 or below by
Moody's shall constitute reasonable grounds for EKT to seek financial
assurance from the KeySpan Parties.
2.4.7. For purposes of managing credit exposure, the parties agree that in
connection with gas supply to Seller under this Agreement, (i) EKT shall
have the right, as agent for the KeySpan Parties, to purchase gas supplies
from third parties, or (ii) the KeySpan Parties shall directly purchase gas
supplies from third parties. However, prior to any such purchases made
under this Section 2.4.7, the parties shall mutually agree in writing to
the quantity and terms of such purchases, and the parties shall mutually
agree whether the purchases shall be by EKT as agent or by KeySpan
directly. Additionally, by December 15, 2002, the parties shall endeavor to
execute an agency agreement that provides EKT the authority to purchase gas
as agent for the KeySpan hereunder.
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ARTICLE III
PRICE
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3.1 Commodity Price.
3.1.1Quantities Within MDQ. The price for Gas delivered hereunder up to the MDQ
will be referred to as the "Commodity Price" and shall be equal to the
following pricing hierarchy:
Canadian Index:
0 up to the sum total of Buyer's entitlements on the
Canadian contracts identified in Appendix 1 stated in
MMBtu's per Day shall be equal to the Canadian Index plus
applicable Variable Charges.
Baseload
Index:
The next volumes, up to the amount indicated by Buyer in
accordance with this section, but not to exceed Buyer's MDQ
less the Storage WACOG tier, less the Canadian Index tier,
shall be equal to the Baseload Index plus applicable
Variable Charges. On October 18, 2002, Buyer indicated to
Seller, the volumes that will be subject to the Baseload
Index for each month over the Term. Such volumes are
identified in Appendix 1. If Buyer fails to take delivery of
volumes it indicates as Baseload Index volumes, and such
failure to take is not excused under the Agreement, then,
Buyer shall reimburse Seller the amount, if any, by which
the price Seller is able to obtain by reselling volumes not
taken is exceeded by the Baseload Index. Seller shall act in
good faith to resell such volumes in a commercially
reasonable manner so as to minimize Buyer's reimbursement
costs hereunder.
Swing
Index:
The next volumes, up to Buyer's MDQ less the Storage WACOG
tier, less the Canadian Index tier, and the less the
Baseload Index tier shall be equal to the Swing Index plus
applicable Variable Charges.
Storage WACOG:
All remaining volumes, up to Buyer's MDQ, shall be equal to
the Storage WACOG plus applicable Variable Charges.
3.1.2Buyer's Right to Fixed Pricing. Buyer shall retain the right to convert
any Baseload Volume Index price to a fixed price for any portion of the MDQ
for any Month(s) during the Term of this Agreement, provided any converted
volumes are specifically within the following Commodity Price tiers:
Baseload Index and Swing Index. Such fixed pricing shall be defined as the
applicable NYMEX based price plus a mutually agreed upon basis
differential. Buyer must notify Seller of any change to fixed pricing for
any Month on or before three (3) full business Days prior the last Day of
trading for the applicable NYMEX future contract Month(s). In addition, if
Buyer elects to convert to a fixed price for any of its MDQ, then Buyer
will be required to purchase on each Day during the applicable converted
period 100 percent of the volume that Buyer elected to convert to a fixed
price.
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3.2 Guaranteed Payment and Net Profit Sharing.
3.2.1. Guaranty Payments. Buyer agrees to invoice Seller on or before the 15th
Day of each Month during the Term and Seller agrees to pay Buyer an amount
of $________ ("Total Guaranty Payment"), payable in five (5) equal
installments of $________ ("Monthly Guaranty Payment") on or before the
25th Day of each Month during the Term of this Agreement to compensate
Buyer for the use of Buyer's portfolio. Such payments shall be made by wire
transfer at such location as Buyer may from time to time designate in
writing. "Prorated Guaranty Amount" means the Total Guaranty Payment
divided by the total number of months in the Term multiplied by the number
of months that have occurred from November 1, 2002 through the date of
calculation (prorated for the month in which the date of calculation
occurs).
3.2.2EKT and the Buyer shall share in the positive Net Profits on a
50%EKT/50%KeySpan Parties basis. EKT shall calculate the Net Profits amount
within 30 days of the expiration of the Term, and shall pay such amount to
Buyer within five Days of such calculation. EKT shall provide a report to
the KeySpan Parties each month during the Term of the Agreement with a
calculation of the Net Profits to date. EKT DOES NOT WARRANT THAT THE NET
PROFITS AMOUNT SHALL BE A POSITIVE NUMBER, AND EKT EXPRESSLY DISCLAIMS THAT
THE NET PROFITS AMOUNT SHALL BE A POSITIVE NUMBER. Except in the case of a
termination based on a Buyer Event of Default, if the Net Profit amount is
a negative number, EKT shall be responsible for such losses.
