FORM
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10-Q
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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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06-0842255
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification No.)
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1201 Louisiana Street,
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Suite 3100,
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Houston,
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TX
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77002
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Trading symbol
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Name of each exchange on which registered
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Common stock, par value $0.01 per share
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TELL
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NASDAQ
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Capital Market
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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Item 1.
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Condensed Consolidated Financial Statements
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Condensed Consolidated Balance Sheets
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Condensed Consolidated Statements of Operations
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Condensed Consolidated Statement of Changes in Stockholders’ Equity
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Condensed Consolidated Statements of Cash Flows
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Notes to Condensed Consolidated Financial Statements
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 3.
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Quantitative and Qualitative Disclosures about Market Risk
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Item 4.
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Controls and Procedures
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Item 1.
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Legal Proceedings
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Item 1A.
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Risk Factors
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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Item 5.
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Other Information
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Item 6.
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Exhibits
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•
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our businesses and prospects and our overall strategy;
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•
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planned or estimated capital expenditures;
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•
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availability of liquidity and capital resources;
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•
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our ability to obtain additional financing as needed and the terms of financing transactions, including at Driftwood Holdings LP;
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•
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revenues and expenses;
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•
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progress in developing our projects and the timing of that progress;
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•
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future values of the Company’s projects or other interests, operations or rights; and
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•
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government regulations, including our ability to obtain, and the timing of, necessary governmental permits and approvals.
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•
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the uncertain nature of demand for and price of natural gas and LNG;
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•
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risks related to shortages of LNG vessels worldwide;
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•
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technological innovation which may render our anticipated competitive advantage obsolete;
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•
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risks related to a terrorist or military incident involving an LNG carrier;
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•
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changes in legislation and regulations relating to the LNG industry, including environmental laws and regulations that impose significant compliance costs and liabilities;
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•
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governmental interventions in the LNG industry, including increases in barriers to international trade;
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•
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uncertainties regarding our ability to maintain sufficient liquidity and attract sufficient capital resources to implement our projects;
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•
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our limited operating history;
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•
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our ability to attract and retain key personnel;
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•
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risks related to doing business in, and having counterparties in, foreign countries;
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•
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our reliance on the skill and expertise of third-party service providers;
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•
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the ability of our vendors to meet their contractual obligations;
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•
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risks and uncertainties inherent in management estimates of future operating results and cash flows;
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•
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our ability to maintain compliance with our senior secured term loans and other agreements;
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•
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changes in competitive factors, including the development or expansion of LNG, pipeline and other projects that are competitive with ours;
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•
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development risks, operational hazards and regulatory approvals;
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•
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our ability to enter and consummate planned financing and other transactions; and
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•
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risks and uncertainties associated with litigation matters.
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ASU
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Accounting Standards Update
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Bcf
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Billion cubic feet of natural gas
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Bcf/d
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Bcf per day
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Bcfe
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Billion cubic feet of natural gas equivalent
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DD&A
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Depreciation, depletion and amortization
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DES
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Delivered ex-ship
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DOE/FE
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U.S. Department of Energy, Office of Fossil Energy
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EPC
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Engineering, procurement and construction
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FEED
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Front-End Engineering and Design
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FERC
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U.S. Federal Energy Regulatory Commission
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FID
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Final investment decision as it pertains to the Driftwood Project
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FTA countries
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Countries with which the U.S. has a free trade agreement providing for national treatment for trade in natural gas
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GAAP
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Generally accepted accounting principles in the U.S.
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JKM
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|
Platts Japan Korea Marker index price for LNG
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LNG
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Liquefied natural gas
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LSTK
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Lump sum turnkey
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Mcf
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Thousand cubic feet of natural gas
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MMBtu
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Million British thermal units
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MMcf
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Million cubic feet of natural gas
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MMcf/d
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MMcf per day
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MMcfe
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Million cubic feet of natural gas equivalent volumes using a ratio of 6 Mcf to 1 barrel of liquid
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Mtpa
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Million tonnes per annum
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Nasdaq
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Nasdaq Capital Market
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Non-FTA countries
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Countries with which the U.S. does not have a free trade agreement providing for national treatment for trade in natural gas and with which trade is permitted
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SEC
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U.S. Securities and Exchange Commission
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Train
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An industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG
|
U.S.
|
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United States
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USACE
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U.S. Army Corps of Engineers
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TELLURIAN INC. AND SUBSIDIARIES
|
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|||||||
(in thousands, except share and per share amounts)
|
|||||||
(unaudited)
|
|||||||
|
|
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|
||||
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June 30, 2019
|
|
December 31, 2018
|
||||
ASSETS
|
|
||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
104,005
|
|
|
$
|
133,714
|
|
Accounts receivable
|
3,345
|
|
|
1,498
|
|
||
Accounts receivable due from related parties
|
1,316
|
|
|
1,316
|
|
||
Prepaid expenses and other current assets
|
7,244
|
|
|
3,906
|
|
||
Total current assets
|
115,910
|
|
|
140,434
|
|
||
Property, plant and equipment, net
|
161,279
|
|
|
130,580
|
|
||
Deferred engineering costs
|
86,591
|
|
|
69,000
|
|
||
Non-current restricted cash
|
17,968
|
|
|
49,875
|
|
||
Other non-current assets
|
35,607
|
|
|
18,659
|
|
||
Total assets
|
$
|
417,355
|
|
|
$
|
408,548
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
7,258
|
|
|
$
|
11,597
|
|
Accrued and other liabilities
|
36,378
|
|
|
41,173
|
|
||
Senior secured term loan
|
56,651
|
|
|
—
|
|
||
Total current liabilities
|
100,287
|
|
|
52,770
|
|
||
Long-term liabilities:
|
|
|
|
||||
Senior secured term loan
|
57,584
|
|
|
57,048
|
|
||
Other non-current liabilities
|
17,828
|
|
|
796
|
|
||
Total long-term liabilities
|
75,412
|
|
|
57,844
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 8)
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|
|
|
||||
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|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value, 100,000,000 authorized:
6,123,782 and 6,123,782 shares outstanding, respectively
|
61
|
|
|
61
|
|
||
Common stock, $0.01 par value, 400,000,000 authorized:
242,214,647 and 240,655,607 shares outstanding, respectively
|
2,210
|
|
|
2,195
|
|
||
Additional paid-in capital
|
767,863
|
|
|
749,537
|
|
||
Accumulated deficit
|
(528,478
|
)
|
|
(453,859
|
)
|
||
Total stockholders’ equity
|
241,656
|
|
|
297,934
|
|
||
Total liabilities and stockholders’ equity
|
$
|
417,355
|
|
|
$
|
408,548
|
|
TELLURIAN INC. AND SUBSIDIARIES
|
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||
(in thousands)
|
|||||||
(unaudited)
|
|||||||
|
|
||||||
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(74,619
|
)
|
|
$
|
(61,038
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation, depletion and amortization
|
6,981
|
|
|
719
|
|
||
Amortization of debt issuance costs, discounts and fees
|
2,687
|
|
|
—
|
|
||
Share-based compensation
|
2,785
|
|
|
2,368
|
|
||
Share-based payments
|
545
|
|
|
—
|
|
||
Impairment charge and loss on transfer of assets
|
—
|
|
|
1,809
|
|
||
Gain on financial instruments not designated as hedges
|
(3,491
|
)
|
|
—
|
|
||
Other
|
(1,826
|
)
|
|
—
|
|
||
Net changes in working capital (Note 14)
|
5,864
|
|
|
4,103
|
|
||
Net cash used in operating activities
|
(61,074
|
)
|
|
(52,039
|
)
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Acquisition and development of natural gas properties
|
(31,332
|
)
|
|
(268
|
)
|
||
Proceeds from sale of asset
|
—
|
|
|
167
|
|
||
Deferred engineering costs
|
(17,591
|
)
|
|
—
|
|
||
Purchase of property - land (Note 14)
|
(180
|
)
|
|
—
|
|
||
Purchase of property, plant and equipment
|
(2,553
|
)
|
|
(3,333
|
)
|
||
Net cash used in investing activities
|
(51,656
|
)
|
|
(3,434
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from borrowing under term loan
|
60,000
|
|
|
—
|
|
||
Payments of term loan financing costs
|
(2,200
|
)
|
|
—
|
|
||
Proceeds from issuance of common stock
|
—
|
|
|
133,800
|
|
||
Tax payments for net share settlement of equity awards (Note 14)
|
(6,686
|
)
|
|
(5,664
|
)
|
||
Equity offering costs
|
—
|
|
|
(4,090
|
)
|
||
Net cash provided by financing activities
|
51,114
|
|
|
124,046
|
|
||
|
|
|
|
||||
Net (decrease) increase in cash, cash equivalents and restricted cash
|
(61,616
|
)
|
|
68,573
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
183,589
|
|
|
128,273
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
121,973
|
|
|
$
|
196,846
|
|
Supplementary disclosure of cash flow information:
|
|
|
|
||||
Interest paid
|
$
|
2,816
|
|
|
$
|
—
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Land
|
$
|
13,808
|
|
|
$
|
13,276
|
|
Proved properties
|
114,722
|
|
|
101,459
|
|
||
Unproved properties
|
10,204
|
|
|
10,204
|
|
||
Wells in progress
|
25,605
|
|
|
4,660
|
|
||
Corporate and other
|
5,147
|
|
|
2,905
|
|
||
Total property, plant and equipment at cost
|
169,486
|
|
|
132,504
|
|
||
Accumulated DD&A
|
(8,207
|
)
|
|
(1,924
|
)
|
||
Total property, plant and equipment, net
|
$
|
161,279
|
|
|
$
|
130,580
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Land lease and purchase options
|
$
|
4,624
|
|
|
$
|
4,115
|
|
Permitting costs
|
12,838
|
|
|
12,585
|
|
||
Right of use asset - leases (Note 13)
|
16,919
|
|
|
—
|
|
||
Other
|
1,226
|
|
|
1,959
|
|
||
Total other non-current assets
|
$
|
35,607
|
|
|
$
|
18,659
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Project development activities
|
$
|
11,623
|
|
|
$
|
8,879
|
|
Payroll and compensation
|
14,607
|
|
|
23,286
|
|
||
Accrued taxes
|
928
|
|
|
2,507
|
|
||
Professional services (e.g., legal, audit)
|
3,909
|
|
|
2,423
|
|
||
Lease liability - current (Note 13)
|
2,178
|
|
|
—
|
|
||
Other
|
3,133
|
|
|
4,078
|
|
||
Total accrued and other liabilities
|
$
|
36,378
|
|
|
$
|
41,173
|
|
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
|||||||||
|
|
Maturity
|
|
Interest Rate
|
|
Amount
|
|
Interest Rate
|
|
Amount
|
|||||
2019 Term Loan
|
|
May 2020 (1)
|
|
12% (2)
|
|
$
|
70,020
|
|
|
—
|
|
|
$
|
—
|
|
2018 Term Loan
|
|
September 2021
|
|
5%-8% + LIBOR (3)
|
|
60,000
|
|
|
5%-8% + LIBOR (3)
|
|
60,000
|
|
|||
Unamortized deferred financing costs, discounts and fees
|
|
|
|
|
|
(15,785
|
)
|
|
|
|
(2,952
|
)
|
|||
Total borrowings
|
|
|
|
|
|
$
|
114,235
|
|
|
|
|
$
|
57,048
|
|
Lease
|
|
Presentation
|
|
June 30, 2019
|
||
Right of use asset
|
|
Other non-current assets
|
|
16,919
|
|
|
Total lease asset
|
|
|
|
$
|
16,919
|
|
Lease liability - current
|
|
Accrued and other liabilities
|
|
2,178
|
|
|
Lease liability - non-current
|
|
Other non-current liabilities
|
|
16,914
|
|
|
Total lease liability
|
|
|
|
$
|
19,092
|
|
Maturity of lease liability
|
|
||
2019
|
$
|
1,846
|
|
2020
|
3,645
|
|
|
2021
|
3,508
|
|
|
2022
|
3,819
|
|
|
2023
|
4,093
|
|
|
After 2023
|
8,061
|
|
|
Total lease payments
|
$
|
24,972
|
|
Less: discount
|
5,880
|
|
|
Present value of lease liability
|
$
|
19,092
|
|
2019
|
$
|
3,126
|
|
2020
|
3,510
|
|
|
2021
|
3,440
|
|
|
2022
|
3,718
|
|
|
2023
|
3,993
|
|
|
Thereafter
|
8,061
|
|
|
Total
|
$
|
25,848
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Accounts receivable
|
$
|
(1,847
|
)
|
|
$
|
4
|
|
Accounts receivable due from related parties
|
—
|
|
|
62
|
|
||
Prepaid expenses and other current assets
|
(137
|
)
|
|
297
|
|
||
Accounts payable and accrued liabilities
|
8,618
|
|
|
7,611
|
|
||
Other, net
|
(770
|
)
|
|
(3,871
|
)
|
||
Net changes in working capital
|
$
|
5,864
|
|
|
$
|
4,103
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Property, plant and equipment and other non-current assets non-cash accruals
|
$
|
415
|
|
|
$
|
3,485
|
|
2019 Term Loan paid-in-kind election
|
240
|
|
|
—
|
|
||
Non-cash settlement of withholding taxes associated with the 2018 and 2017 bonus paid and vesting of certain awards, respectively
|
6,686
|
|
|
5,583
|
|
||
Non-cash settlement of the 2018 and 2017 bonus paid, respectively
|
18,396
|
|
|
15,140
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash and cash equivalents
|
$
|
104,005
|
|
|
$
|
196,846
|
|
Non-current restricted cash
|
17,968
|
|
|
—
|
|
||
Total cash, cash equivalents and restricted cash shown in the statements of cash flows
|
$
|
121,973
|
|
|
$
|
196,846
|
|
•
|
Our Business
|
•
|
Overview of Significant Events
|
•
|
Liquidity and Capital Resources
|
•
|
Capital Development Activities
|
•
|
Results of Operations
|
•
|
Off-Balance Sheet Arrangements
|
•
|
Recent Accounting Standards
|
|
|
Six Months Ended June 30,
|
||||||
|
|
|||||||
|
|
2019
|
|
2018
|
||||
Cash used in operating activities
|
|
$
|
(61,074
|
)
|
|
$
|
(52,039
|
)
|
Cash used in investing activities
|
|
(51,656
|
)
|
|
(3,434
|
)
|
||
Cash provided by financing activities
|
|
51,114
|
|
|
124,046
|
|
||
|
|
|
|
|
||||
Net (decrease) increase in cash, cash equivalents and restricted cash
|
|
(61,616
|
)
|
|
68,573
|
|
||
Cash, cash equivalents and restricted cash, beginning of the period
|
|
183,589
|
|
|
128,273
|
|
||
Cash, cash equivalents and restricted cash, end of the period
|
|
$
|
121,973
|
|
|
$
|
196,846
|
|
|
|
|
|
|
||||
Net working capital
|
|
$
|
15,623
|
|
|
$
|
174,050
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Total revenue
|
|
$
|
5,333
|
|
|
$
|
813
|
|
|
$
|
10,293
|
|
|
$
|
7,614
|
|
Cost of sales
|
|
1,240
|
|
|
217
|
|
|
2,353
|
|
|
4,660
|
|
||||
Development expenses
|
|
18,678
|
|
|
12,895
|
|
|
30,553
|
|
|
21,867
|
|
||||
Depreciation, depletion and amortization
|
|
4,048
|
|
|
342
|
|
|
6,579
|
|
|
719
|
|
||||
General and administrative expenses
|
|
23,403
|
|
|
22,208
|
|
|
45,456
|
|
|
40,609
|
|
||||
Impairment charge and loss on transfer of assets
|
|
—
|
|
|
1,809
|
|
|
—
|
|
|
1,809
|
|
||||
Loss from operations
|
|
(42,036
|
)
|
|
(36,658
|
)
|
|
(74,648
|
)
|
|
(62,050
|
)
|
||||
Interest income (expense), net
|
|
(3,399
|
)
|
|
552
|
|
|
(3,986
|
)
|
|
940
|
|
||||
Other income, net
|
|
4,942
|
|
|
70
|
|
|
4,015
|
|
|
72
|
|
||||
Income tax benefit
|
|
—
|
|
|
182
|
|
|
—
|
|
|
—
|
|
||||
Net loss
|
|
$
|
(40,493
|
)
|
|
$
|
(35,854
|
)
|
|
$
|
(74,619
|
)
|
|
$
|
(61,038
|
)
|
•
|
Cost of sales during the period increased by approximately $1.0 million compared to the same period in 2018 due to an increase in natural gas sales as a result of an increase in production volumes.
|
•
|
Development expenses during the period increased by approximately $5.8 million compared to the same period in 2018 as a result of an overall increase in development activities associated with the Driftwood Project.
|
•
|
DD&A during the period increased by approximately $3.7 million compared to the same period in 2018 due to the increase in natural gas production as discussed earlier.
|
•
|
The $4.0 million increase in interest expense, net, is primarily attributable to the recognition of interest expenses on the 2018 Term Loan and 2019 Term Loan, which were not in place in the prior period.
|
•
|
Development expenses during the period increased by approximately $8.7 million compared to the same period in 2018 as a result of an overall increase in development activities associated with the Driftwood Project.
|
•
|
DD&A during the period increased by approximately $5.9 million compared to the same period in 2018 due to the increase in natural gas production as discussed earlier.
|
•
|
General and administrative expenses increased by approximately $4.8 million during the period, due primarily to an increase in employee headcount when compared to the same period in 2018.
|
•
|
Interest expense, net, increased by approximately $4.9 million during the period, primarily due to the recognition of interest expenses on the 2018 Term Loan and 2019 Term Loan, which were not in place in the prior period.
|
Exhibit No.
|
|
Description
|
4.1*
|
|
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
10.4*
|
|
|
10.5*
|
|
|
10.6*
|
|
|
10.7††*
|
|
|
10.8††*
|
|
|
10.9†*
|
|
|
31.1*
|
|
|
31.2*
|
|
|
32.1**
|
|
|
32.2**
|
|
|
99.1
|
|
|
101.INS*
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
101.SCH*
|
|
Inline XBRL Taxonomy Extension Schema Document
|
101.CAL*
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF*
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB*
|
|
Inline XBRL Taxonomy Extension Labels Linkbase Document
|
101.PRE*
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
104
|
|
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in Inline XBRL
|
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
†
|
Management contract or compensatory plan or arrangement.
|
††
|
Portions of this exhibit have been omitted in accordance with Item 601(b)(10) of Regulation S-K. The omitted information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
|
|
|
TELLURIAN INC.
|
|
|
|
|
|
Date:
|
August 7, 2019
|
By:
|
/s/ Antoine J. Lafargue
|
|
|
|
Antoine J. Lafargue
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
(as Principal Financial Officer)
|
|
|
|
Tellurian Inc.
|
|
|
|
|
Date:
|
August 7, 2019
|
By:
|
/s/ Khaled A. Sharafeldin
|
|
|
|
Khaled A. Sharafeldin
|
|
|
|
Chief Accounting Officer
|
|
|
|
(as Principal Accounting Officer)
|
|
|
|
Tellurian Inc.
|
Warrant Shares: 1,500,000
|
Issue Date: May 23, 2019
|
d)
|
Mechanics of Exercise.
|
i.
|
The Company:
|
|
Tellurian Inc.
1201 Louisiana St
Suite 3100
Houston, TX 77002
Attention: Legal
Email: legal.notices@tellurianinc.com
|
ii.
|
The Holder:
|
|
Nineteen77 Capital Solutions A LP
c/o UBS O’Connor LLC
787 7th Avenue, 13th Floor
New York, NY 10019
Attention: Rodrigo Trelles
Email: OL-OCS@ubs.com
|
with copies (which shall not constitute notice) to:
|
Nineteen77 Capital Solutions A LP
c/o UBS O’Connor LLC
UBS Tower
1 N. Wacker Drive
Chicago, IL 60606
Attention: Andrew Hollenbeck
Email: andrew.hollenbeck@ubs.com
|
with copies (which shall not constitute notice) to:
|
Latham & Watkins LLP
885 Third Avenue
New York, NY 10022
Attention: Matthew Henegar
Telephone No.: 212-906-1814
Email: matthew.henegar@lw.com
Latham & Watkins LLP
885 Third Avenue
New York, NY 10022
Attention: David E. Owen
Telephone No.: 212-906-4503
Email: david.owen@lw.com
|
TELLURIAN INC.
|
By:/s/ Antoine J. Lafargue
Name: Antoine J. Lafargue
Title: Senior Vice President and Chief Financial Officer
|
Name:
|
______________________________________________
|
|
(Please Print)
|
Address:
|
______________________________________________
|
Phone Number:
Email Address:
|
(Please Print)
______________________________________
______________________________________
|
Dated: _______________ __, ______
|
|
Holder’s Signature:_______________________________
|
|
Holder’s Address:________________________________
|
|
|
|
Page
|
Article I Definitions
|
|
|
|
|
|
Section 1.01
|
Certain Defined Terms
|
1
|
Section 1.02
|
Terms Generally
|
26
|
Section 1.03
|
Accounting Terms
|
27
|
|
|
|
Article II The Credits
|
|
|
|
|
|
Section 2.01
|
Loan
|
27
|
Section 2.02
|
Funding of the Loan
|
28
|
Section 2.03
|
Termination and Reduction of the Commitments
|
28
|
Section 2.04
|
Repayment of Loan; Evidence of Debt
|
28
|
Section 2.05
|
Prepayment of the Loan
|
30
|
Section 2.06
|
Fees
|
32
|
Section 2.07
|
Interest
|
32
|
Section 2.08
|
Increased Costs
|
33
|
Section 2.09
|
Taxes
|
35
|
Section 2.10
|
Payments Generally; Pro Rata Treatment; Sharing of Setoffs
|
39
|
Section 2.11
|
Mitigation Obligations; Replacement of Lenders
|
40
|
Section 2.12
|
Acknowledgement and Consent to Bail-In of EEA Financial Institutions
|
41
|
|
|
|
Article III Representations and Warranties
|
|
|
|
|
|
Section 3.01
|
Due Organization, Etc.
|
41
|
Section 3.02
|
Authorization, Etc.
|
42
|
Section 3.03
|
No Conflict
|
43
|
Section 3.04
|
Authorizations, Etc.
|
43
|
Section 3.05
|
Financial Statements; No Material Adverse Effect; No Liabilities.
|
43
|
Section 3.06
|
Litigation
|
43
|
Section 3.07
|
Environmental Matters
|
44
|
Section 3.08
|
Compliance with Laws and Obligations
|
44
|
Section 3.09
|
Material Project Documents
|
44
|
Section 3.10
|
Licenses
|
45
|
Section 3.11
|
Taxes
|
45
|
Section 3.12
|
Full Disclosure
|
45
|
Section 3.13
|
Senior Obligations
|
46
|
Section 3.14
|
Solvency
|
46
|
Section 3.15
|
Regulatory Restrictions on the Loan
|
46
|
Section 3.16
|
Title; Security Documents
|
46
|
Section 3.17
|
ERISA
|
47
|
Section 3.18
|
Insurance
|
47
|
Section 3.19
|
[Reserved]
|
47
|
Section 3.20
|
Use of Proceeds
|
47
|
Section 3.21
|
Membership Interests and Related Matters
|
47
|
Section 3.22
|
Permitted Indebtedness; Investments
|
48
|
Section 3.23
|
No Agreements with Affiliates
|
48
|
Section 3.24
|
No Bank Accounts
|
48
|
Section 3.25
|
No Default or Event of Default
|
48
|
Section 3.26
|
Foreign Assets Control Regulations
|
48
|
Section 3.27
|
ProductionCo Representations and Warranties
|
49
|
|
|
|
Article IV Conditions
|
|
|
|
|
|
Section 4.01
|
Conditions to the Closing Date
|
49
|
Section 4.02
|
Conditions to the Delayed Draw Closing Date
|
53
|
|
|
|
Article V Affirmative Covenants
|
|
|
|
|
|
Section 5.01
|
Corporate Existence; Etc.
|
54
|
Section 5.02
|
Conduct of Business
|
54
|
Section 5.03
|
Compliance with Laws and Obligations
|
55
|
Section 5.04
|
Governmental Authorizations
|
55
|
Section 5.05
|
Maintenance of Title
|
55
|
Section 5.06
|
Insurance
|
55
|
Section 5.07
|
Keeping of Books
|
56
|
Section 5.08
|
Access to Records
|
56
|
Section 5.09
|
Payment of Taxes, Etc.
|
56
|
Section 5.10
|
Financial Statements; Other Reporting Requirements
|
57
|
Section 5.11
|
Notices
|
58
|
Section 5.12
|
Lender Calls
|
59
|
Section 5.13
|
Use of Proceeds
|
59
|
Section 5.14
|
Security
|
59
|
Section 5.15
|
Further Assurances
|
59
|
Section 5.16
|
[Reserved]
|
60
|
Section 5.17
|
Material Project Documents
|
60
|
Section 5.18
|
Collateral Accounts
|
60
|
Section 5.19
|
Intellectual Property
|
61
|
Section 5.20
|
Budget and Updated Model
|
61
|
Section 5.21
|
[Reserved]
|
61
|
Section 5.22
|
ProductionCo as Guarantor
|
61
|
Section 5.23
|
Senior Obligations
|
61
|
Section 5.24
|
NTP Deadline
|
62
|
Section 5.25
|
Post-Closing Covenants
|
63
|
|
|
|
Article VI Negative Covenants
|
|
|
|
|
|
Section 6.01
|
[Reserved]
|
64
|
Section 6.02
|
Indebtedness
|
64
|
Section 6.03
|
Liens, Etc.
|
66
|
Section 6.04
|
Investments, Advances, Loans
|
66
|
Section 6.05
|
Principal Place of Business; Business Activities
|
67
|
Section 6.06
|
Restricted Payments
|
67
|
Section 6.07
|
Fundamental Changes; Asset Dispositions and Acquisitions
|
68
|
Section 6.08
|
Accounting Changes
|
69
|
Section 6.09
|
Amendment or Termination of Material Project Documents; Other
|
69
|
|
Restrictions on Material Project Documents
|
|
Section 6.10
|
Transactions with Affiliates
|
71
|
Section 6.11
|
Collateral Accounts
|
71
|
Section 6.12
|
Guarantees
|
71
|
Section 6.13
|
Hazardous Materials
|
71
|
Section 6.14
|
No Speculative Transactions
|
72
|
Section 6.15
|
Purchase of Capital Stock
|
72
|
|
|
|
Article VII Events of Default
|
|
|
|
|
|
Section 7.01
|
Events of Default
|
72
|
|
|
|
Article VIII The Agents
|
|
|
|
|
|
Section 8.01
|
Appointment and Authorization of the Agents
|
75
|
Section 8.02
|
Rights as a Lender
|
75
|
Section 8.03
|
Duties of Agent; Exculpatory Provisions
|
75
|
Section 8.04
|
Reliance by Agent
|
77
|
Section 8.05
|
Delegation of Duties
|
77
|
Section 8.06
|
Withholding of Taxes by the Administrative Agent; Indemnification
|
77
|
Section 8.07
|
Resignation of Agent
|
78
|
Section 8.08
|
Non-Reliance on Agent or Other Lenders
|
79
|
Section 8.09
|
No Other Duties; Etc.
|
79
|
|
|
|
Article IX Guaranty
|
|
|
|
|
|
Section 9.01
|
Guaranty
|
79
|
Section 9.02
|
Guaranty Unconditional
|
80
|
Section 9.03
|
Discharge Only Upon Payment in Full; Reinstatement in Certain
|
80
|
|
Circumstances
|
|
Section 9.04
|
Waiver by the Guarantors
|
81
|
Section 9.05
|
Subrogation
|
81
|
Section 9.06
|
Acceleration
|
81
|
|
|
|
Article X Miscellaneous
|
|
|
|
|
|
Section 10.01
|
Notices
|
81
|
Section 10.02
|
Waivers; Amendments
|
83
|
Section 10.03
|
Expenses; Indemnity; Etc.
|
84
|
Section 10.04
|
Successors and Assigns
|
86
|
Section 10.05
|
Survival
|
89
|
Section 10.06
|
Counterparts; Integration; Effectiveness
|
89
|
Section 10.07
|
Severability
|
90
|
Section 10.08
|
Right of Setoff
|
90
|
Section 10.09
|
Governing Law; Jurisdiction; Etc.
|
90
|
Section 10.10
|
Headings
|
91
|
Section 10.11
|
Confidentiality
|
91
|
Section 10.12
|
Non-Recourse
|
92
|
Section 10.13
|
No Third Party Beneficiaries
|
93
|
Section 10.14
|
Reinstatement
|
93
|
Section 10.15
|
USA PATRIOT Act
|
93
|
Section 10.16
|
Certain ERISA Matters
|
93
|
Section 10.17
|
Short Selling of Capital Stock in Tellurian
|
94
|
Section 10.18
|
Release of Collateral
|
94
|
|
|
|
|
i
|
|
Exhibit B
|
Form of General Partner LLC Agreement
|
Exhibit C
|
Form of LNG Sale and Purchase Agreement
|
Exhibit D
|
Form of LNG Marketing Agreement
|
Exhibit E
|
Form of Excess LNG SPA
|
Exhibit F
|
Form of DOE Agreement
|
Exhibit G
|
Form of Tax Opinion
|
Exhibit H
|
Form of Initial Limited Partner Contribution Agreement
|
Exhibit I
|
Form of Initial Limited Partner LNG SPA
|
|
|
Schedule 2.1(b)
|
Estimated Schedule of Required Capital Contributions
|
|
ii
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|
7
|
|
|
8
|
|
|
9
|
|
|
10
|
|
|
11
|
|
|
12
|
|
|
13
|
|
|
14
|
|
|
19
|
|
|
20
|
|
|
21
|
|
|
22
|
|
|
23
|
|
|
24
|
|
|
25
|
|
|
26
|
|
|
27
|
|
|
28
|
|
|
29
|
|
|
30
|
|
|
31
|
|
|
32
|
|
|
33
|
|
|
34
|
|
|
35
|
|
|
36
|
|
|
37
|
|
|
38
|
|
|
39
|
|
|
THE PARTNER:
|
|
|
|
|
|
TOTAL DELAWARE, INC.
|
|
|
|
|
|
By:
|
/s/ Christophe Gerondeau
|
|
Name:
|
Christophe Gerondeau
|
|
Title:
|
President
|
|
THE PARTNERSHIP:
|
|
|
|
|
|
DRIFTWOOD HOLDINGS LP
|
|
|
|
|
|
By:
|
/s/ R. Keith Teague
|
|
Name:
|
R. Keith Teague
|
|
Title:
|
Chief Executive Office
|
|
THE GENERAL PARTNER:
|
|
|
|
|
|
(solely for purposes of Section 8.11)
|
|
|
|
|
|
DRIFTWOOD GP HOLDINGS LLC
|
|
|
|
|
|
By:
|
/s/ R. Keith Teague
|
|
Name:
|
R. Keith Teague
|
|
Title:
|
Chief Executive Office
|
|
THE GENERAL PARTNER:
|
|
|
|
|
|
DRIFTWOOD GP HOLDINGS LLC
|
|
|
|
|
|
By:
|
|
|
Name:
|
R. Keith Teague
|
|
Title:
|
Chief Executive Office
|
|
LIMITED PARTNER:
|
|
|
|
|
|
[ ]
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
INITIAL LIMITED PARTNER:
|
|
|
|
|
|
DRIFTWOOD LP HOLDINGS LLC
|
|
|
|
|
|
By:
|
|
|
Name:
|
Meg A. Gentle
|
|
Title:
|
President and Chief Executive Officer
|
Name
|
Total Capital Contributions
|
Class A Units
|
Class A Percentage
|
Class B Units
|
Class C Units
|
Class D Units
|
Total Units
|
Driftwood LP Holdings LLC
c/o Tellurian Inc.
1201 Louisiana Street, Suite 3100
Houston, TX 77002
Attn: General Counsel
Email: legal.notices@tellurianinc.com
|
$[ ]
|
[ ]
|
[ ]%
|
1,104
|
0
|
0
|
[ ]
|
Total Delaware, Inc.
1201 Louisiana Street, Suite 1800
Houston, Texas 77002
Attn: General Counsel
Email: Elizabeth.matthews@total.com;
Isabelle.salhorgne@total.com
|
$[ ]
|
100
|
6.0386%
|
0
|
0
|
0
|
100
|
[ ]
[Address 1]
[Address 2]
Attn: [ ]
Email: [ ]
|
$[ ]
|
[ ]
|
[ ]%
|
0
|
0
|
0
|
[ ]
|
[ ]
[Address 1]
[Address 2]
Attn: [ ]
Email: [ ]
|
$[ ]
|
[ ]
|
[ ]%
|
0
|
0
|
0
|
[ ]
|
[ ]
[Address 1]
[Address 2]
Attn: [ ]
Email: [ ]
|
$[ ]
|
[ ]
|
[ ]%
|
0
|
0
|
0
|
[ ]
|
TOTALS:
|
$[ ]
|
1,656
|
100.0000%
|
1,104
|
0
|
0
|
2,760
|
Name
|
Phase 1 Partner Deposit
|
Phase 1 Capital Commitment
|
Phase 1 Drawn Capital Commitments
|
Phase 1 Unfunded Commitment
|
Driftwood LP Holdings LLC
c/o Tellurian Inc.
1201 Louisiana Street, Suite 3100
Houston, TX 77002
Attn: General Counsel
Email: legal.notices@tellurianinc.com
|
$0.00
|
$1,000,000,000.00
|
$0.00
|
$1,000,000,000.00
|
Total Delaware, Inc.
1201 Louisiana Street, Suite 1800
Houston, Texas 77002
Attn: General Counsel
Email: Elizabeth.matthews@total.com;
Isabelle.salhorgne@total.com
|
$0.00
|
$500,000,000.00
|
$0.00
|
$500,000,000.00
|
[ ]
[Address 1]
[Address 2]
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[Address 1]
[Address 2]
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Email: [ ]
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[Address 1]
[Address 2]
Attn: [ ]
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TOTALS:
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Page No.
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(i)
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monitoring construction budgets for the Project;
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(ii)
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monitoring the various project schedules for the Project;
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(iii)
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assisting the Partnership in obtaining construction permits; and
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(iv)
|
reviewing construction plans, drawings and specifications.
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(i)
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in connection with the construction of the Phase 1 Project, three percent (3%) of the Actual Construction Expenditures for the Phase 1 Project for such Quarter, prior to the Date of Full Operations of the last Phase 1 Plant to achieve Full Operations; provided such Actual Construction Expenditures for such Quarter shall be capped so that the sum of such Actual Construction Expenditures and all other Actual Construction Expenditures previously included in this Section 3.1(b)(i) for prior Quarters shall not exceed three percent (3%) of the Total Construction Budget for the Phase 1 Project;
|
(ii)
|
in connection with the construction of the Phase 2 Project, three percent (3%) of the Actual Construction Expenditures for the Phase 2 Project for such Quarter, prior to the Date of Full Operations of Plant 4; provided such Actual Construction Expenditures for such Quarter shall be capped so that the sum of such Actual Construction Expenditures and all other Actual Construction Expenditures previously included in this Section 3.1(b)(ii) for prior Quarters shall not exceed three percent (3%) of the Total Construction Budget for the Phase 2 Project;
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(iii)
|
in connection with the construction of the Phase 3 Project, three percent (3%) of the Actual Construction Expenditures for the Phase 3 Project for such Quarter, prior to the Date of Full Operations of Plant 5; provided such Actual Construction Expenditures for such Quarter shall be capped so that the sum of such Actual Construction Expenditures and all other Actual Construction Expenditures previously included in this Section 3.1(b)(iii) for prior Quarters shall not exceed three percent (3%) of the Total Construction Budget for the Phase 3 Project; and
|
(iv)
|
in connection with the operation of the Project, USD eight million two hundred and fifty thousand (US$8,250,000) per Quarter and per Plant, starting on the Date of Substantial Completion of each relevant Plant (and pro-rated for the Quarter in which such Date of Substantial Completion occurs, by the number of days in such Quarter on and after such Date of Substantial Completion, divided by the number of days in such Quarter); provided that the MASA Fee paid in connection with operation of the Project shall not exceed USD twenty five million (US$25,000,000) per Quarter.
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(i)
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agrees that the execution, delivery and performance by such Party of this Agreement constitute private and commercial acts rather than public or governmental acts; and
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(ii)
|
consents in respect of the enforcement of any judgment against such Party in any such proceedings in any jurisdiction and to the giving of any relief or the issue of any process in connection with such proceedings (including the making, enforcement or execution of any such judgment or any order arising out of any such judgment against or in respect of any property whatsoever irrespective of its use or intended use).
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TELLURIAN:
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TELLURIAN INC.
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By:
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Name:
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Title:
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THE PARTNERSHIP:
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DRIFTWOOD HOLDINGS LP
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By:
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Name:
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Title:
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Page
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Exhibit A
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Initial Budgets
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Exhibit B
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Calculation of Facilities Charge
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THE MEMBER:
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TELLURIAN INC.
