EXHIBIT 10.71
PRECEDENT AGREEMENT
BY AND BETWEEN
ETOWAH LNG COMPANY, L.L.C.
AND
ATLANTA GAS LIGHT COMPANY
AMENDED AND RESTATED
MARCH 31, 2000
AMENDED AND RESTATED
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PRECEDENT AGREEMENT
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This Amended and Restated Precedent Agreement is made and entered into as
of the 31st day of March, 2000 by and between ETOWAH LNG COMPANY, L.L.C., a
Delaware limited liability company, herein called "Company," and ATLANTA GAS
LIGHT COMPANY, a Georgia corporation, herein called "Customer," pursuant to the
following terms, conditions, and representations:
R E C I T A L S:
A. Company is a Delaware limited liability company formed by Southern
Natural Gas Company, a Delaware corporation ("Southern"), and AGL Peaking
Services, Inc., a Georgia corporation ("AGL"). This Amended and Restated
Precedent Agreement may refer to Southern and AGL individually as a "Member" and
jointly as the "Members."
B. Company filed an application with the Federal Energy Regulatory
Commission ("FERC") on April 20, 1998 for Certificates of Public Convenience and
Necessity authorizing Company to construct and operate natural gas liquefaction,
storage, and vaporization facilities, herein called "Company's Facility,"
located in Polk County, Georgia and interconnected with the pipeline systems of
Southern and Atlanta Gas Light Company;
C. On April 16, 1998, Company and Customer entered into a Precedent
Agreement, which Precedent Agreement, among other things, bound Company and
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Customer to enter into an LNG-1 Service Agreement, substantially in the form
attached as Exhibit A thereto (as approved by the FERC), to effect firm service
through Company's Facility pursuant to the terms of said Precedent Agreement;
and
D. Company and Customer subsequently amended said Precedent Agreement
pursuant to letter agreements dated October 13, 1998, December 14, 1998,
February 15, 1999, August 11, 1999 and October 14, 1999.
E. Company and Customer desire to further amend the Precedent Agreement
for the following purposes, among others: (i) to extend the expiration date for
Customer's "Termination Right" in Paragraph 3; (ii) to eliminate any obligation
of Customer to pay carrying charges to Company associated with project costs;
and (iii) to restructure Customer's obligation to reimburse Company for project
costs if Customer exercises its Termination Right.
F. Company and Customer have determined that it is desirable and in each
of their best interests to restate the Precedent Agreement simultaneous with
amending it as described above in Paragraph E.
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A G R E E M E N T S:
In consideration of: (i) the payment, in immediately available funds
simultaneous with the execution of this agreement, by Customer to Company of the
sum of $1,188,309; (ii) the mutual covenants set forth in this agreement; and
(iii) other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Company and Customer agree as follows:
1. Company shall seek the contractual and property rights, financing
arrangements, and regulatory approvals, including from the FERC all necessary
authorizations under the FERC'S Regulations under the Natural Gas Act ("FERC
Authorization"), as may be necessary to construct Company's Facility and to
render service under Rate Schedule LNG-1. Company reserves the right to file and
prosecute applications for any required authorizations, any supplement or
amendment to an application, and any court review as Company deems in its best
interests. Customer agrees to use its good faith efforts to cooperate with and
support Company in obtaining the necessary regulatory approvals. Customer's
cooperation and support includes, without limitation, (i) filing with the FERC
in support of Company's application for FERC Authorization and (ii) providing to
Company any information that the FERC requires relating to Customer's gas supply
arrangements or markets in a timely manner to enable Company to respond within
the time imposed by the FERC; provided, however, that Company shall at
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Customer's request seek confidential treatment of such information. Customer
agrees that Company may provide copies of this Amended and Restated
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Precedent Agreement to Company's Members that have agreed not to disclose this
Amended and Restated Precedent Agreement to others. Under no circumstances,
however, may Company provide copies of this Amended and Restated Precedent
Agreement to any marketing affiliate of the Members.
2. Upon receipt by Company of the FERC Authorization described in
Paragraph 1, Company shall transmit to Customer a copy of such authorization.