3.3 Transportation and Underground Storage Cost Reimbursement. Buyer shall
reimburse Seller for 100 percent of the transportation and underground
storage reservation charges associated with capacities assigned from Buyer
to Seller pursuant to Article V during the Term of this Agreement. In
addition, Buyer shall reimburse Seller for 100 percent of the applicable
transportation and underground storage Variable Charges associated with the
delivery of Gas by Seller to Buyer's Delivery Points up to the MDQ and
based upon the pricing hierarchy as reflected in section 3.1.1. All
Transporter refunds and credits applicable to the Term of this Agreement
associated with capacities assigned from Buyer to Seller during the Term of
this Agreement shall belong to Buyer.
3.4 Suspension of Indices. If, during the Term of this Agreement, a specified
index referenced in the Agreement ceases to be published or is not
published for a given Month, or, if a more appropriate index becomes
available then Buyer and Seller shall mutually agree upon a replacement
index.
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ARTICLE IV
ADDITIONAL CAPACITY MANAGEMENT
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4.1 Agreement.Buyer possesses certain assets used to meet seasonal requirements
of Buyer's utilities that are not included in this Agreement. From time to
time over the Term, Buyer and Seller may agree to allow Seller to access
and manage some or all of these assets.
4.2 Any asset management strategy implemented under this Article IV will be
memorialized as an amendment to this Agreement, and all net profits related
to such asset management strategies under this Article IV (the "Article IV
Net Profits") will be shared between the Buyer and Seller on a
50%EKT/50%KeySpan Parties basis. Article IV Net Profits shall be equal to
the sales revenues realized by EKT under this Article IV less purchases and
all other variable costs incurred by EKT. Variable costs do not include any
direct overhead costs from EKT but shall include variable costs such as
(without limitation) cost of interest to finance costs of gas in storage,
transportation and storage variable charges and hedging costs.
This Article IV Net Profit sharing calculation shall be separate from and
in addition to the Total Guaranty Payment and Net Profit sharing
calculation referenced in Section 3.2 above. Except in the case of a
termination based on a Buyer Event of Default, if the Net Profit amount is
a negative number, EKT shall be responsible for such losses.
ARTICLE V
TRANSPORTATION AND UNDERGROUND STORAGE ASSIGNMENTS
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5.1 Assignment of Transportation and Underground Storage Contracts to Seller.
Each Month, Buyer shall assign or otherwise provide agency rights to the
specified transportation and underground storage contracts and related
quantities as listed in Appendix 1, as attached hereto. Such quantities are
subject to recall (but only in connection with the Buyer's Unbundling
Program requirements or EKT's default of this Agreement) and will be
adjusted each Month in accordance with Buyer's Unbundling Program
requirements. Subject to Article II of this Agreement and the limitations
set forth in section 5.2.4 below, Seller shall have full and complete
control over the utilization of the contracts and related quantities listed
in Appendix 1, including without limitation the manner and timing of any
transportation, injections, and withdrawals of Gas under such contracts,
provided that Seller shall maintain maximum withdrawal rights on each of
the Tennessee FS-MA contract numbers 527, 524 and 2272 at all times
throughout the term of this Agreement and further that Seller shall not
release any Tennessee capacity on contracts 2062, 2025, 32155 and 435
upstream of Zone 4 at any time during the Months of December, January and
February Any incremental charges incurred by either Buyer or Seller as a
result of such utilization by Seller shall be the sole responsibility of
Seller, and Seller shall either pay or credit Buyer for any such charges
incurred by Buyer. All assignments or agency rights from Buyer to Seller
shall be in accordance with all the applicable Transporters' tariff
provisions and shall terminate upon the expiration of this Agreement.