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By:
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Name:
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Title:
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(1)
|
Seller is developing a liquefied natural gas (“LNG”) liquefaction terminal on the Calcasieu River, south of Lake Charles, Louisiana;
|
(2)
|
On or about the Effective Date, Buyer or Buyer’s Affiliate has entered into an equity capital contribution agreement with Seller’s Affiliate, Driftwood Holdings LP, a Delaware limited partnership (the “Partnership”);
|
(3)
|
Buyer desires to be engaged in the purchase of LNG at Seller’s liquefaction terminal and transportation of such LNG to one or more Discharge Terminals; and
|
(4)
|
Seller and Buyer desire to execute this definitive agreement setting out the Parties’ respective rights and obligations in relation to the sale and purchase of LNG.
|
1.
|
Definitions and Interpretation
|
1.1
|
Definitions
|
AAA:
|
as defined in Section 20.1.2;
|
Acceptable Credit Rating:
|
two (2) Credit Ratings that are each equal to or better than the following: (i) Baa3 by Moody’s Investors Service, Inc., (ii) BBB- by Standard & Poor’s Rating Services, a division of McGraw-Hill Companies, (iii) BBB- by Fitch Ratings, Inc., or (iv) any comparable Credit Ratings by any other nationally recognized statistical rating organizations registered with the U.S. Securities and Exchange Commission, including any successors to Moody’s Investors Service, Inc., Standard & Poor’s Rating Services, or Fitch Ratings, Inc.;
|
Acceptable Guarantor:
|
an Affiliate of Assignee Buyer that has an Acceptable Credit Rating;
|
ACQ:
|
as defined in Section 5.1.1;
|
Actual Laytime:
|
as defined in Section 7.12.2;
|
Quantity or AACQ:
|
as defined in Section 5.2;
|
Adverse Weather Conditions:
|
weather or sea conditions actually experienced or reasonably forecasted at or near the Driftwood LNG Terminal that are sufficiently severe: (i) to prevent an LNG Tanker from proceeding to berth, or loading or departing from berth, in accordance with one or more of the following: (a) regulations published by a Governmental Authority; (b) an Approval; or (c) an order of a Pilot; (ii) to cause an actual determination by the master of an LNG Tanker that it is unsafe for such LNG Tanker to berth, load, or depart from berth; or (iii) to prevent or severely limit the production of LNG at the Driftwood LNG Terminal;
|
Affiliate:
|
with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with such Person; for purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) means the direct or indirect ownership of fifty percent (50%) or more of the voting rights in a Person or the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; for purposes of this Agreement, (i) Seller, the Partnership and all Seller Affiliates that are wholly-owned by the Partnership shall be deemed not to be Affiliates of Buyer, (ii) Buyer, its ultimate parent company, and all Buyer Affiliates that are wholly-owned by the same ultimate parent company shall be deemed not to be Affiliates of Seller, (iii) references to Affiliates of the Partnership shall only include Affiliates that are subsidiaries of the Partnership, and (iv) Tellurian Inc. and its wholly-owned Affiliates shall be deemed not to be Affiliates
|
Agreement:
|
this agreement, including the Exhibits hereto, as the same may be amended, modified or replaced from time to time;
|
Allotted Laytime:
|
as defined in Section 7.12.1;
|
Allowed Laytime:
|
as defined in Section 7.13.2(a);
|
Annual Delivery Program or ADP:
|
as defined in Section 8.2.3;
|
Anti-Corruption Law:
|
any of the U.S. Foreign Corrupt Practices Act, the OECD convention on anti-bribery, the U.K. Bribery Act of 2010, E.U. and E.U. member country anti-bribery and corruption laws, and any other corruption or similar statute, regulation, order or convention binding on the applicable Person, as each may be amended from time to time, and including any implementing regulations promulgated pursuant thereto;
|
Applicable Laws:
|
in relation to matters covered by this Agreement, all applicable laws, statutes, rules, regulations, ordinances, codes, standards and rules of common law, and judgments, decisions, interpretations, orders, directives, injunctions, writs, decrees, stipulations, or awards of any applicable Governmental Authority or duly authorized official, court or arbitrator thereof, in each case, now existing or which may be enacted or issued after the Effective Date;
|
Approvals:
|
any and all permits (including work permits), franchises, authorizations, approvals, grants, licenses, visas, waivers, exemptions, consents, permissions, registrations, decrees, privileges, variances, validations, confirmations or orders granted by or filed with any Governmental Authority, including the Export Authorizations;
|
Assignee Buyer:
|
as defined in Section 15.3.2;
|
Bankruptcy Event:
|
with respect to any Person: (i) such Person’s suspension of payment of, or request to any court for a moratorium on payment of, all or a substantial part
|
Btu:
|
the amount of heat equal to one thousand fifty-five decimal zero five six (1,055.056) Joules;
|
Business Day:
|
any Day (other than Saturdays, Sundays and national holidays in the United States of America) on which commercial banks are normally open to conduct business in the United States of America;
|
Buyer:
|
as defined in the Preamble;
|
Buyer Taxes:
|
as defined in Section 11.3;
|
Cargo DoP Payment:
|
as defined in Section 5.6.2;
|
Cargo DoP Quantity:
|
as defined in Section 5.6.2;
|
Cargo Shortfall Payment:
|
as defined in Section 5.7.3;
|
Cargo Shortfall Quantity:
|
as defined in Section 5.7.2;
|
Claim:
|
all claims, demands, legal proceedings, or actions that may exist, arise, or be threatened currently or in the future at any time following the Effective Date, whether or not of a type contemplated by any Party, and whether based on federal, state, local, statutory or common law or any other Applicable Law;
|
Class A Additional Issuance Notice:
|
any notice pursuant to the Partnership Agreement requesting funding in respect of the construction of the Phase 1 Project or related Partnership expenses or for general Partnership matters other than the construction of the Phase 2 Project or Phase 3 Project and related Partnership expenses;
|
Class A Units:
|
interests in the Partnership denoted as “Class A Units” under the Partnership Agreement;
|
Composite ADP:
|
as defined in Section 8.2.4;
|
Composite Ninety Day Schedule:
|
as defined in Section 8.4.2;
|
Confidential Information:
|
as defined in Section 18.1;
|
Connecting Pipeline:
|
HGAP, the Driftwood Pipeline and any pipeline as may be directly interconnected to the Driftwood LNG Terminal;
|
Contract Year:
|
as defined in Section 4.4;
|
Credit Rating:
|
a credit rating in respect of the senior, unsecured, long-term debt (not supported by third-party credit enhancement) of a Person;
|
Date of Full Operations:
|
as defined in Section 4.3.1;
|
Date of Substantial Completion:
|
as defined in Section 4.2.1;
|
Day:
|
a period of twenty-four (24) consecutive hours starting at 00:00 hours local time in Calcasieu Parish, Louisiana;
|
De-Bottlenecking:
|
“de-bottlenecking” enhancements or modifications in respect of a Phase Project (including a Plant) with the
|
De-Bottlenecking Contributions:
|
as defined in the Partnership Agreement;
|
De-Bottlenecking Total Quantity:
|
the total quantity of LNG (in MMBtu) available for scheduling by LNG buyers in connection with a De-Bottlenecking project, which shall be calculated as (a) prior to determining the Tested Capacity of the Driftwood LNG Terminal following the completion of such De-Bottlenecking project, Seller’s good faith estimate of such quantity, and (b) at all times following such Tested Capacity determination, the difference between such Tested Capacity determination and the Tested Capacity of the Driftwood LNG Terminal prior to the completion of such De-Bottlenecking project;
|
Delivery Point:
|
as defined in Section 6.1;
|
Delivery Window:
|
a twenty-four (24) hour period starting at 6:00 a.m. Central Time on a specified Day and ending twenty-four (24) consecutive hours thereafter that is allocated to Buyer under the ADP or Ninety Day Schedule, as applicable;
|
Demurrage Event:
|
as defined in Section 7.12.3;
|
Demurrage Rate:
|
as defined in Section 7.12.3;
|
Direct Agreement:
|
as defined in Section 21.4.2;
|
Discharge Terminal:
|
with respect to each cargo of LNG taken or scheduled to be taken by Buyer pursuant to this Agreement, the facilities intended by Buyer to be utilized for the unloading, reception, discharge, storage, treatment (if necessary), and regasification of the LNG and the processing and send-out of Gas or regasified LNG,
|
Dispute:
|
any dispute or difference of whatsoever nature arising under, out of, in connection with or in relation (in any manner whatsoever) to this Agreement or the subject matter of this Agreement, including (a) any dispute or difference concerning the initial or continuing existence of this Agreement or any provision of it, or as to whether this Agreement or any provision of it is invalid, illegal or unenforceable (whether initially or otherwise); or (b) any dispute or claim which is ancillary or connected, in each case in any manner whatsoever, to the foregoing;
|
Driftwood LNG Terminal:
|
the facilities that Seller intends to construct, own and operate (or have operated on its behalf) in Calcasieu Parish, Louisiana, on the Calcasieu River, including the Gas pretreatment and processing facilities, liquefaction facility, storage tanks, utilities, terminal facilities, and associated port and marine facilities, and all other related facilities both inside and outside the LNG plant, inclusive of all Plants;
|
Driftwood Marine Operations Manual:
|
as defined in Section 7.8;
|
Driftwood Pipeline:
|
that certain Gas pipeline that Driftwood LNG Pipeline LLC intends to construct, own and operate (or have operated on its behalf), and which will interconnect the Driftwood LNG Terminal with other Gas pipelines in Louisiana;
|
Driftwood Project:
|
the Phase 1 Project, Phase 2 Project and Phase 3 Project, collectively;
|
Effective Date:
|
as defined in the Preamble;
|
Electronic Transmission:
|
any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process;
|
EPC Contract:
|
each of the Phase 1 EPC Contract, Phase 2 EPC Contract, Phase 3 EPC Contract and Phase 4 EPC Contract;
|
ETA:
|
with respect to an LNG Tanker, the estimated time of arrival of such LNG Tanker at the PBS;
|
Excess Boil-Off Event:
|
as defined in Section 7.12.4;
|
Excess LNG SPA:
|
that certain Excess LNG Sale and Purchase Agreement, dated on or before the Effective Date, between Seller and Tellurian Trading;
|
Excluded Terms:
|
as defined in Section 9.3;
|
Expert:
|
a Person agreed upon or appointed in accordance with Section 20.2.1;
|
Export Authorizations:
|
as defined in Section 2.1;
|
Export Control and Sanctions Laws:
|
export control and sanctions laws and regulations of the United States of America, including the Export Administration Regulations, 15 C.F.R. Parts 730 et seq., and economic sanctions administered by the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC), 31 C.F.R. Part 500 et seq.;
|
Estimated Monthly LNG Margin:
|
as defined in Section 9.1;
|
Facilities Charge:
|
as defined in Section 9.1;
|
Final Contract Year:
|
as defined in Section 4.4(b);
|
Final Coverage Amount:
|
as defined in Section 9.2;
|
Final Debt Service Costs:
|
as defined in Section 9.2;
|
Final Invoice:
|
as defined in Section 10.1.8(b);
|
Final Net Gas Costs:
|
as defined in Section 9.2;
|
Final Transfer Price:
|
as defined in Section 9.2;
|
First Contract Year:
|
as defined in Section 4.4(a);
|
Force Majeure:
|
as defined in Section 14.1;
|
FTA Export Authorization:
|
an order from the Office of Fossil Energy of the U.S. Department of Energy granting to Seller or any other Person acting as agent on behalf of Seller the authorization to export LNG delivered pursuant to this Agreement by vessel from the Driftwood LNG Terminal to countries that have entered into a free trade agreement with the United States of America requiring the national treatment for trade in natural gas for a specific term, as the same may be supplemented, amended, modified, changed, superseded or replaced from time to time;
|
Full Operations:
|
as defined in Section 4.3.2;
|
Gas:
|
any hydrocarbon or mixture of hydrocarbons consisting predominantly of methane that is in a gaseous state;
|
General Partner:
|
Driftwood GP Holdings LLC, a Delaware limited liability company, in its capacity as the general partner of the Partnership, or any successor thereto;
|
General Partner LLC Agreement:
|
that certain Second Amended and Restated Limited Liability Company Agreement of the General Partner dated on or about the Effective Date, as the same may be amended or restated from time to time;
|
Governmental Authority:
|
any national, regional, state, or local government, or any subdivision, agency, commission or authority thereof (including any maritime authorities, port authority or any quasi-governmental agency), having jurisdiction over a Party (or any Affiliate or direct or indirect owner thereof), a Connecting Pipeline, Gas in a Connecting Pipeline or the Driftwood LNG Terminal, the Driftwood LNG Terminal, LNG in the Driftwood LNG Terminal, an LNG Tanker, LNG or Gas in an LNG Tanker, a Transporter, the last disembarkation port of an LNG Tanker, a Discharge Terminal, or any Gas pipeline which interconnects with a Connecting Pipeline and which transports Gas to or from a Connecting Pipeline, as the case may be, and acting within its legal authority;
|
Gross Heating Value:
|
the quantity of heat expressed in Btu produced by the complete combustion in air of one (1) cubic foot of anhydrous gas, at a temperature of sixty (60) degrees
|
Guarantor:
|
any Acceptable Guarantor executing a Guaranty for delivery to Seller hereunder to the extent required hereunder;
|
Guaranty:
|
an irrevocable payment guaranty, in a form reasonably acceptable to Seller, which is executed by a Guarantor in favor of Seller;
|
HGAP:
|
that certain Gas pipeline that Haynesville Global Access Pipeline LLC intends to construct, own and operate (or have operated on its behalf);
|
HH:
|
as defined in Section 9.1;
|
ICC:
|
as defined in Section 20.2.1;
|
Indemnified Party:
|
as defined in Section 15.4(a);
|
Indemnifying Party:
|
as defined in Section 15.4(a);
|
International LNG Terminal Standards:
|
to the extent not inconsistent with the express requirements of this Agreement, the international standards and practices applicable to the design, construction, equipment, operation or maintenance of LNG liquefaction terminals, established by the following (such standards to apply in the following order of priority): (i) a Governmental Authority having jurisdiction over the Driftwood LNG Terminal, Seller, or Seller’s operator; (ii) the Society of International Gas Tanker and Terminal Operators (to the extent applicable); (iii) the Oil Companies International Marine Forum (OCIMF) (to the extent applicable) and (iv) any other internationally recognized non-governmental agency or organization with whose standards and practices it is customary for Reasonable and Prudent Operators of LNG liquefaction terminals, to comply, provided, however, that in the event of a conflict between any of the
|
International LNG Vessel Standards:
|
the standards and practices from time to time in force applicable to the ownership, design, equipment, operation or maintenance of LNG vessels established by: (i) a Governmental Authority having jurisdiction over the LNG vessel in the Loading Port; (ii) the International Maritime Organization (IMO); (iii) the classification society of the LNG vessel, provided such classification society is a member of the International Association of Classification Societies Ltd. (IACS); (iv) the Oil Companies International Marine Forum (OCIMF); (v) the Society of International Gas Tanker and Terminal Operators (SIGTTO); and (vi) any other internationally recognized agency or non-governmental organization with whose standards and practices it is customary for Reasonable and Prudent Operators of LNG vessels similar to those applicable to this Agreement, to comply, provided, however, that in the event of a conflict between any of the priorities noted above, the priority with the lowest roman numeral noted above shall prevail;
|
International Standards:
|
(i) with respect to Buyer, the International LNG Vessel Standards; (ii) with respect to Seller, the International LNG Terminal Standards;
|
In-Transit Final Notice:
|
as defined in Section 7.9.3(d);
|
In-Transit First Notice:
|
as defined in Section 7.9.2;
|
In-Transit Fourth Notice:
|
as defined in Section 7.9.3(c);
|
In-Transit Second Notice:
|
as defined in Section 7.9.3(a);
|
In-Transit Third Notice:
|
as defined in Section 7.9.3(b);
|
Lender:
|
any Person, other than a shareholder of either Party, duly authorized in its principal place of business to lend monies, to finance or to provide financial support in any form in respect of the Driftwood LNG Terminal or any other facilities under development by Seller or its Affiliates, including any commercial bank, export credit agency, funding agency, bondholder,
|
Lenders’ Agent:
|
as defined in Section 21.4.1;
|
LIBOR:
|
the rate per annum equal to the London Interbank Offer Rate as administered by ICE Benchmark Administration Limited (or any Person which takes over the administration of that rate) for three (3) month deposits in USD as published at or about 11:00 a.m. London time on any London Banking Day;
|
Limited Partner:
|
each Person identified as a “Limited Partner” on Schedule 1 of the Partnership Agreement and any other Person admitted to the Partnership as a Limited Partner in accordance with the terms of the Partnership Agreement, in each case, to the extent such Person holds units in the Partnership;
|
LNG:
|
Gas in a liquid state at or below its point of boiling and at or near atmospheric pressure;
|
LNG Marketing Agreement:
|
that certain LNG marketing agreement, dated on or before the Effective Date, entered into by Seller and Tellurian Trading;
|
LNG Tanker(s):
|
an ocean-going vessel suitable for transporting LNG which complies with the requirements of this Agreement and which Buyer uses or causes to be used, or intends to use or to be used, in connection with this Agreement;
|
Loading Port:
|
the port where the Driftwood LNG Terminal is located, or the port at an alternate supply source pursuant to Section 3.1.2;
|
London Banking Day:
|
any Day (other than Saturdays, Sundays and national holidays in London, England) on which banks are normally open to conduct business in London, England;
|
Loss:
|
any and all losses, liabilities, damages, costs, judgments, settlements and expenses (whether or not resulting from Claims by Third Parties), including interest and penalties with respect thereto and
|
Made Available Quantity:
|
as defined in Section 9.2;
|
Major Scheduled Maintenance Quantity:
|
as defined in Section 5.5;
|
Measurement Dispute:
|
as defined in Section 20.2.1;
|
Mitigation Sale:
|
as defined in Section 5.7.5;
|
Mitigation Sale Payment:
|
as defined in Section 5.7.6;
|
MMBtu:
|
one million (1,000,000) Btus;
|
Month:
|
each period of time which starts at 00:00 local time in Lake Charles, Louisiana, on the first Day of each calendar month and ends at 24:00 local time in Lake Charles, Louisiana, on the last Day of the same calendar month;
|
Month M:
|
as defined in Section 9.1;
|
MTPA:
|
million tonnes per annum;
|
Ninety Day Schedule:
|
as defined in Section 8.4.1;
|
Non-FTA Export Authorization:
|
an order from the Office of Fossil Energy of the U.S. Department of Energy granting to Seller or any other Person acting as agent on behalf of Seller the authorization to export LNG delivered pursuant to this Agreement by vessel from the Driftwood LNG Terminal to countries that have not entered into a free trade agreement with the United States of America requiring the national treatment for trade in natural gas, which currently has or in the future develops the capacity to import LNG, and with which trade is not prohibited by United States of America law or policy, for a specific term, as the same may be supplemented, amended, modified, changed, superseded or replaced from time to time;
|
Notice of Readiness or NOR:
|
the notice of readiness issued by the master of an LNG Tanker or its agent in accordance with Section 7.10.1;
|
Off-Spec LNG:
|
as defined in Section 12.3.1;
|
Operational Tolerance:
|
as defined in Section 5.6.3;
|
Opex Costs:
|
as defined in Section 9.1;
|
Opex Costs Carryover:
|
as defined in Section 9.1;
|
Original Buyer:
|
Total Gas & Power North America, Inc., and not any successor or assign thereof;
|
Other LNG SPA:
|
as defined in Section 9.3;
|
P&I Club:
|
a Protection and Indemnity Club that is a member of the International Group of P&I Clubs;
|
P&I Insurance:
|
as defined in Section 15.6(b);
|
Partnership:
|
as defined in the Recitals;
|
Partnership Agreement:
|
that certain First Amended and Restated Limited Partnership Agreement of the Partnership;
|
Partnership Buyer:
|
each Person that is a party to a long-term LNG sale and purchase agreement with Seller;
|
Party:
|
Buyer or Seller, and Parties means both Buyer and Seller;
|
Payment Business Day:
|
each Day that is a Business Day on which commercial banks are normally open to conduct business in the United States of America);
|
Payor:
|
as defined in Section 11.4;
|
PBS:
|
the customary Pilot boarding station at the Loading Port where the Pilot boards the LNG Tanker, as determined by the applicable Governmental Authority or other entity with authority to regulate transit and berthing of vessels at the Loading Port;
|
Person:
|
any individual, corporation, partnership, limited liability company, trust, unincorporated organization or other legal entity, including any Governmental Authority;
|
Phase 1 EPC Contract:
|
that certain Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Driftwood LNG Phase 1 Liquefaction Facility,
|
Phase 1 FID:
|
a positive final investment decision by the General Partner on behalf of the Partnership in respect of the Phase 1 Project, as declared by the General Partner in accordance with the General Partner LLC Agreement, provided that Phase 1 FID may be qualified with respect to certain Pipelines and related infrastructure that will ultimately be part of the Phase 1 Project (including the Pipelines and related infrastructure described in clause (c) of the definition of Phase 1 Project below) as being subject to relevant regulatory, permitting, right of way, procurement, or similar requirements;
|
Phase 1 Plants:
|
each of Plant 1, Plant 2 and Plant 3;
|
Phase 1 Project:
|
collectively, Plant 1, Plant 2, Plant 3, associated facilities and associated Project Pipelines and Production Facilities, which shall include (a) Plant 1, Plant 2 and Plant 3 and the related infrastructure for production of sixteen decimal five six (16.56) MTPA of LNG, (b) the Driftwood Pipeline and related infrastructure, and (c) the Permian Global Access Pipeline and related infrastructure – PGAP (approx. two (2) Bcf/d capacity) or for the latter, any other equivalent asset allowing the Partnership and its Affiliates to access competitive Gas prices in the Permian Basin;
|
Phase 2 EPC Contract:
|
that certain Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Driftwood LNG Phase 2 Liquefaction Facility, between Driftwood LNG LLC and Bechtel Oil, Gas and Chemicals, Inc., dated November 10, 2017;
|
Phase 2 Project:
|
collectively, Plant 4, associated facilities and associated Project Pipelines and Production Facilities, for production of five decimal five two (5.52) MTPA of LNG once Plant 4 achieves Full Operations;
|
Phase 2 Project FID Date:
|
as defined in the Partnership Agreement;
|
Phase 3 EPC Contract:
|
that certain Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the
|
Phase 3 Project:
|
collectively, Plant 5, associated facilities and associated Project Pipelines and Production Facilities, for production of five decimal five two (5.52) MTPA of LNG once Plant 5 achieves Full Operations;
|
Phase 3 Project FID Date:
|
as defined in the Partnership Agreement;
|
Phase 4 EPC Contract:
|
that certain Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Driftwood LNG Phase 4 Liquefaction Facility, between Driftwood LNG LLC and Bechtel Oil, Gas and Chemicals, Inc., dated November 10, 2017;
|
Phase Project:
|
the Phase 1 Project, Phase 2 Project or Phase 3 Project;
|
Pilot:
|
any Person engaged by Transporter to come on board the LNG Tanker to assist the master in pilotage, maneuvering, berthing and unberthing of such LNG Tanker;
|
Plant:
|
each of Plant 1, Plant 2, Plant 3, Plant 4 and Plant 5;
|
Plant 1:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 1 EPC Contract that is described thereunder as “LNG Plant 1”;
|
Plant 2:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 1 EPC Contract that is described thereunder as “LNG Plant 2”;
|
Plant 3:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 2 EPC Contract;
|
Plant 4:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 3 EPC Contract;
|
Plant 5:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 4 EPC Contract;
|
Port Charges:
|
all charges of whatsoever nature (including rates, tolls, dues, fees, and imposts of every description) in respect of an LNG Tanker entering or leaving the Loading Port or loading LNG, including wharfage fees, in-and-out fees, franchise fees, line handling charges, and charges imposed by tugs, the U.S. Coast Guard, a port authority, a harbor master, a Pilot, and any other authorized Person assisting an LNG Tanker to enter or leave the Loading Port, and further including port use fees, throughput fees and similar fees payable by users of the Loading Port (or by Seller or its operator on behalf of such users);
|
Port Liability Agreement:
|
an agreement for use of the port and marine facilities located at the Loading Port, to be entered into as described in Section 7.7.1;
|
Preliminary AACQ:
|
as defined in Section 5.4.1;
|
Production Facilities:
|
Gas production, storage, processing, gathering, and midstream facilities, including acreage, wellbores, mineral interests, gas reserves, and related wells and leaseholds, and other similar hydrocarbon facilities acquired or to be acquired from time to time by the Partnership and its Affiliates;
|
Project Pipelines:
|
Gas pipelines to be constructed or acquired from time to time by the Partnership and its Affiliates;
|
Provisional Coverage Amount:
|
as defined in Section 9.1;
|
Provisional Debt Service Costs:
|
as defined in Section 9.1;
|
Provisional Invoice:
|
as defined in Section 10.1.8(a);
|
Provisional Net Gas Costs:
|
as defined in Section 9.1;
|
Provisional Transfer Price:
|
as defined in Section 9.1;
|
Reasonable and Prudent Operator:
|
a Person seeking in good faith to perform its contractual obligations, and in so doing, and in the general conduct of its undertaking, exercising that degree of skill, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced operator, complying with all applicable International Standards and
|
Required Modification:
|
as defined in Section 7.3.2;
|
Round-Down Quantity:
|
as defined in Section 5.4.3;
|
Round-Up Quantity:
|
as defined in Section 5.4.2;
|
SCF:
|
for Gas, the quantity of anhydrous Gas that occupies one (1) cubic foot of space at a temperature of sixty (60) degrees Fahrenheit and a pressure of fourteen decimal six nine six (14.696) pounds per square inch absolute;
|
Scheduled Cargo Quantity:
|
the quantity of LNG (in MMBtus) identified in the ADP or Ninety Day Schedule to be loaded onto an LNG Tanker in a Delivery Window in accordance with Section 8;
|
Seller:
|
as defined in the Preamble;
|
Seller Aggregate Liability:
|
as defined in Section 15.2.6(b);
|
Seller Liability Cap:
|
as defined in Section 15.2.6(c);
|
Seller Taxes:
|
as defined in Section 11.2;
|
SI:
|
the International System of Units;
|
SIRE:
|
Ship Inspection Report Exchange;
|
SIRE Accredited Inspector:
|
an inspector qualified by the OCIMF to inspect an LNG Tanker for the purpose of generating an inspection report for inclusion in OCIMF’s Ship Inspection Report Program;
|
Specifications:
|
as defined in Section 12.1;
|
Stub Quantity:
|
as defined in Section 5.4.1;
|
Substantial Completion:
|
as defined in Section 4.2.2;
|
Suspension Fee:
|
as defined in Section 5.8.2;
|
Taxes:
|
all taxes, levies, duties, charges, withholdings and all other assessments (but excluding Port Charges), which may now or hereafter be enacted, levied or imposed, directly or indirectly, by a Governmental Authority, including income, value added, goods and services, sales and use, gross receipts, license, payroll, environmental, profits, severance, premium, franchise, property, ad valorem, excise, capital stock, import, stamp, transfer, withholding, employment, occupation, generation, privilege, utility, regulatory, energy, consumption, lease, filing, recording and activity taxes, levies, duties, fees, charges, and imposts and any sum charged by reference to energy value and/or carbon content (regardless of whether the quantum of the charge is calculated by reference to energy value and/or carbon content or by reference to sums payable under this Agreement or otherwise), together with any and all penalties, interest and additions thereto;
|
Tellurian Partnership Buyer:
|
Driftwood LP Holdings LLC, if a Partnership Buyer, or its Affiliate that is a Partnership Buyer;
|
Tellurian Trading:
|
Tellurian Trading UK Ltd.;
|
Term:
|
as defined in Section 4.1.1;
|
Termination Event:
|
as defined in Section 19.2.1;
|
Tested Capacity:
|
a quantity, in MMBtu, determined in accordance with the Partnership Agreement;
|
Third Party:
|
a Person other than a Party;
|
Third Party Claim:
|
as defined in Section 15.4(a);
|
Tranche:
|
as defined in Section 5.3;
|
Transfer Price Ceiling:
|
an amount (in USD per MMBtu) equal to one hundred fifteen percent (115%) of HH, plus USD three decimal zero zero (US$3.00);
|
Transfer Taxes:
|
as defined in Section 11.5;
|
Transporter:
|
any Person who contracts with Buyer (or any Person taking delivery, at the Driftwood LNG Terminal, of
|
USD or US$:
|
the lawful currency from time to time of the United States of America.
|
1.2
|
Interpretation
|
1.2.1
|
The titles, headings, and numbering in this Agreement are included for convenience only and will have no effect on the construction or interpretation of this Agreement.
|
1.2.2
|
References in this Agreement to Sections and Exhibits are to those of this Agreement unless otherwise indicated. References to this Agreement and to agreements and contractual instruments will be deemed to include all exhibits, schedules, appendices, annexes, and other attachments thereto and all subsequent amendments and other modifications to such instruments, to the extent such amendments and other modifications are not prohibited by the terms of this Agreement.
|
1.2.3
|
The word “include” or “including” will be deemed to be followed by “without limitation.” The term “will” has the same meaning as “shall,” and thus imposes an obligation.
|
1.2.4
|
Whenever the context so requires, the singular includes the plural and the plural includes the singular, and the gender of any pronoun includes the other gender.
|
1.2.5
|
Unless otherwise indicated, references to any statute, regulation or other law will be deemed to refer to such statute, regulation or other law as amended or any successor law.
|
1.2.6
|
Unless otherwise indicated, references to a Person shall include such Person’s successors and permitted assigns.
|
1.2.7
|
Unless otherwise indicated, any reference to a time of Day shall be to Central Time in the United States of America.
|
1.2.8
|
Approximate conversions of any unit of measurement contained in parenthesis following the primary unit of measurement included in Sections 1 through 25 of this Agreement are inserted as a matter of operational convenience only to show the approximate equivalent in such different measurement. The obligations of the Parties under Sections 1 through 25 of this Agreement will be undertaken in respect of the primary unit of measurement and not in respect of any such approximate conversion.
|
1.3
|
Replacement of Rates and Indices No Longer Available
|
1.3.1
|
If (a) a publication that contains a rate or index used in this Agreement ceases to be published for any reason or (b) such a rate or index ceases to exist, is materially modified, or no longer is used as a liquid trading point for Gas (as applicable), so as systematically to change its economic result, or is disaggregated, displaced or abandoned, for any reason, the Parties shall promptly discuss, with the aim of jointly selecting a rate or index or rates or indices to be used in place of such rates and indices that maintains the intent and economic effect of those original rates or indices.
|
1.3.2
|
If the Parties fail to agree on a replacement rate or index within thirty (30) Days, the Parties may submit such issue to an Expert pursuant to Section 20.2, as amended by the provisions of this Section 1.3.2. Any Expert selected shall be instructed to select the published rate or index, or a combination of published rates or indices, with adjustments as necessary or appropriate, that most nearly preserves the intent and economic result of the original rates or indices. If the Parties are not able to agree upon an Expert within ten (10) Days after the receipt of the notice of request for expert determination, either Party may elect to refer the determination of the replacement rate or index for arbitration in accordance with Section 20.1.
|
1.3.3
|
If any rate used in this Agreement is not published for a particular date, but the publication containing such rate continues to be published and the rate itself continues to exist, the Parties shall use the published rate in effect for the date such rate was most recently published prior to the particular date, unless otherwise provided in this Agreement.
|
1.3.4
|
If any index used in this Agreement is not published for a particular date, but the publication containing such index continues to be published and the index itself continues to exist, the Parties shall use the published rate in effect for the date such rate was most recently published prior to the particular date, unless otherwise provided in this Agreement. If the index is subsequently published for the particular date, such published index will be substituted for the previously-used index and any calculations involving such index will be recalculated and the Parties will take any necessary actions based upon these revised calculations, including adjustments of amounts previously invoiced or paid.
|
1.3.5
|
If an incorrect value is published for any rate or index used in this Agreement and such error is corrected and published within ninety (90) Days of the date of the publication of such incorrect rate or index, such corrected rate or index will be substituted for the incorrect rate or index and any calculations involving such rate or index will be recalculated and the Parties will take any necessary actions based upon these revised calculations, including adjustments of amounts previously invoiced or paid.
|
2.
|
Approvals
|
2.1
|
Approvals
|
2.2
|
Change in Export Laws
|
3.
|
Subject Matter
|
3.1
|
Sale and Purchase of LNG
|
3.1.1
|
Seller shall sell and make available for delivery, or compensate Buyer if not made available for delivery, LNG in cargoes at the Delivery Point, and Buyer shall take and pay for, or compensate Seller if not taken, such LNG, in the quantities and at the prices set forth in and otherwise in accordance with and subject to the provisions of this Agreement.
|
3.1.2
|
Seller intends to load cargoes from the Driftwood LNG Terminal, but, upon not less than sixty (60) Days’ prior written notice and subject to the prior written consent of Buyer (such consent not to be unreasonably withheld or delayed), Seller may deliver cargoes to Buyer from any alternate source; provided, that:
|
(a)
|
LNG from such alternate source shall, when made available by Seller to Buyer, comply with the Specifications;
|
(b)
|
LNG from such alternate source shall comply with the specifications in Buyer’s relevant LNG sales contractual obligation(s) in the reasonable determination of Buyer;
|
(c)
|
Seller has agreed to reimburse Buyer an amount equal to Buyer’s reasonable estimate of the increased costs that would be incurred as a result of the delivery of LNG at such alternate source;
|
(d)
|
the delivery of LNG at an alternate source is necessitated by operational conditions affecting the Driftwood LNG Terminal that have reduced the capability of the Driftwood LNG Terminal to produce or load LNG;
|
(e)
|
the receipt of LNG at an alternate source will not affect the ability of LNG Tankers to perform such cargo receipts and deliveries and other cargo receipts and deliveries in a timely fashion and in accordance with Buyer’s contractual obligations, in the reasonable determination of Buyer;
|
(f)
|
the facilities at the alternate source are compatible with LNG Tankers and acceptable in the reasonable determination of Buyer;
|
(g)
|
any other condition reasonably imposed by Buyer has been satisfied by Seller to Buyer’s reasonable satisfaction; and
|
(h)
|
the alternate source and the voyage thereto do not present added risks or dangers to any LNG Tanker or personnel of Buyer or any Affiliate of Buyer in the reasonable determination of Buyer.
|
4.
|
Term
|
4.1
|
Term
|
4.1.1
|
Term. This Agreement shall enter into force and effect on the Effective Date and shall continue in force and effect until the thirtieth (30th) anniversary of the Date of Full Operations of the first Phase 1 Plant to achieve Full Operations, unless extended pursuant to Section 4.1.2 (the “Term”).
|
4.1.2
|
Extension of Term.
|
(a)
|
At any time not later than the date that is three (3) years prior to the then-current expiration date of this Agreement, Buyer may give notice to Seller electing to extend the then-current Term by an additional ten (10) years beyond the then-current Term, provided that:
|
(i)
|
the sum of the ACQ hereunder and the annual contract quantities of all other Partnership Buyers during the entire
|
(ii)
|
Seller is able, by the exercise of reasonable efforts, to maintain in effect all Approvals necessary for the continued operation of the Driftwood LNG Terminal during the entire extension period.
|
(b)
|
Buyer may exercise its extension right pursuant to Section 4.1.2(a) up to four (4) times, for an aggregate extension of up to forty (40) years in ten (10)-year increments.
|
(c)
|
The terms and conditions of this Agreement during any extension period pursuant to this Section 4.1.2 shall be the same as those prior to such extension period.
|
4.2
|
Date of Substantial Completion
|
4.2.1
|
The Day Buyer is notified by Seller as the day on which a Plant achieves Substantial Completion shall be the “Date of Substantial Completion” for such Plant.
|
4.2.2
|
For all purposes of this Agreement, “Substantial Completion” of a Plant shall mean “Substantial Completion” of the “Project” that includes such Plant, in accordance with the EPC Contract pursuant to which such Plant is to be constructed (where “Project” and “Substantial Completion” are defined according to such EPC Contract). Seller shall provide prompt written notice to Buyer in the event that the terms of any EPC Contract are amended in a manner that alters the manner in which the Date of Substantial Completion of Plant 1, Plant 2 or Plant 3 is determined under such EPC Contract.
|
4.3
|
Date of Full Operations
|
4.3.1
|
The Day occurring three hundred and sixty-five (365) Days after the Date of Substantial Completion of a Plant, or any earlier date during such three hundred sixty-five (365)-Day period as elected by Seller and notified by Seller with not less than one hundred eighty (180) Days’ prior notice, shall be the “Date of Full Operations” for such Plant.
|
4.3.2
|
For all purposes of this Agreement, a Plant shall be considered to have achieved “Full Operations” as of the Date of Full Operations of such Plant.
|
4.3.3
|
If Seller elects an early Date of Full Operations of a Plant pursuant to Section 4.3.1, then:
|
(a)
|
the ACQ shall be adjusted according to Section 5.1.4; and
|
(b)
|
if applicable, Seller shall issue an ADP, or, as applicable, a revised ADP, that includes any additional cargo loadings required as a result thereof, with Seller using reasonable efforts to accommodate Buyer’s requests in respect thereof and making any changes in full-cargo lots (with any quantity that cannot be scheduled due to the full-cargo lot requirement being deemed a Round-Down Quantity or Round-Up Quantity, as applicable, carried forward to the next Contract Year).
|
4.4
|
Contract Year
|
(a)
|
the first Contract Year is the period of time beginning on the Date of Full Operations of the first Phase 1 Plant to achieve Full Operations and ending on December 31st of the same calendar year (the “First Contract Year”); and
|
(b)
|
the final Contract Year is the period of time beginning on the January 1st immediately preceding the final Day of the Term and ending on the final Day of the Term (the “Final Contract Year”).
|
5.
|
Quantities
|
5.1
|
ACQ
|
5.1.1
|
ACQ. Subject to Sections 5.1.2, 5.1.3 and 5.1.4, Buyer’s annual contract quantity of LNG under this Agreement (“ACQ”) for any given Contract Year shall be fifty-two million one hundred seventy thousand (52,170,000) MMBtu.
|
5.1.2
|
Additional Capital Calls.
|
(a)
|
If the Partnership issues any Class A Additional Issuance Notice in respect of the construction of the Phase 1 Project or related Partnership Expenses (as defined in the Partnership Agreement) pursuant to Section 4.3(e)(ii)(A)(1) of the Partnership Agreement (excluding any Class A Additional Issuance Notice in respect of De-Bottlenecking Contributions), then the ACQ shall be adjusted up or down, as applicable, to equal fifty-two million one hundred seventy thousand (52,170,000) MMBtu, multiplied by a fraction having as numerator the number of Class A Units held by Buyer or its Affiliate (as calculated immediately after any changes to the number of Class A Units held by Buyer or its Affiliate in connection with such Class A Additional Issuance, including any Unsubscribed Units (as defined in the Partnership Agreement) purchased by Buyer or its Affiliate
|
(b)
|
If the Partnership issues any Class A Additional Issuance Notice in respect of De-Bottlenecking Contributions pursuant to Section 4.3(e)(ii)(A)(1) of the Partnership Agreement (and only such provision), then the ACQ, as previously adjusted (if any) pursuant to Section 5.1.2(a) or (c) or this Section 5.1.2(b), shall be increased for all purposes of this Agreement starting with the Contract Year in which the relevant De-Bottlenecking project is completed, by a quantity equal to the De-Bottlenecking Total Quantity, multiplied by the number of Class A Units issued to Buyer or its Affiliate in connection with such De-Bottlenecking Contributions, divided by the total number of Class A Units issued to Buyer or its Affiliate and any other Limited Partners in connection with such De-Bottlenecking Contributions; provided that for the year in which the applicable De-Bottlenecking project is completed, such ACQ increase shall be pro-rated based on the number of Days after such completion, compared to the total number of Days in the underlying Contract Year.
|
(c)
|
If the Partnership or its Affiliates undertake any De-Bottlenecking project that is not funded by De-Bottlenecking Contributions, then the ACQ, as previously adjusted (if any) pursuant to Section 5.1.2(a) or (b) or this Section 5.1.2(c), shall be increased for all purposes of this Agreement starting with the Contract Year in which the relevant De-Bottlenecking project is completed, by a quantity equal to the De-Bottlenecking Total Quantity, multiplied by the number of Class A Units held by Buyer or its Affiliate, divided by the total number of Class A Units; provided that for the year in which the applicable De-Bottlenecking project is completed, such ACQ increase shall be pro-rated based on the number of Days after such completion, compared to the total number of Days in the underlying Contract Year.
|
(d)
|
If the ACQ is adjusted pursuant to Section 5.1.2(a), (b) or (c), Seller shall, always in accordance with the ratability principles set out in Section 5.3, issue a revised ADP and Ninety Day Schedule that
|
(e)
|
Any adjustments to the ACQ pursuant to Section 5.1.2(a), (b) or (c) shall be applied prior to any prorating pursuant to one or both of Sections 5.1.3 and 5.1.4.
|
(f)
|
If the Partnership or its Affiliates undertake any De-Bottlenecking project that is funded by De-Bottlenecking Contributions pursuant to Section 4.3(e)(ii)(A)(2) or (3) of the Partnership Agreement, Buyer’s ACQ shall not be adjusted hereunder as a result thereof.
|
5.1.3
|
First and Final Contract Years. The ACQ for the First Contract Year and Final Contract Year shall be pro-rated based on the number of days in each such Contract Year. If the ACQ of the First Contract Year is to be pro-rated pursuant to this Section 5.1.3 and Section 5.1.4, the ACQ shall first be pro-rated pursuant to Section 5.1.4 assuming the First Contract Year is a full calendar year, and then such ACQ shall be pro-rated pursuant to this Section 5.1.3.
|
5.1.4
|
Start-Up.
|
(a)
|
The ACQ during the period of time from the Date of Full Operations of the first Phase 1 Plant to achieve Full Operations until the Date of Full Operations of the second Phase 1 Plant to achieve Full Operations shall be one third (1/3) of the ACQ that would otherwise apply hereunder, pro-rated for the number of days in such period.
|
(b)
|
The ACQ during the period of time from the Date of Full Operations of the second Phase 1 Plant to achieve Full Operations until the Date of Full Operations of the third Phase 1 Plant to achieve Full Operations shall be two thirds (2/3) of the ACQ that would otherwise apply hereunder, pro-rated for the number of days in such period.
|
5.1.5
|
Measurement Units. The ACQ shall be expressed in MMBtus. All references in this Agreement to cargoes or other units are solely for operational convenience.
|
5.2
|
Adjusted Annual Contract Quantity
|
5.2.1
|
any Round-Up Quantity for such Contract Year, determined in accordance with Section 5.4.2; and
|
5.2.2
|
any Round-Down Quantity for the previous Contract Year, determined in accordance with Section 5.4.3, and carried forward to the current Contract Year;
|
5.2.3
|
any Major Scheduled Maintenance Quantities for such Contract Year, if any, determined in accordance with Section 5.5;
|
5.2.4
|
any Round-Up Quantity taken in the previous Contract Year, determined in accordance with Section 5.4.2, and carried forward as a deduction to the current Contract Year; and
|
5.2.5
|
any Round-Down Quantity for the current Contract Year, determined in accordance with Section 5.4.3.
|
5.3
|
Seasonal Deliveries
|
5.3.1
|
the first (1st) Tranche shall be scheduled for delivery on a reasonably ratable basis throughout the months of January, February, March, October, November and December of the relevant Contract Year, taking into consideration planned maintenance at the Driftwood LNG Terminal; and
|
5.3.2
|
the second (2nd) Tranche shall be scheduled for delivery on a reasonably ratable basis throughout the months of April, May, June, July, August and September of the relevant Contract Year, taking into consideration planned maintenance at the Driftwood LNG Terminal.
|
5.4
|
Round-Up/Round-Down Quantities
|
5.4.1
|
If, during the development of the Annual Delivery Program for a Contract Year, it appears that the delivery during such Contract Year of the ACQ plus
|
5.4.2
|
If the other Party, through the use of reasonable efforts, is able to schedule the delivery or receipt, as applicable, of the additional LNG, then the difference between the AACQ and the Preliminary AACQ shall be the “Round-Up Quantity” for such Contract Year; provided, however, that the Round-Up Quantity shall be less than a full cargo lot.
|
5.4.3
|
If the other Party, despite its exercise of reasonable efforts, is not able to schedule the delivery or receipt, as applicable, of the additional LNG, or if neither Party requests a Round-Up Quantity pursuant to Section 8.1.4(b) or 8.2.1, as applicable, then the Stub Quantity shall be the “Round-Down Quantity” for such Contract Year; provided, however, that the Round-Down Quantity shall be less than a full cargo lot.
|
5.5
|
Major Scheduled Maintenance
|
5.5.1
|
Seller may only exercise its right to such reduction in a Contract Year to the extent Seller determines, as a Reasonable and Prudent Operator, that major scheduled maintenance is required for operational reasons;
|
5.5.2
|
Seller shall notify Buyer of its exercise of, and the amount of, Major Scheduled Maintenance Quantity pursuant to Section 8.1.1(b);
|
5.5.3
|
the Major Scheduled Maintenance Quantity reduction elected by Seller during any Contract Year may not exceed seven decimal five percent (7.5%) of the ACQ for such Contract Year; and
|
5.5.4
|
the cumulative amount of all Major Scheduled Maintenance Quantity reductions elected by Seller pursuant to this Section 5.5 shall not exceed twenty-five percent (25%) of the ACQ during any six (6) consecutive Contract Years.
|
5.6
|
Seller’s Delivery Obligation
|
5.6.1
|
During any Contract Year, Seller shall make available to Buyer the Scheduled Cargo Quantity with respect to each cargo scheduled in the ADP for such Contract Year, less;
|
(a)
|
any quantities of LNG not taken by Buyer for any reasons attributable to Buyer (other than quantities for which Buyer is excused pursuant to this Agreement from taking due to Seller’s breach of this Agreement), including quantities not taken by Buyer due to Force Majeure affecting Buyer;
|
(b)
|
any quantities of LNG not made available by Seller due to Force Majeure affecting Seller;
|
(c)
|
any quantities of LNG for which Buyer has provided a notice of suspension pursuant to Section 5.8; and
|
(d)
|
any cargo suspended pursuant to Section 19.1.
|
5.6.2
|
Except as otherwise excused in accordance with the provisions of this Agreement, if, during any Contract Year, for any reason other than those specified in Section 5.6.1, Seller does not make available the Scheduled Cargo Quantity with respect to any cargo identified in Section 5.6.1 then the amount by which the Scheduled Cargo Quantity for such cargo exceeds the quantity of LNG made available by Seller in relation to such cargo shall be the “Cargo DoP Quantity”. Seller shall make a payment to Buyer for the Cargo DoP Quantity in an amount equal to:
|
(a)
|
an amount equal to the actual, documented amount paid by Buyer for the purchase of a replacement quantity of LNG or Gas (not to exceed the MMBtu equivalent of the Cargo DoP Quantity), or, in respect of any Cargo DoP Quantity for which a replacement quantity has not been purchased by Buyer (Buyer having used commercially reasonable efforts to so purchase), the market price of LNG at such time at the cargo’s most recently documented destination, multiplied by the Cargo DoP Quantity; less
|
(b)
|
an amount equal to, initially, the Provisional Transfer Price for purposes of a Provisional Invoice, and thereafter the Final Transfer Price upon the determination thereof for purposes of the Final Invoice (in accordance with Section 10.1.3), multiplied by the Cargo DoP Quantity; plus
|
(c)
|
any actual, reasonable and verifiable incremental costs incurred by Buyer as a result of such failure; less
|
(d)
|
any actual, reasonable and verifiable savings obtained by Buyer as a result of such failure;
|
5.6.3
|
Notwithstanding the foregoing, if the Cargo DoP Quantity is within the operational tolerance of three percent (3%) of the Scheduled Cargo Quantity (“Operational Tolerance”) (such Operational Tolerance to be exercised by Seller only with respect to operational matters regarding the Driftwood LNG Terminal, and without regard commercial considerations), the Cargo DoP Payment shall be zero.
|
5.6.4
|
Buyer shall use reasonable efforts to mitigate Seller’s losses in accordance with this Section 5.6.