Within 20 days of receipt by Company of its FERC Authorization, Company shall
notify Customer of Company's decision to accept or reject such authorization.
3. If Company accepts its FERC Authorization, then within 30 days Company
and Customer shall execute and deliver an LNG-1 Service Agreement that provides
for (i) a Maximum Daily Vaporization Quantity ("MDVQ") of 200,000 Mcf per day,
(ii) a Primary Delivery Point (subject to change by mutual agreement and
according to Company's FERC-approved tariff) at the interconnect between
Company's Facility and Customer's facilities, and (iii) a primary term of 20
years from the in-service date, subject to Paragraph 9(a); provided, however,
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that Company's obligation to provide service pursuant to the executed Service
Agreement remains subject to Company's receipt and acceptance of any remaining
necessary contractual and property rights, financing arrangements, and
regulatory approvals, in form and substance satisfactory to Company. Any other
provision of this Paragraph 3 to the contrary notwithstanding, Customer and
Company agree that the obligations, agreements, and representations in this
Amended and Restated Precedent Agreement remain subject to the following
("Termination Right"): if
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Customer concludes, in Customer's sole judgment, that execution and delivery of
the above-referenced LNG-1 Service Agreement is not in Customer's best interest,
then Customer may terminate this Amended and Restated Precedent Agreement if
Company receives a written notice of termination by April 2, 2001; provided,
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however, that if Company has not received the specified notice of termination by
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April 2, 2001, then this Termination Right shall become null and void and have
no effect, and the other provisions of this Amended and Restated Precedent
Agreement shall continue with full force and effect. If Customer terminates the
Amended and Restated Precedent Agreement pursuant to this Termination Right,
then such termination relieves Customer and Company of further liability;
provided, however, that Customer agrees to reimburse Company for all actual
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costs, including without limitation (i) expenses incurred in the design and
engineering of Company's Facility, (ii) expenses incurred in preparing for
regulatory approvals, and (iii) the cost of all land and materials ("Actual
Costs"). Upon reimbursement of the Actual Costs by Customer, Company agrees to
convey to Customer (or to another entity that Customer designates) such
property, rights, and materials acquired by Company including but not limited to
Company's interest in any land acquired for Company's Facility. Customer and
Company agree and confirm that Customer's obligation to reimburse Company for
Actual Costs survives the termination of this Amended and Restated Precedent
Agreement pursuant to the Termination Right.
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4. Company proposes to provide firm service to Customer under Rate
Schedule LNG-1 at FERC-approved, cost-based rates reflecting the actual initial
capital cost of the Facility or at such other rates as may be agreed to by
Company and Customer. In order to assist Customer's evaluating its Termination
Right, Company shall provide to Customer no later than March 1, 2001 estimated
revised rates for firm service based on projections of Company's revenue
requirement, including updated projections of capital costs and operating and
maintenance expenses. Customer's obligation to pay the maximum monthly
reservation charges and other charges, and Company's obligation to perform
according to its tariff, as approved by the FERC, shall commence as soon as the
Company's Facility has been constructed and is ready for liquefaction and
storage, as determined by Company in its sole opinion. Company agrees that
except for adjustments to its fuel retention percentage and any industry-wide
surcharges imposed by the FERC, Company shall not file a general rate increase
pursuant to Section 4 of the Natural Gas Act ("NGA") before the end of the
three-year period beginning on Company's in-service date, as described in
Paragraph 9(a); provided, however, that Company may, upon written notice to
Customer, terminate this rate moratorium and file a general rate change pursuant
to Section 4 of the NGA if, as a result of legislation or action of the FERC (or
other government agency having jurisdiction), Company is required to change the
cost allocation, rate design, services, or billing determinants in a manner that
materially and adversely affects Company's ability to recover its cost of
service.
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5. Nothing in this Amended and Restated Precedent Agreement shall be
deemed or construed to limit either (i) Company's ability to file with FERC to
increase its maximum lawful rates by the full amount of the actual initial
capital costs of the Company's Facility, or (ii) Customer's right to oppose
such filing.