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5.1.1Transfer of Gas in Underground Storage. The Initial Underground Storage
Balance shall be under the control and discretion of Seller effective with
the Term of this Agreement and title to such Initial Underground Storage
Balance shall transfer to Seller as of the effective date of this Agreement
at no cost to Seller. No resale agreement or other indicia of the transfer
other than this Agreement shall be necessary to evidence such transfer of
title. Buyer warrants title to the Initial Underground Storage Balance and
that such Gas is free from liens and adverse claims of every kind. Buyer
will indemnify and save Seller harmless against all loss, damage and
expense of every character on account of adverse claims to the Initial
Underground Storage Balance prior to transfer of title to Seller. Seller
shall ensure that all tariff provisions and other compliance requirements
of underground storage vendors applicable to Gas in underground storage are
met and penalties are avoided. Any penalties incurred by Buyer or Seller as
a result of Seller's utilization of Gas in underground storage shall be the
sole responsibility of Seller. At the end of this Agreement, if Seller's
actual storage balance is less than the Buyer's storage inventory balance,
Seller will repay the difference in-kind ratably from April 1, 2003 through
October 31, 2003. Seller shall deliver such volumes into Buyer's
Transporter; Buyer shall either be responsible for transportation of the
volumes or Buyer shall provide adequate transportation and injection rights
to Seller to effect redelivery to Buyer's storage capacity.
If Seller's actual storage balance is greater than Buyer's paper storage
balance, Buyer will pay Seller for the difference at the simple average of
the April 2003 through October 2003 first-of-the-month receipt point
indices for the pipelines (Tennessee and Tetco) used to inject supply into
Buyer's storage contracts, grossed up for all variable changes to the
applicable storage contracts.
5.1.2Gas Commodity Contract Volumes. For those Gas Commodity Contract Volumes
identified in Appendix 1, Buyer will transfer and Seller will accept title
to such volumes at the delivery point(s) applicable to each such Gas
Commodity Contract Volumes. All volumes delivered will be adjusted Monthly
in accordance with Buyer's Unbundling Program requirements.
5.2 Responsibility for Transportation and Underground Storage Contracts.
5.2.1Responsibility for Administration. Subject to the limitations in section
5.2.4 below, Seller shall assume all obligations and rights under the
transportation and underground storage contracts listed in Appendix 1,
including without limitation, the obligation to submit nominations to all
applicable Transporters and to pay all Transporter invoices.
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5.2.2Operational Balancing Agreements. Buyer shall retain all responsibilities
for confirming all of Seller's daily deliveries to Buyer's city gates
covered under Buyer's Operational Balancing Agreements (OBA) for both
Tennessee and Algonquin . As such, any imbalances caused by Seller over or
under delivering Buyer's Daily Nominated Quantities shall be the physical
and financial responsibility of Seller. Any imbalances caused by Buyer
physically taking greater or less than Buyer's Daily Nominated Quantities
shall be the physical and financial responsibility of Buyer.
5.2.3Projected Requirements. Buyer shall periodically provide Seller
information concerning Buyer's expected Gas requirements on its
distribution system . Buyer will also provide Seller information concerning
any known or expected events that will cause material changes in Buyer's
daily Gas requirements as soon as the information becomes known to Buyer.
Buyer and Seller agree to work together on a daily basis to ensure that
nominations (including any necessary adjustments thereto) are made timely
on all applicable Transporters and such nominations reflect, as much as
reasonably possible, Buyer's expected requirements.
5.2.4Modification of Contracts. Seller will fully comply with all terms and
conditions of the contracts listed in Appendix 1. Seller shall not amend,
extend or cause the early termination of any transportation, underground
storage or Gas Commodity Contract of Buyer which is subject to this
Agreement without the prior consent of Buyer. In the event such consent is
provided orally it shall be followed up in writing by Buyer within 24
hours.
ARTICLE VI
TERM OF AGREEMENT
-----------------
6.1 Primary Term. This Agreement shall become effective on November 1, 2002 and
shall remain in full force and effect through March 31, 2003 ("Term"). At
the end of the Term, Seller shall immediately assign or release back to
Buyer all of Buyer's right title and interest in the contracts listed on
appendix 1 free and clear of claims, liens, encumbrances restrictions and
defects in title of any nature incurred as a result of Seller's acts or
omissions.
6.2 Events of Default. In the event that EKT or one or more of the KeySpan
Parties (the "Defaulting Party"):
(a) fails to make, when due, any payment under this Agreement and/or
provide financial assurance if required pursuant to Section 2.4.6
above (which shall not include a delay that is cured within two (2)
Business Days of a demand for corrective action);
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(b) (Seller Only) fails to deliver pursuant to Section 2.4.1;
(c) fails to perform any other obligation (that is not referenced in (a)
and (b) above) under this Agreement (which shall not include any
failure of performance that is cured within five (5) Business Days of
a demand for corrective action); or
(d) files a petition or otherwise commences, authorizes, or acquiesces in
the commencement of a proceeding or cause under any bankruptcy or
similar law for the protection of creditors or has such petition filed
or proceeding commenced against it (unless such filing is objected to
and dismissed within three (3) business days; or
(e) otherwise becomes bankrupt or insolvent (however evidenced); or
(f) makes an assignment or any general arrangement of all or substantially
all of its assets for the benefit of creditors; or
(g) is dissolved or has a resolution passed for its winding up or
liquidation (other than pursuant to a consolidation, acquisition,
amalgamation or merger); or
(h) is financially unable to pay its debts as they fall due;
(i) transfers all or substantially all of its assets or merges into or
consolidates with any entity (i) where the creditworthiness of the
resulting entity is below investment grade; or (ii) where the merging
party's obligations are not assumed by operation of law or written
instrument, or
(j) makes a materially incorrect or misleading representation or warranty
under the Agreement.