|
5.6.5
|
Notwithstanding the provisions of Section 15, nothing in this Section 5.6 shall limit Buyer’s right to:
|
(a)
|
recover demurrage pursuant to Section 7.12.3 and amounts in respect of boil-off pursuant to Section 7.12.4;
|
(b)
|
recover damages specified in Section 12.3 for delivery of Off-Spec LNG; or
|
(c)
|
terminate this Agreement in accordance with Section 19.
|
5.7
|
Buyer’s Purchase Obligation
|
5.7.1
|
During any Contract Year, Buyer shall take and pay for the Scheduled Cargo Quantity with respect to each cargo scheduled in the ADP for such Contract Year, less:
|
(a)
|
any quantities of LNG not made available by Seller for any reasons attributable to Seller (other than quantities for which Seller is excused
|
(b)
|
any quantities of LNG not taken by Buyer due to Force Majeure affecting Buyer;
|
(c)
|
any quantities of LNG for which Buyer has provided a notice of suspension pursuant to Section 5.8;
|
(d)
|
any quantities of LNG that the relevant LNG Tanker is not capable of loading due to Seller’s delivery of LNG that has a Gross Heating Value that is less than the value identified by Seller pursuant to Section 8.1.1(a); and
|
(e)
|
any quantities of Off-Spec LNG that Buyer is relieved from taking pursuant to Section 12.3.
|
5.7.2
|
If, with respect to any cargo identified in Section 5.7.1, Buyer does not take all or part of the Scheduled Cargo Quantity of such cargo, and such failure to take is not otherwise excused pursuant to Section 5.7.1, then the amount by which the Scheduled Cargo Quantity for such cargo exceeds the quantity of LNG taken by Buyer in relation to such cargo shall be the “Cargo Shortfall Quantity”.
|
5.7.3
|
Buyer shall pay Seller an amount equal to the Cargo Shortfall Quantity, multiplied by, initially, the Provisional Transfer Price for purposes of a Provisional Invoice, and thereafter the Final Transfer Price upon the determination thereof for purposes of the Final Invoice (in accordance with Section 10.1.4) (the “Cargo Shortfall Payment”). For purposes of calculating the Cargo Shortfall Payment, the Provisional Transfer Price and Final Transfer Price shall be determined as of the Month in which the applicable Delivery Window begins.
|
5.7.4
|
Notwithstanding the foregoing, if the Cargo Shortfall Quantity is within the Operational Tolerance (such Operational Tolerance to be exercised by Buyer only with respect to operational matters regarding the LNG Tanker, and without regard to commercial considerations), the Cargo Shortfall Payment shall be zero.
|
5.7.5
|
Seller shall offer the Cargo Shortfall Quantity to the Tellurian Partnership Buyer, which shall have the right in its discretion to accept or reject the offer of a Cargo Shortfall Quantity. If the Tellurian Partnership Buyer accepts such offer, then Buyer shall pay the Cargo Shortfall Payment in accordance with Section 10.2.4, and upon receipt of a payment from the Tellurian Partnership Buyer of the Final Transfer Price for the Cargo Shortfall Quantity,
|
5.7.6
|
If Seller sells or causes to be sold the Cargo Shortfall Quantity or any portion thereof in a Mitigation Sale, Seller shall, within ten (10) Days of Seller’s receipt of the final payment from a Mitigation Sale, refund to Buyer an amount (the “Mitigation Sale Payment”) equal to the lesser of (x) the Cargo Shortfall Payment in respect of the Cargo Shortfall Quantity (less any Mitigation Sale Payments already received pursuant to other Mitigation Sales in respect of the same Cargo Shortfall Quantity) and (y) an amount calculated as follows:
|
(a)
|
the proceeds of the Mitigation Sale; plus
|
(b)
|
any actual, reasonable and verifiable savings obtained by Seller as a result of the Mitigation Sale as opposed to the sale of LNG to Buyer, including savings associated with reduced or avoided costs and fuel gas for LNG production and other reduced or avoided costs; less
|
(c)
|
any actual, reasonable and verifiable incremental costs incurred by Seller as a result of the Mitigation Sale; less
|
(d)
|
any marketing fee owed by Seller to Tellurian Trading pursuant to the LNG Marketing Agreement.
|
5.7.7
|
Seller shall use reasonable efforts to mitigate Buyer’s losses in accordance with this Section 5.7; provided, however, that Seller, acting as a Reasonable and Prudent Operator, shall have the right at any time to take other actions, in lieu of a sale of LNG to the Tellurian Partnership Buyer or a Mitigation Sale, to mitigate the effects of a Cargo Shortfall Quantity, including reducing Gas quantities purchased or selling any previously purchased Gas quantities. Seller shall, as soon as reasonably possible and in any event within sixty (60) Business Days after the end of the applicable Delivery Window, calculate the effects of such actions on the amount of the refund to be made by Seller to Buyer in respect of the Cargo Shortfall Quantity, which shall be calculated as the net proceeds of any such actions, plus actual, reasonable and verifiable
|
5.7.8
|
Any Mitigation Sale entered into by Seller with a Third Party pursuant to terms proposed to Seller by Tellurian Trading pursuant to the LNG Marketing Agreement shall be deemed to satisfy any obligation of Seller under this Agreement to mitigate Buyer’s losses pursuant to this Section 5.7.
|
5.8
|
Buyer’s Right to Suspend Deliveries
|
5.8.1
|
Subject to the remainder of this Section 5.8, Buyer may elect to suspend delivery of any cargo scheduled in the ADP by providing notice of such election to Seller on or prior to the twentieth (20th) Day of the Month that is two (2) Months prior to the Month in which the relevant cargo’s Delivery Window is scheduled to begin. If a cargo has been suspended pursuant to this Section 5.8.1, Seller shall be relieved of its obligation to make available such cargo to Buyer pursuant to Section 5.6.
|
5.8.2
|
Buyer shall pay a suspension fee (the “Suspension Fee”) for each cargo suspended pursuant to Section 5.8.1, in an amount equal to the lower of (a) the Scheduled Cargo Quantity of such cargo multiplied by an amount equal to USD three decimal zero zero (US$3.00) per MMBtu, plus or minus the applicable Facilities Charge in accordance with Exhibit B of the General Partner LLC Agreement; and (b) the Scheduled Cargo Quantity of such cargo, multiplied by an amount equal to the sum of the applicable Opex Costs, Final Debt Service Costs and Final Coverage Amount, plus or minus the applicable Facilities Charge in accordance with Exhibit B of the General Partner LLC Agreement. Buyer shall pay the Suspension Fee in accordance with Section 10.2.2.
|
6.
|
Delivery Point, Title and Risk, Destination
|
6.1
|
Delivery Point
|
6.2
|
Title and Risk
|
6.3
|
Destination
|
7.
|
Transportation and Loading
|
7.1
|
Transportation by Buyer
|
7.2
|
Driftwood LNG Terminal
|
7.2.1
|
During the period from the Effective Date and continuing through the Date of Full Operations of each Phase 1 Plant, Seller shall proceed diligently to construct, test, commission, maintain and operate such Plant in accordance with the standards and specifications set forth in Section 7.2.3 or cause the same to occur.
|
7.2.2
|
During the period from the Date of Full Operations of a Phase 1 Plant and continuing throughout the Term, Seller shall own, or have access to and use of, and maintain and operate or cause to be maintained and operated, the Driftwood LNG Terminal in accordance with the following: (a) the terms and conditions set forth in this Agreement; (b) Applicable Laws; (c) International Standards; and (d) to the extent not inconsistent with International Standards, such good and prudent practices as are generally followed in the LNG industry by Reasonable and Prudent Operators of similar LNG liquefaction terminals.
|
7.2.3
|
The Driftwood LNG Terminal shall include the following:
|
(a)
|
systems for communications with LNG Tankers;
|
(b)
|
at least one berth, capable of berthing and mooring an LNG Tanker having a displacement of no more than one hundred forty-nine thousand (149,000) tons, an overall length of no more than one
|
(c)
|
lighting sufficient to permit loading operations by day or by night, to the extent permitted by Governmental Authorities (it being acknowledged, however, that Seller shall in no event be obligated to allow nighttime berthing operations at the Driftwood LNG Terminal if Seller determines that such operations during nighttime hours could pose safety or operational risks to the Driftwood LNG Terminal, an LNG Tanker, or a Third Party);
|
(d)
|
facilities capable of loading LNG at an approximate rate of up to twelve thousand (12,000) cubic meters per hour at the Delivery Point, with three (3) LNG loading arms each having a reasonable operating envelope to allow for ship movement in accordance with International Standards;
|
(e)
|
a vapor return line system of sufficient capacity to allow for transfer of Gas necessary for safe LNG loading operations to take place at the allocated rates described in Section 7.2.3(d);
|
(f)
|
a suitable gangway allowing access to each LNG Tanker from the Driftwood LNG Terminal;
|
(g)
|
emergency shut down system capable of interconnecting with an LNG Tanker at berth;
|
(h)
|
LNG storage facilities;
|
(i)
|
LNG liquefaction facilities;
|
(j)
|
qualified and competent personnel, fluent in English to coordinate with the LNG Tanker during loading operations; and
|
(k)
|
facilities for the sampling and analysis of LNG.
|
7.2.4
|
Services and facilities not provided by Seller include the following: (a) facilities and loading lines for liquid or gaseous nitrogen to service an LNG Tanker; (b) facilities for providing bunkers; (c) facilities for the handling and delivery to the LNG Tanker of ship’s stores, provisions and
|
7.3
|
Compatibility of the Driftwood LNG Terminal with LNG Tankers
|
7.3.1
|
Buyer shall ensure, at no cost to Seller, that each of the LNG Tankers is fully compatible with the general specifications set forth in Section 7.2.3 and any modifications made to the Driftwood LNG Terminal that are Required Modifications. Should an LNG Tanker fail materially either to be compatible with the Driftwood LNG Terminal, or to be in compliance with the provisions of Sections 7.5 and 7.6, Buyer shall not employ such LNG Tanker until it has been modified to be so compatible or to so comply.
|
7.3.2
|
During the period from the Date of Full Operations of a Phase 1 Plant and continuing throughout the Term, Seller shall be entitled to modify the Driftwood LNG Terminal in any manner whatsoever, provided that: (w) such modifications do not render the Driftwood LNG Terminal noncompliant with International Standards; (x) such modifications do not render the Driftwood LNG Terminal incompatible with an LNG Tanker that is compatible with the general specifications set forth in Section 7.2.3; (y) such modifications, once finalized, do not reduce the ability of Seller to make available LNG in accordance with the terms of this Agreement; and (z) such modifications do not otherwise conflict with Seller’s obligations hereunder. Notwithstanding the foregoing, Seller may modify the Driftwood LNG Terminal in a manner that would render it incompatible with an LNG Tanker if such modification is required by and is made pursuant to a change in Applicable Laws, a change in required Approvals, or a change in International Standards (each such modification, a “Required Modification”).
|
7.3.3
|
In the event the LNG Tanker fails to be compatible with the Driftwood LNG Terminal due to a modification to the Driftwood LNG Terminal that is not a Required Modification, the actual and documented costs and expenses incurred by Buyer solely as a result of such modification, including as a result of delays in the berthing of the LNG Tanker at the Driftwood LNG Terminal, repositioning of the LNG Tanker, and of the modifications of the LNG Tanker directly caused by such modification shall be reimbursed by Seller to Buyer.
|
7.4
|
Buyer Inspection Rights in Respect of the Driftwood LNG Terminal
|
7.4.1
|
Upon giving reasonable advance notice and obtaining Seller’s prior written consent, which consent shall not be unreasonably withheld or delayed, a reasonable number of Buyer’s designated representatives may from time to time (including during the period of construction of the Driftwood LNG Terminal), (x) not more often than once every calendar quarter or (y) following a material change to the Driftwood LNG Terminal (excluding during the period of construction of the Driftwood LNG Terminal), inspect
|
7.4.2
|
Buyer shall indemnify and hold Seller and its Affiliates harmless from any Claims and Losses resulting from Buyer’s inspection or audit of the Driftwood LNG Terminal pursuant to Section 7.4.1.
|
7.4.3
|
Buyer shall have the right to reject the Driftwood LNG Terminal if it does not comply materially with the provisions of Section 7, provided that:
|
(a)
|
neither the exercise nor the non-exercise of such right shall reduce the responsibility of Seller to Buyer in respect of the Driftwood LNG Terminal and its operation, nor increase Buyer’s responsibilities to Buyer or Third Parties for the same; and
|
(b)
|
without prejudice to Section 14, Seller’s obligations under this Agreement shall not be excused or suspended by reason of the Driftwood LNG Terminal failing to comply materially with the provisions of this Agreement.
|
7.5
|
LNG Tankers
|
7.5.1
|
Buyer shall cause each LNG Tanker to comply with the requirements of this Section 7.5 and the requirements of Section 7.6 in all respects.
|
7.5.2
|
Each LNG Tanker shall comply with all Applicable Laws and International LNG Vessel Standards, including those that relate to seaworthiness, design, safety, environmental protection and navigation, and shall obtain all Approvals required by Governmental Authorities, in each case to enable such LNG Tanker to enter, leave and carry out all required operations at the Driftwood LNG Terminal. Each LNG Tanker shall at all times have on board valid documentation evidencing all such Approvals. Each LNG Tanker shall at all times be in possession of valid documents of compliance and safety management certificates, and shall have an effective management system in operation and an emergency response plan that addresses all identified risks and provides proper controls for dealing with these risks.
|
7.5.3
|
Buyer shall be required to obtain towing, escort, line handling, and pilot services, in accordance with this Section 7.5.3. Seller shall cause an Affiliate of Seller to procure tug services at the Driftwood LNG Terminal from a competent and experienced tug services provider. As soon as reasonably practicable after the Affiliate has so contracted for tug services, Seller shall notify Buyer thereof. Prior to the arrival of any LNG Tanker at the Loading Port, Buyer shall cause Transporter or the master of each LNG Tanker (acting on behalf of the ship-owner and charterer) making use of the port or marine facilities at the Loading Port on behalf of Buyer, to enter into a tug services agreement with the designated Affiliate of Seller for Buyer’s procurement, at its sole risk and expense, of tug services at the Driftwood LNG Terminal, which tug services shall include towing and escort services. Such agreement shall provide that the fees for tug services shall be paid by the Transporter to the designated Affiliate of Seller. Fees and other significant terms of the tug services agreement shall be in line with those at similar liquefaction facilities located on the United States Gulf Coast. In the event the Transporter or the master of an LNG Tanker fails to execute a tug services agreement that complies with the requirements of this Section 7.5.3, Seller may refuse to make LNG available and in such event, Buyer shall be deemed to have failed to take the applicable Scheduled Cargo Quantity, and Sections 5.7.2 to 5.7.8 shall apply. Seller shall cause line handling services to be provided at the Driftwood LNG Terminal for Buyer’s procurement at Buyer’s sole risk and expense. Pilot services shall be obtained by Buyer in accordance with the requirements of Governmental Authorities. Without prejudice to Seller’s obligations to secure towing, escort, line handling, and pilot services in accordance with this Section 7.5.3, Seller and its designated Affiliate procuring the tug services shall have no liability to Buyer for the performance
|
7.5.4
|
Buyer shall pay or cause to be paid: (a) all Port Charges directly to the appropriate Person (including reimbursing Seller for any documented Port Charges paid by Seller or Seller’s operator on Buyer’s behalf); and (b) all documented charges payable by reason of any LNG Tanker having to shift from berth at the Driftwood LNG Terminal as a result of the action or inaction of Buyer.
|
7.5.5
|
Each LNG Tanker must satisfy the following requirements:
|
(a)
|
Except as otherwise mutually agreed in writing by the Parties, each LNG Tanker shall be compatible with the specifications of the Driftwood LNG Terminal identified in Section 7.2.3 and any modifications to the Driftwood LNG Terminal pursuant to Section 7.3.2, and shall be of a sufficient size to load the applicable Scheduled Cargo Quantity. If Buyer’s LNG Tanker is not capable of loading the applicable Scheduled Cargo Quantity, Buyer shall be deemed to have failed to take the shortfall quantity and the provisions of Sections 5.7.2 to 5.7.8 shall apply, except that Buyer shall not be deemed to have failed to take a shortfall quantity and the provisions of Sections 5.7.2 to 5.7.8 shall not apply if the volume equivalent of the Scheduled Cargo Quantity at the nominated Gross Heating Value has been loaded.
|
(b)
|
Except as otherwise agreed in writing by Seller, which agreement shall not be unreasonably withheld or delayed, each LNG Tanker shall have a gross volumetric capacity between one hundred twenty-five thousand (125,000) cubic meters and two hundred sixteen thousand (216,000) cubic meters.
|
(c)
|
Each LNG Tanker shall be, in accordance with International Standards, (i) fit in every way for the safe loading, handling and carrying of LNG in bulk at atmospheric pressure; (ii) tight, staunch, strong and otherwise seaworthy; and (iii) equipped with facilities for mooring and unmooring and with cargo handling and storage systems (including instrumentation) necessary for the safe loading, handling, carrying and measuring of LNG, in each case in good order and condition.
|
(d)
|
Each LNG Tanker shall at all times be maintained in class with any classification society that is a member of International Association of Classification Societies Ltd. (IACS) and that has experience in the classification of LNG vessels.
|
(e)
|
Each LNG Tanker shall have been constructed to all applicable International Standards (including the International Code for the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk).
|
(f)
|
Each LNG Tanker shall comply with, and shall be fully equipped, supplied, operated, and maintained to comply with, all applicable International Standards and Applicable Laws, including those that relate to seaworthiness, design, safety, environmental protection, navigation, and other operational matters, and all procedures, permits, and approvals of Governmental Authorities for LNG vessels that are required for the transportation and loading of LNG at the Loading Port. Unless approved by Seller in writing, which approval shall not be unreasonably withheld or delayed, an LNG Tanker shall be prohibited from engaging in any maintenance, repair or in-water surveys while berthed at the Driftwood LNG Terminal. Each LNG Tanker shall comply fully with the guidelines of any Governmental Authority of the United States of America.
|
(g)
|
The officers and crew of each LNG Tanker shall have the ability, experience, licenses and training commensurate with the performance of their duties in accordance with internationally accepted standards with which it is customary for Reasonable and Prudent Operators of LNG vessels to comply and as required by Governmental Authorities and any labor organization having jurisdiction over the LNG Tanker or her crew. Without in any way limiting the foregoing, the master, chief engineer, all cargo engineers and all deck officers shall be fluent in written and oral English and shall maintain all records and provide all reports with respect to the LNG Tanker in English.
|
(h)
|
Each LNG Tanker shall have communication equipment complying with applicable regulations of Governmental Authorities and permitting such LNG Tanker to be in constant communication with the Driftwood LNG Terminal, the Vessel Traffic Information System (VTIS) and other vessels in the area.
|
(i)
|
Provided that the Driftwood LNG Terminal supplies a vapor return line meeting the requirements of Section 7.2.3(e), each LNG Tanker shall be capable of loading a full cargo of LNG in a maximum of nineteen (19) hours, in addition to any time for the connecting, cooling, draining, purging and disconnecting of liquid arms.
|
(j)
|
Each LNG Tanker shall procure and maintain Hull and Machinery Insurance and P&I Insurance in accordance with Section 15.6.
|
7.6
|
LNG Tanker Inspections; LNG Tanker Vetting Procedures; Right to Reject LNG Tanker
|
7.6.1
|
During the Term, on prior reasonable notice to Buyer, Seller may, at its sole risk, send its qualified representatives to inspect during normal working hours any LNG Tanker as Seller may consider necessary to ascertain whether the LNG Tanker complies with this Agreement. Seller shall bear all the costs and expenses in connection with any inspection conducted hereunder. Any such inspection may include, as far as is practicable having regard to the LNG Tanker’s operational schedule, examination of the records related to the LNG Tanker’s hull, cargo and ballast tanks, machinery, boilers, auxiliaries and equipment; examination of the LNG Tanker’s deck, engine and official log books; review of records of surveys by the LNG Tanker’s classification society and relevant Governmental Authorities; and review of the LNG Tanker’s operating procedures and performance of surveys, both in port and at sea. Additionally, each LNG Tanker shall have been inspected and reported upon by a SIRE Accredited Inspector within six (6) Months of the time of its initial use at the Driftwood LNG Terminal, and each LNG Tanker shall be reported upon by a SIRE Accredited Inspector once every twelve (12) Months for the first ten (10) years of such LNG Tanker’s useful life and once every six (6) Months thereafter, and each inspection report of such SIRE Accredited Inspector shall show, to the reasonable satisfaction of Seller, no material deficiencies in the safety or operability of such LNG Tanker. Any inspection carried out pursuant to this Section 7.6.1: (a) shall not interfere with, or hinder, any LNG Tanker’s safe and efficient construction or operation; and (b) shall not entitle Seller or any of its representatives to make any request or recommendation directly to Transporter except through Buyer. No inspection (or lack thereof) of an LNG Tanker hereunder shall: (i) modify or amend Buyer’s obligations, representations, warranties, and covenants hereunder; or (ii) constitute an acceptance or waiver by Seller of Buyer’s obligations hereunder.
|
7.6.2
|
Seller shall indemnify and hold Buyer and its Affiliates harmless from any Claims and Losses resulting from Seller’s inspection of any LNG Tanker pursuant to Section 7.6.1.
|
7.6.3
|
Buyer shall comply with all LNG Tanker vetting procedures, as set forth in the Driftwood Marine Operations Manual.
|
7.6.4
|
Seller shall have the right to reject any LNG vessel that Buyer intends to use to take delivery of LNG hereunder at the Driftwood LNG Terminal if such LNG vessel does not comply materially with the provisions of Section 7, provided that:
|
(a)
|
neither the exercise nor the non-exercise of such right shall reduce the responsibility of Buyer to Seller in respect of such LNG vessel
|
(b)
|
Buyer’s obligations under this Agreement shall not be excused or suspended by reason of Buyer’s inability (pursuant to the foregoing) to use a vessel as an LNG Tanker.
|
7.7
|
Port Liability Agreement
|
7.7.1
|
Buyer shall cause Transporter or the master of each LNG Tanker (acting on behalf of the ship-owner and charterer) making use of the port or marine facilities at the Loading Port on behalf of Buyer, to execute a Port Liability Agreement prior to such LNG Tanker’s arrival at the Loading Port. Seller shall engage in good faith consultation with Buyer in the development of the form of the Port Liability Agreement and shall act as a Reasonable and Prudent Operator in developing the form of the Port Liability Agreement. The Port Liability Agreement shall treat Transporter in a non-discriminatory manner in comparison to all other owners and charterers of LNG vessels that use or transit the Loading Port. In the event the master of an LNG Tanker fails to execute the Port Liability Agreement, Buyer shall indemnify and hold Seller and its Affiliates harmless from any Claims brought against, or Losses incurred by Seller or any of its Affiliates arising from such failure. If, as a result of Transporter executing the Port Liability Agreement, Transporter is liable to the LNG Tanker’s P&I Club for an additional premium for the LNG Tanker’s P&I indemnity coverage, and if Buyer is liable to Transporter for such additional premium, then Seller shall pay Buyer for such additional premium, but only to the extent such additional premium relates to such LNG Tanker calling at the Loading Port.
|
7.7.2
|
Subject to Section 7.7.1 and without prejudice to the terms of the Port Liability Agreement and the obligations of Buyer or its Affiliate pursuant to the Partnership Agreement and any equity capital contribution agreement with the Partnership, Seller releases Buyer, its Affiliates and their respective shareholders and members, officers, directors, employees, designees, representatives, and agents from liability to Seller incident to all Claims and Losses that may exist, arise or be threatened currently or in the future at any time following the Effective Date and whether or not of a type contemplated by either Party at any time, brought by any Person for injury to, illness or death of any employee of Seller, or for damage to or loss of the Driftwood LNG Terminal, which injury, illness, death, damage or loss arises out of, is incident to, or results from the performance or failure to perform this Agreement by Buyer, or any of its Affiliates, shareholders and members, officers, directors, employees, designees, representatives and agents.
|
7.7.3
|
Subject to Section 7.7.1 and without prejudice to the terms of Section 12 or the Port Liability Agreement, Buyer releases Seller, its Affiliates, and their
|
7.7.4
|
The initial form of Port Liability Agreement developed in accordance with Section 7.7.1 may be amended from time to time without consent of Buyer only if after any such amendment the revised terms of such Port Liability Agreement: (a) do not negatively impact Buyer’s ability to perform its obligations or exercise its rights under this Agreement, (b) treat Transporter in a non-discriminatory manner in comparison to all other owners and charterers of LNG vessels that use or transit the Loading Port, and (c) do not prevent any Transporter from obtaining full P&I indemnity coverage from a P&I Club, and such P&I indemnity will cover all Claims and Losses pursuant to such Port Liability Agreement in relation to use of the Loading Port by an LNG Tanker. Seller shall promptly notify Buyer upon any amendment to the Port Liability Agreement and shall provide a copy of the amended Port Liability Agreement to Buyer.
|
7.8
|
Driftwood Marine Operations Manual
|
7.9
|
Loading of LNG Tankers
|
7.9.1
|
Except as otherwise specifically provided, the terms of this Section 7.9 shall apply to all LNG Tankers calling at the Driftwood LNG Terminal.
|
7.9.2
|
Not later than twenty (20) Days prior to the ETA, Buyer shall notify, or cause the master of the LNG Tanker to notify, Seller of the information specified below (“In-Transit First Notice”):
|
(a)
|
name of the LNG Tanker, the volume of LNG onboard at the time the relevant notice is issued and the operator and owner of such LNG Tanker;
|
(b)
|
any operational deficiencies in the LNG Tanker that may affect either its performance at the Driftwood LNG Terminal or its approach to or departure from the Driftwood LNG Terminal;
|
(c)
|
whether the LNG Tanker will require cool-down service upon arrival at the Driftwood LNG Terminal, and, if so, the quantity of LNG (in cubic meters) estimated to be required for such cool-down service;
|
(d)
|
whether the LNG Tanker will require gas-up service upon arrival at the Driftwood LNG Terminal; and
|
(e)
|
the ETA.
|
7.9.3
|
With respect to each LNG Tanker scheduled to call at the Driftwood LNG Terminal, Buyer shall give, or cause the master of the LNG Tanker to give, to Seller the following notices. Each such notice shall include details of any significant change in the information provided pursuant to Section 7.9.2 (as updated pursuant to subsequent notices) since the immediately preceding notice was given (including, subject to Sections 7.6 and 8.3, any change to the LNG Tanker):
|
(a)
|
A second notice (“In-Transit Second Notice”), which shall be sent ninety-six (96) hours prior to the ETA set forth in the In-Transit First Notice or as soon as practicable prior to such ETA if the sea time between the point of departure of the LNG Tanker and the Loading Port is less than ninety-six (96) hours, stating the LNG Tanker’s then ETA. If, thereafter, such ETA changes by more than six (6) hours, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Seller notice of the corrected ETA;
|
(b)
|
A third notice (“In-Transit Third Notice”), which shall be sent forty-eight (48) hours prior to the ETA set forth in the In-Transit Second Notice (as corrected), confirming or amending such ETA. If, thereafter, such ETA changes by more than six (6) hours, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Seller notice of the corrected ETA;
|
(c)
|
A fourth notice (“In-Transit Fourth Notice”), which shall be sent twenty-four (24) hours prior to the ETA set forth in the In-Transit Third Notice (as corrected), confirming or amending such ETA. If, thereafter, such ETA changes by more than three (3) hours, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Seller notice of the corrected ETA;
|
(d)
|
A fifth notice (“In-Transit Final Notice”), which shall be sent twelve (12) hours prior to the ETA set forth in the In-Transit Fourth Notice (as corrected), confirming or amending such ETA. If, thereafter, such ETA changes by more than one (1) hour, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Seller notice of the corrected ETA; and
|
(e)
|
An NOR, which shall be given at the time prescribed in Section 7.10.
|
7.9.4
|
Except where prohibited by any applicable Governmental Authority or International Standards, Buyer shall have the right to cause an LNG Tanker to burn Gas as fuel during operations at the Driftwood LNG Terminal (including while conducting cargo loading operations). Any quantity of Gas burned as fuel pursuant to this Section 7.9.4 shall be taken into account for purposes of determining the quantity of LNG loaded in accordance with Exhibit A.
|
7.9.5
|
Seller shall have a right to use or dispose of, or cause to be used or disposed of, all Gas returned to the Driftwood LNG Terminal during cool-down or gas-up operations without compensation to Buyer. Seller shall have a right to use or dispose of, or cause to be used or disposed of, all Gas returned to the Driftwood LNG Terminal during loading operations, provided that Gas returned to the Driftwood LNG Terminal during loading shall be deducted for determining the quantity loaded for Buyer’s account in accordance with Paragraph 11(c)(ii) of Exhibit A and the formula set out in Paragraph 12.4 of Exhibit A.
|
7.10
|
Notice of Readiness
|
7.10.1
|
The master of an LNG Tanker or such master’s agent shall tender the NOR to Seller upon arrival at the PBS or any customary anchorage location for LNG vessels seeking to transit the Calcasieu ship channel, provided that such
|
7.10.2
|
A valid NOR given under Section 7.10.1 shall become effective as follows:
|
(a)
|
For an LNG Tanker that tenders its NOR according to Section 7.10.1 at any time prior to or during the Delivery Window allocated to such LNG Tanker, an NOR shall become effective when the LNG Tanker is all fast at a berth of the Driftwood LNG Terminal and has received all required Approvals from the relevant Governmental Authorities (including security clearance from the US Coast Guard); and
|
(b)
|
For an LNG Tanker that tenders its NOR according to Section 7.10.1 at any time after the expiration of the Delivery Window, an NOR shall become effective when, after Seller has notified the LNG Tanker that Seller is ready to receive the LNG Tanker, the LNG Tanker is all fast at a berth of the Driftwood LNG Terminal and has received all required Approvals from the relevant Governmental Authorities (including security clearance from the US Coast Guard).
|
7.11
|
Berthing Assignment
|
7.11.1
|
Seller shall berth or caused to be berthed an LNG Tanker which has tendered NOR before or during its Delivery Window promptly after Seller determines such LNG Tanker will not interfere with berthing and loading of any other scheduled LNG vessel with a higher berthing priority but in no event later than the end of the Delivery Window allocated to such LNG Tanker; provided, however, that if Seller does not berth or cause to be berthed such LNG Tanker by the end of the Delivery Window, (a) Seller shall use reasonable efforts to berth or cause to be berthed such LNG Tanker within forty-eight (48) hours after the end of its Delivery Window, (b) Buyer shall use reasonable efforts to cause the LNG Tanker to remain at the PBS or applicable anchorage location for the Driftwood LNG Terminal, and (c) Buyer’s sole recourse and remedy during such period of time for Seller’s failure to berth or cause to be berthed the LNG Tanker by the end of the Delivery Window shall be demurrage pursuant to Section 7.12.3, payment for excess boil-off pursuant to Section 7.12.4 and provision by Seller of a cool-down pursuant to Section 7.16.1(b). If (i) at any time during such forty-eight (48) hour period, Buyer is no longer able, having used reasonable efforts, to cause the LNG Tanker to remain at the PBS or applicable anchorage location, or (ii) the forty-eight (48) hour period expires, and in either case Seller has not berthed or caused to be berthed the LNG Tanker, and such delay is not attributable to a reason that would result in an extension of Allotted Laytime under Section 7.12.1,
|
7.11.2
|
For each delivery window period, Seller shall determine or cause to be determined the berthing priority among LNG vessels which have tendered NOR before or during their scheduled delivery window as follows:
|
(a)
|
The first berthing priority for a delivery window period shall be for an LNG vessel scheduled for such delivery window period. Priority within this group shall be given to the LNG vessel which has first tendered to Seller its NOR. Once an LNG vessel achieves a first berthing priority pursuant to this Section 7.11.2(a) or 7.11.2(c), such LNG vessel shall maintain such priority until such LNG vessel is berthed, so long as its tendered NOR does not become invalid pursuant to Section 7.13.1;
|
(b)
|
The second berthing priority for a delivery window period shall be for an LNG vessel scheduled for arrival before such delivery window period, which tendered to Seller its NOR prior to or during its scheduled delivery window but which was unable to proceed to berth for reasons not attributable to Buyer, the Transporter, the LNG Tanker or its master, crew, owner or operator. Priority within this group shall be given to the LNG vessel which has first tendered to Seller its NOR; and
|
(c)
|
The third berthing priority for a delivery window period shall be for an LNG vessel scheduled for arrival after such delivery window period. Priority within this group shall be given to the LNG vessel which has first tendered to Seller its NOR. An LNG vessel with third berthing priority pursuant to this Section 7.11.2(c) will achieve a first berthing priority on its scheduled delivery window pursuant to Section 7.11.2(a) if such LNG vessel has not been berthed prior to such date, so long as its tendered NOR does not become invalid pursuant to Section 7.13.1.
|
7.11.3
|
If an LNG Tanker tenders NOR after the end of its Delivery Window, Seller shall use reasonable efforts to berth or cause to be berthed such LNG Tanker as soon as reasonably practical; provided, however, that, unless otherwise agreed with Buyer, Seller shall have no obligation to use such efforts to berth or cause to be berthed an LNG Tanker that tenders NOR more than forty-eight (48) hours after the end of its Delivery Window. If, as of the forty-
|
7.12
|
Berth Laytime
|
7.12.1
|
The allotted laytime for each LNG Tanker (“Allotted Laytime”) shall be thirty (30) hours, as extended by any period of delay that is caused by:
|
(a)
|
reasons attributable to a Governmental Authority, Buyer, the Transporter, the LNG Tanker or its master, crew, owner or operator or any Third Party outside of the reasonable control of Seller, Seller’s Affiliates or the operator of the Driftwood LNG Terminal, including security clearance review by the US Coast Guard;
|
(b)
|
Force Majeure or Adverse Weather Conditions;
|
(c)
|
unscheduled curtailment or temporary discontinuation of operations at the Driftwood LNG Terminal necessary for reasons of safety, except to the extent such unscheduled curtailment or temporary discontinuation of operations is due to Seller’s failure to operate and maintain its facilities as a Reasonable and Prudent Operator;
|
(d)
|
time at berth during any cool-down pursuant to Sections 7.16.1(a) and (c);
|
(e)
|
time at berth during any gas-up pursuant to Section 7.17;
|
(f)
|
nighttime transit restrictions, if applicable;
|
(g)
|
time to transit from the PBS or anchorage location, as applicable, to a berth of the Driftwood LNG Terminal, in the event Actual Laytime commences pursuant to Section 7.12.2(a)(1); and
|
(h)
|
any other interruption impacting the Loading Port, including the unavailability or delay of Pilot services, tugs, and other similar interruptions, to the extent such interruptions are not caused by reasons attributable to Seller or the operator of the Driftwood LNG Terminal.
|
7.12.2
|
The actual laytime for each LNG Tanker (“Actual Laytime”) shall commence (a) if a valid NOR was given pursuant to Section 7.10.1 prior to or during the Delivery Window for such LNG Tanker, the earlier of (1) twelve (12) hours after the later of the start of the Delivery Window and the time
|
7.12.3
|
In the event Actual Laytime exceeds Allotted Laytime (as extended pursuant to Section 7.12.1) (“Demurrage Event”), Seller shall pay to Buyer as liquidated damages demurrage in USD (which shall be prorated for a portion of a Day) at a rate equal to the Demurrage Rate. The “Demurrage Rate” initially shall be USD eighty thousand (US$80,000) per Day and shall be revised by Seller each Contract Year ending in five (5) or zero (0) (e.g., 2025 and 2030) to reflect the average of three quotes, each received from a different ship broker, for then-current long-term LNG vessel charter rates. Seller shall determine such revised Demurrage Rate and notify Buyer of such revised Demurrage Rate at least thirty (30) days prior to the start of such Contract Year ending in five (5) or zero (0), as applicable, and such revised Demurrage Rate shall be effective starting on the first day of such Contract Year ending in five (5) or zero (0), as applicable, and continuing for five (5) years until subsequently revised pursuant to this Section 7.12.3. If a Demurrage Event occurs, Buyer shall invoice Seller for such demurrage within ninety (90) Days pursuant to Section 10.1.5.
|
7.12.4
|
In the event (a) an LNG Tanker is delayed in berthing at the Driftwood LNG Terminal or commencement of LNG loading due to an event occurring at or near the Driftwood LNG Terminal (including at the berth) and for a reason that would not result in an extension of Allotted Laytime under Section 7.12.1, and (b) as a result thereof, the commencement of LNG loading is delayed beyond twenty-four (24) hours after the LNG Tanker (i) has either tendered a valid NOR or berthed and (ii) is cleared by the Governmental Authorities to commence loading (“Excess Boil-Off Event”), Seller shall pay Buyer as liquidated damages an amount, on account of excess boil-off. The amount payable shall equal (x) the total number of full hours by which commencement of LNG loading is delayed beyond the aforementioned twenty-four (24) hour period, multiplied by (y) initially, the Provisional Transfer Price for purposes of a Provisional Invoice, and thereafter the Final Transfer Price upon the determination thereof for purposes of the Final Invoice (in accordance with Section 10.1.6), multiplied by (z) a quantity in MMBtu equal to (A) the guaranteed daily ballast rate of boil-off of such LNG Tanker pursuant to Form B of the relevant charterparty or similar description provided by the LNG Tanker’s owner in the relevant charterparty, divided by (B) twenty-four (24) hours per Day, multiplied by (C) the cargo containment capacity of such LNG Tanker (in MMBtu), provided that in no event shall such quantity of MMBtu exceed the quantity of LNG onboard
|
7.13
|
LNG Tanker Not Ready for LNG Loading; Excess Laytime
|
7.13.1
|
Except in the event Seller provides a cool-down service under Section 7.16.1(b), if any LNG Tanker previously believed to be ready for LNG loading is determined to be not ready after being berthed for reasons not attributable to Seller or Seller’s Affiliates or the operator of the Driftwood LNG Terminal, the NOR shall be invalid, and Seller may direct the LNG Tanker’s master to vacate the berth and proceed to anchorage, whether or not other LNG vessels are awaiting the berth, unless it appears reasonably certain to Seller that such LNG Tanker can be made ready without disrupting the overall berthing schedule of the Driftwood LNG Terminal or operations of the Driftwood LNG Terminal. When an unready LNG Tanker at anchorage becomes ready for LNG loading, its master shall notify Seller. If, as a result of such LNG Tanker not being ready to berth for reasons not attributable to Seller or Seller’s Affiliate or the operator of the Driftwood LNG Terminal, Buyer fails to take a cargo, the provisions of Sections 5.7.2 to 5.7.8 shall apply. If, as a result of such LNG Tanker not being ready to berth for reasons attributable to Seller or Seller’s Affiliates, Buyer fails to take a cargo, Seller shall be deemed to have failed to make available such cargo and the provisions of Sections 5.6.2 to 5.6.4 shall apply.
|
7.13.2
|
The following shall apply with respect to berthing:
|
(a)
|
An LNG Tanker shall complete LNG loading and vacate the berth as soon as possible but not later than thirty (30) hours from the time the LNG Tanker is all fast at the berth and has received all required Approvals from the relevant Governmental Authorities (including security clearance from the US Coast Guard). Such thirty (30) hour-period (“Allowed Laytime”) shall be extended by any period of delay that is caused by:
|
(i)
|
reasons attributable to a Governmental Authority, Seller, the operator of the Driftwood LNG Terminal or any Third Party outside the reasonable control of Buyer, the Transporter, the LNG Tanker or its master, crew, owner or operator;
|
(ii)
|
Force Majeure or Adverse Weather Conditions;
|
(iii)
|
unscheduled curtailment or temporary discontinuation of operations at the Driftwood LNG Terminal necessary for reasons of safety, except to the extent such unscheduled curtailment or temporary discontinuation of operations is
|
(iv)
|
time at berth during any cool-down pursuant to Sections 7.16.1(a)-(c);
|
(v)
|
time at berth during any gas-up pursuant to Section 7.17;
|
(vi)
|
nighttime transit restrictions, if applicable;
|
(vii)
|
tidal restrictions; and
|
(viii)
|
any other interruption impacting the Loading Port, including the unavailability or delay of Pilot services, tugs, and other similar interruptions, to the extent such interruptions are not caused by reasons attributable to Buyer, the Transporter, the LNG Tanker or its master, crew, owner or operator.
|
(b)
|
If an LNG Tanker fails to depart at the end of its Allowed Laytime (as extended pursuant to Sections 7.13.2(a)(i)-(viii)), another LNG vessel is awaiting the berth and the LNG Tanker’s continued occupancy of the berth will disrupt the overall berthing schedule of the Driftwood LNG Terminal or operations of the Driftwood LNG Terminal, Seller may direct the LNG Tanker to vacate the berth and proceed to sea at utmost dispatch.
|
(c)
|
If an LNG Tanker fails to depart the berth at the end of its Allowed Laytime (as extended pursuant to Sections 7.13.2(a)(i)-(viii)) and as a result the subsequent LNG vessel is prevented from or delayed in loading, Buyer shall reimburse Seller for any and all actual documented demurrage or excess boil-off that Seller becomes contractually obligated to pay to any Third Party with respect to such subsequent LNG vessel, as a result of the LNG Tanker not completing LNG loading and vacating the berth as required by this Section 7.13.2; provided that Buyer shall not be required to reimburse Seller for any amounts based on a demurrage rate or excess boil-off rate in excess of those specified in Section 7.12.3 and Section 7.12.4, as applicable. Seller shall invoice Buyer for any amounts due under this Section 7.13.2(c) pursuant to Section 10.1.5 within ninety (90) Days after the relevant Delivery Window.
|
(d)
|
In the event an LNG Tanker fails to vacate the berth pursuant to this Section 7.13 and Buyer is not taking actions to cause it to vacate the berth, Seller may effect such removal at the expense of Buyer.
|
7.14
|
LNG Loadings at the Driftwood LNG Terminal
|
7.14.1
|
Seller shall cooperate with Transporters (or their agents) and with the master of each LNG Tanker to facilitate the continuous and efficient loading of LNG hereunder.
|
7.14.2
|
During LNG loading, Seller shall take receipt of, through the Driftwood LNG Terminal vapor return line, Gas in such quantities as are necessary for the safe loading of LNG at such rates, pressures and temperatures as may be required by the design of the LNG Tanker or any standard operating practices of such LNG Tanker, provided such practices conform to International LNG Vessel Standards.
|
7.14.3
|
Promptly after completion of loading of each cargo, Seller shall send or cause to be sent to Buyer a certificate of origin, certificate of quantity, certificate of quality, cargo manifest and bill of lading, together with such other documents concerning the cargo as may reasonably be requested by Buyer.