6. No modification of the terms and provisions of this Amended and
Restated Precedent Agreement shall be made except by the execution of written
agreements by Company and Customer.
7. Company and Customer agree and confirm that this Amended and Restated
Precedent Agreement is in full force and effect and supersedes all prior
agreements and amendments.
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8. Notices under this Amended and Restated Precedent Agreement shall be
sent to:
Company: Etowah LNG Company, L.L.C.
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Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Phone: 205/▇▇▇-▇▇▇▇
Fax: 205/▇▇▇-▇▇▇▇
Customer: Atlanta Gas Light Company
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Attention: President
Phone: 404/▇▇▇-▇▇▇▇
Fax: 404/▇▇▇-▇▇▇▇
Either party may change its address by written notice to that effect to the
other party. Notices given hereunder shall be deemed to have been effectively
given upon the third day following the day when the notice properly addressed
and postpaid has been placed in the United States mail, or upon confirmation of
receipt if delivered by facsimile or other similar means, or in accordance with
the dates and time provided for overnight delivery service.
9. Customer and Company acknowledge and agree to the following:
(a) After Company and Customer execute and deliver the LNG-1 Service
Agreement, and after Company receives and accepts all necessary
contractual and property rights, financing arrangements, and
regulatory approvals, in form and substance satisfactory to
Company, Company shall proceed with the construction of
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Company's Facility so as to begin liquefaction and storage for
Customer by a proposed in-service date of March 1, 2004. If
Company is unable to complete the construction and place the
Company's Facility into operation by the proposed in-service date
despite its exercise of due diligence, then Company shall
continue to proceed with due diligence to complete such
construction and place Company's Facility in-service at the
earliest practicable date. Company shall not be liable in any
manner to Customer, nor shall this Amended and Restated Precedent
Agreement or the LNG-1 Service Agreement be subject to
termination, if, despite Company's exercise of due diligence,
construction is not completed or service is not commenced by the
proposed in-service date.
(b) Company is a Delaware limited liability company.
(c) Customer shall have no recourse against any Member of Company
with respect to Company's obligations under this Amended and
Restated Precedent Agreement or with respect to any agreements
executed pursuant to the terms hereof, and its sole recourse
shall be against the assets of Company, irrespective of any
failure to comply with applicable law or any provision of this
Amended and Restated Precedent Agreement.
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(d) No claim shall be made against any Member of Company under or in
connection with this Amended and Restated Precedent Agreement or
any agreements executed pursuant to the terms hereof.
(e) Customer shall have no right of subrogation to any claim of
Company for any Capital Contributions from any Member of Company.
(f) The representations in (b) through (e) above are made expressly
for the benefit of the Members of Company.
10. If Company has not received and accepted the FERC Authorization on or
before January 31, 2003, then either Company or Customer may, at any time
thereafter until Company receives and accepts the FERC Authorization, terminate
this Amended and Restated Precedent Agreement by giving 30 days' advance written
notice to the other; provided, however, that the termination has no effect if
Company receives and accepts the FERC Authorization within the 30-day notice
period. Termination shall be without liability for damages, costs, or expenses
of either Company or Customer to each other or others, or to shareholders,
directors, officers, employees, agents, or consultants of Company or Customer.
11. THIS AMENDED AND RESTATED PRECEDENT AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA, WITHOUT REFERENCE
TO RULES FOR CONFLICTS OF LAW.
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12. (a) Any company which shall succeed by purchase, merger, or consolidation
to the properties substantially as an entirety, of either Company or
Customer, as the case may be, shall be entitled to the rights and
shall be subject to the obligations of its predecessor in title under
this Amended and Restated Precedent Agreement.
(b) Either party may, without the consent of the other party, assign any
of its rights hereunder to an entity with which it is affiliated, but
the assignor shall not be relieved of its obligations under this
Amended and Restated Precedent Agreement. In the event of such
assignment, the assignor shall provide written notice of such
assignment to the other party to this Amended and Restated Precedent
Agreement as soon as practicable after such assignment.