then, upon the occurrence and continuance of any such event (each an "Event
of Default"), then the counterparty ("Non-Defaulting Party") shall have the
right to withhold or suspend its performance under this Agreement. In
addition, the Non-Defaulting Party may establish a date (upon notice to the
Defaulting Party) that shall be the "Early Termination Date." However, in
the case of an Event of Default under clauses (d) through (i) above, an
Early Termination Date shall be deemed to have occurred immediately prior
to such event and no prior notice shall be required) upon which the
Non-Defaulting Party may terminate and liquidate any and all outstanding
Transactions under this Agreement. All amounts then currently owed or
pending shall become payable by the debtor party to the party owed. The
parties agree and acknowledge that if one or more of the KeySpan Parties
are Defaulting Parties, then EKT shall have the right to wind down this
Agreement as to all of the KeySpan Parties.
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Upon the designation or occurrence of an Early Termination Date, the
Parties' shall wind down this Agreement pursuant to Section 6.3, 6.4 or 6.5
(as applicable).
6.3 Wind Down Upon an EKT Event of Default. If this Agreement is terminated by
the Buyer as a result of an EKT Event of Default, all capacity shall be
automatically recalled by the KeySpan Parties, and EKT's obligation to pay
any remaining Monthly Guaranty Payments shall cease as of the Early
Termination Date. EKT shall exercise best efforts to unwind any related
outstanding trading positions it has taken based on this Agreement and
shall be solely and fully liable for such positions. KeySpan shall pay to
EKT any amounts due for gas supplies hereunder. Further, EKT shall be
obligated to calculate and pay the Buyer the applicable Net Profits
percentage. EKT shall pay the Buyer such amount within thirty (30) days of
the effective date of the termination.
6.4 Wind Down Upon an Event of Default by One or More KeySpan Parties or a
Discretionary Termination. If this Agreement is terminated by EKT as a
result of a KeySpan Party Event of Default or if this Agreement is
terminated by Buyer as a result of a Discretionary Termination, the
capacity hereunder shall be recallable upon KeySpan's payment to EKT of any
amounts currently due or pending by the KeySpan Parties to EKT upon the
Early Termination Date (unless such amounts are the subject of a good faith
dispute by the KeySpan Parties, in which case the parties shall establish a
prompt and reasonable recall schedule for the capacity hereunder), and
EKT's obligation to pay any remaining Guaranteed Value Payments shall cease
as of the Early Termination Date. EKT shall calculate the Net Profits
amount.
a. If upon such termination, the Net Profits amount is positive,
KeySpan Parties shall:
(1) Retain the Prorated Guaranteed Amount, and
(2) Receive its fifty percent share of the Net Profits.
b. If Net Profits are negative, the KeySpan Parties shall pay to EKT
the absolute value of such negative amount.
The Parties acknowledge that for this Section 5.4, "Prorated Guaranty
Amount" shall replace "Total Guaranteed Amount" for the calculation of Net
Profits upon termination. The KeySpan Parties reimbursement to EKT or (if
applicable) EKT`s obligation to pay the KeySpan Parties the Net Profit
percentage shall occur within thirty (30) days of the effective date of the
termination.
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6.5 Wind Down Upon No-Fault Termination or Mandated Termination. If this
Agreement is terminated based on a No-Fault Termination or if this
Agreement is terminated by Buyer as a result of a Mandated Termination, the
parties shall establish a prompt and reasonable recall schedule for the
capacity hereunder, and EKT's obligation to pay any remaining Guaranteed
Value Payments shall cease as of the Early Termination Date. EKT shall
calculate the Net Profits amount.
a. If upon such termination, the Net Profits amount is positive,
KeySpan Parties shall:
(1) Retain the Prorated Guaranteed Amount, and
(2) Receive its fifty percent share of the Net Profits.
b. If Net Profits are negative, the KeySpan Parties shall pay to EKT
the fifty percent (50%) of the absolute value of such negative amount. .