|
7.14.4
|
Buyer, in cooperation with Seller, shall cause the LNG Tanker to depart safely and expeditiously from the berth upon completion of LNG loading.
|
7.15
|
Cooperation
|
7.16
|
Cool-Down of LNG Tankers
|
7.16.1
|
Buyer shall be solely responsible for ensuring that each LNG Tanker elected by Buyer for taking a cargo arrives at the Driftwood LNG Terminal cold and in a state of readiness. Notwithstanding the foregoing and subject to Section 7.16.2, Seller shall provide cool-down service to LNG Tankers at Buyer’s request as follows:
|
(a)
|
Seller shall use reasonable efforts (taking into account availability of sufficient berth time) to accept Buyer’s request to provide cool-down service for any LNG Tanker, subject to Buyer requesting such cool-down service by notice to Seller as far in advance of the relevant cargo’s Delivery Window as is reasonably practicable but in no case
|
(b)
|
Seller shall provide cool-down service without payment to any LNG Tankers requiring cool-down solely as a result of a delay caused by Seller, but only if such LNG Tanker made no other call between the original Delivery Window and the requested cool-down time.
|
(c)
|
Seller shall use reasonable efforts, contingent on the availability of sufficient berth time and facilities status, to provide cool-down service at any time other than as described in Sections 7.16.1(a)-(b) upon request by Buyer, provided that Buyer shall pay Seller for all LNG provided by Seller for cooling such LNG Tankers in an amount equal to the quantity of LNG provided, multiplied by initially, the Provisional Transfer Price for purposes of a Provisional Invoice, and thereafter the Final Transfer Price upon the determination thereof for purposes of the Final Invoice (in accordance with Section 10.1.5); provided, further, that Seller shall have no obligation to provide such cool-down service if doing so would interfere with a scheduled Delivery Window of Buyer or a scheduled delivery window of any other Person.
|
7.16.2
|
The following shall apply to any cool-down service provided by Seller pursuant to Section 7.16.1:
|
(a)
|
the MMBtu content of the total liquid quantities delivered for cooling, measured before evaporation, shall be determined by reference to the relevant LNG Tanker’s cool-down tables;
|
(b)
|
the Parties will determine by mutual agreement the rates and pressures for delivery of LNG for cool-down, but always in full accordance with safe operating parameters and procedures established by Seller;
|
(c)
|
LNG provided during cool down by Seller pursuant to Section 7.16.1 shall not be applied against the Scheduled Cargo Quantity for the relevant cargo; and
|
(d)
|
unless cool-down services are agreed to be provided in the mitigation of Force Majeure, cool-down service shall not be provided during January, February, March, October, November or December of any Contract Year, provided that if Buyer requests cool-down service during such period, then Seller shall use commercially reasonable efforts to provide cool-down service during such period.
|
7.17
|
Gas-Up of LNG Tankers
|
7.17.1
|
Seller shall use reasonable efforts to obtain all relevant Approvals needed to allow Seller to offer gas-up service to LNG Tankers at the Driftwood LNG Terminal.
|
7.17.2
|
Notwithstanding the first sentence of Section 7.16.1 and subject to Section 7.17.3, to the extent Seller has all relevant Approvals needed to offer gas-up service to LNG Tankers at the Driftwood LNG Terminal and such services is otherwise permitted under Applicable Law, Seller shall provide gas-up service to LNG Tankers at Buyer’s request as follows:
|
(a)
|
Buyer’s request for gas-up service in respect of an LNG Tanker shall be provided at the same time that Buyer requests cool-down service in respect of such LNG Tanker pursuant to Section 7.16.
|
(b)
|
Seller shall use reasonable efforts (taking into account availability of sufficient berth time) to accept Buyer’s request to provide gas-up service for any LNG Tanker, subject to Buyer requesting such gas-up service by notice to Seller as far in advance of the relevant cargo’s Delivery Window as is reasonably practicable but in no case less than thirty (30) Days before the relevant cargo’s Delivery Window, provided that Seller shall accept Buyer’s request to provide a gas-up service if (i) Buyer makes such request by notice at the time Buyer proposes its schedule of receipt of cargoes pursuant to Section 8.1.2 for the relevant Contract Year or (ii) at the time of the request, the Composite ADP for the relevant Contract Year indicates sufficient available berth time to accommodate such gas-up service.
|
(c)
|
Seller shall use reasonable efforts, contingent on the availability of sufficient berth time and facilities status, to provide gas-up service
|
7.17.3
|
The following shall apply to any gas-up service provided by Seller pursuant to Section 7.17.2:
|
(a)
|
the Parties will determine by mutual agreement the rates and pressures for delivery of Gas for gas-up service, but always in full accordance with safe operating parameters and procedures established by Seller;
|
(b)
|
gas-up service shall only be provided to an LNG Tanker that is also entitled to receive, and is receiving, immediately after such gas-up service, cool-down service pursuant to Section 7.16;
|
(c)
|
without prejudice to any amounts owed by Buyer for cool-down service provided pursuant to Section 7.16 to an LNG Tanker that also receives gas-up service pursuant to this Section 7.17, Buyer shall not be obligated to make a payment to Seller for gas-up service;
|
(d)
|
gas-up service shall not be provided during January, February, March, October, November or December of any Contract Year, provided that if Buyer requests gas-up service during such period, then Seller shall use commercially reasonable efforts to provide gas-up service during such period; and
|
(e)
|
gas-up service shall only be available for LNG Tankers under nitrogen purge, provided that the Parties, acting reasonably, will discuss the acceptance of LNG Tankers under inert gas, if Buyer can demonstrate unavailability of nitrogen and if Seller is able to accommodate, including taking into consideration operational and regulatory requirements (in the case of regulatory requirements, as reasonably provided by Seller).
|
8.
|
Annual Delivery Program
|
8.1
|
Programming Information
|
8.1.1
|
No later than one hundred ninety-five (195) Days before the start of each Contract Year, Seller shall provide Buyer with:
|
(a)
|
Seller’s good faith estimate of the Gross Heating Value of LNG to be delivered during such Contract Year; and
|
(b)
|
the Major Scheduled Maintenance Quantity for such Contract Year, if any.
|
8.1.2
|
No later than one hundred twenty-five (125) Days before the start of each Contract Year, Buyer shall notify Seller of Buyer’s proposed schedule of receipt of cargoes for each Month of such Contract Year. Such schedule shall identify sufficient proposed cargoes in order to schedule the full AACQ, and such AACQ shall be distributed across the Contract Year in accordance with Section 5.3. Buyer’s notice shall include the following information:
|
(a)
|
the LNG Tanker (if known) for each proposed cargo;
|
(b)
|
the Scheduled Cargo Quantity for each proposed cargo;
|
(c)
|
the proposed Delivery Window for each cargo;
|
(d)
|
Buyer’s request (if any) for a Round-Up Quantity for such Contract Year; and
|
(e)
|
any other information that may affect annual scheduling.
|
8.1.3
|
Seller shall call a one- or two-day scheduling meeting of Seller and all Partnership Buyers to occur no earlier than one hundred twenty-four (124) Days before the start of each Contract Year and no later than seventy (70) Days before the start of such Contract Year, by providing at least thirty (30) Days’ advance notice thereof to all Partnership Buyers. Unless otherwise agreed by Seller and all Partnership Buyers, the location of the meeting will be in Houston, Texas. Buyer shall use reasonable efforts to attend any such meeting notified by Seller. Any terms proposed, discussed or determined at such meeting shall not be binding on either Party except to the extent included in the Annual Delivery Program promulgated by Seller pursuant to Section 8.2.
|
8.1.4
|
Seller will then notify Buyer no less than ninety-three (93) Days before the start of such Contract Year of Seller’s proposed schedule of cargoes to be made available in each Month of such Contract Year, exercising reasonable efforts to adopt Buyer’s proposed schedule of receipts requested in accordance with Section 8.1.2; provided that (x) if Buyer fails to deliver the notice according to Section 8.1.2, Seller may nevertheless propose a schedule according to the terms of this Section 8.1.4, and (y) Seller shall have the right
|
(a)
|
the proposed AACQ for the Contract Year;
|
(b)
|
the proposed Round-Up Quantity (if any) or Round-Down Quantity (if any) for the Contract Year;
|
(c)
|
any Round-Down Quantity not taken in the previous Contract Year and carried forward to the current Contract Year;
|
(d)
|
any Round-Up Quantity taken in the previous Contract Year and carried forward as a deduction in the current Contract Year;
|
(e)
|
the Major Scheduled Maintenance Quantity (if any) for the Contract Year identified by Seller pursuant to Section 8.1.1(b);
|
(f)
|
for each cargo:
|
(i)
|
the LNG Tanker (if specified by Buyer);
|
(ii)
|
the Scheduled Cargo Quantity, if any, specified in the notice sent by Buyer pursuant to Section 8.1.2; and
|
(iii)
|
the proposed Delivery Window; and
|
(g)
|
any other information that may affect annual scheduling.
|
8.2
|
Determination of Annual Delivery Program
|
8.2.1
|
No later than ten (10) Days after receipt of Seller’s proposed schedule provided under Section 8.1.4, Buyer shall notify Seller if Buyer desires to consult with Seller regarding the proposed schedule, including (a) if Seller has not requested a Round-Up Quantity pursuant to Section 8.1.4(b), whether Buyer desires to request a Round-Up Quantity in accordance with Section 5.4.2, or (b) if Seller has requested a Round-Up Quantity pursuant to Section 8.1.4(b), whether Buyer is unable, despite its exercise of reasonable efforts, to schedule the receipt of the additional LNG. Seller shall, no later than fifteen (15) Days after receipt of Buyer’s notice, meet and consult with Buyer.
|
8.2.2
|
If, prior to the date that is sixty-eight (68) Days before the start of a Contract Year, the Parties have agreed on a schedule of deliveries for such Contract Year, then Seller shall issue the delivery schedule agreed by the Parties. If the Parties are unable to agree on a schedule of deliveries for such Contract Year, then no later than sixty-eight (68) Days before the start of such Contract
|
8.2.3
|
The schedule for deliveries of LNG during the Contract Year established pursuant to this Section 8.2, as amended from time to time in accordance with Section 8.3, is the “Annual Delivery Program” or “ADP”. If Seller fails to issue the schedule provided for in Sections 8.1.4 or 8.2.2, if applicable, then the schedule proposed by Buyer under Section 8.1.2 shall be the ADP for the relevant Contract Year.
|
8.2.4
|
Seller shall combine the ADP with the annual delivery programs of all other Partnership Buyers and provide to Buyer a combined schedule (the “Composite ADP”) showing all delivery windows and scheduled cargo quantities that have been committed by Seller, along with available, uncommitted loading windows at the Driftwood LNG Terminal. Seller shall promptly update the Composite ADP as the ADP is changed pursuant to Section 8.3 or other Partnership Buyers’ annual delivery programs are changed pursuant to their respective LNG sale and purchase agreements.
|
8.2.5
|
All references in Section 8.1 and this Section 8.2 to a specific number of Days prior to the start of a Contract Year shall be construed to mean, for purposes of the First Contract Year, as such number of Days prior to the anticipated Date of Full Operations for Plant 1 as revised by any acceleration thereof by Seller pursuant to Section 4.3.1. In the event of such acceleration, Seller shall be deemed to be in compliance with Section 8.1.1 for purposes of the First Contract Year so long as Seller provides the notice required by Section 8.1.1 at the same time Seller provides notice of such acceleration.
|
8.3
|
Changes to Annual Delivery Program
|
8.3.1
|
Subject to the remainder of this Section 8.3, either Party may request by notice a change in the ADP or Ninety Day Schedule for a Contract Year for any reason.
|
8.3.2
|
As soon as possible after notice has been received pursuant to this Section 8.3, the Parties shall consult with one another in order to examine whether such ADP or Ninety Day Schedule can be revised to accommodate such proposed change(s). Neither Party shall unreasonably withhold or delay its consent to revise the ADP or Ninety Day Schedule in accordance with changes proposed by the other Party; provided that neither Party shall be under any obligation to consent thereto if:
|
(a)
|
in the case of Seller, (i) Seller is unable to agree after the exercise of reasonable efforts to any necessary changes in its arrangements with other Partnership Buyers, (ii) the requested change would impose additional costs (unless Buyer agrees to reimburse such costs) or risks upon Seller, or (iii) the requested change would increase the total quantities scheduled hereunder or decrease the total quantities scheduled hereunder; or
|
(b)
|
in the case of Buyer, (i) Buyer is unable to agree after the exercise of reasonable efforts to any necessary changes in its arrangements with Transporter or Buyer’s customers, (ii) the requested change would impose additional costs (unless Seller agrees to reimburse such costs) or risks upon Buyer, or (iii) the requested change would increase the total quantities scheduled hereunder or decrease the total quantities scheduled hereunder.
|
8.3.3
|
A Party shall not withhold or delay its consent to revise the ADP or Ninety Day Schedule if the proposed change: (a) complies with the terms of this Agreement and Applicable Laws; (b) by the exercise of reasonable efforts on the part of such Party, does not create a material adverse impact on health, safety, environment or the operations of such Party; (c) does not result in unreimbursed increased costs or decreased revenues to such Party; and (d) results in no change to the total quantities scheduled hereunder.
|
8.3.4
|
Upon a scheduling change pursuant to this Section 8.3, the ADP and, if applicable, the Ninety Day Schedule shall be amended accordingly and an updated ADP and, if applicable, an updated Ninety Day Schedule shall promptly be provided in writing by Seller to Buyer.
|
8.4
|
Ninety Day Schedule
|
8.4.1
|
No later than the twentieth (20th) Day of each Month, Seller shall issue a forward plan of deliveries for the three (3)-Month period commencing on the first (1st) Day of the following Month thereafter (e.g., the Ninety Day Schedule for the three (3)-Month period commencing on May 1st shall be issued no later than the twentieth (20th) Day of April) (such plan, as amended from time to time in accordance with procedures set forth in this Agreement, the “Ninety Day Schedule”). The Ninety Day Schedule shall set forth by cargo the forecast pattern of deliveries, including the Delivery Window, LNG Tanker and Scheduled Cargo Quantity for each cargo. In the absence of agreement between the Parties otherwise, the Ninety Day Schedule will maintain the Scheduled Cargo Quantities and Delivery Windows as identified in the Annual Delivery Program.
|
8.4.2
|
Seller shall combine the Ninety Day Schedule with the ninety day schedules of all other Partnership Buyers and provide to Buyer a combined schedule (the “Composite Ninety Day Schedule”) showing all delivery windows and scheduled cargo quantities that have been committed by Seller, along with available, uncommitted loading windows at the Driftwood LNG Terminal. Seller shall promptly update the Composite Ninety Day Schedule as the Ninety Day Schedule is changed pursuant to Section 8.3 or 8.4.1 or other Partnership Buyers’ ninety day schedules are changed pursuant to their respective LNG sale and purchase agreements.
|
9.
|
Transfer Price; Uniform LNG SPAs
|
9.1
|
Provisional Transfer Price
|
Provisional Transfer Price =
|
the lesser of:
|
(a)
|
115% HH + $3.00/MMBtu;
|
(b)
|
HH + [***];
|
9.2
|
Final Transfer Price
|
(a)
|
115% HH + $3.00/MMBtu;
|
(b)
|
HH + [***];
|
9.3
|
Uniform LNG SPAs
|
10.
|
Invoicing and Payment
|
10.1
|
Invoices
|
10.1.1
|
Invoices for Cargoes. Invoices for each cargo made available by Seller and taken by Buyer, together with relevant supporting documents including a certificate of quantity loaded and all relevant information in respect of calculations of the Provisional Transfer Price and the Final Transfer Price as may be reasonably required by Buyer, shall be prepared and delivered by Seller to Buyer promptly following each Delivery Window and receipt of the final inspection certificate applicable to the loading of such cargo. The Provisional Invoice amount shall be the Provisional Transfer Price, multiplied by the quantity of LNG loaded on the LNG Tanker as calculated pursuant to Section 13.5. Each such Provisional Invoice shall be followed by a Final Invoice pursuant to Section 10.1.8(b) as soon as reasonably possible and in any event not later than sixty (60) Business Days after the first Day of Month M for such cargo; the Final Invoice amount shall be the Final Transfer Price, multiplied by the quantity of LNG loaded on the LNG Tanker as calculated pursuant to Section 13.5.
|
10.1.2
|
Invoices for Suspension Fees. Invoices for Suspension Fees shall be prepared and delivered by Seller to Buyer following Seller’s receipt of Buyer’s suspension notice pursuant to Section 5.8.1 for the suspended cargos. Each such invoice shall be, initially, a Provisional Invoice pursuant to Section 10.1.8(a), which shall be followed by a Final Invoice pursuant to Section 10.1.8(b).
|
10.1.3
|
Invoices for Cargo DoP Payments. Invoices for Cargo DoP Payments owed to Buyer by Seller shall be prepared by Buyer and delivered to Seller promptly following the Delivery Window of each affected cargo, and Seller shall give Buyer all reasonable assistance reasonably requested by Buyer in providing relevant information necessary to calculate the Cargo DoP Payments. Each such invoice shall be, initially, a Provisional Invoice pursuant to Section 10.1.8(a), which shall be followed by a Final Invoice pursuant to Section 10.1.8(b).
|
10.1.4
|
Invoices for Cargo Shortfall Payments. Invoices for Cargo Shortfall Payments owed to Seller by Buyer shall be prepared by Seller and delivered to Buyer promptly following the Delivery Window for each affected cargo. Each such invoice shall be, initially, a Provisional Invoice pursuant to Section
|
10.1.5
|
Invoices for Various Sums Due. In the event that any sums are due from one Party to the other Party under Section 7.5.4(b), 7.12.3, 7.12.4, 7.13.2(c), 7.16.1, 10.3.3, 10.4.1, 11.5, 12.3.1, or 12.3.2 of this Agreement, the Party to whom such sums are owed shall furnish an invoice therefor, describing in reasonable detail the basis for such invoice and providing relevant documents supporting the calculation thereof. To the extent Section 10.1.8(a)(i), (ii) or (iii) apply to such invoice, such invoice shall be, initially, a Provisional Invoice pursuant to Section 10.1.8(a), which shall be followed by a Final Invoice pursuant to Section 10.1.8(b).
|
10.1.6
|
Invoices for Other Sums Due. In the event that any sums are due from one Party to the other Party under this Agreement, other than for a reason addressed in Section 10.1.1 through 10.1.5, the Party to whom such sums are owed shall furnish an invoice therefor, describing in reasonable detail the basis for such invoice and providing relevant documents supporting the calculation thereof. To the extent Section 10.1.8(a)(i), (ii) or (iii) apply to such invoice, such invoice shall be, initially, a Provisional Invoice pursuant to Section 10.1.8(a), which shall be followed by a Final Invoice pursuant to Section 10.1.8(b).
|
10.1.7
|
Notice. Invoices shall be sent in accordance with Section 24.
|
10.1.8
|
Provisional Invoices.
|
(a)
|
In the event (i) an invoice required to be issued hereunder includes a calculation based on the Provisional Transfer Price or any portion thereof and the information required to calculate the Final Transfer Price or portion thereof is not available; (ii) a rate or index used in the calculation of an amount is not available on a temporary or permanent basis; or (iii) any other relevant information necessary to compute an invoice is not available, the invoicing Party may issue a provisional invoice (“Provisional Invoice”) in an amount calculated, in the case of subsection (i), based on the temporary estimated terms described in the applicable definition or definitions in Section 9.1, in the case of subsection (ii) of this Section 10.1.8(a), in accordance with Section 1.3, and, in the case of subsection (iii) of this Section 10.1.8(a), based on the best estimate of the unavailable information by the Party issuing the Provisional Invoice. A Provisional Invoice shall be deemed to be an invoice issued pursuant to Section 10.1.1 through 10.1.4, as applicable, for the purposes of the payment obligations of Seller or Buyer, as applicable, and shall
|
(b)
|
If a Provisional Invoice has been issued, the invoicing Party shall issue a final invoice reflecting any credit or debit, as applicable, to the Provisional Invoice as soon as reasonably practicable after the information necessary to compute the final amount of the payment has been obtained by such Party (“Final Invoice”). The settlement amount for a Final Invoice shall equal the difference between the amount of the Provisional Invoice and the amount of the Final Invoice, and such settlement amount shall be applied in the next invoice issued pursuant to Section 10.1.1 as a payment to the applicable Party or, if earlier, upon the termination of this Agreement.
|
(c)
|
If a Final Invoice has previously been issued in respect of a Provisional Invoice, the invoicing Party shall have a right to issue a revised Final Invoice reflecting any further credit or debit, as applicable, to the Final Invoice as soon as reasonably practicable after the information necessary to compute the final amount of the payment has been obtained by such Party. The settlement amount for a revised Final Invoice shall equal the difference between the amount of the Final Invoice and the amount of the revised Final Invoice, and such settlement amount shall be applied in the next invoice issued pursuant to Section 10.1.1 as a payment to the applicable Party or, if earlier, upon the termination of this Agreement.
|
10.2
|
Payment
|
10.2.1
|
Payments for Cargoes. Invoices issued in accordance with Section 10.1.1 for cargoes made available and taken shall become due and payable by Buyer on the tenth (10th) Day after the date on which Buyer received such invoice.
|
10.2.2
|
Payments for Suspension Fees. Invoices issued in accordance with Section 10.1.2 shall become due and payable by Buyer on the later of (a) the day on which the Delivery Window of the suspended cargo was scheduled to begin, and (b) ten (10) Days after Buyer receives Seller’s invoice.
|
10.2.3
|
Cargo DoP Payments. Invoices issued in accordance with Section 10.1.3 shall become due and payable on the tenth (10th) Day following receipt by Seller.
|
10.2.4
|
Cargo Shortfall Payments. Invoices issued to Buyer in accordance with Section 10.1.4 shall become due and payable on the tenth (10th) Day
|
10.2.5
|
Payments for Other Sums Due. An invoice issued pursuant to Section 10.1.5 or 10.1.6 shall be paid by the paying Party thereunder not later than twenty (20) Days after receipt of such invoice.
|
10.2.6
|
Payment Method. All invoices shall be settled by payment in USD of the sum due by wire transfer of immediately available funds to an account with the bank designated by the other Party in accordance with Section 10.2.7.
|
10.2.7
|
Designated Bank. Each Party shall designate a bank in a location reasonably acceptable to the other Party for payments under this Agreement. Initially a Party shall designate its bank by notice to the other Party prior to the later of (a) the date thirty (30) Days after the Effective Date and (b) the Date of Substantial Completion of Plant 1, and thereafter not less than thirty (30) Days before any redesignation is to be effective.
|
10.2.8
|
Payment Date. If any invoice issued pursuant to Section 10.1 would result in a Party being required to make a payment on a Day that is not a Payment Business Day, then the due date for such invoice shall be the immediately succeeding Payment Business Day.
|
10.3
|
Disputed Invoice
|
10.3.1
|
Payment Pending Dispute. Absent manifest error, each Party invoiced pursuant to Section 10.1.1, 10.1.2, 10.1.3, 10.1.4, or 10.1.5 shall pay all disputed and undisputed amounts due under such invoice without netting or offsetting. In the case of manifest error, the correct amount shall be paid disregarding such error, and necessary correction and consequent adjustment shall be made within five (5) Business Days after agreement or determination of the correct amount.
|
10.3.2
|
Timing. Except with respect to Sections 1.3, 10.3.4, and 14, any invoice may be contested by the receiving Party only pursuant to Section 10.5 or if, within a period of thirteen (13) Months after its receipt thereof, that Party serves notice to the other Party questioning the correctness of such invoice. Subject to Section 10.5, if no such notice is served, the invoice shall be deemed correct and accepted by both Parties.
|
10.3.3
|
Interest. The Party who invoiced and received payment of a sum, subsequently determined not to have been payable under this Agreement to such Party, shall pay interest to the other Party on such amount, at a rate per annum equal to two percent (2%) above LIBOR (as in effect on the Day when
|
10.3.4
|
Measurement or Analyzing Errors. Any errors found in an invoice or credit note which are caused by the inaccuracy of any measuring or analyzing equipment or device shall be corrected in accordance with Exhibit A hereto, as applicable, and shall be settled in the same manner as is set out above in this Section 10.3.
|
10.4
|
Delay in Payment
|
10.4.1
|
Interest. If either Party fails to make payment of any sum as and when due under this Agreement, it shall pay interest thereon to the other Party at a rate per annum equal to two percent (2%) above LIBOR (as in effect on the Day when such sum was originally due) on and from the Day when payment was due until the date of payment, provided that, without prejudice to the other terms of this Agreement, if such period lasts longer than ninety (90) Days, the applicable LIBOR rate for each successive term of ninety (90) Days during that period shall be that in effect on the first (1st) Day of that ninety (90) Day period. Interest shall accrue from Day to Day and be calculated on the basis of a three hundred sixty (360) Day year.
|
10.4.2
|
Costs and Expenses. Subject to Section 20.1.12, each Party shall bear its own costs (including attorneys’ or experts’ fees or costs) in respect of enforcement of such Party’s rights in any Dispute proceeding as a result of the other Party failing to perform or failing timely to perform its obligations under this Agreement including failing timely to make any payment in accordance with this Agreement.
|
10.5
|
Audit Rights
|
11.
|
Taxes
|
11.1
|
Responsibility
|
11.2
|
Seller Taxes
|
(a)
|
solely on account of the corporate existence of Seller or its Affiliates;
|
(b)
|
in respect of the property, revenue, income, or profits of Seller or its Affiliates (other than Taxes required to be deducted or withheld by Buyer from or in respect of any payments (whether in cash or in kind) under this Agreement);
|
(c)
|
subject to Section 11.5, in the United States of America or any political subdivision thereof, that may be levied or assessed upon the export, loading, storage, processing, transfer, transport, ownership of title, or delivery of LNG, up to and at the Delivery Point; and
|
(d)
|
payable by Buyer by reason of a failure by Seller to properly deduct, withhold or pay any Taxes described in Section 11.4.
|
11.3
|
Buyer Taxes
|
(a)
|
solely on account of the corporate existence of Buyer or its Affiliates;
|
(b)
|
in respect of the property, revenue, income, or profits of Buyer or its Affiliates (other than Taxes required to be deducted or withheld by
|
(c)
|
in the United States of America (or any political subdivision thereof) or in any jurisdiction in which any of Buyer’s Discharge Terminals are located (or any political subdivision thereof), or any jurisdiction through which any LNG Tanker transits or on which any LNG Tanker calls (or any political subdivision thereof), in each case that may be levied or assessed upon the sale, use, purchase, import, unloading, export, loading, storage, processing, transfer, transport, ownership of title, receipt or delivery of LNG after the Delivery Point; and
|
(d)
|
payable by Seller by reason of a failure by Buyer to properly deduct, withhold or pay any Taxes described in Section 11.4.
|
11.4
|
Withholding Taxes
|
11.5
|
Transfer Taxes
|
11.6
|
Mitigation and Cooperation
|
11.7
|
Refunds
|
12.
|
Quality
|
12.1
|
Specification
|
Minimum Gross Heating Value
|
1000 Btu/SCF
|
Maximum Gross Heating Value
|
1150 Btu/SCF
|
Minimum methane (C1)
|
84.0 MOL%
|
Maximum H2S
|
0.25 grains per 100 SCF
|
Maximum Sulfur
|
1.35 grains per 100 SCF
|
Maximum N2
|
1.5 MOL%
|
Maximum Ethane (C2)
|
11 MOL%
|
Maximum Propane (C3)
|
3.5 MOL%
|
Maximum Butane (C4) and heavier
|
2 MOL%
|
12.2
|
Determining LNG Specifications
|
12.3
|
Off-Specification LNG
|
12.3.1
|
If Seller, acting as a Reasonable and Prudent Operator, determines prior to loading of a cargo that the LNG is expected not to comply with the Specifications (“Off-Spec LNG”) upon loading, Seller shall, as soon as reasonably practicable, suspend loading and shall give notice to Buyer of the extent of the expected variance as soon as practicable (but in no case later than the commencement of loading of the cargo), and:
|
(a)
|
Buyer shall use reasonable efforts, including coordinating with the Transporter and the operator of the Discharge Terminal, to accept such LNG where the LNG would be acceptable to the Transporter and the operator of the Discharge Terminal, each of them acting in their sole discretion (unless Transporter or such operator is Buyer or an Affiliate of Buyer), and would not prejudice the safe and reliable operation of any LNG Tanker, the Discharge Terminal, and any downstream facilities being supplied regasified LNG; Buyer shall notify Seller within twenty-four (24) hours of receipt of Seller’s notice whether Buyer is so able to accept such LNG;
|
(b)
|
if Buyer can accept delivery of such cargo, then Buyer shall take delivery of such cargo, and Seller shall reimburse Buyer for all reasonable documented direct costs incurred by Buyer (including direct costs owed to any Affiliate of Buyer, Transporter, and the operator of the Discharge Terminal) in transporting and treating such Off-Spec LNG to meet the Specifications (or to otherwise make such LNG marketable); provided, however, the Seller’s liability shall not exceed twenty percent (20%) of the Transfer Price Ceiling for such cargo, multiplied by the quantity (in MMBtu) of the Off-Spec LNG; and
|
(c)
|
if Buyer determines in good faith that it cannot, using reasonable efforts, receive such cargo, or that Buyer anticipates that it might be
|
12.3.2
|
If Off-Spec LNG is delivered to Buyer without Buyer being made aware of the fact that such Off-Spec LNG does not comply with the Specifications, or without Buyer being made aware of the actual extent to which such Off-Spec LNG does not comply with the Specifications, then upon Buyer or Seller becoming aware that the LNG is Off-Spec LNG and following prompt notice thereof to the other Party, Seller shall immediately suspend loading operations (if applicable) pending a determination by Buyer and:
|
(a)
|
if Buyer is able, using reasonable efforts, to transport and treat the Off-Spec LNG to meet the Specifications (or to otherwise make such LNG marketable) within the cost limitations set forth in this Section 12.3.2(a), then Buyer shall notify Seller as soon as practicable to resume loading (if applicable) and Seller shall reimburse Buyer for all reasonable documented direct costs and expenses incurred by Buyer (including direct costs owed to any Affiliate of Buyer, Transporter, and the operator of the Discharge Terminal) in transporting and treating such Off-Spec LNG received at the Discharge Terminal to meet the Specifications (or to otherwise make such LNG marketable), in an amount not exceeding one hundred percent (100%) of an amount equal to the delivered quantity of such Off-Spec LNG, multiplied by the Transfer Price Ceiling for such cargo; provided, however, that Buyer, any Affiliate of Buyer, Transporter, and the operator of the Discharge Terminal shall not be required to incur costs in excess of those reimbursable by Seller; or
|
(b)
|
if Buyer determines in good faith that it cannot, using reasonable efforts, transport and treat such Off-Spec LNG to meet the Specifications (or to make such LNG marketable) within the cost limitations set forth in Section 12.3.2(a), then: (i) Buyer shall be entitled to reject such Off-Spec LNG by giving Seller notice of such rejection as soon as practicable, and in any case within ninety-six (96) hours after (A) Seller notifies Buyer that such LNG is Off-Spec LNG and the actual extent to which such Off-Spec LNG does not comply with the Specifications or (B) Buyer becomes aware that such LNG is Off-Spec LNG, whichever occurs first; (ii) Buyer shall be entitled to dispose of the loaded portion of such Off-Spec LNG (or regasified LNG produced therefrom) in any manner that Buyer, acting
|
12.3.3
|
If Buyer rejects a cargo in accordance with Section 12.3.1(c) or 12.3.2(b), Seller shall be deemed to have failed to make available such cargo, and the Scheduled Cargo Quantity for such cargo shall be treated as a Cargo DoP Quantity resulting in a Cargo DoP Payment under Section 5.6.2. If Buyer accepts a cargo of Off-Spec LNG in accordance with Section 12.3.1(b) or transports and treats a cargo of Off-Spec LNG in accordance with Section 12.3.2(a), Seller shall be deemed to have satisfied its obligation to make available such LNG to Buyer for purposes of Section 5.6.1.
|
13.
|
Measurements and Tests
|
13.1
|
LNG Measurement and Tests
|
13.2
|
Parties to Supply Devices
|
13.2.1
|
Buyer shall supply, operate and maintain, or cause to be supplied, operated and maintained, suitable gauging devices for the LNG tanks of the LNG Tanker, as well as pressure and temperature measuring devices, in accordance with Section 13.3 and Exhibit A, and any other measurement, gauging or testing devices which are incorporated in the structure of such LNG Tanker or customarily maintained on shipboard.
|
13.2.2
|
Seller shall supply, operate and maintain, or cause to be supplied, operated and maintained, devices required for collecting samples and for determining quality and composition of the delivered LNG, in accordance with Section 13.3 and Exhibit A, and any other measurement, gauging or testing devices which are necessary to perform the measurement and testing required hereunder at the Loading Port.
|
13.3
|
Selection of Devices
|
13.4
|
Tank Gauge Tables of LNG Tanker
|
13.5
|
Gauging and Measuring LNG Volumes Loaded
|
13.6
|
Samples for Quality Analysis
|
13.7
|
Quality Analysis
|
13.8
|
Operating Procedures
|
13.8.1
|
Prior to carrying out measurements, gauging and analyses hereunder, the Party responsible for such operations shall notify the designated representative(s) of the other Party, allowing such representative(s) a reasonable opportunity to be present for all operations and computations; provided, however, that the absence of such representative(s) after notification and reasonable opportunity to attend shall not affect the validity of any operation or computation thereupon performed.
|
13.8.2
|
At the request of either Party, any measurements, gauging and/or analyses provided for in Sections 13.5, 13.6, 13.7 and 13.10.1 shall be witnessed and verified by an independent surveyor agreed in writing by the Parties. The results of verifications and records of measurement shall be maintained in accordance with the terms of Exhibit A.
|
13.9
|
MMBtu Quantity Delivered
|
13.10
|
Verification of Accuracy and Correction for Error
|
13.10.1
|
Each Party shall test and verify the accuracy of its devices at intervals to be agreed between the Parties. In the case of gauging devices of the LNG Tanker, such tests and verifications shall take place during each scheduled dry-docking, provided that the interval between such dry dockings shall not exceed five (5) years. Indications from any redundant determining devices should be reported to the Parties for verification purposes. Each Party shall have the right to inspect and if a Party reasonably questions the accuracy of any device, to require the testing or verification of the accuracy of such device in accordance with the terms of Exhibit A.
|
13.10.2
|
Permissible tolerances of the measurement, gauging and testing devices shall be as described in Exhibit A.
|
13.11
|
Costs and Expenses
|
13.11.1
|
Except as provided in this Section 13.11, all costs and expenses for testing and verifying measurement, gauging or testing devices shall be borne by the Party whose devices are being tested and verified; provided, however, that representatives of the Parties attending such tests and verifications shall do so at the cost and risk of the Party they represent.
|
13.11.2
|
In the event that a Party inspects or requests the testing/verification of any of the other Party’s devices on an exceptional basis in each case as provided in Section 13.10.1, the Party requesting the testing/verification shall bear all costs thereof; provided, however, that in the event that such testing or verification discloses that the other Party’s devices fail to comply with the requirements of this Agreement, all costs and expenses for such testing and verification of the devices that failed to comply shall be borne by the Party whose devices were tested.
|
13.11.3
|
The costs of the independent surveyor:
|
(a)
|
requested by a Party in accordance with Section 13.8.2 or paragraph 3(a) of Exhibit A shall be borne by the requesting Party; and
|
(b)
|
referred to in Section 13.9 shall be borne equally by Buyer and Seller.
|
14.
|
Force Majeure
|
14.1
|
Force Majeure
|
14.1.1
|
Force Majeure may include circumstances of the following kind, provided that such circumstances satisfy the definition of Force Majeure set forth above:
|
(a)
|
acts of God, a Governmental Authority, or a public enemy;
|
(b)
|
subject to Section 14.6, strikes, lockout, or other industrial action;
|
(c)
|
wars, blockades or civil disturbances of any kind; epidemics, actual or reasonably forecasted adverse weather or sea conditions, fires, explosions, arrests and restraints of governments or people; acts of terrorism, acts of piracy and serious threat of piracy;
|
(d)
|
the breakdown or failure of, freezing of, breakage or accident to, or the necessity for making repairs or alterations to any facilities or equipment;
|
(e)
|
in respect of Seller: (i) loss of, accidental damage to, or inaccessibility to or inoperability of (x) the Driftwood LNG Terminal or any Connecting Pipeline or (y) the liquefaction and loading facilities at the alternate source agreed by the Parties pursuant to Section 3.1.2
|
(f)
|
in respect of Buyer, events affecting the ability of any LNG Tanker to receive and transport LNG including the unavailability of tug services, subject to Section 14.2.3; and
|
(g)
|
the withdrawal, denial, or expiration of, or failure to obtain, any Approval.
|
14.1.2
|
Nothing in this Section 14.1 shall be construed to require a Party to observe a higher standard of conduct than that required of a Reasonable and Prudent Operator as a condition to claiming the existence of Force Majeure.
|
14.2
|
Limitations on Force Majeure
|
14.2.1
|
Indemnity and Payment Obligations. Notwithstanding Section 14.1, no Force Majeure shall relieve, suspend, or otherwise excuse either Party from performing any obligation to indemnify, reimburse, hold harmless or otherwise pay the other Party under this Agreement.
|
14.2.2
|
Events Not Force Majeure. The following events shall not constitute Force Majeure:
|
(a)
|
a Party’s inability to finance its obligations under this Agreement or the unavailability of funds to pay amounts when due in the currency of payment;
|
(b)
|
the unavailability of, or any event affecting, any facilities at or associated with any loading port or unloading port (or downstream of an unloading port) other than the Driftwood LNG Terminal or any alternate source agreed by the Parties pursuant to Section 3.1.2;
|
(c)
|
the ability of Seller or Buyer to obtain better economic terms for LNG or Gas from an alternative supplier or buyer, as applicable;
|
(d)
|
changes in either Party’s market factors, default of payment obligations or other commercial, financial or economic conditions,
|
(e)
|
breakdown or failure of plant or equipment caused by normal wear and tear or by a failure to properly maintain such plant or equipment;
|
(f)
|
the non-availability or lack of economically obtainable Gas reserves;
|
(g)
|
in the case of Seller, any event arising from an action or omission of (i) any Affiliate of Seller, (ii) the contractor or sub-contractor or agent of Seller or Affiliate of Seller, or (iii) the operator of the Driftwood LNG Terminal, in each case to the extent that, had Seller taken such action or experienced such event, such event would not constitute Force Majeure pursuant to the provisions of this Section 14;
|
(h)
|
in the case of Buyer, any event arising from an action or omission of (i) any Affiliate of Buyer, (ii) any customer of Buyer scheduled to take delivery of LNG from Buyer at the Driftwood LNG Terminal, (iii) the contractor or sub-contractor or agent of Buyer or Affiliate of Buyer, (iv) the operator of any part of any Discharge Terminal or (v) any Transporter, in each case to the extent that, had Buyer taken such action or experienced such event, such event would not constitute Force Majeure pursuant to the provisions of this Section 14; and
|
(i)
|
the loss of interruptible or secondary firm transportation service on a Connecting Pipeline or any pipeline upstream of a Connecting Pipeline unless the cause of such loss was an event that would satisfy the definition of Force Majeure hereunder and primary in-the-path transportation service on such pipeline was also interrupted as a result of such event.
|
14.2.3
|
LNG Tankers.
|
(a)
|
Force Majeure relief in respect of Buyer for an event described in Section 14.1.1(f) affecting a specific LNG Tanker shall only be available with respect to cargoes that are scheduled to be transported on such LNG Tanker in the applicable Ninety Day Schedule or ADP for such Contract Year, or (to the extent that the ADP for the following Contract Year has been issued by Seller) in the ADP for the following Contract Year.
|
(b)
|
With respect to any particular cargo, Buyer shall not be entitled to claim Force Majeure relief for an event affecting the LNG Tanker nominated for such cargo if such LNG Tanker was affected by, or should reasonably have been expected by Buyer or its customer utilizing such LNG Tanker (in each case acting as a Reasonable and
|
14.2.4
|
Alternative Sources. Force Majeure relief in respect of Seller for an event described in Section 14.1.1(e) affecting an alternate LNG source or facility thereat agreed between the Parties pursuant to Section 3.1.2 shall (a) only be available with respect to the cargo that is scheduled to be loaded at the Loading Port of such facility in the ADP or applicable Ninety Day Schedule for such Contract Year or, to the extent that the ADP for the following Contract Year has been issued, in the ADP for such following Contract Year and (b) not be available for an event affecting such alternate LNG source or facility thereat if such alternate LNG source or facility thereat was affected by such Force Majeure at the time it was nominated by Seller pursuant to Section 3.1.2 for the applicable cargo.
|
14.3
|
Notification
|
14.3.1
|
the estimated period during which performance may be prevented, interfered with or delayed, including, to the extent known or ascertainable, the estimated extent of such reduction in performance;
|
14.3.2
|
the particulars of the program to be implemented to resume normal performance under this Agreement; and
|
14.3.3
|
the anticipated quantity of LNG scheduled in the ADP for a Contract Year that will not be made available or taken, as the case may be, by reason of Force Majeure.
|
14.4
|
Measures
|
14.5
|
No Extension of Term
|
14.6
|
Settlement of Industrial Disturbances
|
15.
|
Liabilities and Indemnification
|
15.1
|
General
|
15.2
|
Limitations on Liability
|
15.2.1
|
Incidental and Consequential Losses. Neither Party shall be liable to the other Party hereunder as a result of any act or omission in the course of or in connection with the performance of this Agreement, for or in respect of:
|
(a)
|
any indirect, incidental, consequential or exemplary losses;
|
(b)
|
any loss of income or profits;
|
(c)
|
except as expressly provided in this Agreement, any failure of performance or delay in performance to the extent relieved by the application of Force Majeure in accordance with Section 14; or
|
(d)
|
except as expressly provided in this Agreement, any losses arising from any claim, demand or action made or brought against the other Party by a Third Party.
|
15.2.2
|
Exclusive Remedies. A Party’s sole liability, and the other Party’s exclusive remedy, arising under or in connection with Sections 5.6, 5.7, 5.8, 7.12.3, 7.12.4, 7.13.2(c) and 12.3 and this Section 15 shall be as set forth in each such provision, respectively.