(c) In addition to the rights provided in Paragraph 12(b), if Customer
assigns any of its rights hereunder to an entity with which it is
affiliated and, prior to such assignment, obtains the written consent
thereto of Company, such consent not to be unreasonably withheld, then
Customer shall be relieved of its obligations hereunder to the extent
so assigned prospectively from the effective date of the assignment
(except for the obligations to pay monies related to periods prior to
the assignment which become due before or after such date).
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(d) Except as provided in Paragraph 12(b) hereof, no assignment of this
Amended and Restated Precedent Agreement or any of the rights or
obligations hereunder shall be made unless there first shall have been
obtained the written consent thereto of Customer in the event of an
assignment by Company, or the written consent thereto of Company in
the event of an assignment by Customer, such consent not to be
unreasonably withheld.
(e) It is agreed, however, that the restrictions on assignment contained
in Paragraphs 12(a) through (d) above shall not in any way prevent
either party to this Amended and Restated Precedent Agreement from
pledging or mortgaging its rights hereunder as security for its
indebtedness.
(f) For purposes of this Amended and Restated Precedent Agreement,
"Affiliate" means, with respect to any relevant entity, any other
entity that directly or indirectly controls, is controlled by, or is
under common control with, such relevant entity in question. As used
herein, the term "control" (including its derivatives and similar
terms) means owning or holding, directly or indirectly, the power (i)
to vote 10% or more of the Voting Stock of any such relevant entity,
or (ii) to direct or cause the direction of the management and
policies of any such relevant entity. "Voting Stock" means capital
stock
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issued by a corporation, or equivalent interests in any other entity,
the holders of which are ordinarily, in the absence of contingencies,
entitled to vote for the election of directors (or entity with
management authority performing similar functions) of such entity.
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Precedent Agreement to be duly executed by their proper officers
thereunto duly authorized as of the date first hereinabove written.
ATLANTA GAS LIGHT COMPANY ETOWAH COMPANY, L.L.C.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
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Title: Senior Vice President Title: President
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Date: As of 3/31/00 Date: Southern Natural Gas Co.
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EXHIBIT A
Precedent Agreement--LNG-1
(_____________)
FORM OF SERVICE AGREEMENT
(For Use Under Rate Schedule LNG-1)
THIS AGREEMENT entered into this _____ day of ___________ by and between
Etowah LNG Company, L.L.C (Etowah) and __________________ (Customer).
W I T N E S S E T H:
WHEREAS, Etowah has undertaken to provide services of liquefaction,
storage, and vaporization of natural gas under Part 284 of the Federal Energy
Regulatory Commission's (Commission) Regulations; and
WHEREAS, Customer has requested service pursuant to Rate Schedule LNG-1 and
has submitted to Etowah a request for such service in compliance with Section 2
of Rate Schedule LNG-1; and
WHEREAS, Etowah agrees service to render to Customer pursuant to the
provisions of Rate Schedule LNG-1, this Agreement, and the Commission's
Regulations.
NOW, THEREFORE, Etowah and Customer agree as follows:
ARTICLE I
SERVICE TO BE RENDERED
Subject to the terms and provisions of both this agreement and Etowah's
Rate Schedule LNG-1, as amended from time to time, Etowah agrees to liquefy
natural gas, delivered to Etowah by Customer pursuant to Article II; store such
gas in liquefied form; and vaporize and deliver such gas to Customer or for
Customer's account, as follows:
To withdraw from storage and vaporize the gas stored in liquefied form by
Etowah for Customer's account up to a maximum quantity of _____ Mcf, which
quantity shall be Customer's Maximum Daily Vaporization Quantity (MDVQ).
To liquefy natural gas for Customer up to a maximum quantity on any day of
5% of MDVQ, which equals Customer's Maximum Daily Liquefaction Quantity (MDLQ).
To store in liquefied form for Customer's account up to a total quantity of
833% of MDVQ, which equals Customer's Maximum Storage Capacity (MSC).