The Parties acknowledge that for this Section 6.5, "Prorated Guaranty
Amount" shall replace "Total Guaranteed Amount" for the calculation of Net
Profits upon termination. The KeySpan Parties reimbursement to EKT or (if
applicable) EKT`s obligation to pay the KeySpan Parties the Net Profit
percentage shall occur within thirty (30) days of the effective date of the
termination.
A "No-Fault" Termination is a termination based on a suspension of
performance based on Force Majeure.
6.6 In addition, the Non-defaulting Party shall have a general right of set off
with respect to all amounts owed among the parties hereunder, under this
Agreement or any agreement or arrangement among the parties. Obligations
hereunder shall be deemed satisfied and discharged to the extent of any
such setoff. A party shall give the affected party notice of any setoff
effected under this section provided that a failure to provide such notice
shall not affect the validity of the setoff.
ARTICLE VII
TITLE AND TAXES
---------------
7.1 Transfer of Title, Possession and Control. Title to the Gas sold hereunder
shall pass from Seller to Buyer upon delivery of said Gas to the Delivery
Points as reflected in Appendix 1. As between the Parties hereto, Seller
shall be deemed to be in control and possession of all Gas delivered
hereunder and shall indemnify and hold Buyer harmless from any damage,
injury or losses which occur prior to the delivery to Buyer at the Delivery
Points; otherwise, Buyer shall be deemed to be in exclusive control and
possession thereafter and shall indemnify and hold Seller harmless from any
other injury, damage or losses.
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7.2 Warranty of Title. Except as set forth below, Seller warrants title to all
Gas delivered hereunder by Seller, including the Ending Underground Storage
Balance or that Seller has the right to sell the same, and that such Gas is
free from liens and adverse claims of every kind. Seller will indemnify and
save Buyer harmless against all loss, damage and expense of every character
on account of adverse claims to the Gas delivered by it before delivery to
Buyer.
7.3 Taxes. Other than ad valorem taxes on underground storage Gas which are
subject to section 7.4 below, Buyer shall reimburse Seller for any taxes,
fees or charges, other than an income tax, which are levied by a
governmental or regulatory body on the Gas sold under this Agreement.
7.4 Ad Valorem Taxes If any underground storage Gas is subject to ad valorem
property taxes during the term of this Agreement, Buyer shall be
responsible for payment of such taxes regardless of whether title to such
underground storage Gas is held by Buyer or Seller except if Seller injects
Gas into underground storage for its own account or withdraws Gas from
underground storage for purposes other than meeting the city gate
requirements of Buyer, then Seller shall be responsible for payment of all
applicable ad valorem taxes on the amounts so injected or withdrawn.
ARTICLE VIII
QUALITY AND PRESSURE
--------------------
8.1 Pressure Requirements. All Gas delivered at the Delivery Points shall be at
the pressure existing in Tennessee and Algonquin's facilities. Neither
Seller nor Buyer shall be obligated to install or operate compression
facilities.
ARTICLE IX
MEASUREMENT AND TESTS
---------------------
9.1 Measurement Point. All Gas sold hereunder shall be measured at the Delivery
Points on Tennessee and Algonquin systems at pressures in existence at the
time of delivery and shall be measured to the unit of one MMBtu.
9.2 Standards for Measurement and Tests. Unless specified herein to the
contrary, the standards for measurement and tests shall be governed by
those standards set forth in the currently effective Tennessee and
Algonquin tariffs.
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ARTICLE X
BILLING AND PAYMENT
-------------------
10.1 Billing and Payment. Seller shall render to Buyer, at the address indicated
in Section 13.2 hereof, on or before the third business Day of each Month
an estimate of all Gas volumes purchased during the preceding Month and on
or before the fifteenth (15th) Day of each calendar Month an invoice for
all Gas purchased during the preceding Month, according to the
measurements, computations, and prices provided herein. Invoices may be
based initially upon estimates, but will be corrected to actual as soon as
possible. Buyer agrees to make payment hereunder to Seller for its account
in available funds by wire transfer or by mail at such location as Seller
may from time to time designate in writing. Payment shall be made by Buyer
within ten (10) Days of the date of receipt of Seller's invoice.
Notwithstanding the above, if a good faith dispute arises between the
Parties over the amounts due under the invoice for any matters, other than
any reimbursement for the demand or reservation charges under the firm
transportation and underground storage contracts, then Buyer will pay that
portion of the invoice(s) not in dispute on or before the due date and both
Parties will continue to perform their obligations under this Agreement
during such dispute.