|
15.2.3
|
Liquidated Damages. The Parties agree that it would be impracticable to determine accurately the extent of the loss, damage and expenditure that
|
15.2.4
|
Express Remedies. The Parties agree that Section 15.2.1 shall not impair a Party’s obligation to pay the amounts specified in, or the validity of or limitations imposed by, Sections 5.6, 5.7, 5.8, 7.12.3, 7.12.4, 7.13.2(c) and 12.3. Neither Party shall have a right to make a claim for actual damages (whether direct or indirect) or other non-specified damages under any circumstances for which an express remedy or measure of damages is provided in this Agreement.
|
15.2.5
|
Remedies in Contract. Except with respect to claims for injunctive relief under Sections 18 and 20.1.11, a Party’s sole remedy against the other Party for nonperformance or breach of this Agreement or for any other claim of whatsoever nature arising out of or in relation to this Agreement shall be in contract and no Party shall be liable to another Party (or its Affiliates and contractors and their respective members, directors, officers, employees and agents) in respect of any damages or losses suffered or claims which arise out of, under or in any alleged breach of statutory duty or tortious act or omission or otherwise.
|
15.2.6
|
Seller Aggregate Liability for Certain Events.
|
(a)
|
Notwithstanding any provision herein to the contrary, the maximum Seller Aggregate Liability as of any given date in respect of any occurrence or series of occurrences shall not exceed the Seller Liability Cap.
|
(b)
|
“Seller Aggregate Liability” shall mean, as of any date of determination, any and all liability of Seller to Buyer under this Agreement, excluding (i) any Seller liabilities under this Agreement for which Seller has already made payment to Buyer as of such date and (ii) any liability caused by the gross negligence or willful
|
(c)
|
The “Seller Liability Cap”, as of any given time of determination, shall be an amount (in USD) equal to USD one hundred million (US$100,000,000), multiplied by the ACQ at such time, divided by fifty-two million one hundred seventy thousand (52,170,000) MMBtu.
|
15.2.7
|
EXCEPT FOR WARRANTIES OF TITLE AND NO LIENS OR ENCUMBRANCES, AND SUBJECT TO THE PROVISIONS OF THIS AGREEMENT CONCERNING THE QUALITY OF LNG TO BE DELIVERED UNDER THIS AGREEMENT, SELLER EXPRESSLY NEGATES ANY WARRANTY WITH RESPECT TO LNG DELIVERED UNDER THIS AGREEMENT, WRITTEN OR ORAL, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY WITH RESPECT TO CONFORMITY TO SAMPLES, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.
|
15.3
|
Buyer’s Credit; Credit Support
|
15.3.1
|
At all times prior to any assignment of this Agreement by Original Buyer, Original Buyer shall have no obligation to maintain any credit rating or provide any guaranty, letter of credit or other credit support in connection with this Agreement; provided that, if required for financing, Buyer shall use its commercial reasonable efforts to provide information or documents confirming its ability to perform its financial obligations under this Agreement.
|
15.3.2
|
If Buyer assigns or novates this Agreement to a Third Party who is not an Affiliate of Original Buyer (such Third Party, the “Assignee Buyer”) and if in connection with such assignment or novation Lenders require in accordance with Section 21.2.2(c) that Assignee Buyer have an Acceptable Credit Rating or a Guaranty be provided to Seller prior to such novation or assignment, then at all times following such assignment or novation (including following any subsequent assignments or novations thereafter), and only then, the following terms of this Section 15.3.2 shall apply:
|
(a)
|
Assignee Buyer shall at all times on and after such assignment or novation maintain an Acceptable Credit Rating or provide or cause to be provided a Guaranty. In the event any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder no longer has an Acceptable Credit Rating or is otherwise no longer an Acceptable Guarantor, Assignee Buyer shall provide a replacement Guaranty or, if unable to comply with the requirements of a Guaranty because no Guarantor exists, an alternative credit
|
(b)
|
If Assignee Buyer, or Assignee Buyer’s Guarantor, merges or consolidates, sells all or substantially all of its assets, or novates or assigns this Agreement or the Guaranty, as applicable, then the surviving entity, asset purchaser or assignee, as the case may be, shall either have and maintain an Acceptable Credit Rating or assume in writing or by operation of law the obligations of Assignee Buyer or Assignee Buyer’s Guarantor, as applicable. In the event the foregoing conditions are not satisfied, Assignee Buyer shall provide a replacement Guaranty or, if unable to comply with the requirements of a Guaranty because no Guarantor exists, an alternative credit support reasonably acceptable to Lenders at all times. Any Guaranty or alternative credit support required to be delivered to Seller pursuant to this Section 15.3.2(b) shall be delivered within thirty (30) Days of such requirement arising.
|
15.4
|
Third Party Liability
|
(a)
|
If any Third Party shall notify either Party (the “Indemnified Party”) with respect to any matter (a “Third Party Claim”) that may give rise to a claim for indemnification against the other Party (the “Indemnifying Party”) under this Section 15 or elsewhere in this Agreement, then the Indemnified Party shall promptly notify the Indemnifying Party thereof in writing; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is materially prejudiced.
|
(b)
|
The Indemnifying Party will have the right to defend against the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying Party notifies the Indemnified Party in writing within fifteen (15) Days after the Indemnified Party has given notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against any damages the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim; (ii) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend
|
(c)
|
So long as the Indemnifying Party is conducting the defense of the Third Party Claim in accordance with Section 15.4(b): (i) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim; (ii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed); and (iii) the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed).
|
(d)
|
In the event any of the conditions in Section 15.4(b) is or becomes unsatisfied, or a conflict arises, with regard to the Third Party Claim, between the Indemnified Party and the Indemnifying Party in respect of such Third Party Claim the Indemnified Party may defend against the Third Party Claim in any manner it reasonably may deem appropriate.
|
(e)
|
If either Party gives notice to the other Party of a Third Party Claim pursuant to the provisions of Section 15.4(a) and the notified Party does not give notice that it will indemnify the notifying Party in the manner set out in Section 15.4(b), the notifying Party shall nevertheless send copies of all pleadings and other documents filed in any such Third Party lawsuit to the notified Party and such notified Party may have the right to participate in the defense of the Third Party Claim in any manner permitted by Applicable Law.
|
15.5
|
Seller’s Insurance
|
15.5.1
|
Seller shall obtain and maintain or cause to be obtained and maintained:
|
(a)
|
insurance for the Driftwood LNG Terminal to the extent required by Applicable Law, and
|
(b)
|
additional insurance, as is reasonably necessary, against such other risks and at such levels as a Reasonable and Prudent Operator of a liquefaction terminal would obtain.
|
15.5.2
|
Seller shall obtain or cause to be obtained the insurance required by Section 15.5.1 from a reputable insurer (or insurers) reasonably believed to have adequate financial reserves. Seller shall exercise its best efforts, or shall cause the applicable insured Person to use its best efforts, to collect any amount due under such insurance policies.
|
15.6
|
Buyer’s Insurance
|
(a)
|
Hull and Machinery Insurance shall be placed and maintained with reputable marine underwriters; and
|
(b)
|
Protection & Indemnity Insurance (“P&I Insurance”) shall be placed and maintained with full P&I indemnity cover in the ordinary course from a P&I Club, and such LNG Tanker shall be entered for insurance with a P&I Club, including pollution liability standard for LNG vessel and Certificate of Financial Responsibility.
|
16.
|
Safety
|
16.1
|
General
|
16.2
|
Third Parties
|
17.
|
Exchange of Information
|
18.
|
Confidentiality
|
18.1
|
Duty of Confidentiality
|
(a)
|
already known to the recipient from sources other than the other Party;
|
(b)
|
already in the public domain (other than as a result of a breach of the terms of this Section 18.1); or
|
(c)
|
independently developed by the recipient;
|
18.2
|
Permitted Disclosures
|
18.2.1
|
The Confidential Information, which either Party receives from the other, may be disclosed by such Party:
|
(a)
|
to any Person who is such Party’s legal counsel, other professional consultant or adviser, Transporter, insurer, accountant or construction contractor; provided that such disclosure is solely to assist the purpose for which such Person was so engaged;
|
(b)
|
if required and to the extent required by the rules of any recognized stock exchange or agency established in connection therewith upon which the securities of such Party or a company falling within Section 18.2.1(f) are quoted;
|
(c)
|
as may be required under federal or state securities or “Blue Sky” Applicable Laws;
|
(d)
|
if required and to the extent required by the U.S. Department of Energy;
|
(e)
|
without limiting Section 18.2.1(c) or (d), if required and to the extent required by any Applicable Laws, or such Party becomes legally required (by oral questions, interrogatories, request for information or documents, orders issued by any Governmental Authority or any other process) to disclose such information, or to the extent necessary to enforce Section 20.1 or 20.2 or any arbitration award or binding decision of an Expert (including by filing Confidential Information in proceedings before a court or other competent judicial authority) or to enforce other rights of a party to the Dispute; provided that such Party shall, to the extent practicable, give prior notice to the other Party of the requirement and the terms thereof and shall cooperate with the other Party to minimize the disclosure of the information, seek a protective order or other appropriate remedy, and if such protective order or other remedy is not obtained, then such Party will furnish only that portion of such information that it is legally required to furnish;
|
(f)
|
to any of its Affiliates or shareholders (or any company involved in the provision of advice to any such Affiliate or shareholder for the purposes of this Agreement) and any employee of that Party or of a company to which disclosure is permitted pursuant to this Section 18.2.1(f);
|
(g)
|
to any bona fide intended assignees of a Party’s interests under this Agreement;
|
(h)
|
to any Third Party as reasonably necessary for the performance of a Party’s obligations under this Agreement;
|
(i)
|
to any arbitrator appointed in accordance with Section 20.1.4, to any Expert appointed pursuant to Section 20.2.1, or to any other party to an arbitration or Expert proceeding arising under or in connection with this Agreement, or to any witnesses appearing in an arbitration under Section 20.1 or in an Expert proceeding under Section 20.2; or
|
(j)
|
to any Person reasonably required to see such Confidential Information, including the Lenders, in connection with any bona fide financing or offering or sale of securities by Seller, Buyer or any Affiliate or shareholder of any of the foregoing, to comply with the
|
18.2.2
|
The Party making the disclosure shall ensure that any Person listed in Section 18.2.1(a), (f), (g), (h), (i) or (j) to which it makes the disclosure (excluding any legal counsel, arbitrator or Expert already bound by confidentiality obligations) undertakes to hold such Confidential Information subject to confidentiality obligations equivalent to those set out in Section 18.1. In the case of a disclosure to an employee made in accordance with Section 18.2.1(f), the undertaking shall be given by the company on its own behalf and in respect of all its employees.
|
18.2.3
|
Seller may disclose to the other Partnership Buyers Confidential Information related to scheduling, operations and other relevant technical information to comply with Seller’s performance of Section 8, but only to the extent necessary to ensure the effective implementation thereof.
|
18.2.4
|
No press release concerning the execution of this Agreement or resolution of any Disputes shall be issued unless agreed by the Parties.
|
18.3
|
Confidential Information Remedy
|
18.4
|
Duration of Confidentiality
|
19.
|
Default and Termination
|
19.1
|
Right to Suspend Performance
|
19.1.1
|
Seller Right to Suspend. If (a) Seller has not received payment in respect of any amounts due under any invoice(s) under this Agreement totaling in excess of USD fifteen million (US$15,000,000) within five (5) Business Days after the due date thereof, (b) any Termination Event in favor of a Seller right to terminate has arisen, or (c) (i) Buyer or its Affiliate is a Defaulting Partner (as defined in the Partnership Agreement) pursuant to Section 4.3(c)(i) of the
|
(a)
|
Seller may suspend delivery of any or all subsequent cargoes until (a) the amounts outstanding under such invoice(s) and interest thereon have been paid in full, (b) the circumstances constituting the Termination Event have been fully remedied or have ceased to apply or (c) Buyer or its Affiliate, as applicable, is no longer a Defaulting Partner (as defined in the Partnership Agreement), as the case may be.
|
(b)
|
In the event of such suspension, Buyer shall not be relieved of any of its obligations under this Agreement, and the provisions of Sections 5.7.2 to 5.7.8 shall apply with respect to each cargo scheduled in the Annual Delivery Program or Ninety Day Schedule which is not delivered during the suspension.
|
(c)
|
During the period that such suspension is effective, Seller shall have no obligation to make available LNG to Buyer.
|
19.1.2
|
Buyer Right to Suspend. Without prejudice to its rights under the Termination Event set out in Section 19.2.1(j), if a Bankruptcy Event has occurred with respect to Seller, Buyer shall be entitled to suspend by written notice to Seller the performance of its obligations under this Agreement to take and pay for LNG, until such Bankruptcy Event is no longer occurring with respect to Seller. Buyer’s right to suspend shall not excuse Buyer from paying for LNG taken prior to the suspension.
|
19.2
|
Elective Termination
|
19.2.1
|
Termination Events. The following circumstances (each, a “Termination Event”) shall give rise to the right for the specified Party (and only the specified Party) to terminate this Agreement:
|
(a)
|
by Seller, if Buyer fails to pay or cause to be paid any amount or amounts in the aggregate due under this Agreement that are in excess of USD fifty million (US$50,000,000), for a period of ten (10) Days or more following the due date of the relevant invoice;
|
(b)
|
by Seller, if Buyer fails to comply with Section 15.3 or 21;
|
(c)
|
by Seller, violation by Buyer of Section 25.1;
|
(d)
|
by the non-violating Party, if a Party violates Section 25.2(b) or breaches the representation and warranty in Section 25.5;
|
(e)
|
by Seller, if (i) Buyer or any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder fails to execute any Direct Agreement with Seller’s or its Affiliate’s respective Lenders within sixty (60) Days after Seller’s request thereof, provided that such Direct Agreement complies with the requirements in Sections 21.4.2(a) to (g), or (ii) in connection with any financing, Buyer fails to provide to the Lenders and the Lenders’ Agent any legal opinion that complies with the requirements in Section 21.4.1 within sixty (60) Days after Seller’s request thereof;
|
(f)
|
by Seller, if a Bankruptcy Event has occurred with respect to Buyer or any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder;
|
(g)
|
by Seller, if (i) Buyer or its Affiliate is a Defaulting Partner (as defined in the Partnership Agreement) pursuant to Section 4.3(c)(i) of the Partnership Agreement and the Default Forfeiture Units (as defined in the Partnership Agreement) are Class A Units issued to such Defaulting Partner pursuant to the equity capital contribution agreement entered into by such Defaulting Partner in respect of the Phase 1 Project, and the General Partner exercises its rights pursuant to the Partnership Agreement to cause all such Class A Units to be redeemed or forfeited in accordance with the Partnership Agreement or (ii) Buyer or its Affiliate is a Defaulting Partner (as defined in the Partnership Agreement) pursuant to Section 4.3(c)(ii) of the Partnership Agreement, and the General Partner exercises its rights pursuant to the Partnership Agreement to cause all of such Defaulting Partner’s Class A Units to be redeemed or forfeited in accordance with the Partnership Agreement;
|
(h)
|
by either Party, if Buyer’s or its Affiliate’s entire interest in the Partnership is redeemed pursuant to Section 4.17 of the Partnership Agreement;
|
(i)
|
by Seller, if Buyer’s or its Affiliate’s entire interest in the Partnership is redeemed pursuant to Section 4.8 of the Partnership Agreement;
|
(j)
|
by Buyer, if a Bankruptcy Event has occurred in respect of Seller;
|
(k)
|
by Buyer, if each of the following conditions have been satisfied: (i) the amount of indebtedness for purposes of constructing the Phase 1 Project (including any such indebtedness that has been refinanced from time to time) has been paid in full, (ii) Buyer or its Affiliate has contributed to the Partnership its entire capital commitment for the Phase 1 Project and (iii) one (1) or more events of Force Majeure affecting Seller prevent Seller from making available an aggregate quantity of LNG equal to or greater than fifty percent (50%) of the AACQ during any given twelve (12) Month period;
|
(l)
|
by Buyer, if each of the following conditions have been satisfied: (i) the amount of indebtedness for purposes of constructing the Phase 1 Project (including any such indebtedness that has been refinanced from time to time) has been paid in full, (ii) Buyer or its Affiliate has contributed to the Partnership its entire capital commitment for the Phase 1 Project, and (iii) Seller fails to make available an aggregate amount of LNG in accordance with Section 5.6 resulting in Cargo DoP Quantities totaling more than fifty percent (50%) of the AACQ in aggregate during any given twelve (12) consecutive Month period of the Term.
|
19.2.2
|
Notice of Termination Event. Upon the occurrence of any Termination Event, the terminating Party may give notice thereof to the other Party, specifying in reasonable detail the nature of such Termination Event.
|
19.2.3
|
Timing of Elective Termination. Except with respect to the Termination Events described in Section 19.2.4, at any time after the expiry of a period of forty-five (45) Days after the terminating Party gave notice of a Termination Event pursuant to Section 19.2.2, unless the circumstances constituting the Termination Event have been fully remedied or have ceased to apply, the terminating Party may terminate this Agreement with immediate effect by giving notice of such termination to the other Party.
|
19.2.4
|
Certain Termination Events. Upon the occurrence of a Termination Event described in Section 19.2.1(b), (c), (d), (e), (f), (g), (h), (i), (j), (k) or (l), the terminating Party’s notice pursuant to Section 19.2.2 shall terminate this Agreement immediately.
|
19.3
|
Rights Accrued Prior to Termination
|
(a)
|
the rights and liabilities of the Parties accrued prior to or as a result of such termination; and
|
(b)
|
claims for breaches of Section 18 that occur during the three (3) year period after termination of this Agreement.
|
19.4
|
Liability in Connection with Certain Termination Rights
|
19.5
|
Final Reconciliation
|
19.6
|
Survival
|
20.
|
Dispute Resolution and Governing Law
|
20.1
|
Dispute Resolution
|
20.1.1
|
Arbitration. Any Dispute (other than a Dispute submitted to an Expert under Section 20.2.1) shall be exclusively and definitively resolved through final and binding arbitration, it being the intention of the Parties that this is a broad form arbitration agreement designed to encompass all possible claims and disputes under this Agreement.
|
20.1.2
|
Rules. The arbitration shall be conducted in accordance with the International Arbitration Rules of the American Arbitration Association (“AAA”) (as then in effect).
|
20.1.3
|
Number of Arbitrators. The arbitral tribunal shall consist of three (3) arbitrators, who shall endeavor to complete the final hearing in the arbitration within six (6) Months after the appointment of the last arbitrator.
|
20.1.4
|
Method of Appointment of the Arbitrators. If there are only two (2) parties to the Dispute, then each party to the Dispute shall appoint one (1) arbitrator within thirty (30) Days of the filing of the arbitration, and the two arbitrators so appointed shall select the presiding arbitrator within thirty (30) Days after the latter of the two arbitrators has been appointed by the parties to the
|
20.1.5
|
Consolidation. If multiple arbitration proceedings are initiated under this Agreement, any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder, one or more other LNG sale and purchase agreements entered into by Seller, one or more equity capital contribution agreements entered into by the Partnership, the Partnership Agreement, the General Partner LLC Agreement, any management and advisory services agreement entered into by the Partnership or the LNG Marketing Agreement, the subject matters of which are related by common questions of law or fact and which could result in conflicting awards or obligations, then any party to any such dispute may request prior to the appointment of the arbitrators for such multiple or subsequent disputes that all such proceedings be consolidated into a single arbitral proceeding. Such request shall be directed to the AAA, which shall consolidate appropriate proceedings into a single proceeding unless consolidation would result in undue delay for the arbitration of the disputes.
|
20.1.6
|
Place of Arbitration. Unless otherwise agreed by all parties to the Dispute, the place of arbitration shall be New York, New York.
|
20.1.7
|
Language. The arbitration proceedings shall be conducted in the English language, and the arbitrators shall be fluent in the English language.
|
20.1.8
|
Entry of Judgment. The award of the arbitral tribunal shall be final and binding. Judgment on the award of the arbitral tribunal may be entered and enforced by any court of competent jurisdiction. The Parties agree that service of process for any action to enforce an award may be accomplished according to the procedures of Section 24, as well as any other procedure authorized by law.
|
20.1.9
|
Notice. All notices required for any arbitration proceeding shall be deemed properly given if given in accordance with Section 24.
|
20.1.10
|
Qualifications and Conduct of the Arbitrators. All arbitrators shall be and remain at all times wholly impartial, and, once appointed, no arbitrator shall have any ex parte communications with any of the parties to the Dispute concerning the arbitration or the underlying Dispute other than communications directly concerning the selection of the presiding arbitrator, where applicable.
|
20.1.11
|
Interim Measures. Any party to the Dispute may apply to a court in New York, New York, for interim measures (a) prior to the constitution of the arbitral tribunal (and thereafter as necessary to enforce the arbitral tribunal’s rulings); or (b) in the absence of the jurisdiction of the arbitral tribunal to rule on interim measures in a given jurisdiction. The Parties agree that seeking and obtaining such interim measures shall not waive the right to arbitration. The Parties unconditionally and irrevocably submit to jurisdiction in New York, New York, for the limited purposes of an application for interim measures under this Section 20.1.11. The arbitrators (or in an emergency the presiding arbitrator acting alone in the event one or more of the other arbitrators is unable to be involved in a timely fashion) may grant interim measures including injunctions, attachments and conservation orders in appropriate circumstances, which measures may be immediately enforced by court order. Hearings on requests for interim measures may be held in person, by telephone, by video conference or by other means that permit the parties to the Dispute to present evidence and arguments.
|
20.1.12
|
Costs and Attorneys’ Fees. The arbitral tribunal is authorized to award costs of the arbitration in its award, including: (a) the fees and expenses of the arbitrators; (b) the costs of assistance required by the tribunal, including its experts; (c) the fees and expenses of the administrator; (d) the reasonable costs for legal representation of a successful party; and (e) any such costs incurred in connection with an application for interim or emergency relief and to allocate those costs between the parties to the Dispute. The costs of the arbitration proceedings, including attorneys’ fees, shall be borne in the manner determined by the arbitral tribunal.
|
20.1.13
|
Interest. The award shall include pre-award and post-award interest, as determined by the arbitral tribunal, from the date of any default or other
|
20.1.14
|
Currency of Award. The arbitral award shall be made and payable in USD, free of any Tax or other deduction.
|
20.1.15
|
Waiver of Challenge to Decision or Award. To the extent permitted by law, the Parties hereby waive any right to appeal from or challenge any arbitral decision or award, or to oppose enforcement of any such decision or award before a court or any Governmental Authority, except with respect to the limited grounds for modification or non-enforcement provided by any applicable arbitration statute or treaty.
|
20.1.16
|
Confidentiality. Any arbitration or Expert determination relating to a Dispute (including an arbitral award, a settlement resulting from an arbitral award, documents exchanged or produced during an arbitration or Expert proceeding, and memorials, briefs or other documents prepared for the arbitration or Expert proceeding) shall be Confidential Information subject to the confidentiality provisions of Section 18; provided, however, that breach of such confidentiality provisions shall not void any settlement, determination or award.
|
20.2
|
Expert Determination
|
20.2.1
|
General. In the event of any disagreement between the Parties regarding a measurement under Exhibit A hereto or any other Dispute which the Parties agree to submit to an Expert (in either case, a “Measurement Dispute”), the Parties hereby agree that such Measurement Dispute shall be resolved by an Expert selected as provided in this Section 20.2.1. The Expert is not an arbitrator of the Measurement Dispute and shall not be deemed to be acting in an arbitral capacity. The Party desiring an expert determination shall give the other Party notice of the request for such determination. If the Parties are unable to agree upon an Expert within ten (10) Days after receipt of the notice of request for an expert determination, then, upon the request of either of the Parties, the International Centre for Expertise of the International Chamber of Commerce (“ICC”) shall appoint such Expert and shall administer such expert determination through the ICC’s Rules for Expertise. The Expert shall be and remain at all times wholly impartial, and, once appointed, the Expert shall have no ex parte communications with either of
|
20.2.2
|
Final and Binding. The Expert’s decision shall be final and binding on the Parties unless challenged in an arbitration pursuant to Section 20.1 within thirty (30) Days of the date the Expert’s decision. If challenged, (a) the decision shall remain binding and be implemented unless and until finally replaced by an award of the arbitrators; (b) the decision shall be entitled to a rebuttable presumption of correctness; and (c) the Expert shall not be appointed in the arbitration as an arbitrator or as advisor to either Party without the written consent of both Parties.
|
20.2.3
|
Arbitration of Expert Determination. In the event that a Party requests expert determination for a Measurement Dispute which raises issues that require determination of other matters in addition to correct measurement under Exhibit A hereto, then either Party may elect to refer the entire Measurement Dispute for arbitration under Section 20.1.1. In such case, the arbitrators shall be competent to make any measurement determination that is part of a Dispute. An expert determination not referred to arbitration shall proceed and shall not be stayed during the pendency of an arbitration.
|
20.3
|
Governing Law
|
20.4
|
Immunity
|
20.4.1
|
Each Party, to the maximum extent permitted by Applicable Law, as to itself and its assets, hereby irrevocably, unconditionally, knowingly and intentionally waives any and all rights of immunity (sovereign or otherwise) and agrees not to claim, or assert any immunity with respect to the matters covered by this Agreement in any arbitration, Expert proceeding, or other action with respect to this Agreement, whether arising by statute or otherwise, that it may have or may subsequently acquire, including rights under the doctrines of sovereign immunity and act of state, immunity from legal process (including service of process or notice, pre-judgment or pre-award
|
20.4.2
|
Each Party hereby irrevocably, unconditionally, knowingly and intentionally:
|
(a)
|
agrees that the execution, delivery and performance by such Party of this Agreement constitute private and commercial acts rather than public or governmental acts; and
|
(b)
|
consents in respect of the enforcement of any judgment against such Party in any such proceedings in any jurisdiction and to the giving of any relief or the issue of any process in connection with such proceedings (including the making, enforcement or execution of any such judgment or any order arising out of any such judgment against or in respect of any property whatsoever irrespective of its use or intended use).
|
21.
|
Successors; Assignments
|
21.1
|
Successors
|
21.2
|
Assignment by Buyer
|
21.2.1
|
Early Assignments. Buyer may not novate or assign this Agreement to any Person other than an Affiliate of Buyer prior to the time that the Date of Substantial Completion for each of the Phase 1 Plants has occurred.
|
21.2.2
|
Prior Written Consent. At any time after the Date of Substantial Completion for each of the Phase 1 Plants has occurred, Buyer may novate or assign this Agreement in its entirety to another Person, for the remainder of the Term, upon the prior written consent of Seller (which consent shall not be unreasonably withheld or delayed), provided that:
|
(a)
|
Lenders have provided prior written consent to such novation or assignment;
|
(b)
|
such assignee or novatee assumes all of the obligations of Buyer under this Agreement commencing as of the date of the novation or assignment by execution of a copy of this Agreement in its own name (countersigned by Seller) or by execution of a binding assignment and assumption agreement which is enforceable by Seller; and
|
(c)
|
if required by Lenders, such assignee or novatee has an Acceptable Credit Rating or a Guaranty is provided to Seller prior to such novation or assignment.
|
21.2.3
|
Without Prior Consent to Affiliates. At any time, so long as Buyer is Original Buyer or an Affiliate of Original Buyer, Buyer may novate or assign this Agreement in its entirety, for the remainder of the Term, without Seller’s prior consent, to an Affiliate of Buyer, provided that:
|
(a)
|
Lenders have provided prior written consent to such novation or assignment;
|
(b)
|
such Affiliate assignee or novatee assumes all of the obligations of Buyer under this Agreement commencing as of the date of the novation or assignment by execution of a copy of this Agreement in its own name (countersigned by Seller) or by execution of a binding assignment and assumption agreement which is reasonably acceptable in form and substance to, and enforceable by, Seller; and
|
(c)
|
performance of this Agreement by Seller with such Affiliate assignee or novatee would comply with Applicable Laws and all relevant Approvals.
|
21.2.4
|
Further Obligations. Upon a novation or assignment in whole by Buyer in accordance with this Section 21.2, the assignor or novator shall be released from all further obligations, duties and liabilities under this Agreement, other than any obligations, duties and liabilities arising prior to the date of effectiveness of such novation or assignment
|
21.3
|
Assignment by Seller
|
21.4
|
Seller Financing
|
21.4.1
|
Lender Financing. Seller and its Affiliates shall have the right to obtain financing (including non-recourse or limited recourse financing) from Lenders. In connection with any financing or refinancing obtained by Seller or its Affiliates, Buyer shall, if so requested by Seller, deliver to Seller’s or its Affiliate’s Lenders or the agent acting on behalf of any such Lenders (“Lenders’ Agent”) certified copies of its corporate charter and by-laws, resolutions, incumbency certificates, financial statements and other financial information, and such other items or information upon the reasonable request by Lenders or Lenders’ Agent. Buyer shall, at Seller’s cost, also provide to the Lenders and Lenders’ Agent legal opinions in form and substance and from counsel reasonably acceptable to the Lenders.
|
21.4.2
|
Assignment as Security. Buyer further acknowledges and agrees that Seller may collaterally assign, transfer, or otherwise encumber, all or any of its rights, benefits and obligations under this Agreement to such Lenders or Lenders’ Agent as security for Seller’s obligations or its Affiliate’s obligations to Lenders. Accordingly, upon Seller’s request pursuant to a notice hereunder and at Seller’s cost, Buyer shall enter into, and if Buyer is Assignee Buyer, then Assignee Buyer shall cause any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder to enter into, one or more direct agreements or consent agreements (each, a “Direct Agreement”) pursuant to which Buyer or such guarantor, as applicable:
|
(a)
|
consents to the collateral assignment of Seller’s or its Affiliate’s rights and obligations under this Agreement or the guaranty, as applicable, to the Lenders or the Lenders’ Agent and the subsequent assignment and transfer of this Agreement or the guaranty, as applicable, to the Lenders’ Agent or other designee or nominee of the Lenders (including a purchaser at any foreclosure sale or any assignee or transferee under any instrument of assignment or transfer in lieu of foreclosure) following an event of default by Seller or its Affiliate under the financing documents entered into by Seller or its Affiliates with the Lenders;
|
(b)
|
provides representations and warranties that this Agreement or the guaranty, as applicable, is in full force and effect and has not been modified or amended and that there are no defaults existing under this Agreement or the guaranty, as applicable;
|
(c)
|
in the case of Buyer, provides representations and warranties regarding the corporate existence of Buyer, its authority to enter into and perform this Agreement and that this Agreement is the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, and in the case of guarantor, provides representations and warranties regarding the corporate existence of guarantor, its authority to enter into and perform the guaranty and that the guaranty is the legal, valid and binding obligation of guarantor, enforceable against guarantor in accordance with its terms;
|
(d)
|
agrees to make payments of amounts owed under this Agreement or the guaranty, as applicable, to one or more accounts as notified by Lenders’ Agent from time to time;
|
(e)
|
in the case of Buyer, agrees to give Lenders and Lenders’ Agent notice of and an opportunity to cure any default by Seller under this Agreement;
|
(f)
|
agrees to modify or clarify provisions of this Agreement or the guaranty, as applicable, as reasonably requested by the Lenders or the Lenders’ Agent; and
|
(g)
|
agrees to other undertakings that are normal and customary in financings or refinancings of the type entered into by Seller or its Affiliates and the Lenders.
|
21.4.3
|
Assignment or Novation to Lenders. Seller may novate or assign this Agreement in its entirety, for the remainder of the Term, without Buyer’s prior consent, to Seller’s Lenders or its Affiliate’s Lenders or the relevant Lenders’ Agent and to any other designee or nominee of such Lenders (including a purchaser at any foreclosure sale or any assignee or transferee under any instrument of assignment or transfer in lieu of foreclosure) following an event of default by Seller or its Affiliate under the financing documents entered into by Seller or its Affiliates with such Lenders, provided that each such transferee assumes all of the obligations of Seller under this Agreement commencing on the date of the assignment by execution of a copy of this Agreement in its own name (countersigned by Buyer) or by execution of a binding assignment and assumption agreement which is enforceable by Buyer. Upon a novation or assignment by Seller, in accordance with this Section 21.4.3, the assignor or novator shall be released from all further obligations, duties and liabilities under this Agreement, other than any obligations, duties and liabilities arising prior to the date of effectiveness of such novation or assignment.
|
22.
|
Contract Language
|
23.
|
Miscellaneous
|
23.1
|
Disclaimer of Agency
|
23.2
|
Entire Agreement
|
23.3
|
Third Party Beneficiaries
|
23.4
|
Amendments and Waiver
|
23.5
|
Exclusion
|
23.6
|
Further Assurances
|
23.7
|
Severability
|
24.
|
Notices
|
24.1
|
Form of Notice
|
24.1.1
|
Except where otherwise specifically provided in this Agreement, all notices, requests, consents, proposals, approvals and statements shall be in writing and in English, and if properly addressed to the recipient in the manner required by Sections 24.1.2 and 24.2, shall be deemed to have been properly given or delivered: (i) on the date of actual delivery when personally delivered to the intended recipient or when delivered to the intended recipient by a reputable courier delivery service; or (ii) on the date specified in Section 24.2.2, if by Electronic Transmission, provided that if such Electronic Transmission is directed after 5:00 p.m. (local time of the recipient) or on a day that is not a Business Day, then on the next succeeding Business Day after the date specified in Section 24.2.2.
|
24.1.2
|
A non-electronic document is deemed to be properly addressed, in each case, if to Buyer or Seller, to the address of such Person as set forth in this Section 24.1.2, or, in each case, to such other address or addresses as the addressee may have specified by written notice given to the other Party in the manner contemplated by Section 24.1.1.
|
24.2
|
Electronic Transmission
|
24.2.1
|
Without limiting the manner by which notice otherwise may be given effectively to Parties pursuant to Section 24.1, any notice under any provision of this Agreement shall be effective if given by a form of Electronic Transmission.
|
24.2.2
|
Notice given pursuant to Section 24.2.1 will be deemed delivered on the date on which it is directed to the electronic mail address set forth in Section 24.1.2, or to such other electronic mail address as the addressee previously may have specified by written notice given to the other Party in the manner contemplated by Section 24.1.1.
|
24.2.3
|
Buyer and Seller hereby consent to receive notices by Electronic Transmission at the electronic mail address set forth in Section 24.1.2.
|
25.
|
Trade Law Compliance
|
25.1
|
Trade Law Compliance
|
25.1.1
|
Each Party agrees to comply with the Export Authorizations, including incorporating into any resale contract for LNG sold under this Agreement the necessary conditions to ensure compliance with the Export Authorizations. Buyer shall promptly provide to Seller all information in order for Seller or any other Person acting as agent on behalf of Seller under an Export Authorization, to comply with the Export Authorizations, including information that identifies for each LNG cargo delivered under this Agreement the country (or countries) into which the LNG or Gas was actually delivered (i.e., use in combustion or other chemical reaction conversion process). Buyer commits to include in any resale contract for LNG sold under this Agreement the necessary conditions to ensure Seller is made aware of all such countries into which the LNG or Gas was actually delivered. If any Export Authorization requires conditions to be included in this Agreement beyond those that are already included herein, then, within fifteen (15) days following the issuance of the Export Authorization imposing such condition, the Parties shall discuss the appropriate changes to be made to this Agreement to comply with such Export Authorization and shall amend this Agreement accordingly. Buyer acknowledges and agrees that it will resell or transfer LNG purchased hereunder for delivery only to the countries identified in an applicable Export Authorization and/or to purchasers that have agreed in writing to limit their direct or indirect resale or transfer of such LNG to such countries. Buyer represents and warrants that the final delivery of LNG received pursuant to the terms of this Agreement are permitted and lawful under United States of America laws and policies, including Export Control and Sanctions Laws and the rules, regulations, orders, policies, and other determinations of the United States Department of Energy, the Office of Foreign Assets Control of the United States Department of the Treasury and the Federal Energy Regulatory Commission, and Buyer shall not take any action which would cause Seller to be in violation of United States of America laws and policies or any Export Authorization to be withdrawn, revoked, suspended or not renewed.
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25.1.2
|
Without limiting the foregoing, the following provisions are included in this Agreement in accordance with the requirements of the Export Authorizations, and Buyer shall include, and require any direct or indirect buyer of LNG sold hereunder for whom Seller acts as agent in connection with one or more Export Authorizations to include, the following provisions in any agreement or other contract for the sale or transfer of LNG exported pursuant to any Export Authorization:
|
(a)
|
Buyer acknowledges and agrees that it will resell or transfer LNG purchased hereunder for delivery only to countries identified in Ordering Paragraph B of DOE/FE Order No. 3968, issued February 28, 2017, in FE Docket No. 16-144-LNG, and/or to purchasers that have agreed in writing to limit their direct or indirect resale or transfer of such LNG to such countries. Buyer further commits to cause a report to be provided to Driftwood LNG LLC that identifies the country (or countries) into which the LNG or natural gas was actually delivered and/or received for end use, and to include in any resale contract for such LNG the necessary conditions to ensure that Driftwood LNG LLC is made aware of all such countries.
|
(b)
|
Buyer acknowledges and agrees that it will resell or transfer LNG, purchased hereunder for delivery only to countries identified in Ordering Paragraph F of DOE/FE Order No. 4373, issued May 2, 2019, in FE Docket No. 16-144-LNG, and/or to purchasers that have agreed in writing to limit their direct or indirect resale or transfer of such natural gas or LNG to such countries. Buyer further commits to cause a report to be provided to Driftwood LNG LLC that identifies the country (or countries) into which the LNG was actually delivered, and to include in any resale contract for such LNG the necessary conditions to ensure that Driftwood LNG LLC is made aware of all such actual destination countries.
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25.2
|
Compliance with Law
|
25.3
|
Commercial Activities
|
25.4
|
Records
|
25.5
|
Representation and Warranty
|
25.5.1
|
in the performance of this Agreement and the activities contemplated herein, neither such Party, nor any of its officers, directors, employees, agents or other representatives have taken any action, or omitted to take any action, which would (i) violate any applicable Anti-Corruption Law, any applicable Export Control and Sanctions Laws or any other Applicable Law applicable to such Party, or (ii) cause the other Party to be in violation of any Anti-Corruption Law or Export Control and Sanctions Law applicable to the other Party; and
|
25.5.2
|
without limiting the foregoing, neither such Party nor any of its directors, managers, officers, employees, agents, contractors or Affiliates has paid any fees, commissions, or rebates to any employee, officer, or agent of the other Party or any of its Affiliates or has provided or caused to be provided to any of them any gifts or entertainment of significant cost or value in connection with this Agreement in order to influence or induce any actions or inactions in connection with the commercial activities of the other Party hereunder.
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25.6
|
Buyer Indemnity
|
|
[Signature Page to LNG Sale and Purchase Agreement]
|
QBOG
|
= the quantity of boil-off gas in MJ consumed by the LNG Tanker during loading, calculated as follows:
|
V2
|
= the quantity of Gas consumed by the LNG Tanker during loading (as calculated pursuant to the below formula), stated in kg and rounded to the nearest kg; and
|
55.575
|
= the heating value of the vapor (assumed to be 100% of methane) stated in MJ/kg at standard reference conditions (15˚C, 1.01325 bar) for both combustion & metering references (tables below).
|
V2
|
= the quantity of Gas consumed by the LNG Tanker during loading, stated in kg;
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Vf
|
= the reading of Natural Gas Consumption Meter on board the LNG Tanker after the completion of loading, stated in kg; and
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Vi
|
= the reading of Natural Gas Consumption Meter on board the LNG Tanker before the start of loading, stated in kg.
|
Molecular
Mass of
Mixture
|
-150°C
|
-154°C
|
-158°C
|
-160°C
|
-162°C
|
-166°C
|
-170°C
|
16.0
|
-0.000039
|
-0.000031
|
-0.000024
|
-0.000021
|
-0.000017
|
-0.000012
|
-0.000009
|
16.5
|
0.000315
|
0.000269
|
0.000196
|
0.000178
|
0.000162
|
0.000131
|
0.000101
|
17.0
|
0.000669
|
0.000568
|
0.000416
|
0.000377
|
0.000341
|
0.000274
|
0.000210
|
17.2
|
0.000745
|
0.000630
|
0.000478
|
0.000436
|
0.000397
|
0.000318
|
0.000246
|
17.4
|
0.000821
|
0.000692
|
0.000540
|
0.000495
|
0.000452
|
0.000362
|
0.000282
|
17.6
|
0.000897
|
0.000754
|
0.000602
|
0.000554
|
0.000508
|
0.000406
|
0.000318
|
17.8
|
0.000973
|
0.000816
|
0.000664
|
0.000613
|
0.000564
|
0.000449
|
0.000354
|
18.0
|
0.001049
|
0.000878
|
0.000726
|
0.000672
|
0.000620
|
0.000493
|
0.000390
|
18.2
|
0.001116
|
0.000939
|
0.000772
|
0.000714
|
0.000658
|
0.000530
|
0.000425
|
18.4
|
0.001184
|
0.001000
|
0.000819
|
0.000756
|
0.000696
|
0.000567
|
0.000460
|
18.6
|
0.001252
|
0.001061
|
0.000865
|
0.000799
|
0.000735
|
0.000605
|
0.000496
|
18.8
|
0.001320
|
0.001121
|
0.000912
|
0.000841
|
0.000773
|
0.000642
|
0.000531
|
19.0
|
0.001388
|
0.001182
|
0.000958
|
0.000883
|
0.000811
|
0.000679
|
0.000566
|
19.2
|
0.001434
|
0.001222
|
0.000998
|
0.000920
|
0.000844
|
0.000708
|
0.000594
|
19.4
|
0.001480
|
0.001262
|
0.001038
|
0.000956
|
0.000876
|
0.000737
|
0.000623
|
19.6
|
0.001526
|
0.001302
|
0.001078
|
0.000992
|
0.000908
|
0.000765
|
0.000652
|
19.8
|
0.001573
|
0.001342
|
0.001118
|
0.001029
|
0.000941
|
0.000794
|
0.000681
|
20.0
|
0.001619
|
0.001382
|
0.001158
|
0.001065
|
0.000973
|
0.000823
|
0.000709
|
25.0
|
0.002734
|
0.002374
|
0.002014
|
0.001893
|
0.001777
|
0.001562
|
0.001383
|
30.0
|
0.003723
|
0.003230
|
0.002806
|
0.002631
|
0.002459
|
0.002172
|
0.001934
|
TTUK:
TELLURIAN TRADING UK LTD
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By:
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Name:
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Title:
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Driftwood LNG:
DRIFTWOOD LNG LLC
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By:
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Name:
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Title:
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Page No.