ARTICLE II
POINT OF RECEIPT AND DELIVERY
1. Point of Receipt
Subject to the terms and provisions of both this Agreement and
Etowah's Rate Schedule LNG-1 and the General Terms and Conditions
thereto, Etowah agrees to accept at the Receipt Point on any day a
quantity of gas up to Customer's MDLQ.
2. Points of Delivery
Subject to the terms and provisions of both this Agreement and
Etowah's Rate Schedule LNG-1 and the General Terms and Conditions
thereto, Etowah agrees to deliver to Customer at the Delivery Points
described in Exhibit A and Exhibit A-1 to this Agreement. Etowah's
obligation to deliver on a firm basis is limited to the Delivery Point
specified on Exhibit A and the MDVQ stated for that delivery point.
All quantities delivered in excess of MDVQ equal Authorized Excess
Vaporization, as defined in Section 6.1(d) of Rate Schedule LNG-1.
ARTICLE III
TERM OF AGREEMENT
This agreement shall be effective as of ______________ and shall remain in
force and effect until _________________, and year to year thereafter, subject
to termination by either party upon two (2) years prior written notice to the
other.
ARTICLE IV
RATE SCHEDULE AND PRICE
1. Customer shall pay Etowah for service rendered hereunder in accordance
with Etowah's Rate Schedule LNG-1 and the applicable provisions of the General
Terms and Conditions of Etowah's FERC Gas Tariff as filed with the Commission,
and as the same may be amended or superseded from time to time. Such rate
schedule and General Terms and Conditions are by this reference made a part
hereof.
2. Etowah shall have the unilateral right to propose, file, and make
effective with the Commission, or other regulatory authority having
jurisdiction, changes and revisions to the rates and rate design proposed
pursuant to Section 4 of the Natural Gas Act, or to propose, file, and make
effective superseding rates or rate schedules, for the purposes of changing the
rates, charges, rate design, terms, and conditions of service and other
provisions thereof effective as to Customer; provided, however, that the (i)
firm character of service, (ii) term of agreement (as set forth in Article III
above), (iii) quantities, and (iv) points of receipt and delivery shall not be
subject to unilateral change under this paragraph. Customer shall have the right
to file with the Commission or other regulatory authority in opposition to any
such filings or proposals by Etowah. This agreement does not alter pre-existing
rights under Section 5 of the Natural Gas Act.
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ARTICLE V
MISCELLANEOUS
1. The subject headings of the Articles of this agreement are inserted
for the purpose of convenient reference and are not intended to be a part of
this agreement nor to be considered in the interpretation of the same.
2. This agreement supersedes and cancels as of the effective date hereof
the following contracts between the parties hereto:
________________________________________________________________________________
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________________________________________________________________________________
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________________________________________________________________________________
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3. No waiver by either party of any one or more defaults by the other in
the performance of any provisions of this agreement shall operate or be
construed as a waiver of any future default or defaults, whether of a like or
different character.
4. This agreement shall be interpreted, performed, and enforced in
accordance with the laws of the State of Georgia, without reference to rules for
conflicts of law.
5. This agreement shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors and assigns.
6. Notices to either party shall be in writing and shall be considered as
duly delivered when mailed to the other party at the following address:
(a) If to Etowah:
Etowah LNG Company, L.L.C.
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(b) If to Customer:
___________________________________________________________________________
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Such addresses may be changed from time to time by mailing appropriate notice
thereof to the other party.
7. Customer acknowledges and agrees that (a) Company is a Delaware
limited liability company; (b) Customer shall have no recourse against any
member of Company with respect to Company's obligations under this agreement and
its sole recourse shall be against
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the assets of Company, irrespective of any failure to comply with applicable law
or any provision of this Agreement; (c) no claim shall be made against any
member of Company under or in connection with this Agreement; (d) Customer shall
have no right of subrogation to any claim of Company for any Capital
Contribution from any member of Company; and (e) this representation is made
expressly for the benefit of the members in Company.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
signed and sealed by their respective officers or representatives thereunto duly
authorized on any day and year above written.
ETOWAH LNG COMPANY, L.L.C.
By ____________________________
[L.S.]
CUSTOMER
By ____________________________
[L.S.]
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