10.2 Review of Books and Records. For a period of two years after the date of
final billing for the last Month in the Term of this Agreement, Buyer and
Seller shall have the right to inspect and examine, at reasonable hours,
the books, records and charts of the other pertaining to any term or
condition of this Agreement to the extent necessary to verify the accuracy
of any invoice, charge or computation made pursuant to this Agreement.
10.3 In payment obligation hereunder are due and payable on the same date, then
the parties shall net all such arising under this Agreement such that the
party owing the greater amount shall make a single payment of the net
amount to the other party in accordance with this Article. If the Buyer
terminates this Agreement based on its interpretation (or the
interpretation of any of its counsel or advisors) that continued
performance under this Agreement is not permitted by a change, directive,
order of the like by a governing authority, such termination shall be
referred to as a "Discretionary Termination."
ARTICLE XI
REGULATORY BODIES
-----------------
11.1 Laws and Regulations. This Agreement is subject to all valid applicable
governmental laws and orders, including but not limited to the FERC and
DTE, regulatory authorizations directives, rules and regulations of any
governmental body or official having jurisdiction over the Parties, their
facilities, the Gas or this Agreement or any provision thereof; but nothing
contained herein shall be construed as a waiver of any right to question or
contest any such law, order, rule or regulation in any forum having
jurisdiction.
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11.2 Applicable Law. This Contract shall be construed in accordance with the
laws of the Commonwealth of Massachusetts, excluding any conflict of laws
and principles of said jurisdiction that might require the application of
the laws of another jurisdiction.
11.3 Changes in Law or Regulation. If any federal or state statute or regulation
or order by a court of law or regulatory authority directly or indirectly
(i) prohibits performance under this Agreement, (ii) makes such performance
illegal or impossible, or (iii) effects a change in a substantive provision
of this Agreement which has a significant material adverse impact upon the
ability of either Party to perform its obligations under this Agreement,
then the Parties will use all reasonable efforts to revise the Agreement so
that:
(a) performance under the Agreement is no longer prohibited, illegal,
impossible or is no longer impacted in a material adverse fashion, and
(b) the Agreement is revised in a manner that preserves, to the maximum
extent possible, the respective positions of the Parties.
Each Party will provide reasonable and prompt notice to the other Party as
to any proposed law, regulations or any regulatory proceedings or actions
that could affect the rights and obligations of the Parties. If the Parties
are unable to revise the Agreement in accordance with the above, then the
Party whose performance is rendered prohibited, illegal, impossible or is
impacted in a material adverse manner shall have the right, at its sole
discretion, to suspend this Agreement upon written notice to the other
Party. Either Party may then terminate this Agreement upon 30 Days written
notice to the other Party.
If the Buyer terminates this Agreement based on its interpretation (or the
interpretation of any of its counsel or advisors) that continued
performance under this Agreement is not permitted by a change, directive,
order of the like by a governing authority, such termination shall be
referred to as a "Discretionary Termination."
If the Buyer terminates this Agreement based on an express mandate to do so
by a governing authority, such termination shall be referred to as a
"Mandated Termination."
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ARTICLE XII
FORCE MAJEURE
-------------
12.1 Suspension of Receipt and Delivery Obligations. If Buyer or Seller is
rendered unable, wholly or in part, by Force Majeure to perform obligations
under this Agreement, other than the obligation to make payments due under
this Agreement, it is agreed that the performance of the respective
obligations of Seller and Buyer to deliver or purchase and receive Gas, so
far as they are affected by Force Majeure, shall be excused and suspended
from the inception of any such inability until it is corrected, but for no
longer period. Buyer or Seller, whichever is claiming such inability, shall
give notice thereof to the other as soon as practicable after the
occurrence of the Force Majeure. Such notice may be given orally or in
writing but, if given orally, it shall be promptly confirmed in writing,
giving reasonably full particulars. Such inability shall be promptly
corrected to the extent it may be corrected through the exercise of
reasonable diligence by the Party claiming inability by reason of Force
Majeure.
12.2 Liability During Force Majeure. Neither Buyer nor Seller shall be liable to
the other for any losses or damages, regardless of the nature thereof and
however occurring, whether such losses or damages be direct or indirect,
immediate or remote, by reason of, caused by, arising out of or in any way
attributable to suspension of the performance of any obligation of either
Party to the extent that such suspension occurs because a Party is rendered
unable, wholly or in part, by Force Majeure to perform its obligations.