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1.
|
DEFINITIONS AND INTERPRETATION
|
1.1.
|
Definitions
|
AAA:
|
has the meaning specified in Section 15.1.2.
|
Adverse Weather Conditions:
|
means weather (including fog) and sea conditions that are sufficiently severe (a) to prevent an LNG Tanker from proceeding to berth, loading, discharging or departing from berth in accordance with an order of a Pilot or the weather and navigational restrictions sea standards prescribed in the published regulations of the applicable maritime agency Authority having jurisdiction at the Loading Port or Unloading Port, as applicable; or (b) to cause an actual determination by the master of an LNG Tanker that it is unsafe for the LNG Tanker to proceed to berth, load, discharge, or depart from berth.
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Affiliate:
|
means, with respect to a Party, any Person that is controlled by, under common control with, or controlling the Party; a Person will be deemed to have control of another if (directly or indirectly) it owns or has the right to cast votes of greater than fifty percent (50%) of the voting shares or other ownership interests of the other entity.
|
Agreed Interest Rate:
|
means a rate of interest equal to LIBOR plus two (2) percentage points, which rate of interest shall be compounded on a monthly basis; provided, however, that if this rate is contrary to any usury Law, the rate of interest to be charged will be the maximum rate permitted by such Law.
|
Agreement:
|
means, separately (a) this MSA, and (b) each Confirmation Memorandum.
|
Allowed Laytime:
|
has the meaning specified in Clause B.8.1 (in respect of FOB Sales) and Clause C.8.1 (in respect of Ex-Ship Sales). If no such time period is specified in the Confirmation Memorandum, the Allowed Laytime shall be twenty-four (24) hours or, thirty-six (36) hours if the expected volume of LNG cargo nominated in the Transaction to be delivered to the Buyer is 150,000 cubic meter or more.
|
Arrival Period:
|
means the period of time during which an LNG Tanker is scheduled to arrive at the PBS, as specified in the Confirmation Memorandum.
|
Banking Day:
|
means any Day in the relevant country of the Party with a payment obligation, other than a national holiday or any other Day on which banks are closed for business. For purposes of this definition, a Party’s relevant country is the country in which that Party’s bank is located, as specified in the Confirmation Memorandum.
|
Boil-Off Rate:
|
has the meaning specified in the Confirmation Memorandum.
|
BTU or Btu:
|
means a British thermal unit, defined as the amount of heat equal to 1,055.06 joules.
|
Buyer:
|
means the Person identified as Buyer in a particular Confirmation Memorandum, provided that such Person is also a Party to this MSA or an Affiliate of a Party to this MSA.
|
Buyer Connecting Pipeline:
|
means any pipeline facility connecting any of the facilities described in clause (a) of the definition of “Buyer’s Facilities” to a high pressure national or regional pipeline system for the transportation of Natural Gas; or, if no such pipeline system exists, then the pipeline connecting any of the facilities described in clause (a) of the definition of “Buyer’s Facilities” to Buyer’s primary customer(s).
|
Buyer Control Entities:
|
means collectively, the following Persons: (a) any owner of Buyer’s Facilities; (b) Buyer’s Operator; (c) any Buyer’s Transporter; (d) any Affiliate of Buyer; and (e) any director, officer, or employee of one or more of the foregoing Persons.
|
Buyer’s Country:
|
means the country in which the Buyer’s Facilities are located.
|
Buyer’s Facilities:
|
means (a) the facilities located either offshore or onshore in the vicinity of the Unloading Port (including port and marine facilities and any floating storage and regasification storage unit (FSRU) or floating storage unit (FSU) used by Buyer to receive LNG and store such LNG) that are used by Buyer for the fulfillment of its obligations pursuant to an Agreement and that are capable of: (i) berthing an LNG Tanker; (ii) unloading, receiving, storing, treating (if necessary), and regasifying LNG; and (iii) receiving, processing, and delivering Natural Gas and all facilities ancillary to any of the foregoing; and (b) any Buyer Connecting Pipeline.
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Buyer Group:
|
means Buyer and its Affiliates, their respective directors, officers, shareholders, and employees, and the successors and assigns of each of the foregoing.
|
Buyer’s Operator:
|
means any operator of Buyer’s Facilities.
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Buyer Shortfall Quantity:
|
has the meaning specified in Section 5.2.1.
|
Cargo Tolerance:
|
has the meaning specified in the Confirmation Memorandum.
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Claims:
|
means all claims, demands, legal proceedings, or actions that may exist, arise, or be threatened currently or in the future at any time following the Execution Date, whether or not of a type contemplated by any Party and whether based on federal, state, local, statutory or common law or other applicable Law.
|
Confidential Information:
|
has the meaning specified in Section 18.1.
|
Confirm Date:
|
means the date so specified in the Confirmation Memorandum.
|
Confirmation Memorandum:
|
means each document executed by a Seller and a Buyer substantially in the form contained in Exhibit A and incorporating the provisions of this MSA (as such provisions may be amended, deleted, or supplemented by such Confirmation Memorandum) to record the terms and conditions of a particular sale and purchase of LNG.
|
Consequential Loss:
|
means any loss, liability, damage, cost, judgment, settlement, and expense (whether or not resulting from Claims), including interest, penalties, reasonable legal costs, and attorneys’ and accountants’ fees and expenses, regardless of cause, which is not immediately and directly caused by the relevant act or omission. By way of illustration, and subject to the satisfaction of the standard set forth in the preceding sentence, Consequential Loss will include the following:
|
|
(a) indirect loss arising out of any delay, reduction, or loss of ability to produce, store, transport, process, deliver, purchase, sell, or dispose of LNG, Natural Gas, or any other hydrocarbons;
|
|
(b) indirect loss associated with business interruption or increased cost of working during business interruption, including the incremental cost of overhead expenses incurred;
|
|
(c) indirect, incidental, special, consequential, or punitive damages and penalties of any kind;
|
|
(d) loss or deferment of bargain, contract, expectation, revenue, profit, use, or opportunity; and
|
|
(e) a Claim made or brought by a Third Party for a loss which, had it been suffered by a Party, would have been a Consequential Loss.
|
Contract Price:
|
has the meaning specified in Section 7.
|
Cover Purchase:
|
has the meaning specified in Section 5.3.2(a).
|
Cubic Meter or m3:
|
means the unit of volume equal to a cube with a length of one meter on each edge.
|
Day:
|
means a period of twenty-four (24) consecutive hours beginning at 00:00 hours (a) in the time zone in which Buyer’s Unloading Port is located for obligations related to Buyer’s Facilities; (b) in the time zone in which the Loading Port is located for obligations relating to the Loading Port; or (c) in the time zone relevant to the particular location in any other case where the context so requires.
|
Delivery Point:
|
means: (a) in respect of an Ex-Ship Sale, the point at the Unloading Port at which the flange coupling of the LNG receiving line of Buyer’s Facilities connects to the flange coupling of the LNG discharging line of the LNG Tanker; and (b) in respect of an FOB Sale, the point at the Loading Port at which the flange coupling of the LNG loading line of Seller’s Facilities connects to the flange coupling of the LNG loading line of the LNG Tanker.
|
Demurrage:
|
has the meaning specified in Clause B.10.1.1 (in respect of FOB Sales) or Clause C.10.1.1 (in respect of Ex-Ship Sales).
|
Departure Notice:
|
means the information required to be provided pursuant to Clause B.6.1 (in respect of FOB Sales) or Clause C.6.1 (in respect of Ex-Ship Sales).
|
Dispute:
|
means any dispute or difference of whatsoever nature arising under, out of, in connection with or in relation (in any manner whatsoever) to an Agreement or the subject matter of an Agreement, including (a) any dispute or difference concerning the initial or continuing existence of an Agreement or any provision of it, or as to whether this Agreement or any provision of it is invalid, illegal or unenforceable (whether initially or otherwise); or (b) any dispute or claim which is ancillary or connected, in each case in any manner whatsoever, to the foregoing.
|
Disputed Amount:
|
means any amount in any invoice that a Party asserts it has no obligation to pay.
|
Estimated Time of Arrival or ETA:
|
means the estimated time of arrival of an LNG Tanker at the PBS.
|
Ex Ship Sale:
|
means a sale where the title and risk of loss of LNG transfers from the Seller to the Buyer at a Delivery Point at the Unloading Port and the Seller is responsible for transporting and insuring LNG from the Loading Port to the Unloading Port.
|
Execution Date:
|
means the date first written above.
|
Expected Delivery Quantity:
|
means the quantity of LNG contained in an LNG Cargo, expressed in MMBtu, that Buyer and Seller expect Seller to deliver to Buyer, as specified in the Confirmation Memorandum.
|
Expected LNG Quality:
|
has the meaning specified in Clause C.6.1.6.
|
Expert:
|
means a Person agreed upon or appointed in accordance with Section 15.2.1.
|
Export Authorization:
|
means the FTA Export Authorization(s) and Non-FTA Export Authorization(s) required to permit the export of an LNG Cargo.
|
Export Control and Sanctions Laws:
|
means the export control and sanctions laws and regulations of the United States of America, including the Export Administration Regulations, 15 C.F.R. Parts 730 et seq., and economic sanctions administered by the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC), 31 C.F.R. Part 500 et seq.
|
FOB Sale:
|
means a sale where the title and risk of loss of LNG transfers from the Seller to the Buyer at a Delivery Point at the Loading Port and the Buyer is responsible for transporting and insuring LNG from the Loading Port to the Unloading Port.
|
Force Majeure:
|
has the meaning specified in Section 13.1.2.
|
FTA Export Authorization:
|
means an order from the Office of Fossil Energy of the U.S. Department of Energy granting to Seller, its direct or indirect LNG supplier or any other Person acting as agent on behalf of Seller or such LNG supplier the authorization to export LNG sold and delivered pursuant to an Agreement (or pursuant to an LNG supply or tolling agreement with such LNG supplier) by vessel from an LNG liquefaction facility in the United States to countries that have entered into a free trade agreement with the United States requiring the national treatment for trade in natural gas for a specific term, as the same may be supplemented, amended, modified, changed, superseded or replaced from time to time;
|
LNG Tanker:
|
means an ocean-going vessel meeting the requirements of Clause B.3 (in respect of FOB Sales) or Clause C.3 (in respect of Ex-Ship Sales) and suitable for transporting LNG, which vessel is either identified in the applicable Confirmation Memorandum and approved in accordance with Clause B.1.2 or Clause C.1.2, as applicable, or, alternatively, approved as a Substitute LNG Tanker in accordance with Clause B.1.3 or Clause C.1.3, as applicable.
|
Loading Country:
|
means the country in which Seller’s Facilities are located.
|
Loading Port:
|
means the port identified in the Confirmation Memorandum as the port at which Seller’s Facilities are located.
|
Loss:
|
means all losses, liabilities, damages, costs, judgments, settlements, and expenses (whether or not resulting from Claims by Third Parties), including interest, penalties, reasonable legal costs, and attorneys’ and accountants’ fees and expenses, but excluding any Consequential Loss unless specifically provided otherwise in the Agreement.
|
Marine Incident:
|
means any casualty or accident, or series of casualties or accidents having the same origin, including a collision, allision, release, discharge, or grounding, that occur during the operation of an LNG Tanker or that result from, or that is related to, the use of an LNG Tanker.
|
Marine Services:
|
means the tugs, Pilots, harbor, line-handling, mooring, and other support services required for LNG Tankers to: (a) in respect of an Ex-Ship Sale, berth and unload at, and depart from, Buyer’s Facilities; or (b) in respect of an FOB Sale, berth and load at, and depart from, Seller’s Facilities, in either case including such other vessels and services as may be required under applicable Law.
|
Marine Terminal Liability Regime:
|
means an agreement to be entered into between the owner of Buyer’s Facilities or Buyer’s Operator (in respect of an Ex-Ship Sale), or the owner of Seller’s Facilities or Seller’s Operator (in respect of an FOB Sale), or, in either case, an applicable Governmental Authority, and the owner of an LNG Tanker (or the operator or master of such LNG Tanker on behalf of the owner) in respect of the delivery of LNG pursuant to an Agreement, which sets forth the liability and provides remedies between such Persons for Claims and Losses arising from the performance by such Persons of their duties in connection with such Agreement. The Marine Terminal Liability Regime includes the Marine Terminal Manual, any conditions of use or other regulatory instruments (whether as agreed by the master of an LNG Tanker or mandatorily applied, including those applicable by Law), or any portion thereof that contain such liability provisions.
|
Marine Terminal Manual:
|
means the manual issued by the owner of Buyer’s Facilities or Buyer’s Operator (in respect of an Ex-Ship Sale); or the owner of Seller’s Facilities or Seller’s Operator (in respect of an FOB Sale) (in consultation with applicable Governmental Authority where required) that governs the requirements and procedures for operations to be followed by such facilities and all LNG tankers using such facilities and: (a) (in respect of an Ex-Ship Sale) the Unloading Port, including procedures for the arrival, berthing, and unloading at, and departure of LNG Tankers from, Buyer’s Facilities and the Unloading Port; or (b) (in respect of an FOB Sale) the Loading Port, including procedures for the arrival, berthing, and loading at, and departure of LNG Tankers from, Seller’s Facilities and the Loading Port, including applicable safety and emergency response procedures.
|
Master LNG Sale and Purchase
|
|
Agreement or MSA:
|
means the provisions of Section 1 through 22 of this instrument, together with the attached Exhibits, but not including an executed Confirmation Memorandum.
|
Measurement Dispute:
|
has the meaning specified in Section 15.2.1.
|
Mitigation Sale:
|
has the meaning specified in Section 5.2.2(a).
|
MMBtu:
|
means one million (1,000,000) Btu.
|
Natural Gas:
|
means any combustible hydrocarbon or mixture of hydrocarbons consisting primarily of methane and including other combustible and non-combustible gases in a gaseous state.
|
Non-FTA Export Authorization:
|
means an order from the Office of Fossil Energy of the U.S. Department of Energy granting to Seller, its direct or indirect LNG supplier or any other Person acting as agent on behalf of Seller or such LNG supplier the authorization to export LNG sold and delivered pursuant to an Agreement (or pursuant to an LNG supply or tolling agreement with such LNG supplier) by vessel from an LNG liquefaction facility in the United States to countries that have not entered into a free trade agreement with the United States requiring the national treatment for trade in natural gas, which currently has or in the future develops the capacity to import LNG, and with which trade is not prohibited by United States law or policy, for a specific term, as the same may be supplemented, amended, modified, changed, superseded or replaced from time to time;
|
Notice of Readiness or NOR:
|
has the meaning specified in Clause B.7.1 (in respect of FOB Sales) or Clause C.7.1 (in respect of Ex-Ship Sales).
|
Off-Spec LNG:
|
has the meaning specified in Section 6.1.
|
Oil Companies International Marine
Forum or OCIMF:
|
means that voluntary association of oil companies having an interest in the shipment and terminalling of crude oil and oil products, the promotion of safety, and the prevention of pollution from tankers and at oil terminals.
|
Party:
|
means (a) with respect to this MSA, the Persons identified in first paragraph of this MSA, and (b) with respect to a Confirmation Memorandum (and this MSA as incorporated therein), each of Buyer and Seller identified in the Confirmation Memorandum.
|
Payor:
|
has the meaning specified in Section 10.3.1.
|
PBS:
|
means the customary Pilot boarding station at the Unloading Port (in respect of an Ex-Ship Sale), or at the Loading Port (in respect of an FOB Sale) where the Pilot boards the LNG Tanker, as determined by the applicable Governmental Authority or other Person with authority to regulate transit and berthing of vessels at such port.
|
Person:
|
means any natural person, corporation, company, partnership (general or limited), limited liability company, Governmental Authority, or other entity or association.
|
Pilot:
|
means any Person engaged by Transporter to come on board an LNG Tanker to assist the master in pilotage, mooring and unmooring of such LNG Tanker.
|
Port Charges:
|
means the fees, imposts, or charges imposed for use of any port or marine facility, including harbor dues, tonnage dues, wharfage charges, charges related to immigration and customs clearance for the LNG Tanker and its crew, and harbor master dues, all as established by a Governmental Authority or Person having jurisdiction over an LNG Tanker at the Loading Port or the Unloading Port, as applicable.
|
Pricing Month:
|
has the meaning specified in the Confirmation Memorandum.
|
Protection and Indemnity Club or
|
|
P&I Club:
|
means an independent mutual insurance association that is a member of the International Group of P&I Clubs and provides liability protection to ship-owners and charterers against third-party liabilities encountered in their commercial operations.
|
Provisional Invoice:
|
has the meaning specified in Section 8.4.1.
|
Qualifying Institution
|
a first class international bank having a senior unsecured long-term debt rating of at least “A’ from Standard & Poor’s and “A2” from Moody’s and is acceptable to Seller;
|
Qualifying Rating
|
a senior unsecured long-term debt rating or issuer rating of at least “BBB-” by Standard and Poor’s and “Baa3” by Moody’s;
|
Quantity Delivered:
|
means the quantity of LNG, expressed in MMBtu, (in respect of an Ex-Ship Sale) unloaded from or (in respect of an FOB Sale) loaded onto an LNG Tanker at the Delivery Point, less any Heel provided for in a Confirmation Memorandum.
|
Ready to Discharge:
|
has the meaning specified in Clause C.6.2.8.
|
Ready to Load:
|
has the meaning specified in Clause B.6.2.8.
|
Reasonable and Prudent Operator:
|
means a Person seeking in good faith to perform its contractual obligations and comply with applicable Laws while exercising the degree of skill, diligence, prudence, and foresight that would reasonably and ordinarily be expected from a skilled and experienced operator complying with applicable Laws and engaging in the same type of undertaking under the same or similar circumstances and conditions.
|
Recipient:
|
has the meaning specified in Section 10.3.1.
|
Rules:
|
has the meaning specified in Section 15.1.2.
|
Seller:
|
means the Person identified as Seller in a particular Confirmation Memorandum, provided that such Person is also a Party to this MSA or an Affiliate of a Party to this MSA.
|
Seller Connecting Pipeline:
|
means any pipeline facility interconnecting with any of the facilities described in clause (a) of the definition of “Seller’s Facilities” for the transportation of Natural Gas to Seller’s Facilities.
|
Seller Control Entities:
|
means collectively, the following Persons: (a) any supplier of Natural Gas to Seller; (b) any owner of Seller’s Facilities; (c) Seller’s Operator; (d) any Seller’s Transporter; (e) any Affiliate of Seller; and (f) any director, officer, or employee of one or more of the foregoing Persons.
|
Seller’s Country:
|
means the country in which the Seller’s Facilities are located.
|
Seller’s Facilities:
|
means (a) the liquefaction trains and associated liquefaction facilities, Natural Gas inlet facilities, Natural Gas pre-treatment and processing facilities, LNG storage and loading facilities, berthing and marine facilities, and other facilities at the Loading Port, including LNG storage tanks, infrastructure, and utilities, together with their associated facilities, whether or not owned or operated by the Seller, at which the LNG to be sold pursuant to an Agreement is produced, stored, transported, and loaded; and (b) any Seller Connecting Pipeline.
|
Seller Group:
|
means Seller, its Affiliates, and their respective directors, officers, shareholders, and employees, and the successors, and assigns of each of the foregoing.
|
Seller’s Operator:
|
means any operator of Seller’s Facilities.
|
Seller Shortfall Quantity:
|
has the meaning specified in Section 5.3.1.
|
Senior Executives:
|
means those Persons having decision-making authority for a Party with respect to any material decisions required by that Party pursuant to an Agreement.
|
Ship/Shore Safety Checklist:
|
means the ship/shore safety checklist (as approved by the IMO) for use by ship and terminal operators, including guidance on completion procedures and a model loading/unloading plan.
|
Society of International Gas Tanker
and Terminal Operators or SIGTTO:
|
means the Society of International Gas Tanker and Terminal Operators, a non-profit company formed to promote high operating standards and best practices in gas tankers and terminals throughout the world, and which provides technical advice and support to its members in technical and operational matters.
|
Standard Cubic Foot or SCF:
|
means for Natural Gas, the quantity of anhydrous gas that occupies one (1) cubic foot of space at a temperature of sixty (60) degrees Fahrenheit and a pressure of 14.696 pounds per square inch absolute.
|
Substitute LNG Tanker:
|
has the meaning specified in Clause B.1.3 (in respect of FOB Sales) or Clause C.1.3 (in respect of Ex-Ship Sales).
|
Taxes:
|
means any tax, levy, rate, duty, fee, or other charge (other than any Port Charges) imposed directly or indirectly on a Party, its assets, income, dividends, or profits (without regard to the manner of collection or assessment, whether by withholding or otherwise) by any government, Governmental Authority, or other body authorized by Law to impose such tax, levy, rate, duty, fee, or other charge. Without limiting the generality of the foregoing, Taxes include income taxes, gross receipts taxes, goods and services taxes, capital gains taxes, property taxes, excise taxes, value-added taxes, carbon tax or any tax related to environmental effects of exploring for, producing, processing, transporting, storing, supplying, selling, or consuming LNG sold pursuant to an applicable Confirmation Memorandum. Taxes also include penalties and interest that may be imposed for underpaying, failing to report, or late filing of returns or reports for any Taxes.
|
Third Party:
|
means any Person other than a Party to this MSA and, for a Confirmation Memorandum, any Person other than Seller and Buyer.
|
Transporter:
|
means any Person who is a registered owner or a disponent owner of an LNG Tanker, and any Person contracting to provide or operate an LNG Tanker.
|
Unloading Port:
|
means the port identified in a Confirmation Memorandum where Buyer’s Facilities are located.
|
U.S. or United States:
|
means the United State of America.
|
USD or US$:
|
means the legal currency of the United States.
|
Used Laytime:
|
has the meaning specified in Clause B.8.2 (in respect of FOB Sales) or Clause C.8.2 (in respect of Ex-Ship Sales).
|
1.2.
|
Interpretation
|
1.2.1.
|
Reference to the singular includes a reference to the plural and vice versa.
|
1.2.2.
|
Reference to a gender includes a reference to both genders.
|
1.2.3.
|
The words “include” and “including” shall not be construed as being by way of limitation. The term “will” has the same meaning as “shall” and thus imposes an obligation.
|
1.2.4.
|
References in this Agreement to a Section are to a Section of the MSA (excluding Exhibits). References in this Agreement to an Exhibit are to an Exhibit of this MSA, and references in this Agreement to a Clause are to a Clause of an Exhibit of this MSA (i.e., Clause B.1.1 means Clause 1.1 of Exhibit B). The table of contents and headings to Sections, Exhibits and
|
1.2.5.
|
Unless otherwise provided in an Agreement, all references to time are: (a) in the case of an Ex-Ship Sale, to local time at Buyer’s Facilities; and (b) in the case of an FOB Sale, to local time at Seller’s Facilities, and references to dates and periods of time are determined by reference to the Gregorian calendar.
|
1.2.6.
|
References to a Party include the successors and permitted assigns of that Party.
|
1.2.7.
|
References to a statute, ordinance, or other Law include all regulations and other instruments thereunder and all consolidations, amendments, re-enactments, or replacements thereof.
|
1.2.8.
|
References to this Agreement and to agreements and contractual instruments will be deemed to include all exhibits, schedules, appendices, annexes, and other attachments thereto and all subsequent amendments and other modifications to such instruments, to the extent such amendments and other modifications are not prohibited by the terms of this Agreement.
|
1.3.
|
Rounding
|
2.
|
SCOPE
|
2.1.
|
Requirement for a Confirmation Memorandum
|
2.1.1.
|
Notwithstanding any provision of this MSA, neither Party shall be under any obligation, express or implied, to sell or purchase LNG, and Sections 4 through 11 and Exhibits B and C shall have no effect unless and until the Parties execute a Confirmation Memorandum for the sale and purchase of LNG.
|
2.1.2.
|
This MSA does not and will not impose any obligation, express or implied, on any Party to negotiate, agree, or execute any Confirmation Memorandum.
|
2.1.3.
|
If any conflict exists between the terms and conditions of this MSA and a particular Confirmation Memorandum, then the terms and conditions of the Confirmation Memorandum shall take precedence.
|
2.2.
|
FOB Sales and Ex-Ship Sales
|
3.
|
TERM
|
3.1.
|
Term of MSA
|
3.2.
|
Term of Each Confirmation Memorandum
|
3.3.
|
Certain Rights and Remedies
|
4.
|
SALE AND PURCHASE
|
4.1.
|
Seller’s and Buyer’s Obligation to Sell and Purchase
|
4.2.
|
Title and Risk of Loss
|
4.3.
|
Source of LNG
|
5.
|
QUANTITIES
|
5.1.
|
Quantities
|
5.2.
|
Buyer’s Liability for Shortfall
|
5.2.1.
|
With respect to each LNG Cargo to be delivered pursuant to a Confirmation Memorandum, if Buyer does not take delivery of any quantity of LNG made available by Seller in accordance with this Agreement, up to the Expected Delivery Quantity for any reason other than:
|
(a)
|
Force Majeure affecting Buyer;
|
(b)
|
failure of Seller to make available such quantity for any reason attributable to Seller, including for Force Majeure affecting Seller or Seller’s Facilities, but excluding quantities that Seller is excused from making available due to Buyer’s breach of an Agreement; or
|
(c)
|
Buyer refusing to take delivery of all or part of any LNG Cargo because it does not comply with the LNG Specifications in accordance with Section 6.3;
|
(d)
|
In the event Buyer will fail to take delivery or fails to take delivery of all or part of an LNG Cargo pursuant to a relevant Confirmation, the Parties shall use reasonable efforts to reschedule delivery of such Cargo. There shall be no reasonable efforts obligation to reschedule
|
5.2.2.
|
With respect to any Buyer Shortfall Quantity:
|
(a)
|
Seller shall use reasonable efforts to mitigate its Losses resulting from Buyer’s failure to take such Buyer Shortfall Quantity by reselling such Buyer Shortfall Quantity to Third Parties (each such sale a “Mitigation Sale”); provided, however, that any sale of a quantity of Buyer Shortfall Quantity by Seller to Third Parties that Seller was already obligated to make at the earlier to occur of (i) Buyer’s default, determined pursuant to this Section 5.2; or (ii) any Buyer’s notice to Seller that it will not take such LNG, is not a Mitigation Sale;
|
(b)
|
Buyer shall pay to Seller an amount equal to (i) the Contract Price multiplied by (ii) the Buyer Shortfall Quantity; and
|
(c)
|
Seller shall credit Buyer with (i) the proceeds from any Mitigation Sale, plus (ii) reasonable and verifiable savings obtained by Seller, including savings related to transportation and Third Party costs avoided, as a result of the Mitigation Sale as opposed to the sale to Buyer, less (iii) reasonable, verifiable, incremental costs incurred by Seller (acting as a Reasonable and Prudent Operator) as a result of such Mitigation Sale (including costs related to the transporting, marketing, selling, and delivering such LNG Cargo);
|
(d)
|
Buyer is not entitled to a credit, rebate, or offset of any amount in excess of the amount owed by Buyer pursuant to Section 5.2.2(b).
|
5.2.3.
|
Any payment that Buyer makes under this Section 5.2 shall not be treated as a Consequential Loss.
|
5.3.
|
Seller’s Liability for Shortfall
|
5.3.1.
|
With respect to each LNG Cargo to be delivered pursuant to a Confirmation Memorandum, if Seller does not make available any quantity of LNG in accordance with this Agreement at least equal to the Expected Delivery Quantity less the Cargo Tolerance, for any reason other than:
|
(a)
|
Force Majeure affecting Seller; or
|
(b)
|
failure of Buyer to take delivery of such quantity for any reason attributable to Buyer, including for Force Majeure affecting Buyer or (in the case of an Ex-Ship Sale) Buyer’s Facilities, but excluding quantities that Buyer is excused from taking due Seller’s breach of the Agreement;
|
(c)
|
In the event Seller will fail deliver or fails to deliver of all or part of an LNG Cargo pursuant to a relevant Confirmation, the Parties shall use reasonable efforts to reschedule delivery of such Cargo. There shall be no reasonable efforts obligation to reschedule in case of willful failure. Such Cargo shall only be rescheduled if the Parties mutually agree on scheduling of an alternate delivery date and cost allocation thereof. In the event the Parties are unable to reschedule delivery of such LNG Cargo within thirty-six (36) hours after the end of the Arrival Period, then it shall be considered as Seller’s failure to deliver of the amount by which the scheduled quantity exceeds the quantity delivered.
|
5.3.2.
|
With respect to any Seller Shortfall Quantity:
|
(a)
|
Buyer shall use reasonable efforts to mitigate its Losses resulting from Seller’s failure to make such Seller Shortfall Quality available by purchasing an equivalent quantity of Natural Gas, or LNG from Third Parties, not to exceed the Seller Shortfall Quantity (each such purchase a “Cover Purchase”); and
|
(b)
|
Seller shall pay to Buyer an amount equal to
|
(i)
|
to the extent Buyer makes one or more Cover Purchases to cover the Seller Shortfall Quantity, (A) the amount paid by Buyer for any Cover Purchase, plus (B) all reasonable and verifiable incremental costs incurred by Buyer (acting as a Reasonable and Prudent Operator) as a result of any Cover Purchase, including costs related to transportation, terminal fees, and Third Party costs, less (C) all reasonable and verifiable savings obtained by Buyer as a result of any Cover Purchase, including savings related to transportation and Third Party costs avoided, less (D) the Contract Price multiplied by the Seller’s Shortfall Quantity; and
|
(ii)
|
to the extent Buyer does not make sufficient Cover Purchases to cover the Seller Shortfall Quantity (after having used reasonable efforts to do so), Buyer’s costs associated with terminating its resale arrangements in respect of such uncovered portion of Seller’s Shortfall Quantity, including capacity reservation and transportation and other reasonable expenses incurred by Buyer in relation to Seller’s Shortfall Quantity;
|
(c)
|
Seller’s obligation to pay Buyer pursuant to this Section 5.3.2(b) will only apply if the result of the calculation is greater than zero. Seller’s liability to Buyer pursuant to this Section 5.3 shall be limited to and not exceed thirty percent (30%) of the Contract Price multiplied by the Seller’s Shortfall Quantity.
|
5.3.3.
|
In the case of an Ex-Ship Sale, Seller shall have satisfied its obligation to “make available” to Buyer a specified quantity of LNG if (a) Seller has caused an LNG Tanker containing such quantity of LNG to arrive at the PBS and (i) issue a NOR prior to or during the Arrival Period, or (ii) issue a NOR following the end of the Arrival Period, and Buyer is able to berth such LNG Tanker in accordance with Clause C.7.4.2; and (b) such LNG complies with the terms and conditions hereof. In such instances, except as otherwise provided in Section 6.3, if Buyer has notified Seller that Buyer will not accept a particular LNG Cargo scheduled for delivery by Seller, then Seller will be deemed to have made available such LNG Cargo.
|
5.3.4.
|
Any payment that Seller makes under this Section 5.3 shall not be treated as a Consequential Loss.
|
6.
|
QUALITY
|
6.1.
|
Specifications
|
6.2.
|
Determining LNG Specifications
|
6.3.
|
Off-Spec LNG
|
6.3.1.
|
If either Buyer or Seller, acting as a Reasonable and Prudent Operator, determines prior to unloading (in respect of an Ex-Ship Sale) or loading (in respect of an FOB Sale), an LNG Cargo that the LNG is expected to be Off-Spec LNG upon delivery, then such Party shall notify the other Party of the extent of the expected variance as soon as practicable (but in no case later than (in respect of an Ex-Ship Sale) the commencement of unloading or (in respect of an FOB Sale) the commencement of loading, of such LNG Cargo), and the Buyer and Seller shall discuss such variance and possible mitigating actions, subject to the following:
|
(a)
|
Buyer shall use reasonable efforts, including coordinating with the Buyer’s Operator and Transporter (in respect of an FOB Sale), to accept Off-Spec LNG; and
|
(b)
|
as soon as practicable, but in no case later than forty-eight (48) hours after giving or receiving any notification pursuant to Section 6.3.1 that LNG is expected to be Off-Spec LNG, Buyer shall notify Seller that Buyer (i) despite using reasonable efforts to accept the LNG Cargo, rejects the LNG Cargo containing such Off-Spec LNG; or (ii) subject to Section 6.3.2, is willing to accept all or any of the Off-Spec LNG. If the quality of the Off-Spec LNG delivered by Seller is not materially consistent with the expected variance notified by Buyer or Seller pursuant to Section 6.3.1, upon which expected variance Buyer’s decision pursuant to this Section 6.3.1(b)(ii) is based, then notwithstanding Buyer’s initial acceptance of such Off-Spec LNG, Buyer is entitled to reject all or part of such Off-Spec LNG pursuant to this Section 6.3.
|
6.3.2.
|
If Buyer determines that it could accept Off-Spec LNG pursuant to Sections 6.3.1(b)(ii) or 6.3.4, then Buyer shall include with its notice issued pursuant to Sections 6.3.1(b)(ii) or 6.3.4 Buyer’s good faith estimate of the Losses that Buyer will incur as a result of the receipt and treatment of such Off-Spec LNG. If Seller promptly, but in no case later than twelve (12) hours after receiving Buyer’s notice, consents to reimburse Buyer for Buyer’s Losses associated with the delivery of such Off-Spec LNG, then Buyer shall accept such Off-Spec LNG, and Seller shall reimburse Buyer for the Losses incurred by Buyer as a result of the receipt and treatment of such Off-Spec LNG; provided, however, that Seller’s liability to Buyer for such Losses pursuant to this Section 6.3.2 and Section 6.3.4 will not exceed one hundred twenty percent (120%) of the amount estimated by Buyer pursuant to this Section 6.3.2. The limit established in this Section 6.3.2 is exclusive of any liability of Seller pursuant to Section 6.3.3.
|
6.3.3.
|
If after the commencement of unloading (in respect of an Ex-Ship Sale) or loading (in respect of an FOB Sale) the LNG Cargo, either Buyer or Seller reasonably believes that Off-Spec LNG exists or becomes aware that an LNG Cargo contains Off-Spec LNG only, then such Party shall promptly, but in no event later than eight (8) hours after becoming aware of such Off-Spec LNG, notify the other Party of such Off-Spec LNG. Either Buyer or Seller may at any time thereafter, subject to Section 6.3.1(a), suspend loading or unloading of such Off-Spec LNG. Without prejudice to Buyer’s rights pursuant to Sections 6.3.1(b) and 6.3.4 for any Off-Spec LNG that has not been loaded or unloaded, Buyer shall be deemed to have accepted all of the LNG loaded or unloaded prior to any suspension pursuant to this Section 6.3.3., and Seller shall reimburse Buyer for all Losses incurred by Buyer as a result of Buyer’s receipt of such Off-Spec LNG, including all reasonable documented direct costs incurred by Buyer (including costs owed to any Affiliate of Buyer, Buyer’s Transporter, and Buyer’s Operator in transporting (if applicable) and treating such Off-Spec LNG (or to otherwise make such LNG marketable) (b) the loss in value of any other LNG supplies at Buyer’s Facilities (other than the Off-Spec LNG unloaded by Buyer) or in the LNG Tanker (in the case of FOB Sales), where such loss in value results from blending the Off-Spec LNG with other LNG supplies at Buyer’s Facilities or in the LNG Tanker (in the case of FOB Sales); and (c) all Losses relating to damage caused by such Off-Spec LNG to Buyer’s Facilities (in case of Ex-Ship Sales) or in the LNG Tanker (in the case of FOB Sales); provided, however, that such reimbursement shall not exceed one hundred (100%) of the product of the Expected Delivery Quantity and the Contract Price.
|
6.3.4.
|
After becoming aware of the existence of Off-Spec LNG pursuant to Section 6.3.3, Buyer may elect to accept any Off-Spec LNG that has not been loaded (in the case of Ex-Ship Sales) or unloaded (in the case of FOB Sales) prior to suspension, in which case, Section 6.3.2 will apply to such Off-Spec LNG. If the quality of the Off-Spec LNG delivered by Seller is not materially consistent with the expected variance notified by Buyer or Seller pursuant to Section 6.3.1, upon which expected variance Buyer’s decision pursuant to this Section 6.3.4 is based, then notwithstanding Buyer’s initial acceptance of such Off-Spec LNG, Buyer shall be entitled to reject all or part of such Off-Spec LNG that has not been loaded or unloaded. Buyer shall have no obligation to Seller pursuant to Clause B.10.1, or Clause C.10.1 for any delays associated with loading or unloading such Off-Spec LNG, as applicable, provided that Buyer acted as a Reasonable and Prudent Operator and in accordance with this Section 6.
|
6.3.5.
|
If Buyer refuses to take delivery of any Off-Spec LNG pursuant to this Section 6.3, then Seller shall be deemed to have failed to make available the quantity of Off-Spec LNG rejected by Buyer, and Seller shall be liable
|
7.
|
PRICE
|
8.
|
INVOICES AND PAYMENT
|
8.1.
|
Delivery Invoices
|
8.1.1.
|
the Gross Heating Value content of the LNG Cargo delivered, expressed in MMBtu, calculated pursuant to Clause B.13 (in the case of an FOB Sale) or Clause C.13 (in the case of an Ex-Ship Sale) and Exhibit D, together with any relevant documents showing the basis for such calculation;
|
8.1.2.
|
the Contract Price applicable to such LNG Cargo;
|
8.1.3.
|
the sum due from Buyer for the relevant LNG Cargo, which Seller shall calculate by multiplying the relevant MMBtu content specified in Section 8.1.1 by the Contract Price specified in Section 8.1.2’ and
|
8.1.4.
|
a certificate of quantity and quality of LNG loaded (or unloaded as relevant) prepared in accordance with Exhibit D, and such other documents Buyer or a Governmental Authority reasonably requires for Loading Port or Unloading Port customs clearance.
|
8.2.
|
Statements of LNG Not Taken, Not Made Available, or Not Delivered
|
8.2.1.
|
If Buyer incurs a liability to Seller pursuant to Section 5.2 for failing to take an LNG Cargo, then Seller shall send to Buyer an invoice and reasonable supporting documentation showing (a) the Expected Delivery Quantity of such LNG Cargo, (b) the quantity (if any) taken by Buyer, (c) the Contract Price applicable to such LNG Cargo, and (d) the amount payable by Buyer pursuant to Section 5.2 for Buyer’s failure to take such LNG.
|
8.2.2.
|
If Seller incurs a liability to Buyer pursuant to Section 5.3 for failing to make available an LNG Cargo, then Buyer shall send to Seller an invoice and reasonable supporting documentation showing (a) the Expected Delivery Quantity of such LNG Cargo, (b) the quantity (if any) made
|
8.3.
|
Other Invoices
|
8.3.1.
|
If any sums are due from one Party to the other Party, except for reasons addressed in Sections 8.1 or 8.2, then the Party to whom such sums are owed shall furnish to the other an invoice describing in reasonable detail the basis for the invoice and providing relevant supporting documentation.
|
8.3.2.
|
A Party entitled to receive payment pursuant to Clause B.10 or Clause B.11 with respect to any LNG Cargo (in the case of an FOB Sale), or pursuant to Clause C.10 or Clause C.11 with respect to any LNG Cargo (in the case of an Ex-Ship Sale), shall issue an invoice for such amount no later than ninety (90) Days following the completion of the Used Laytime for such LNG Cargo. Any claim for amounts owed pursuant to Clause B.10 or Clause B.11 (in the case of an FOB Sale) or pursuant to Clause C.10 or Clause C.11 (in the case of an Ex-Ship Sale), will be time barred if the Party to which any amount is owed thereunder fails to provide to the other Party a fully documented invoice within ninety (90) Days after the completion of the Used Laytime for such LNG Cargo.
|
8.4.
|
Provisional Invoices
|
8.4.1.
|
If Seller is unable to (a) obtain from Buyer the quantity of MMBtus of LNG delivered to Buyer within three (3) Days after making an LNG Cargo available to Buyer (including the results of sampling and analysis required pursuant to Clause D.4); or to have a representative present as provided pursuant to Clause D.1.1 or (b) obtain any other relevant information necessary to compute an invoice pursuant to Section 8.1, then Seller may issue a provisional invoice (“Provisional Invoice”) in an amount calculated based on the Expected Delivery Quantity for the LNG Cargo. A Provisional Invoice will be deemed to be an invoice issued pursuant to Section 8.1 for the purposes of the payment obligations of Buyer and will be subject to subsequent adjustment pursuant to Section 8.4.2.
|
8.4.2.
|
If Seller issues a Provisional Invoice, then Seller shall issue a final invoice reflecting any credit or debit, as applicable, to the Provisional Invoice as soon as reasonably practicable after (a) Seller receives the results of sampling, analysis, and quantity determination (as required pursuant to Clause B.13.3 or C.13.3 (as applicable) and Clauses D.4 and D.5), if the Provisional Invoice was issued as a result of Section 8.4.1(a); or (b) Seller obtains the information necessary to compute the payment, if the Provisional Invoice was issued as a result of Section 8.4.1(b). Buyer and Seller shall settle such debit or credit amount, as the case may be, when
|
8.5.
|
Payment Due Dates
|
8.5.1.
|
The due date for payment by Buyer of each invoice delivered pursuant to Section 8.1 is ten (10) days after receipt of the invoice by Buyer.
|
8.5.2.
|
The due date for payment by the relevant Party of each invoice delivered pursuant to Section 8.2 is ten (10) days after receipt of the invoice by such Party.
|
8.5.3.
|
The due date for payment by the relevant Party of each invoice delivered pursuant to Section 8.3 is ten (10) Days after receipt of the invoice by such Party.
|
8.5.4.
|
If the due date for any invoice is not a Banking Day, then such invoice shall be due on the next Banking Day.
|
8.6.
|
Payment Method and Currency
|
8.7.
|
Disputed Invoices
|
8.7.1.
|
The Party receiving an invoice containing a Disputed Amount shall immediately notify the other Party of the reasons for such dispute and shall pay the amount due under the invoice, on or before the due date for payment and, subject to Section 8.7.4, Buyer and Seller shall seek to settle the Disputed Amount pursuant to Section 15.1; provided, however, that in the case of manifest error, the correct amount shall be paid disregarding such manifest error, and any necessary correction and consequent adjustment shall be made within five (5) Banking Days after agreement on or determination of the correct amount.
|
8.7.2.
|
Buyer and Seller shall endeavor to resolve any Disputed Amount as quickly as possible. Any adjustments necessary to reconcile the Disputed Amount with the amount actually paid shall be paid within ten (10) Days following resolution of the Disputed Amount.
|
8.7.3.
|
All adjustments, whether for overpayment or underpayment, will bear interest pursuant to Section 8.8.
|
8.7.4.
|
Buyer and Seller shall promptly discuss any Disputed Amount in good faith. Either Buyer or Seller shall be entitled to refer the Disputed Amount to arbitration pursuant to Section 15.1 at any time following sixty (60) Days after delivery of notice by either Buyer or Seller questioning the correctness of such invoice pursuant to this Section 8.7.
|
8.7.5.
|
Except as specified in Section 8.7.6, an invoice may be contested only if, within three hundred sixty-five (365) Days after its receipt, the Party receiving the invoice provides notice to the other Party questioning the correctness of such invoice. If such notice is not given as required pursuant to this Section 8.7.5, then the invoice shall be deemed correct and accepted by both Buyer and Seller.
|
8.7.6.
|
Disputed Amounts resulting from the inaccuracy of any measuring or analyzing equipment or device shall be corrected in accordance with Clause B.13.2.2 or C.13.2.2 (as applicable) and shall be settled in the same manner as set out above in this Section 8.7.
|
8.8.
|
Late Payment and Refunds
|
8.8.1.
|
If either Buyer or Seller fails to pay an amount owed pursuant to an Agreement when due, then that Party shall pay interest on the amount owed to the other Party at the Agreed Interest Rate on and from the Day when payment was due until the Day of payment. If Buyer or Seller receives an amount not owed pursuant to an Agreement, then the Party receiving that overpayment shall pay interest on the amount of overpayment at the Agreed Interest Rate on and from the Day when such sum was originally paid until the date of its repayment. Interest shall accrue from Day-to-Day and be calculated on the basis of a three hundred sixty (360) Day year.
|
8.8.2.
|
Transfer of funds (taking into account the time zones and Banking Days applicable in the countries in which Buyer’s and Seller’s banks are located) from Buyer’s or Seller’s bank, as the case may be, effected before the close of business of the receiving Party’s bank and on or before the due date of any invoice, is timely payment, regardless of whether the bank receiving the transfer credits the transfer as immediately available funds by reason of such different time zones or Banking Days.
|
8.9.
|
Access To Information; Audit
|
8.10.
|
No Netting of Invoices
|
8.11.
|
Safe Harbor
|
8.11.1.
|
This Agreement constitutes a “master agreement” for purposes of the United States Bankruptcy Code, 11 U.S.C. §§ 101 et seq.
|
8.11.2.
|
Each of Buyer and Seller is a “forward contract merchant” within the meaning of the United States Bankruptcy Code, 11 U.S.C. §§ 101 et seq.
|
8.11.3.
|
The transactions under each Confirmation Memorandum constitute “forward contracts” and “commodity contracts” under the United States Bankruptcy Code, and the Parties recognize that LNG is a commodity for purposes of the United States Bankruptcy Code and the Commodities Exchange Act.
|
9.
|
CREDIT SUPPORT
|
10.
|
TAXES, DUTIES, AND CHARGES
|
10.1.
|
Seller’s Tax Obligations
|
10.1.1.
|
Subject to Section 10.3.1, Seller shall pay, indemnify, defend, and hold harmless Buyer and any Affiliate of Buyer against and from, or shall reimburse Buyer for, payments made by Buyer, any Affiliate of Buyer, or
|
10.1.2.
|
No indemnity or reimbursement pursuant to Section 10.1.1 relating to Taxes shall be provided or paid by Seller to Buyer for any Taxes payable by Buyer, any Affiliate of Buyer, or Transporter resulting from (a) an activity of Buyer, any Affiliate of Buyer, or Transporter that does not directly relate to the performance by Buyer or Transporter of Buyer’s obligations pursuant to an Agreement; or (b) the existence or establishment of a permanent presence, office, fixed place of business, nexus, or other connection between Buyer or Transporter (or any Affiliate or agent of Buyer or Transporter) and the taxing jurisdiction except for (i) the delivery or transportation of LNG pursuant to an Agreement, and (ii) the receipt of payments pursuant to an Agreement.
|
10.1.3.
|
If Seller has (a) provided timely and reasonably detailed notice to Buyer of reasonable certification, documentation, or other reporting requirements of a Governmental Authority that may levy or impose Taxes that require action by Buyer, any Affiliate of Buyer, or Transporter to reduce or avoid Taxes; or (b) reasonably relied on any material information with respect to Taxes provided by Buyer, any Affiliate of Buyer, or Transporter at Seller’s request but which later proves to be materially incorrect, then Seller shall not be obligated to indemnify or hold harmless Buyer or any Affiliate of Buyer from any such Taxes levied or imposed solely by reason of Buyer’s, any Affiliate of Buyer’s, or Transporter’s failure to comply with such requirements or by reason of Seller’s reasonable reliance on such information.
|
10.1.4.
|
Seller shall be the exporter of record at the Loading Port and shall be responsible for complying with customs and excise procedures at the Loading Port. All customs duties, excise duties and any other similar tariffs at the Loading Port are for Seller’s account. Seller shall not be the importer of record at the Discharge Port. However, Seller shall provide the documentation requested by Buyer which is necessary to comply with the customs and excise entry procedures at the Discharge Port. If the documents requested by Buyer are not customarily issued in relation to the sale and
|
10.2.
|
Buyer’s Tax Obligations
|
10.2.1.
|
Subject to Section 10.3.1, Buyer shall pay, indemnify, defend, and hold harmless Seller and any Affiliate of Seller against and from, or shall reimburse Seller for, payments made by Seller, any Affiliate of Seller, or Transporter for Taxes levied or imposed on Seller, any Affiliate of Seller, Transporter or the LNG Tankers by a Governmental Authority of or in Buyer’s Country (in the case of an Ex-Ship Sale) or for Taxes imposed by a Governmental Authority of or in any country other than Seller’s Country (in the case of an FOB Sale) arising from or in connection with the following: (a) the sale, purchase, unloading, transportation, storage, import, export, or delivery of LNG sold or to be sold pursuant to an Agreement or in respect of the LNG itself or its ownership, and any receipts, revenues, profits, or income resulting therefrom; (b) payments made by Buyer to Seller pursuant to an Agreement; and (c) income resulting from payments made by Buyer pursuant to an Agreement.
|
10.2.2.
|
No indemnity or reimbursement pursuant to Section 10.2.1 relating to Taxes shall be provided or paid by Buyer to Seller for any Taxes payable by Seller, any Affiliate of Seller, or Transporter resulting from (a) an activity of Seller, any Affiliate of Seller, or Transporter that does not directly relate to the performance by Seller or Transporter of Seller’s obligations pursuant to an Agreement; or (b) the existence or establishment of a permanent presence, office, fixed place of business, nexus, or other connection between Seller or Transporter (or any Affiliate or agent of Seller or Transporter) and the taxing jurisdiction except for (i) the delivery or transportation of LNG pursuant to an Agreement, and (ii) the receipt of payments pursuant to an Agreement.
|
10.2.3.
|
If Buyer has (a) provided timely and reasonably detailed notice to Seller of reasonable certification, documentation, or other reporting requirements of a Governmental Authority that may levy or impose Taxes that require action by Seller, any Affiliate of Seller, or Transporter to reduce or avoid Taxes; or (b) reasonably relied on any material information with respect to Taxes provided by Seller, any Affiliate of Seller, or Transporter at Buyer’s request but which later proves to be materially incorrect, then Buyer shall not be obligated to indemnify or hold harmless Seller or any Affiliate of Seller from any such Taxes levied or imposed solely by reason of Seller’s, any Affiliate of Seller’s, or Transporter’s failure to comply with such requirements or by reason of Buyer’s reasonable reliance on such information.
|
10.2.4.
|
Buyer shall be the importer of record at the Discharge Port and shall be responsible for complying with customs and excise procedures at the Discharge Port. All customs duties, excise duties and any other similar tariffs at the Discharge Port are for Buyer’s account. Buyer shall not be the exporter of record at the Loading Port. However, Buyer shall provide the documentation requested by Seller which is necessary to comply with the customs and excise procedures at the Loading Port. If the documents requested by Seller are not customarily issued in relation to the sale and purchase and transportation of LNG and/or the LNG Ship, Buyer shall exercise reasonable endeavours to obtain such documents.
|
10.3.
|
Withholding Taxes
|
10.3.1.
|
If either Buyer or Seller (for purposes of this Section 10.3, the “Payor”) is required to deduct or withhold Taxes from or in respect of any payments (whether in cash or in kind) to the other Party (for purposes of this Section 10.3, the “Recipient”) under an Agreement, then (a) the Payor shall make such deductions or withholdings, (b) the Payor shall pay the full amount deducted or withheld to the appropriate Governmental Authority in accordance with applicable Law, (c) the Payor shall promptly furnish to the Recipient the original or a certified copy of a receipt evidencing such payment, and (d) the sum payable by the Payor to the Recipient shall be increased by such additional sums as necessary so that after making all required deductions and withholdings of Taxes (including deductions and withholdings of Taxes applicable to additional sums payable under this Section 10.3), the Recipient receives an amount equal to the sum it would have received had no such deductions or withholdings of Taxes been made.
|
10.3.2.
|
If the Payor fails to pay to the relevant Governmental Authority when due any Taxes that it was required to deduct or withhold under Section 10.3.1 or fails to promptly furnish the Recipient with the documentation referred to in Section 10.3.1, the Payor shall indemnify and hold harmless the Recipient from and against the full amount of any Taxes, losses, and expenses that the Recipient may suffer or incur as a result of such failure.
|
10.4.
|
Tax Refunds
|
10.5.
|
Procedure for Payment of Taxes
|
11.
|
MEASUREMENT AND TESTING OF LNG AND VAPORIZED LNG
|
12.
|
LIABILITIES
|
12.1.
|
Consequential Loss
|
12.2.
|
Exclusive Remedies
|
12.3.
|
No Express Remedy
|
12.4.
|
Estimated Loss
|
13.
|
FORCE MAJEURE
|
13.1.
|
Events of Force Majeure
|
13.1.1.
|
A Party shall be excused for failure to carry out its obligations to the extent that and for the period during which it is rendered unable to carry out such obligations by reason of Force Majeure.
|
13.1.2.
|
“Force Majeure” means for a Party that has acted as a Reasonable and Prudent Operator, any act, event, or circumstance, whether of the kind described herein or otherwise, that is not reasonably within the control of the Party, that does not result from the fault or negligence of the Party, that would not have been overcome by the reasonable diligence of the Party, and that prevents or delays the Party’s performance.
|
(a)
|
By way of illustration and subject to satisfaction of the conditions specified in the foregoing paragraph of this Section 13.1.2, Force Majeure may include circumstances of the following kind:
|
(i)
|
fire, flood, atmospheric disturbance, lightning, storm, hurricane, cyclone, typhoon, tidal wave, tornado, earthquake, volcanic eruption, landslide, soil erosion, subsidence, washout, epidemic, or other Adverse Weather Conditions, natural disaster or act of God;
|
(ii)
|
acts of war (whether declared or undeclared), invasion, armed conflict, embargo, revolution, rebellion, sabotage, acts or threats of terrorism, riot, civil war, blockade, piracy or the threat of piracy, insurrection, acts of public enemies, civil disturbances, or sanctions on the import or export of goods, services or technology;
|
(iii)
|
chemical contamination, ionizing radiation or contamination, or radioactivity from any nuclear fuel or from nuclear waste or from the combustion of nuclear waste, or the combustion of nuclear, radioactive, toxic, explosive, or other hazardous properties of any explosive assembly or nuclear component;
|
(iv)
|
strike, lockout, or other industrial disturbances;
|
(v)
|
the unavailability of, or any event affecting, the Panama Canal or Suez Canal (if applicable);
|
(vi)
|
any change in Law after the Confirm Date, or a change in the interpretation or application of existing Law after the Confirm Date, subject to 13.1.2(b)(iii);
|
(vii)
|
acts or omissions of a Governmental Authority, subject to Section 13.1.2(b)(iv);
|
(viii)
|
in the case of a Seller: (A) loss of, serious accidental damage to, or inoperability of Seller’s Facilities; (B) in the event of an Ex-Ship Sale, loss of, damage to, failure of, or unavailability of the LNG Tanker; and (C) in the event of an Ex-Ship Sale, breakdown or unavailability of Marine Services; and
|
(ix)
|
in the case of Buyer: (A) loss of, serious accidental damage to, or inoperability of Buyer’s Facilities; (B) in the event of an FOB Sale, loss of, damage to, failure of, or unavailability of the LNG Tanker; and (C) in the event of an FOB Sale, breakdown or unavailability of Marine Services.
|
(b)
|
Notwithstanding the foregoing, Force Majeure does not include:
|
(i)
|
the ability of Buyer or Seller to obtain better economic terms for LNG or Natural Gas from an alternative supplier or buyer, as applicable;
|
(ii)
|
any change in the market or demand for LNG, Natural Gas or electric power or events primarily affecting individual downstream customer facilities;
|
(iii)
|
any change in Law after the Confirm Date or a change in the interpretation or application of existing Law after the Confirm Date that does not prevent performance, but merely renders such performance more costly; and
|
(iv)
|
acts of a Governmental Authority that affect solely or primarily the affected Party and are not generally applicable to public and private entities doing business in the same country.
|
13.1.3.
|
For the purposes of Section 13.1.2, an event will not be considered to be beyond the reasonable control of Seller or Buyer unless:
|
(a)
|
in the case of Seller, it is beyond the reasonable control of Seller and the Seller Control Entities; or
|
(b)
|
in the case of Buyer, it is beyond the reasonable control of Buyer and the Buyer Control Entities.
|
13.1.4.
|
A Force Majeure shall not relieve a Party of its obligation to pay sums of money due or that might become due pursuant to an Agreement except to the extent expressly provided in an Agreement.
|
13.2.
|
Notice; Resumption of Normal Performance
|
13.2.1.
|
Promptly upon the occurrence of an act, event, or circumstance that a Party considers to be Force Majeure, the Party affected shall give notice of such act to the other Party and shall state in such notice:
|
(a)
|
the particulars of the act, event, or circumstance giving rise to the Force Majeure claim in reasonable detail;
|
(b)
|
the obligations that have been or are reasonably anticipated to be delayed or prevented in performance and the estimated period during which such performance might be delayed or prevented, including the estimated extent of the delay or prevention of performance; and
|
(c)
|
the specific actions the Party affected will take to resume performance of its obligations.
|
13.2.2.
|
During periods in which a Party claims Force Majeure, such Party shall use reasonable efforts to resume performance of the obligations delayed or prevented by the Force Majeure. The Parties shall continue to perform their obligations pursuant to this Agreement to the extent not prevented by Force Majeure. A Party whose performance is excused by Force Majeure shall not be required to incur uneconomic cost, make additional investments in new facilities, or bring into production existing or potential reserves not already flowing in support of the applicable Agreement.
|
13.3.
|
Settlement of Industrial Disturbances
|
14.
|
NOTICES
|
14.1.
|
Delivery
|
14.2.
|
Notice Details
|
To:
|
Tellurian Trading UK Ltd
|
To:
|
[_____]
|
14.3.
|
Change of Address
|
15.
|
DISPUTE RESOLUTION AND GOVERNING LAW
|
15.1.
|
Dispute Resolution
|
15.1.1.
|
Arbitration. Any Dispute (other than a Dispute submitted to an Expert under Section 15.2.1) shall be exclusively and definitively resolved through final and binding arbitration, it being the intention of the Parties that this is a broad form arbitration agreement designed to encompass all possible claims and disputes under an Agreement.
|
15.1.2.
|
Rules. The arbitration shall be conducted in accordance with the International Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) (as then in effect).
|
15.1.3.
|
Number of Arbitrators. The arbitral tribunal shall consist of three (3) arbitrators, who shall endeavor to complete the final hearing in the arbitration within six (6) Months after the appointment of the last arbitrator.
|
15.1.4.
|
Method of Appointment of the Arbitrators. If there are only two (2) parties to the Dispute, then each party to the Dispute shall appoint one (1) arbitrator within thirty (30) Days of the filing of the arbitration, and the two arbitrators so appointed shall select the presiding arbitrator within thirty (30) Days after the latter of the two arbitrators has been appointed by the parties to the Dispute. If a party to the Dispute fails to appoint its party-appointed arbitrator or if the two party-appointed arbitrators cannot reach an agreement on the presiding arbitrator within the applicable time period, then the AAA shall serve as the appointing authority and shall appoint the remainder of the three arbitrators not yet appointed. If the arbitration is to be conducted by three arbitrators and there are more than two parties to the Dispute, then within thirty (30) Days of the filing of the arbitration, all claimants shall jointly appoint one arbitrator and all respondents shall jointly appoint one arbitrator, and the two arbitrators so appointed shall select the presiding arbitrator within thirty (30) Days after the latter of the two arbitrators has been appointed by the parties to the Dispute. For the
|
15.1.5.
|
Consolidation. If the Parties initiate multiple arbitration proceedings under an Agreement and/or under any credit support document (if any) required to be delivered to a Party pursuant to the terms of a Confirmation Memorandum, the subject matters of which are related by common questions of law or fact and which could result in conflicting awards or obligations, then a Party may request prior to the appointment of the arbitrators for such multiple or subsequent Disputes that all such proceedings be consolidated into a single arbitral proceeding. Such request shall be directed to the AAA, which shall consolidate appropriate proceedings into a single proceeding unless consolidation would result in undue delay for the arbitration of the Disputes.
|
15.1.6.
|
Place of Arbitration. Unless otherwise agreed by all parties to the Dispute, the place of arbitration shall be New York, New York.
|
15.1.7.
|
Language. The arbitration proceedings shall be conducted in the English language, and the arbitrators shall be fluent in the English language.
|
15.1.8.
|
Entry of Judgment. The award of the arbitral tribunal shall be final and binding. Judgment on the award of the arbitral tribunal may be entered and enforced by any court of competent jurisdiction. The Parties agree that service of process for any action to enforce an award may be accomplished according to the procedures of Section 14, as well as any other procedure authorized by law.
|
15.1.9.
|
Notice. All notices required for any arbitration proceeding shall be deemed properly given if given in accordance with Section 14.
|
15.1.10.
|
Qualifications and Conduct of the Arbitrators. All arbitrators shall be and remain at all times wholly impartial, and, once appointed, no arbitrator shall have any ex parte communications with any of the parties to the Dispute
|
15.1.11.
|
Interim Measures. Any party to the Dispute may apply to a court in Harris County, Texas, for interim measures (a) prior to the constitution of the arbitral tribunal (and thereafter as necessary to enforce the arbitral tribunal’s rulings); or (b) in the absence of the jurisdiction of the arbitral tribunal to rule on interim measures in a given jurisdiction. The Parties agree that seeking and obtaining such interim measures shall not waive the right to arbitration. The Parties unconditionally and irrevocably submit to jurisdiction in Harris County, Texas for the limited purposes of an application for interim measures under this Section 15.1.11. The arbitrators (or in an emergency the presiding arbitrator acting alone in the event one or more of the other arbitrators is unable to be involved in a timely fashion) may grant interim measures including injunctions, attachments and conservation orders in appropriate circumstances, which measures may be immediately enforced by court order. Hearings on requests for interim measures may be held in person, by telephone, by video conference or by other means that permit the parties to the Dispute to present evidence and arguments.
|
15.1.12.
|
Costs and Attorneys’ Fees. The arbitral tribunal is authorized to award costs of the arbitration in its award, including: (a) the fees and expenses of the arbitrators; (b) the costs of assistance required by the tribunal, including its Experts; (c) the fees and expenses of the administrator; (d) the reasonable costs for legal representation of a successful Party; and (e) any such costs incurred in connection with an application for interim or emergency relief and to allocate those costs between the parties to the Dispute. The costs of the arbitration proceedings, including attorneys’ fees, shall be borne in the manner determined by the arbitral tribunal.
|
15.1.13.
|
Interest. The award shall include pre-award and post-award interest, as determined by the arbitral award, from the date of any default or other breach of an Agreement until the arbitral award is paid in full. Interest shall accrue at the Agreed Interest Rate on and from the Day when such award was issued until the date of its repayment.
|
15.1.14.
|
Currency of Award. The arbitral award shall be made and payable in USD, free of any tax or other deduction.
|
15.1.15.
|
Waiver of Challenge to Decision or Award. To the extent permitted by law, the Parties hereby waive any right to appeal from or challenge any arbitral decision or award, or to oppose enforcement of any such decision or award before a court or any governmental authority, except with respect to the
|
15.1.16.
|
Confidentiality. Any arbitration or Expert determination relating to a Dispute (including an arbitral award, a settlement resulting from an arbitral award, documents exchanged or produced during an arbitration or Expert proceeding, and memorials, briefs or other documents prepared for the arbitration or Expert proceeding) shall be Confidential Information subject to the confidentiality provisions of Section 18; provided, however, that breach of such confidentiality provisions shall not void any settlement, determination or award.
|
15.2.
|
Expert Determination
|
15.2.1.
|
General. In the event of any disagreement between the Parties regarding a measurement under Exhibit D or any other Dispute which the Parties agree to submit to an Expert (in either case, a “Measurement Dispute”), the Parties hereby agree that such Measurement Dispute shall be resolved by an Expert selected as provided in this Section 15.2.1. The Expert is not an arbitrator of the Measurement Dispute and shall not be deemed to be acting in an arbitral capacity. The Party desiring an expert determination shall give the other Party to the Measurement Dispute notice of the request for such determination. If the Parties to the Measurement Dispute are unable to agree upon an Expert within ten (10) Days after receipt of the notice of request for an expert determination, then, upon the request of any of the Parties to the Measurement Dispute, the International Centre for Expertise of the International Chamber of Commerce (“ICC”) shall appoint such Expert and shall administer such expert determination through the ICC’s Rules for Expertise. The Expert shall be and remain at all times wholly impartial, and, once appointed, the Expert shall have no ex parte communications with any of the Parties to the Measurement Dispute concerning the expert determination or the underlying Measurement Dispute. The Parties to the Measurement Dispute shall cooperate fully in the expeditious conduct of such expert determination and provide the Expert with access to all facilities, books, records, documents, information and personnel necessary to make a fully informed decision in an expeditious manner. Before issuing a final decision, the Expert shall issue a draft report and allow the Parties to the Measurement Dispute to comment on it. The Expert shall endeavor to resolve the Measurement Dispute within thirty (30) Days (but no later than sixty (60) Days) after his appointment, taking into account the circumstances requiring an expeditious resolution of the matter in dispute.
|
15.2.2.
|
Final and Binding. The Expert’s decision shall be final and binding on the Parties to the Measurement Dispute unless challenged in an arbitration
|
15.2.3.
|
Arbitration of Expert Determination. In the event that a Party requests expert determination for a Measurement Dispute which raises issues that require determination of other matters in addition to correct measurement under Exhibit D, then a Party may elect to refer the entire Measurement Dispute for arbitration under Section 15.1.1. In such case, the arbitrators shall be competent to make any measurement determination that is part of a Dispute. An expert determination not referred to arbitration shall proceed and shall not be stayed during the pendency of an arbitration.
|
15.3.
|
Governing Law
|
15.4.
|
Immunity
|
15.4.1.
|
Each Party to an Agreement, as to itself and its assets, hereby irrevocably, unconditionally, knowingly and intentionally waives any right of immunity (sovereign or otherwise) and agrees not to claim, or assert any immunity with respect to the matters covered by an Agreement in any arbitration, Expert proceeding, or other action with respect to this Agreement, whether arising by statute or otherwise, that it may have or may subsequently acquire, including rights under the doctrines of sovereign immunity and act of state, immunity from legal process (including service of process or notice, pre-judgment or pre-award attachment, attachment in aid of execution, or otherwise), immunity from jurisdiction or judgment of any court, arbitrator, Expert or tribunal (including any objection or claim on the basis of inconvenient forum), and immunity from enforcement or execution of any award or judgment or any other remedy.
|
15.4.2.
|
Each Party to an Agreement irrevocably, unconditionally, knowingly and intentionally:
|
(a)
|
agrees that the execution, delivery and performance by it of this Agreement constitute private and commercial acts rather than public or governmental acts; and
|
(b)
|
consents in respect of the enforcement of any judgment against it in any such proceedings in any jurisdiction and to the giving of any relief or the issue of any process in connection with such proceedings (including the making, enforcement or execution of any such judgment or any order arising out of any such judgment against or in respect of any property whatsoever irrespective of its use or intended use).
|
16.
|
TERMINATION
|
16.1.
|
Termination of MSA by Notice
|
16.2.
|
Termination of Confirmation Memorandum for Cause
|
16.2.1.
|
Upon the occurrence of any of the following events, Buyer or Seller is entitled to notify the other Party to a Confirmation Memorandum of early termination of the Confirmation Memorandum:
|
(a)
|
if, as a result of an event of Force Majeure (i) the obligation of Seller to sell and make available an LNG Cargo pursuant to a Confirmation Memorandum; or (ii) the obligation of Buyer to take an LNG Cargo pursuant to a Confirmation Memorandum is materially delayed or prevented for a period of thirty (30) consecutive Days;
|
(b)
|
if the other Party fails or refuses to perform a material obligation pursuant to such Confirmation Memorandum;
|
(c)
|
a Party is the subject of an Insolvency Event;
|
(d)
|
if the other Party to such Confirmation Memorandum fails to provide or maintain credit support, as specified in the Confirmation Memorandum;
|
(e)
|
any letter of credit provided by a Party under a Confirmation Memorandum expires while payment obligations remain outstanding or the institution providing the letter of credit ceases to be a Qualifying Institution and, in either case, the letter of credit is not replaced by the Party which provided it within three (3) Business Days following
|
(f)
|
(i) any parent company guarantee required to be provided under a Confirmation Memorandum is not timely provided, or is withdrawn or terminated except pursuant to its terms, (ii) the guarantor ceases to hold a Qualifying Rating and Buyer does not provide a letter of credit from a Qualifying Institution, or (iii) the guarantor fails to comply with or perform all or any of its obligations under the guarantee.
|
(g)
|
if any representation or warranty given by the other Party to such Confirmation Memorandum pursuant to Section 20 is false;
|
(h)
|
if Buyer violates Section 21.1;
|
(i)
|
if the other Party to an Agreement violates Section 20.3 or Section 21.2.1(b); or
|
(j)
|
any step is taken by any competent authority with a view to the seizure, compulsory acquisition, expropriation or nationalization of all or substantially all of the assets of a Party, provided that an Event of Default shall not occur where such Party is contesting such action in good faith by appropriate means, unless and until such time as there is a material risk of all or substantially all of such Party’s assets being so seized, compulsorily acquired, expropriated or nationalized; or
|
16.2.2.
|
Without prejudice to any of its rights pursuant to an Agreement, the Party giving notice of early termination of a Confirmation Memorandum pursuant to this Section 16.2 shall specify the basis for early termination and designate a termination date.
|
16.3.
|
Effect of Termination
|
16.4.
|
Seller’s Right to Suspend Performance
|
17.
|
AMENDMENT AND WAIVER
|
17.1.
|
Amendment
|
17.2.
|
Waiver
|
18.
|
CONFIDENTIALITY
|
18.1.
|
Duty of Confidentiality
|
(a)
|
already known to the recipient from sources other than the other Party;
|
(b)
|
already in the public domain (other than as a result of a breach of the terms of this Section 18.1); or
|
(c)
|
independently developed by the recipient;
|
18.2.
|
Permitted Disclosures
|
18.2.1.
|
The Confidential Information, which a Party receives from the other Party, may be disclosed by such Party:
|
(a)
|
to any Person who is such Party’s legal counsel, other professional consultant or adviser, Transporter, operator, insurer, accountant or construction contractor; provided that such disclosure is solely to assist the purpose for which such Person was so engaged;
|
(b)
|
if required and to the extent required by the rules of any recognized stock exchange or agency established in connection therewith upon which the securities of such Party or a company falling within Section 18.2.1(e) are quoted;
|
(c)
|
if required and to the extent required by the U.S. Department of Energy;
|
(d)
|
without limiting Section 18.2.1(c), if required and to the extent required by any applicable Laws, or such Party becomes legally required (by oral questions, interrogatories, request for information or documents, orders issued by any Governmental Authority or any other process) to disclose such information, or to the extent necessary to enforce Sections 15.1 or 15.2 or any arbitration award or binding decision of an Expert (including by filing Confidential Information in proceedings before a court or other competent judicial authority) or to enforce other rights of a party to the Dispute; provided that such Party shall, to the extent practicable, give prior notice to the other
|
(e)
|
to any of its Affiliates or shareholders (or any company involved in the provision of advice to any such Affiliate or shareholder for the purposes of an Agreement) and any employee of that Party or of a company to which disclosure is permitted pursuant to this Section 18.2.1(e);
|
(f)
|
to any bona fide intended assignees of a Party’s interests under an Agreement;
|
(g)
|
to any Third Party as reasonably necessary for the performance of a Party’s obligations under an Agreement;
|
(h)
|
to any arbitrator appointed in accordance with Section 15.1.4, or Expert appointed pursuant to Section 15.2.1, or to any other party to an arbitration or Expert proceeding arising under or in connection with an Agreement, or to any witnesses appearing in an arbitration under Section 15.1 or in an Expert proceeding under Section 15.2;
|
(i)
|
to any Person reasonably required to see such Confidential Information, including any lenders, in connection with any bona fide financing or offering or sale of securities by a Party or any Affiliate of a Party or any Affiliate of any of the shareholders of a Party, to comply with the disclosure or other requirements of applicable Law or of financial institutions or other participants (including rating agencies) in such financing, offering or sale.
|
18.2.2.
|
The Party making the disclosure shall ensure that any Person listed in Sections 18.2.1(e), (f), (g), (h) or (i) to which it makes the disclosure (excluding any legal counsel, arbitrator or Expert already bound by confidentiality obligations) undertakes to hold such Confidential Information subject to confidentiality obligations equivalent to those set out in Section 18.1.
|
18.2.3.
|
No press release concerning the execution of an Agreement or resolution of any Disputes in connection therewith shall be issued unless agreed by the Parties.
|
18.3.
|
Duration of Confidentiality
|
19.
|
ASSIGNMENT
|
19.1.
|
Assignment with Prior Consent
|
19.2.
|
Assignment of Rights for Security and Payment
|
20.
|
REPRESENTATIONS AND WARRANTIES
|
20.1.
|
Governmental Approvals and Other Approvals
|
20.2.
|
Corporate Good Standing and Validity
|
20.2.1.
|
It is a company duly organized, validly existing, and in good standing under the Laws of the state and country of its incorporation, as applicable, and is duly qualified to do business and is in good standing in all other jurisdictions
|
20.2.2.
|
The execution, delivery, and performance of its obligations respectively pursuant to an Agreement
|
(a)
|
are within its corporate powers;
|
(b)
|
have been authorized by all necessary corporate action; and
|
(c)
|
do not and will not:
|
(i)
|
violate its charter, by-laws, other constitutional documents, or Law;
|
(ii)
|
violate any legal restriction binding on it; or
|
(iii)
|
require any consent or approval of the stockholders of the Party.
|
20.2.3.
|
A signed MSA or Confirmation Memorandum, as applicable, is a legal, valid, and binding obligation enforceable against it in accordance with its terms; provided, however, that the enforcement of the rights and remedies pursuant to an Agreement are subject to bankruptcy and other similar Laws of general application affecting rights and remedies of creditors.
|
20.2.4.
|
There are no pending or threatened actions, suits, or proceedings against it or, to its knowledge, before any court, governmental agency, or arbitrator that would reasonably be expected to affect the legality, validity, or enforceability of the Agreement.
|
20.3.
|
Business Practices
|
20.4.
|
Warranty of Title
|
20.5.
|
Other Warranties
|
21.
|
TRADE LAW COMPLIANCE, BUSINESS PRACTICES AND FOREIGN CORRUPT PRACTICES ACT
|
21.1.
|
Trade Law Compliance for LNG Loaded in the United States
|
21.2.
|
Prohibited Practices
|
21.2.1.
|
Each Party agrees that in connection with an Agreement and the activities contemplated therein, it will take no action, or omit to take any action, which would (a) violate any applicable Law applicable to that Party, or (b) cause the other Party to be in violation of any applicable Law applicable to such other Party related to the business practices of the Parties concerning anti-bribery and corruption, including the U.S. Foreign Corrupt Practices Act, the OECD convention on anti-bribery, the U.K. Bribery Act of 2010, E.U. and E.U. member country anti-bribery and corruption laws, and corruption or any similar statute, regulation, order or convention binding on such other Party, as each may be amended from time to time, and including any implementing regulations promulgated pursuant thereto.
|
21.2.2.
|
Without limiting Section 21.2.1, each Party agrees on behalf of itself, its directors, officers, employees, agents, contractors, and Affiliates, not to pay any fees, commissions or rebates to any employee, officer or agent of the other Party or its Affiliates or shareholders nor provide or cause to be provided to any of them any gifts or entertainment of significant cost or value in connection with an Agreement or in order to influence or induce any actions or inactions in connection with the commercial activities of the Parties hereunder.
|
21.3.
|
Records; Audit
|
21.4.
|
Indemnity
|
22.
|
MISCELLANEOUS
|
22.1.
|
Third Party Beneficiaries
|
22.2.
|
Exclusion
|
22.3.
|
Each Party To Bear its Own Costs
|
22.4.
|
No Partnership or Agency Relationship
|
22.5.
|
Entire Agreement; Confirmation Memoranda
|
22.6.
|
Severability
|
22.7.
|
Counterpart Execution
|
22.8.
|
Further Assurances
|
|
|
|
Name: [____]
|
|
Name: [____]
|
Title: [____]
|
|
Title: [____]
|
1.1
|
In the case of FOB Sales, Buyer shall provide or procure, at its expense, transportation from the Loading Port to the Unloading Port of the LNG Cargoes sold pursuant to each Confirmation Memorandum. Buyer shall maintain sufficient LNG shipping capacity to enable Buyer to fulfill its obligations to purchase LNG from Seller in accordance with this Agreement.
|
1.2
|
Seller, at its expense, is entitled to inspect and approve each such LNG Tanker specified in the Confirmation Memorandum (or a Substitute LNG Tanker proposed pursuant to Clause B.1.3) to satisfy itself, without assuming or reducing Buyer’s obligations, that each LNG Tanker is capable of loading the LNG Cargoes safely and in an environmentally sound and timely manner, except that it must conduct such inspection no later than thirty (30) Days (determined in the time zone in which the Loading Port is located) from the Confirm Date. Such inspection may include a review of class history records, Port State control inspection databases, changes in status records, tanker management self-assessments, vessel conditions reports, and physical inspection reports (e.g., SIRE reports). Seller shall not unreasonably withhold approval of any LNG Tanker. Buyer agrees to provide or render assistance in obtaining, at Seller’s expense, such information as may be necessary to verify the compatibility of a proposed LNG tanker with any relevant Loading Port and loading berth. Such information shall include drawings with sufficient detail to allow Seller (or a Person acting on behalf of Seller) to evaluate the compatibility of gangways, unloading arms, communications systems, mooring lines and breasting points and information regarding such proposed LNG tanker’s compliance with the Marine Terminal Services Manual and Laws applicable at the Loading Port, unloading rate, and other physical dimensions. OCIMF/SIGTTO ship and shore facilities standard questionnaire forms for ship to shore compatibility may be used. Seller shall have the right to reject any LNG tanker that does not comply with the provisions of this Agreement.
|
1.3
|
Although Buyer is not obligated to do so, Buyer is entitled to propose the use of a substitute LNG tanker of similar cargo capacity to the LNG Tanker specified in the Confirmation Memorandum (“Substitute LNG Tanker”) if necessary. Buyer shall not use a Substitute LNG Tanker until Seller has approved its use. Seller shall not unreasonably withhold approval of any Substitute LNG Tanker. A Substitute LNG Tanker approved by Seller pursuant to this Clause B.1.3 shall be an LNG Tanker for purposes of this Agreement. The use of a Substitute LNG Tanker shall not change the Expected Delivery Quantity unless the Confirmation Memorandum is amended by mutual agreement of Buyer and Seller.
|
1.4
|
Buyer’s obligations under the relevant Agreement will not be excused or suspended by reason of Seller’s rejection of the nominated LNG Tanker pursuant to Clause B.1.2 or the proposed Substitute LNG Tanker pursuant to Clause B.1.3.
|
2.1
|
Seller, at no cost to Buyer, shall ensure that Seller’s Facilities shall be in all respects compatible with the LNG Tanker specifications specified in the Confirmation Memorandum for each LNG Cargo identified therein. Seller and Buyer shall cooperate to ensure the compatibility of Seller’s Facilities and each LNG Tanker. Seller’s Facilities shall be of appropriate design and sufficient capacity to enable Seller to perform its obligations to deliver the quantities of LNG that Seller is obligated to make available pursuant to an Agreement, including the following:
|
2.1.1
|
berthing facilities that comply with International Standards; at which such LNG Tanker can safely reach and safely depart, fully laden; and at which such LNG Tanker can lie safely berthed and load safely afloat at all times;
|
2.1.2
|
loading facilities equipped with standard marine loading arms that shall permit the loading of an LNG cargo onboard an LNG Tanker at a rate of no less than 11,000 cubic meters per hour; or other suitable loading rate mutually agreed by the Seller and Buyer where the loading facility is located offshore or onshore and equipped with cryogenic hoses for the transfer of LNG cargoes;
|
2.1.3
|
a closed vapor return line system of sufficient capacity to transfer from an LNG Tanker quantities of regasified LNG necessary for the safe maximum loading rate of LNG at pressures, and temperatures required by either or both of such LNG Tanker’s and loading facility’s good operating practice and design;
|
2.1.4
|
a suitable gangway (or in the case of a floating export facility a barge or launch boat service) for safe personnel access;
|
2.1.5
|
LNG storage tanks (whether onshore, offshore, or floating) of adequate capacity to permit the loading of the LNG Cargo upon arrival of the LNG Tanker;
|
2.1.6
|
appropriate systems for email, facsimile, telephone, and radio communications with each LNG Tanker; and
|
2.1.7
|
emergency shut-down systems (including suitable ship to shore communication link).
|
2.2
|
Seller’s Facilities shall not be modified in any manner that would render them incompatible with an LNG Tanker that has been accepted by Seller for loading at Seller’s Facilities pursuant to a Confirmation Memorandum, subject to the following:
|
2.2.1
|
Seller’s Facilities may be modified pursuant to a change in International Standards or a change in Law with which Seller’s Facilities are required to comply, in which case, Seller shall pay for such modifications;
|
2.2.2
|
Buyer shall pay for any modification of an LNG Tanker required as a result of any modification of Seller’s Facilities pursuant to Clause B.2.2.1, to maintain compatibility with Seller’s Facilities (unless the applicable change in Law (a) is a change in the Law of Seller’s Country, and (b) mandates standards beyond those recommended by International Standards, in which case Seller shall pay for such modifications to the LNG Tanker);
|
2.2.3
|
Seller’s Facilities may be modified, at Seller’s sole expense, in respect of any change not described in Clause B.2.2.1; provided, however, that Seller shall reimburse Buyer for the reasonable costs and expenses incurred by Buyer in modifying an LNG Tanker previously accepted by Seller for loading at Seller’s Facilities pursuant to a Confirmation Memorandum to maintain compatibility with Seller’s Facilities as so modified;
|
2.2.4
|
Seller shall promptly notify Buyer of any proposed modification to Seller’s Facilities if such modification will affect the compatibility of Seller’s Facilities with any LNG Tanker scheduled to load an LNG Cargo at the Loading Port pursuant to a Confirmation Memorandum. If a modification to Seller’s Facilities pursuant to Clauses B.2.2.1 or B.2.2.3 would require the modification of an LNG Tanker for Buyer to perform its obligations hereunder, then Buyer may, within five (5) Days after receiving notice from Seller of the proposed modification to Seller’s Facilities, cancel delivery of any LNG Cargo scheduled to be loaded on an LNG Tanker that would require modification (such cancellation is effective upon Seller’s receipt of Buyer’s notice); provided, however, that prior to canceling such LNG Cargo(es), Buyer shall use reasonable efforts to use a Substitute LNG Tanker that is compatible with Seller’s modified Facilities to load the affected LNG Cargo. Neither Seller nor Buyer shall incur liability to the other Party as a consequence of Buyer’s cancellation of such LNG Cargo(es);
|
2.2.5
|
If as a consequence of any modification to Seller’s Facilities, Seller would be obligated to reimburse Buyer for modifications to an LNG Tanker pursuant to Clauses B.2.2.2 or B.2.2.3, then Seller may cancel any affected LNG Cargo (such cancellation is effective upon Buyer’s receipt of Seller’s notice), in which case Seller shall be liable to Buyer pursuant to Section 5.3 for failure to make available such cancelled LNG Cargo(es).
|
2.3
|
Prior to execution of any Confirmation Memorandum, Seller shall provide to Buyer a copy of the Marine Terminal Services Manual (MTSM) then in effect. Buyer shall either comply with such Marine Terminal Services Manual or shall obtain a waiver of compliance from the Seller or Seller’s Operator, as applicable (such waiver may be obtained before or after execution of the applicable Confirmation Memorandum).
|
3.1
|
Buyer shall ensure that, for each LNG Cargo identified in the Confirmation Memorandum, the LNG Tanker shall at all times be:
|
3.1.1
|
within the maximum and minimum gross volumetric capacities as specified in the Confirmation Memorandum;
|
3.1.2
|
equipped with appropriate systems for communication with the Loading Port and Seller’s Facilities, including all ship/shore communication systems normally required for the loading of LNG; and shall be in every respect fit to load, transport, unload and measure LNG and have all certificates, documents and equipment required to enable the LNG tankers to perform their voyage service without delay.