12.3 Force Majeure. The term Force Majeure means an event: (i) that was not
within the control of the Party claiming its occurrence; (ii) that could
not have been prevented or avoided by such Party through the exercise of
due diligence; and (iii) that prohibits or prevents such Party from
performing its obligations under this Agreement. Events that may give rise
to a claim of Force Majeure include:
12.3.1 Acts of God. The term acts of God, including earthquakes, epidemics,
fires, floods, landslides, lightning, storms, washouts, weather related
events such as hurricanes or freezing or failure of xxxxx or lines of pipe
used to supply the Gas described in this Agreement which prevents delivery
to the delivery points, and other similar, unusual and severe natural
calamities.
12.3.2 Acts of the public enemy, wars, blockage, insurrections, riots, civil
disturbances and arrests.
12.3.3 Strikes, lockouts or other industrial disturbances.
12.3.4 Explosions, breakage, accidents to equipment, facilities or lines of pipe
used to supply the Gas under this Agreement or explosions, breakage,
accidents to equipment, facilities or lines of pipe used to enable Buyer to
receive Gas under this Agreement, including without limitation to
equipment, facilities or lines of pipe related to Buyer's liquefied natural
gas facilities.
20
12.3.5 The temporary inability of Transporters to receive, transport or deliver
the Gas described in this Agreement; or
12.3.6 Any other cause of a similar type provided that such cause satisfies each
of the three conditions referenced in Section 12.3 hereof (i.e.
"(i)-(iii)").
12.4 Termination. If a Force Majeure event continues for a period of two
(2)Days, and the parties, working together in good faith, have been unable
to resolve such Force Majuere event, then the Party which did not claim
such Force Majeure may at any time thereafter terminate this Agreement upon
forty eight (48) hours prior written notice to the extent the Force Majeure
event has not been corrected prior to the expiration of such notice period.
Such termination shall be considered a "No-Fault Termination."
12.5 Notwithstanding anything in this Article XII to the contrary, if, upon the
occurrence of a Force Majeure event, (a) first of the month gas is
curtailed, and (b) delivery to KeySpan is possible, then EKT shall deliver
gas supply quantities hereunder to KeySpan upon the occurrence of a Force
Majeure event, provided that the parties negotiate a mutually acceptable
price for such quantities (such revised price shall only apply during the
duration of the applicable Force Majeure event). If EKT's performance is
suspended in connection with supply obligations that are of like-kind to
the supply obligation hereunder as a result of Force Majeure, EKT shall
perform (to the extent possible) such obligations on a pro-rated basis.
ARTICLE XIII
MISCELLANEOUS
-------------
13.1 Confidentiality. Except as otherwise provided herein, Seller and Buyer
agree to maintain the confidentiality of the price provisions of this
Agreement and Seller and Buyer agree not to divulge same to any third Party
except to the extent, and only to the extent, required by law, court order
or the order or regulation of an administrative agency having jurisdiction
over Buyer and Seller, or the subject matter of this Agreement. If required
to be disclosed, then the Party subject to the disclosure requirement shall
(a) notify the other Party immediately, and (b) cooperate to the fullest
extent in seeking whatever confidential status may be available to protect
any material so disclosed.
13.2 Notices. Except as otherwise expressly provided in this Agreement, every
notice, request, statements and invoices provided in this Agreement shall
be in writing and directed to the Party to whom given, made or delivered at
such Party's address as follows:
21
Buyer: KeySpan Energy Delivery New England
000 Xxxxxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxx
Director of Customer Choice and Gas Resource Management.
Telephone: 617-723-5512 ext. 4730
Fax: 000-000-0000
For Payments:
KeySpan Energy Delivery
Fleet Bank of Massachusetts
Account # 00-0000-0000
ABA # 000-000-000
For Nominations:
Buyer shall provide to EKT (from time to time) a primary and
secondary contact (collectively referred to as "Buyer
Designated Representatives").
Seller: Entergy-Xxxx Trading, LP
00 Xxxx Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
For Nominations:
EKT shall provide to Buyer (from time
to time) a primary and secondary
contact (collectively referred to as
"EKT Designated Representatives").
For Payments:
Wire Transfer
XXXxxxxx Xxxxx Xxxx, Xxx Xxxx, XX
Account # 000-000-000
ABA #000-000-000
Either Buyer or Seller may change one or more of its addresses for
receiving invoices, statements, notices, nominations and payments by
notifying the other in writing.
13.3 Headings. The Table of Contents and the headings of any article, section or
subsection of this Agreement are for purposes of convenience only and shall
not be interpreted as having meaning or effect.
22
13.4 Waiver of Default. No waiver by either Party of one or more defaults or
breaches by the other in performance of any of the terms or provisions of
this Agreement shall operate or be construed as a waiver of any future
default or breach, whether of a like or of a different character.
13.5 Entire Agreement. The terms and conditions contained herein constitute the
full and complete agreement between the Parties and any change to be made
must be submitted in writing and agreed to by both Parties.
13.6 Enforceability. This Agreement shall inure to the benefit of and be binding
upon the parties and their respective heirs, successors and assigns. Each
Party represents that it has all necessary power and authority to enter
into and perform its obligations under this Agreement and that this
Agreement constitutes a legal, valid and binding obligation of that Party
enforceable against it in accordance with its terms, except as such
enforceability may be affected by any bankruptcy law or the application of
principles of equity. The parties agree that the transactions hereunder
constitute a "forward contract" within the meaning of the United States
Bankruptcy Code and that Buyer and Seller are each "forward contract
merchants" within the meaning of the United States Bankruptcy Code.
13.7 Assignment and Organizational Changes. Seller shall not assign its rights
or obligations under this Agreement without the express written consent of
Buyer. In the event of a Change of Control of Seller occurring during the
term of this Agreement, Buyer shall have the right to terminate this
Agreement upon thirty (30) Days written notice to Seller. For purposes of
this Section, 13.7 "Change of Control" means the occurrence of any one or
more of the following events: (a) the shareholders of Seller approve a
merger or consolidation of Seller with any other entity, (b) the
shareholders of Seller approve a plan of liquidation of Seller or an
agreement for the sale or disposition by Seller of all or substantially all
of its assets, or (c) if a majority of the key individuals at Seller, who
at the beginning of this Agreement are providing the services for Buyer
under this Agreement are no longer employed by Seller.
13.8 NAESB Compliance. Seller warrants and represents that all computer hardware
or software used in Seller's performance of this Agreement is and will
continue to be compatible with the latest software release of NAESB.
13.9 Necessary Authorizations. Each party represents that it has all necessary
corporate, legal and other authority, including regulatory approval, to
enter into this Agreement and to perform each and every duty and obligation
imposed herein, and that this Agreement, represents a valid, binding and
enforceable legal obligation of each party. No party to this Agreement
entered into hereunder shall be required to investigate the authority of
the person executing this Agreement entered into hereunder as a condition
to enforcing the terms of this Agreement.
23
13.10Compliance with Laws. Each of the KeySpan Parties represents to EKT that
(i) to the best of its knowledge, its execution and performance of this
Agreement will not violate any provisions of any federal, state or local
laws and will not result in the breach or violation of, constitute a
default under, or result in the creation of any lien, charge or encumbrance
upon any of its assets, and (ii) it shall comply with all any federal,
state or local laws and any applicable tariff requirements applicable to
this Agreement.
EKT represents to the KeySpan Parties that (i) to the best of its
knowledge, EKT's execution and performance of this Agreement will not
violate any provisions of any federal, state or local laws and will not
result in the breach or violation of, constitute a default under, or result
in the creation of any lien, charge or encumbrance upon any of the Buyer's
assets, and (ii) EKT shall comply with all any federal, state or local laws
and any applicable tariff requirements applicable to this Agreement.
13.11The KeySpan Parties acknowledge that they are jointly obligated to perform
the Buyer's obligation hereunder.
13.12EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED HEREIN, IN NO EVENT WILL ANY
PARTY BE LIABLE UNDER THIS AGREEMENT, WHETHER IN CONTRACT, IN TORT
(INCLUDING NEGLIGENCE AND STRICT LIABILITY), OR OTHERWISE, FOR INCIDENTAL,
INDIRECT, CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES.
IN WITNESS WHEREOF, the parties hereto have caused these presents to
be executed by their respective officers thereunto duly authorized as of
the Day and year first written.
[THIS SPACE INTENTIONALLY LEFT BLANK]
SIGNATURES ON FOLLOWING PAGE
24
BOSTON GAS COMPANY ENTERGY-XXXX TRADING LP
d/b/a KeySpan Energy Delivery New England
By: _____________________________ By: ________________________________
Signature Signature
----------------------------- --------------------------------
Print Name Print Name
----------------------------- --------------------------------
Buyer Seller
ESSEX GAS COMPANY COLONIAL GAS COMPANY
d/b/a KeySpan Energy Delivery New England d/b/a KeySpan Energy Delivery New England
By: ______________________________ By: ________________________________
Signature Signature
------------------------------ --------------------------------
Print Name Print Name
______________________________ ________________________________
Buyer Buyer