|
3.1.3
|
entered for liability and hull and machinery insurance with a P&I Club, including the pollution liability standard for LNG tankers; and have a current Certificate of Financial Responsibility and USCG approved Vessel Response Plan (VRP) for Oil Pollution under OPA-90 in the event the LNG tanker uses a port of call in U.S.A.;
|
3.1.4
|
equipped with adequate facilities for mooring, unmooring, and handling LNG;
|
3.1.5
|
constructed and maintained pursuant to the rules and regulations of, and maintained in class with, a member of the International Association of Classification Societies that has prior experience in classifying LNG tankers, and in compliance with applicable Laws;
|
3.1.6
|
operated in compliance with International Standards and applicable Laws of the country of vessel registry, including those that relate to seaworthiness, design, safety, environmental protection, navigation, and other operational matters, and all permits and approvals from Governmental Authorities for LNG tankers that are required for the loading of LNG at the Loading Port, transportation, and discharge of such LNG at the Unloading Port; and in all cases able to comply with all national and international marine emissions and ballast water management regulations applicable to loading Port and respective sea passage and approaches to the loading Port;
|
3.1.7
|
manned with skilled and competent operators, officers, and crew, who (a) are suitably qualified, trained, and experienced in international LNG tanker operations and qualified to a minimum of International Maritime Organization’s Standards of Training, Certification and Watchkeeping for Seafarers (“STCW”); (b) are able to communicate with regulatory authorities and operators at the Seller’s Facilities in written and spoken English; and (c) have subscribed to a policy, reasonably acceptable to Seller, precluding the use of drugs or alcohol aboard an LNG Tanker;
|
3.1.8
|
operated pursuant to a plan consistent with the IMO’s good industry’s practice Ship/Shore Safety Checklist for LNG transfers including the ISPS Security Checklist and Declarations of Safety and Security documentation as agreed in writing with Seller or Seller’s Facility operator before the commencement of loading operations;
|
3.1.9
|
the cargo tanks and all gas and LNG piping systems shall be gas and liquid tight; in all cases fitted with a working inert gas and nitrogen generation system;
|
3.1.10
|
the LNG tankers shall comply with the particulars described in the LNG Gas Form B or C as applicable and appended to the Confirmation Memorandum; if there is any conflict between the provisions of the Form B or C and any other provision of this MSA, such other provisions shall govern;
|
3.1.11
|
The LNG tankers shall have all cargo tanks’ measuring equipment and instrumentation calibrated by a recognised calibration company as referenced in Clause B.13 and certified in accordance with good industry practice and the requirements of the vessel’s Classification Society
|
3.1.12
|
if any of the nominated LNG tanker is fifteen years old or over, the Buyer shall ensure that the vessel maintains a LNG Condition Assessment Program (“CAP”) of not less than Category two (2); and
|
3.1.13
|
consistent with the marine emissions regulations in the loading Port, the vessel shall be able to burn for main propulsion engines or main Boiler any proportion of marine diesel oil and boil-off gas in the dual fuel mode, or if in the 100% boil-off gas mode, then it can be demonstrated from previous voyages that the propulsion will remain reliable and the vessel will be under control at all times during the maneuvering and transiting in restricted waters.
|
3.2
|
Once Seller has accepted an LNG Tanker for the loading of LNG pursuant to a Confirmation Memorandum, such LNG Tanker shall not continue to be used for the loading of LNG pursuant to such Confirmation Memorandum if such LNG Tanker is modified in any manner that would render it not in conformity with the specifications set forth in the Confirmation Memorandum or incompatible with Seller’s Facilities, subject to the following:
|
3.2.1
|
the LNG Tanker may be modified pursuant to a change in International Standards necessary for such LNG Tanker to retain its classification or comply with its flag registration requirements, or pursuant to a change in Law with which such LNG Tanker is required to comply, in which case, Buyer shall pay for the modification, unless the applicable change in Law was a change in the Law of Seller’s Country and the change mandated standards beyond those recommended by International Standards, in which case, Seller shall pay for such modifications;
|
3.2.2
|
Seller shall pay for any modifications to Seller’s Facilities required as a result of a modification to an LNG Tanker pursuant to Clause B.3.2.1, unless the applicable change in Law (a) is a change in Law other than a change in the Law of Seller’s Country referred to in Clause B.3.2.1; and (b) mandates standards beyond those recommended by International Standards, in which case Buyer shall pay for such modifications;
|
3.2.3
|
an LNG Tanker may be modified, at Buyer’s sole expense, in respect of any change not described in Clause B.3.2.1; provided, however, that Buyer shall reimburse Seller for the reasonable costs and expenses incurred by Seller due to any resulting modification to Seller’s Facilities that are necessary to maintain compatibility with the modified LNG Tanker;
|
3.2.4
|
Buyer shall promptly notify Seller of any required or planned modification to an LNG Tanker that will affect the compatibility of the LNG Tanker with Seller’s Facilities. If a modification to an LNG Tanker pursuant to Clauses B.3.2.1 or B.3.2.3 (other than a modification required by a change in Law of Seller’s Country that mandates standards beyond those recommended by International Standards) would require the modification of Seller’s Facilities for Seller to perform its obligations hereunder, Seller may, within five (5) Days after receiving notice from Buyer of the modification to an LNG Tanker, cancel loading of any LNG Cargo scheduled to be loaded from Seller’s Facilities to such modified LNG Tanker (such cancellation is effective upon Buyer’s receipt of Seller’s notice), provided, however, that if within five (5) Days after receiving Seller’s notice, Buyer gives notice that it can use one or more Substitute LNG Tankers compatible to load the relevant LNG Cargo in Seller’s Facilities, such LNG Cargo shall not be cancelled. If any change in Law of Seller’s Country would require the modification to an LNG Tanker for Buyer to perform its obligations hereunder, then Buyer may cancel any LNG Cargo(es) scheduled for loading to an LNG Tanker that would require modification (such cancellation is effective upon Seller’s receipt of Buyer’s notice); provided, however, that prior to canceling such LNG Cargo(es), Buyer shall use reasonable efforts to utilize a Substitute LNG Tanker that would not require modification to deliver such LNG Cargo(es). Neither Buyer nor Seller shall incur any liability to the other Party as a consequence of a cancellation of any LNG Cargo(es) pursuant to this Clause B.3.2.4.
|
3.2.5
|
If (a) an LNG Tanker must be modified for any reason other than a change in Law of Seller’s Country; or (b) as a consequence of any modification to any LNG Tanker, Buyer would be obligated to reimburse Seller for any modification to Seller’s Facilities pursuant to Clauses B.3.2.2 or B.3.2.3, Buyer may cancel any LNG Cargo affected by such modifications (such cancellation is effective upon Seller’s receipt of Buyer’s notice), in which case Buyer shall be liable to Seller pursuant to Section 5.2.2 for failure to take the cancelled LNG Cargo.
|
4.1
|
Buyer shall berth the LNG Tanker or cause it to be berthed as safely and expeditiously as reasonably possible pursuant to the requirements prescribed by the Marine Terminal Services Manual and in cooperation with Seller. Seller shall cooperate to commence loading (or cause it to be commenced) upon completion of berthing and complete loading (or cause it to be completed) safely and as expeditiously as reasonably possible and in accordance with all the requirements prescribed by the Marine Terminal Services Manual and any provisions described the Declaration of Safety and Declaration of Security documentation, if any.
|
4.2
|
During loading of each LNG Cargo, Buyer shall cause the LNG Tanker to return Natural Gas to Seller’s Facilities in such quantities necessary for the safe loading of the LNG at such rates, pressures, and temperatures required by the LNG Tanker.
|
4.3
|
Buyer shall cause the LNG Tanker to depart as safely and expeditiously as reasonably possible from the berth after completion of loading in accordance with all requirements prescribed by the Marine Terminal Services Manual and in cooperation with Seller.
|
4.4
|
If a problem occurs or is foreseen to occur that will or might cause delay to the LNG Tanker in berthing, loading, or departing berth, then Seller and Buyer shall discuss such problem in good faith and shall use reasonable efforts to minimize or to avoid the delay. Seller and Buyer shall cooperate with each other to find countermeasures to minimize or avoid the occurrence of any similar delay in the future.
|
5.1
|
Buyer shall be responsible for obtaining, and shall employ and pay for, the Marine Services required for loading of LNG by each LNG Tanker.
|
5.2
|
Buyer shall pay all Port Charges that are incurred in connection with delivery of LNG by each LNG Tanker; provided, however, that such Port Charges, if imposed by Seller, an Affiliate of Seller, or Seller’s Operator, shall be imposed on a non-discriminatory basis with respect to other similar users of the Loading Port.
|
5.3
|
Seller shall ensure that Marine Services are available at the Loading Port and that Buyer is able to contract for the Marine Services on reasonable terms and conditions.
|
6.1
|
As soon as reasonably practicable, but no later than eight (8) hours after the LNG Tanker’s drop of Pilots (DOP) on its departure from its last port of call and prior to its arrival at the Loading Port, Buyer shall notify Seller of the following (the “Departure Notice”):
|
6.1.1
|
the name of the LNG Tanker and IMO number;
|
6.1.2
|
the ETA of the LNG Tanker;
|
6.1.3
|
details of any operational deficiencies in the LNG Tanker that might affect its operations at the Loading Port or at the Seller’s Facilities; including any delays foreseen from Class Surveys and, or Port State Control inspections such as USCG Certificate of Compliance inspection (COC) onboard the vessel’s arrival at berth in a U.S. Port.
|
6.1.4
|
the LNG capacity of the LNG Tanker and the estimated quantity of LNG Heel on board the LNG Tanker;
|
6.1.5
|
the quantity of LNG that Buyer expects Seller to be able to load onto the LNG Tanker; and
|
6.1.6
|
any other information Seller may reasonably require.
|
6.2
|
In addition to the Departure Notice, Buyer or the master of the LNG Tanker shall send to Seller written notices confirming the ETA of an LNG Tanker (or updating the ETA with respect to any change in the ETA equal to or greater than six (6) hours) including the following information (and additional information Seller may reasonably require):
|
6.2.1
|
one hundred and twenty (120) hours prior to the ETA specified in the notice required by Clause B.6.1, unless the LNG Tanker’s ballast voyage is less than one hundred and twenty (120) hours;
|
6.2.2
|
ninety-six (96) hours prior to the most recently notified ETA, which notice shall include a crew list of LNG Tanker personnel unless the LNG Tanker’s ballast voyage is less than ninety-six (96) hours;
|
6.2.3
|
seventy-two (72) hours prior to the most recently notified ETA, which notice shall include a crew list of LNG Tanker’s personnel if a notice was not required to be given pursuant to Clause B.6.2.2;
|
6.2.4
|
forty-eight (48) hours prior to the most recently notified ETA, which notice must include the following information:
|
(a)
|
a list of services the LNG Tanker has scheduled while at the Loading Port and the scheduled date and time of the services (such as bunkering, stores, waste removal, or other services from another vessel alongside the LNG Tanker while at the Loading Port provided, however, these services are permitted and are available in the Seller’s Facilities and the Loading Port); and
|
(b)
|
a visitor list for personnel boarding the LNG Tanker from the berth at the Seller’s Facilities;
|
6.2.5
|
twenty-four (24) hours prior to the most recently notified ETA;
|
6.2.6
|
twelve (12) hours prior to the most recently notified ETA;
|
6.2.7
|
NOR as provided in Clause B.7; and
|
6.2.8
|
notice of “Ready to Load” to be issued as soon as the LNG Tanker is “all fast” at berth, cleared by the Governmental Authorities to commence loading operations and first loading arm is connected to the LNG tanker’s manifold flange.
|
6.3
|
In addition to the requirements of Clause B.6.2, Buyer shall give other notices and information as may be required by Law.
|
7.1
|
Upon arrival of the LNG Tanker at the PBS, the master of the LNG Tanker or its agent shall notify Seller that such LNG Tanker is fit in every way and ready to berth and to load LNG (“Notice of Readiness” or “NOR”). The master of the LNG Tanker or its agent is entitled to tender an NOR, and Seller shall accept such NOR on any Day of the week and any hour of the Day. The NOR becomes effective as follows:
|
7.1.1
|
if the LNG Tanker tenders its NOR prior to the end of the Arrival Period, then at the later of (a) the time such LNG Tanker tenders its NOR or (b) the start of such LNG Tanker’s Arrival Period; provided, however, that, if such LNG Tanker tenders its NOR, berths at the Seller’s Facilities, and initiates commencement of loading prior to the start of its Arrival Period, then the NOR becomes effective when the LNG Tanker is “all fast” at the berth and
|
7.1.2
|
if the LNG Tanker tenders its NOR after the end of the Arrival Period, then at such time (if ever) that Seller notifies Buyer pursuant to Clause B.7.3 that the LNG Tanker may proceed to the berth.
|
7.2
|
Subject to Clause B.7.4.1, Seller shall berth an LNG Tanker which has tendered NOR before or during its Arrival Period promptly after Seller determines such LNG Tanker will not interfere with berthing and loading or unloading of any other scheduled LNG tanker with a higher berthing priority in accordance with Clause B.7.3 but in no event later than the end of the Arrival Period allocated to such LNG Tanker; provided, however, that if Seller does not berth such LNG Tanker by the end of the Arrival Period, but berths such LNG Tanker within thirty six (36) hours after the end of the Arrival Period, Buyer’s sole recourse and remedy for Seller’s failure to berth the LNG Tanker by the end of the Arrival Period is Demurrage pursuant to Clause B.10.1.1 and payment for excess boil-off pursuant to Clause B.10.1.2. If, as of the thirty six (36th) hour after the end of the Arrival Period, Seller has not berthed the LNG Tanker, and such delay is not attributable to a reason that would result in an extension of the Allowed Laytime under Clause B.8.1, Seller shall be deemed to have failed to make available the Expected Delivery Quantity of the relevant LNG Cargo and the provisions of Section 5.3 shall apply.
|
7.3
|
Subject to (i) the rules of a Governmental Authority; (ii) the rules specified in the Marine Terminal Services Manual; and (iii) decisions taken by Pilots with respect to the berthing of LNG tankers in determining the berthing sequence, upon receipt of Buyer’s NOR, Seller or Seller’s Operator shall notify Buyer to have the LNG tanker proceed to berth in accordance with the following assigned berthing priority:
|
7.3.1
|
first, among those LNG tankers tendering NOR within the Arrival Period, and as between such LNG tankers, berthing priority is to the LNG tanker whose Arrival Period is the first to occur;
|
7.3.2
|
second, among those LNG tankers tendering NOR prior to the commencement of the Arrival Period, and as between such LNG tankers, berthing priority is on a “first come, first served” basis; and
|
7.3.3
|
third, among those LNG tankers tendering NOR after the end of the Arrival Period, and as between such LNG tankers berthing priority is on a “first come, first served” basis.
|
7.4
|
Subject to the foregoing Clause B.7.3, Seller shall use reasonable efforts to berth, as soon as practicable:
|
7.4.1
|
an LNG Tanker that tenders NOR prior to the Arrival Period; provided, however, that Seller is not obligated to berth such LNG Tanker prior to the
|
7.4.2
|
an LNG Tanker that tenders NOR after the end of the Arrival Period; provided, however, that (a) Seller is not obligated to berth such LNG Tanker after the end of the Arrival Period if such berthing would affect the ability of other LNG tankers arriving within their arrival periods, or prior to the commencement of their arrival periods, to proceed to berth, and (b) Seller shall have no obligation to use such efforts to berth an LNG Tanker that tenders NOR more than seventy-two (72) hours after the end of its Arrival Period; provided, further, that if, as of the seventy-second (72nd) hour after the end of the Arrival Period, the LNG Tanker has not tendered NOR, and such delay is not attributable to (i) Seller or Seller’s Operator, (ii) a Governmental Authority except where the reason for the delay was within Buyer’s, Transporter’s, the LNG Tanker’s, or the master, crew, owner or operator of such LNG Tanker’s reasonable control, or (iii) Force Majeure, Buyer shall be deemed to have failed to take delivery of the Expected Delivery Quantity of the relevant LNG Cargo and the provisions of Section 5.2 shall apply.
|
7.5
|
Notwithstanding the foregoing provisions of this Clause B.7, if Seller, acting as a Reasonable and Prudent Operator, determines that the berthing of the LNG Tanker would affect the safe operations of the Seller’s Facilities, then Seller may refuse to allow the LNG Tanker to proceed to berth.
|
7.6
|
If Seller’s Operator does not follow the normal industry practice of “first come, first served” with respect to LNG tankers, each of which arrives at the Loading Port not on schedule, then Seller, in the same manner as specified in Clauses B.10.1.1 and B.10.1.2, shall compensate Buyer for Demurrage (LNG Tanker rate per day) for the period of such delay and any excess boil-off that results from Seller’s Operator’s decision to allow any other LNG Tanker not on schedule to berth prior to Buyer’s LNG Tanker.
|
8.1
|
“Allowed Laytime” shall mean the allotted loading time as set forth in the Confirmation Memorandum. Allowed Laytime shall be extended as reasonably required to overcome delays in the loading of the LNG Cargo due to any of the following:
|
8.1.1
|
reasons attributable to Buyer; the LNG Tanker; the master, crew, owner or operator of such LNG Tanker; or any provider of Marine Services or other services for which the LNG Tanker or Buyer is responsible;
|
8.1.2
|
reasons attributable to a Governmental Authority (including Government Authority-mandated repairs to an LNG Tanker at the berth) except where the reason for the delay was within Seller’s or Seller’s Operator’s reasonable control;
|
8.1.3
|
Force Majeure;
|
8.1.4
|
nighttime transit or berthing restrictions notified by Seller in advance of the Arrival Period that actually delay the LNG Tanker from proceeding to berth or berthing immediately following NOR;
|
8.1.5
|
vessel traffic within the approach channel of the Loading Port;
|
8.1.6
|
Adverse Weather Conditions affecting Seller’s Facilities or the Loading Port;
|
8.1.7
|
occupancy of the berth by (a) another LNG Tanker of Buyer; or (b) another LNG tanker where that occupancy is due to reasons attributable to Force Majeure or Adverse Weather Conditions; and
|
8.1.8
|
delays associated with limited tidal windows for the approach channels to a Loading Port, but solely to the extent that such tidal windows actually delay the LNG Tanker from proceeding to berth immediately following NOR.
|
8.2
|
“Used Laytime” means the period of time, stated in hours, that begins and ends as follows:
|
8.2.1
|
Used Laytime begins when the NOR becomes effective pursuant to Clause B.7.
|
8.2.2
|
Used Laytime ends when all loading and return lines have been disconnected, and the LNG Tanker’s master has received all necessary clearances to depart from the Loading Port.
|
9.1
|
Upon receiving notice to proceed to berth, an LNG Tanker shall proceed to berth and become “all fast”, commence loading, complete loading, and shall use reasonable efforts, acting as a Reasonable and Prudent Operator, to vacate the berth promptly following emptying of deck piping and disconnecting of the LNG loading arms. Under limited circumstances, as detailed below, Seller or Seller’s Operator is entitled to direct an LNG Tanker to leave the berth after becoming “all fast”, prior to commencement of loading or prior to completing loading and necessary pre-departure activities. In so exercising its discretion, Seller shall not require an LNG Tanker to vacate the berth if (i) allowing the LNG Tanker to remain at berth will not be detrimental to the operations at the Seller’s Facilities (including the scheduled arrivals of other LNG tankers); or (ii) it is not safe for the LNG Tanker to leave the berth. Prior to directing an LNG Tanker to leave the berth, Seller shall use reasonable efforts to allow the LNG Tanker to remain at the berth. Subject to the foregoing sentence, if in the opinion of Seller’s Operator, the LNG Tanker presents an unacceptable health, safety, security, environmental, or operational risk, then Seller is entitled to direct the LNG Tanker to vacate the berth and proceed to sea. Seller also is entitled to direct the LNG Tanker to vacate the berth and proceed to sea under any of the following circumstances if the event described is caused by the action or inaction of Buyer, Transporter, or the LNG Tanker:
|
9.1.1
|
an LNG Tanker is not ready for loading (including by way of detention by Governmental Authorities) or commencement of loading and is not expected to load or commence loading within six (6) hours;
|
9.1.2
|
the loading process is interrupted for more than six (6) hours; or
|
9.1.3
|
completion of loading and necessary pre-departure activities of the LNG Tanker has not been achieved nor can reasonably be expected to be achieved within the Allowed Laytime.
|
9.2
|
If an LNG Tanker that has not been allowed to berth (or that has vacated the berth and proceeded to sea or an anchorage pursuant to Clause B.9.1) is ready for loading, then Buyer shall, if Buyer desires the LNG Tanker to return to the berth, notify Seller by tendering an NOR (which supersedes any previous NOR), in which case, Clauses B.7 and B.10 apply and a new Allowed Laytime shall commence.
|
10.1
|
Except as otherwise provided in Section 5.3, the remedies provided in this Clause B.10 are Buyer’s exclusive sole and exclusive remedies for any delay by Seller or Seller’s Operator in berthing and loading an LNG Tanker. Buyer shall invoice Seller (in accordance with Section 8.3) for any boil-off or demurrage due pursuant to this Clause B.10, and Seller shall pay such invoice in accordance with Section 8.5.3.
|
10.1.1
|
If Used Laytime exceeds Allowed Laytime (as the same may be extended pursuant to Clause B.8.1), then for the period of time that Used Laytime exceeds Allowed Laytime, Seller shall pay to Buyer, as liquidated damages, demurrage at a daily rate (pro-rata for any portion of a day) specified in the Confirmation Memorandum (“Demurrage”) until the earlier of (a) the end of Used Laytime, or (b) the time at which Seller is deemed to have failed to make available LNG pursuant to Clause B.7.2.
|
10.1.2
|
If (a) the LNG Tanker tenders its NOR prior to or during the Arrival Period and is delayed in berthing or commencement of loading (including a delay pending notification by Seller that it will not make an LNG Cargo available for reasons that are not excused pursuant to an Agreement); or if loading is interrupted, in each case for reasons that would not result in an extension of Allowed Laytime pursuant to Clause B.8.1; and (b) as a result, the commencement of loading is delayed beyond the effective time of the NOR by an amount of time which, when added to the amount of time of any interruptions in loading, exceeds twenty-four (24) hours, then Seller shall pay to Buyer an amount, on account of excess boil-off, equal to the following: (i) the Contract Price, per MMBtu, applicable to the relevant LNG Cargo, multiplied by (ii) the Boil-Off Rate applicable to the LNG Cargo, as specified in the Confirmation Memorandum, multiplied by (iii) the hours by which (A) the time between the effective time of the NOR and (I) the commencement of loading of such LNG Tanker (increased by any period of time following the commencement of loading during which loading has stopped) or (II) if loading does not commence and Seller becomes liable to Buyer pursuant to Section 5.3 with respect to such LNG Cargo then the time at which Seller becomes so liable, exceeds (B) twenty-four (24) hours.
|
10.2
|
If the Gross Heating Value of LNG to be made available by Seller hereunder is higher than the specifications set forth in the Confirmation Memorandum by reason of boil-off occurring during a delay in loading an LNG Tanker of more than forty eight (48) hours after the NOR is effective, and such delay is attributable to Buyer or Transporter such LNG will be deemed to have met the LNG Specifications pursuant to Section 6.1 and as set forth in the applicable Confirmation Memorandum regarding Gross Heating Value.
|
11.1
|
The remedies provided in this Clause B.11 are Seller’s sole and exclusive remedies for Buyer’s excess berth occupancy. Seller shall invoice Buyer as provided in Section 8.3 for any boil-off or demurrage due pursuant to this Clause B.11, and Buyer shall pay such invoice in accordance with Clause 8.5.2.
|
11.2
|
If, for reasons attributable to Buyer or the LNG Tanker (i) an LNG Tanker delays in vacating the berth after loading ends and return lines have been finally disconnected and the LNG Tanker is cleared by Seller’s Operator for departure; and (ii) as a result
|
13.1
|
Measurement and testing shall be conducted in accordance with Exhibit D.
|
13.2
|
Verification of accuracy of the measuring devices shall be conducted in accordance with the following provisions.
|
13.2.1
|
Accuracy of devices used will be tested and verified at the request of either Seller or Buyer, including the request by Seller or Buyer to verify accuracy of its own devices. Each of Seller and Buyer are entitled to inspect at any time the measurement devices installed by the other Party (or the Transporter) if the other Party is notified in advance. Either Party shall notify the other Party of tests of its measurement devices requested by other customers or suppliers, and may notify other customers or suppliers of the tests requested by the other Party. Testing shall be performed only when both Buyer and Seller are represented or have received adequate advance notice thereof, using methods recommended by the manufacturer or any other recognized method mutually agreed to by Buyer and Seller. At the request of either Buyer or Seller, an Independent Surveyor mutually agreed upon by Buyer and Seller shall witness and verify any test. If, after notice, Buyer or Seller fails to have a representative present, then the results of the test shall nevertheless be considered accurate until the next test. Permissible tolerances shall be as defined herein or as defined in the applicable standards referenced herein.
|
13.2.2
|
If at the time of verification a measuring instrument used for measuring the quality or quantity of LNG being loaded at the Loading Port is found to result in errors of one-half percent (0.5%) or less of the energy being measured, then the equipment’s previous measurements shall be considered accurate and such equipment shall be adjusted as necessary. If at the time of verification a measuring instrument is found to result in errors of more than
|
13.2.3
|
Buyer shall bear all costs and expenses for testing and verifying Buyer’s measurement devices (including, the LNG Tanker’s measurement devices), and Seller shall bear all costs and expenses for testing and verifying Seller’s measurement devices; provided, however, that if Seller or Buyer requests a test and is not the owner of or responsible for the measurement device being tested, then the requesting Party shall bear the expense of tests (including the cost of the Independent Surveyor, if requested pursuant to Clause B.13.2.1) if the inaccuracy is found to result in errors of one-half percent (0.5%) or less of the energy being measured.
|
13.3
|
Within three (3) Days after completion of loading of an LNG Cargo, Buyer shall send to Seller a report of the results of the measurements performed pursuant to Exhibit D.
|
13.4
|
Buyer and Seller shall each preserve for at least three hundred sixty-five (365) Days the test data, charts, and other similar records relating to the equipment referred to in Exhibit D.
|
13.5
|
Buyer and Seller shall mutually agree on the selection of the Independent Surveyor, and each shall equally bear the fees and charges of the Independent Surveyor, except in the circumstances described in Clause B.13.2.3.
|
14.1
|
Without prejudice to any liability that may arise or be imposed pursuant to the Marine Terminal Liability Regime or other agreement referenced in Clause B.14.3, Seller releases Buyer Group from liability to Seller incident to all Claims and Losses, brought by any Person, for: (i) injury to, illness, or death of any employee of Seller; or (ii) damage to or loss of any Seller’s Facilities, which injury, illness, death, damage, or loss arises out of, is incident to, or results from a Marine Incident occurring as a result of the performance or failure to perform this Agreement by Buyer, any Transporter or any of their respective Affiliates, shareholders, officers, directors, employees, designees, representatives, and agents.
|
14.2
|
Without prejudice to any liability that may arise or be imposed pursuant to the Marine Terminal Liability Regime or other agreement referenced in Clause B.14.3, Buyer releases Seller Group from liability to Buyer incident to all Claims and Losses,
|
14.3
|
Buyer shall cause the master of each LNG Tanker transporting an LNG Cargo pursuant to an Agreement to execute, or otherwise agree to be bound by, the terms of the Marine Terminal Liability Regime (or similar document establishing the liability relationship between the LNG Tanker and the port facilities) if:
|
14.3.1
|
(a) the Marine Terminal Liability Regime (i) is consistent with the Law (and with marine terminal liability regimes and conditions of use typically used elsewhere in the LNG industry), and (ii) treats Transporter in a nondiscriminatory manner in comparison to other owners and charterers of LNG vessels that use or transit such Loading Port; and (b) Transporter is readily able to obtain, on commercially reasonable terms, full P&I indemnity cover from a P&I Club that is a member with full entry in the International Group of P&I Clubs, and such P&I indemnity will cover all Claims and Losses pursuant to such Marine Terminal Liability Regime in relation to delivery of LNG Cargoes at the Loading Port. Seller warrants that the Marine Terminal Liability Regime for any Loading Port at which Seller makes available an LNG Cargo to Buyer will, at the time Seller makes available the LNG Cargo, meet the requirements specified in this Clause B.14.3.1 and will not prevent Buyer or Transporter from obtaining P&I full indemnity cover as described in this Clause B.14.3.1; or
|
14.3.2
|
Seller has provided Buyer a copy of the Marine Terminal Liability Regime, as indicated in the Confirmation Memorandum, and no material changes have been made to the Marine Terminal Liability Regime since its delivery to Buyer.
|
14.4
|
If the Marine Terminal Liability Regime at a Loading Port at which Seller is required to make available an LNG Cargo is inconsistent with the provisions of this Agreement (including the requirements specified in Clause B.14.3), then (i) the master of the relevant LNG Tanker will not be required to execute, or otherwise be bound by, the terms of the Marine Terminal Liability Regime; and (ii) Seller will be deemed to have failed to make available the LNG Cargo and Section 5.3 shall apply.
|
1.1
|
In the case of Ex-Ship Sales, Seller shall provide or procure, at its expense, transportation from the Loading Port to the Unloading Port of the LNG Cargoes sold pursuant to each Confirmation Memorandum. Seller shall maintain sufficient LNG shipping capacity to enable Seller to fulfill its obligations to deliver LNG to Buyer in accordance with this Agreement.
|
1.2
|
Buyer, at its expense, is entitled to inspect and approve each such LNG Tanker specified in the Confirmation Memorandum (or a Substitute LNG Tanker proposed pursuant to Clause C.1.3) to satisfy itself, without assuming or reducing Seller’s obligations, that each LNG Tanker is capable of delivering the LNG Cargoes safely and in an environmentally sound and timely manner, except that it must conduct such inspection no later than thirty (30) Days (determined in the time zone in which the Unloading Port is located) from the Confirm Date. Such inspection may include a review of class history records, port state control inspection databases, changes in status records, tanker management self-assessments, vessel conditions reports, and physical inspection reports (e.g., SIRE reports). Buyer shall not unreasonably withhold approval of any LNG Tanker. Seller agrees to provide or render assistance in obtaining, at Buyer’s expense, such information as may be necessary to verify the compatibility of a proposed LNG tanker with any relevant Unloading Port and unloading berth. Such information shall include drawings with sufficient detail to allow Buyer (or a Person acting on behalf of Buyer) to evaluate the compatibility of gangways, unloading arms, communications systems, mooring lines and breasting points and information regarding such proposed LNG tanker’s compliance with the Marine Terminal Services Manual and Laws applicable at the Unloading Port, unloading rate, and other physical dimensions. OCIMF/SIGTTO ship and shore facilities standard questionnaire forms for ship to shore compatibility may be used. Buyer shall have the right to reject any LNG tanker that does not comply with the provisions of this Agreement.
|
1.3
|
Although Seller is not obligated to do so, Seller is entitled to propose the use of a substitute LNG tanker of similar cargo capacity to the LNG Tanker specified in the Confirmation Memorandum (“Substitute LNG Tanker”) if necessary. Seller shall not use a Substitute LNG Tanker until Buyer has approved its use. Buyer shall not unreasonably withhold approval of any Substitute LNG Tanker. A Substitute LNG Tanker approved by Buyer pursuant to this Clause C.1.3 shall be an LNG Tanker for purposes of this Agreement. The use of a Substitute LNG Tanker shall not change the Expected Delivery Quantity unless the Confirmation Memorandum is amended by mutual agreement of Buyer and Seller.
|
1.4
|
Seller’s obligations under the relevant Agreement will not be excused or suspended by reason of Buyer’s rejection of the nominated LNG Tanker pursuant to Clause C.1.2 or the proposed Substitute LNG Tanker pursuant to Clause C.1.3.
|
2.1
|
Buyer, at no cost to Seller, shall ensure that Buyer’s Facilities shall be in all respects compatible with the LNG Tanker specifications specified in the Confirmation Memorandum for each LNG Cargo identified therein. Buyer and Seller shall cooperate to ensure the compatibility of Buyer’s Facilities and each LNG Tanker. Buyer’s Facilities shall be of appropriate design and sufficient capacity to enable Buyer to perform its obligations to take the quantities of LNG that Buyer is obligated to take and purchase, pursuant to an Agreement, including the following:
|
2.1.1
|
berthing facilities that comply with International Standards; at which such LNG Tanker can safely reach and safely depart, fully laden; and at which such LNG Tanker can lie safely berthed and discharge safely afloat at all times;
|
2.1.2
|
unloading facilities that shall permit the full discharge of an LNG Cargo from a fully loaded LNG Tanker at a rate of no less than 11,000 cubic meters per hour;
|
2.1.3
|
a vapor line system of sufficient capacity to transfer to an LNG Tanker quantities of regasified LNG necessary for the safe unloading of LNG at the rates, pressures, and temperatures required by either or both of such LNG Tanker’s design or good operating practice;
|
2.1.4
|
a suitable gangway (or in the case of a floating export facility a barge or launch) for personnel access;
|
2.1.5
|
LNG storage tanks (whether onshore, offshore, or floating) of adequate capacity to accept the LNG Cargo upon arrival of the LNG Tanker;
|
2.1.6
|
appropriate systems for email, facsimile, telephone, and radio communications with each LNG Tanker;
|
2.1.7
|
LNG regasification facilities; and
|
2.1.8
|
emergency shut-down systems.
|
2.2
|
Buyer’s Facilities shall not be modified in any manner that would render them incompatible with an LNG Tanker that has been accepted by Buyer for deliveries to Buyer’s Facilities pursuant to a Confirmation Memorandum, subject to the following:
|
2.2.1
|
Buyer’s Facilities may be modified pursuant to a change in International Standards or a change in Law with which Buyer’s Facilities are required to comply, in which case, Buyer shall pay for such modifications;
|
2.2.2
|
Seller shall pay for any modification of an LNG Tanker required as a result of any modification of Buyer’s Facilities pursuant to Clause C.2.2.1, to maintain compatibility with Buyer’s Facilities (unless the applicable change in Law (a) is a change in the Law of Buyer’s Country, and (b) mandates standards beyond those recommended by International Standards, in which case Buyer shall pay for such modifications to the LNG Tanker);
|
2.2.3
|
Buyer’s Facilities may be modified, at Buyer’s sole expense, in respect of any change not described in Clause C.2.2.1; provided, however, that Buyer shall reimburse Seller for the reasonable costs and expenses incurred by Seller in modifying an LNG Tanker previously accepted by Buyer for deliveries to Buyer’s Facilities pursuant to a Confirmation Memorandum to maintain compatibility with Buyer’s Facilities as so modified;
|
2.2.4
|
Buyer shall promptly notify Seller of any proposed modification to Buyer’s Facilities if such modification will affect the compatibility of Buyer’s Facilities with any LNG Tanker scheduled to deliver an LNG Cargo to the Unloading Port pursuant to a Confirmation Memorandum. If a modification to Buyer’s Facilities pursuant to Clauses C.2.2.1 or C.2.2.3 would require the modification of an LNG Tanker for Seller to perform its obligations hereunder, then Seller may, within five (5) Days after receiving notice from Buyer of the proposed modification to Buyers Facilities, cancel delivery of any LNG Cargo scheduled to be delivered by an LNG Tanker that would require modification (such cancellation is effective upon Buyer’s receipt of Seller’s notice); provided, however, that prior to canceling such LNG Cargo(es), Seller shall use reasonable efforts to use a Substitute LNG Tanker that is compatible with Buyer’s modified Facilities to deliver the affected LNG Cargo. Neither Seller nor Buyer shall incur liability to the other Party as a consequence of Seller’s cancellation of such LNG Cargo(es);
|
2.2.5
|
If as a consequence of any modification to Buyer’s Facilities, Buyer would be obligated to reimburse Seller for modifications to an LNG Tanker pursuant to Clauses C.2.2.2 or C.2.2.3, then Buyer may cancel any affected LNG Cargo (such cancellation is effective upon Seller’s receipt of Buyer’s notice), in which case Buyer shall be liable to Seller pursuant to Section 5.2 for failure to take such cancelled LNG Cargo(es).
|
2.3
|
Prior to execution of any Confirmation Memorandum, Buyer shall provide to Seller a copy of the Marine Terminal Manual then in effect. Seller shall either comply with such Marine Terminal Manual or shall obtain a waiver of compliance from the Buyer or Buyer’s Operator, as applicable (such waiver may be obtained before or after execution of the applicable Confirmation Memorandum).
|
3.1
|
Seller shall ensure that, for each LNG Cargo identified in the Confirmation Memorandum, the LNG Tanker shall at all times be:
|
3.1.1
|
within the maximum and minimum gross volumetric capacities as specified in the Confirmation Memorandum;
|
3.1.2
|
equipped with appropriate systems for communication with the Unloading Port and Buyer’s Facilities, including all ship/shore communication systems normally required for the discharge of LNG;
|
3.1.3
|
entered for insurance with a P&I Club, including the pollution liability standard for LNG tankers;
|
3.1.4
|
equipped with adequate facilities for mooring, unmooring, and handling LNG;
|
3.1.5
|
constructed and maintained pursuant to the rules and regulations of, and maintained in class with, a member of the International Association of Classification Societies that has prior experience in classifying LNG tankers, and in compliance with applicable Laws;
|
3.1.6
|
operated in compliance with International Standards and applicable Laws of the country of vessel registry, including those that relate to seaworthiness, design, safety, environmental protection, navigation, and other operational matters, and all permits and approvals from Governmental Authorities for LNG tankers that are required for the loading of LNG at the Loading Port, transportation, and discharge of such LNG at the Unloading Port;
|
3.1.7
|
manned with skilled and competent operators, officers, and crew, who (a) are suitably qualified, trained, and experienced in international LNG tanker operations and qualified to a minimum of International Maritime Organization standards; (b) are able to communicate with regulatory authorities and operators at the Buyer’s Facilities in written and spoken English; and (c) have subscribed to a policy, reasonably acceptable to Buyer, precluding the use of drugs or alcohol aboard an LNG Tanker; and
|
3.1.8
|
operated pursuant to a plan consistent with the IMO’s Ship/Shore Safety Checklist for discharging LNG agreed in writing with Buyer before the commencement of unloading operations.
|
3.2
|
Once Buyer has accepted an LNG Tanker for the transportation and discharging of LNG pursuant to a Confirmation Memorandum, such LNG Tanker shall not continue to be used to deliver LNG pursuant to such Confirmation Memorandum if such LNG Tanker is modified in any manner that would render it not in conformity with the
|
3.2.1
|
the LNG Tanker may be modified pursuant to a change in International Standards necessary for such LNG Tanker to retain its classification or comply with its registration requirements, or pursuant to a change in Law with which such LNG Tanker is required to comply, in which case, Seller shall pay for the modification, unless the applicable change in Law was a change in the Law of Buyer’s Country and the change mandated standards beyond those recommended by International Standards, in which case, Buyer shall pay for such modifications;
|
3.2.2
|
Buyer shall pay for any modifications to Buyer’s Facilities required as a result of a modification to an LNG Tanker pursuant to Clause C.3.2.1, unless the applicable change in Law (a) is a change in Law other than a change in the Law of Buyer’s Country referred to in Clause C.3.2.1; and (b) mandates standards beyond those recommended by International Standards, in which case Seller shall pay for such modifications;
|
3.2.3
|
an LNG Tanker may be modified, at Seller’s sole expense, in respect of any change not described in Clause C.3.2.1; provided, however, that Seller shall reimburse Buyer for the reasonable costs and expenses incurred by Buyer due to any resulting modification to Buyer’s Facilities that are necessary to maintain compatibility with the modified LNG Tanker;
|
3.2.4
|
Seller shall promptly notify Buyer of any required or planned modification to an LNG Tanker that will affect the compatibility of the LNG Tanker with Buyer’s Facilities. If a modification to an LNG Tanker pursuant to Clauses C.3.2.1 or C.3.2.3 (other than a modification required by a change in Law of Buyer’s Country that mandates standards beyond those recommended by International Standards) would require the modification of Buyer’s Facilities for Buyer to perform its obligations hereunder, Buyer may, within five (5) Days after receiving notice from Seller of the modification to an LNG Tanker, cancel delivery of any LNG Cargo scheduled to be delivered to Buyer’s Facilities by such modified LNG Tanker (such cancellation is effective upon Seller’s receipt of Buyer’s notice), provided, however, that if within five (5) Days after receiving Buyer’s notice, Seller gives notice that it can use one or more Substitute LNG Tankers compatible to deliver the relevant LNG Cargo in Buyer’s Facilities, such LNG Cargo shall not be cancelled. If any change in Law of Buyer’s Country would require the modification to an LNG Tanker for Seller to perform its obligations hereunder, then Seller may cancel any LNG Cargo(es) scheduled for delivery by an LNG Tanker that would require modification (such cancellation is effective upon Buyer’s receipt of Seller’s notice); provided, however, that prior to canceling such LNG Cargo(es), Seller shall use reasonable efforts to utilize a Substitute LNG
|
3.2.5
|
If (a) an LNG Tanker must be modified for any reason other than a change in Law of Buyer’s Country; or (b) as a consequence of any modification to any LNG Tanker, Seller would be obligated to reimburse Buyer for any modification to Buyer’s Facilities pursuant to Clauses C.3.2.2 or C.3.2.3, Seller may cancel any LNG Cargo affected by such modifications (such cancellation is effective upon Buyer’s receipt of Seller’s notice), in which case Seller shall be liable to Buyer pursuant to Section 5.3 for failure to make available the cancelled LNG Cargo.
|
4.1
|
Seller shall berth the LNG Tanker or cause it to be berthed as safely and expeditiously as reasonably possible pursuant to the requirements prescribed by the Marine Terminal Manual and in cooperation with Buyer. Buyer shall cooperate to commence unloading (or cause it to be commenced) upon completion of berthing and complete unloading (or cause it to be completed) safely and as expeditiously as reasonably possible and in accordance with all the requirements prescribed by the Marine Terminal Manual.
|
4.2
|
During discharge of each LNG Cargo, Buyer shall cause the Buyer’s Facilities to return Natural Gas to the LNG Tanker in such quantities necessary for the safe unloading of the LNG at such rates, pressures, and temperatures required by the LNG Tanker.
|
4.3
|
Seller shall cause the LNG Tanker to depart as safely and expeditiously as reasonably possible from the berth after completion of unloading in accordance with all requirements prescribed by the Marine Terminal Manual and in cooperation with Buyer.
|
4.4
|
If a problem occurs or is foreseen to occur that will or might cause delay to the LNG Tanker in berthing, unloading, or departing berth, then Buyer and Seller shall discuss such problem in good faith and shall use reasonable efforts to minimize or to avoid the delay. Buyer and Seller shall cooperate with each other to find countermeasures to minimize or avoid the occurrence of any similar delay in the future.
|
5.1
|
Seller shall be responsible for obtaining, and shall employ and pay for, the Marine Services required for delivery of LNG by each LNG Tanker.
|
5.2
|
Seller shall pay all Port Charges that are incurred in connection with delivery of LNG by each LNG Tanker; provided, however, that such Port Charges, if imposed by Buyer, an Affiliate of Buyer, or Buyer’s Operator, shall be imposed on a non-discriminatory basis with respect to other similar users of the Unloading Port.
|
5.3
|
Buyer shall ensure that Marine Services are available at the Unloading Port and that Seller is able to contract for the Marine Services on reasonable terms and conditions.
|
6.1
|
As soon as reasonably practicable, but no later than eight (8) hours after the LNG Tanker’s departure from the Loading Port, Seller shall notify Buyer of the following (the “Departure Notice”):
|
6.1.1
|
the name of the LNG Tanker;
|
6.1.2
|
the ETA of the LNG Tanker;
|
6.1.3
|
details of any operational deficiencies in the LNG Tanker that might affect its operations at the Unloading Port or at the Buyer’s Facilities;
|
6.1.4
|
the quantity of LNG loaded at Seller’s Facilities;
|
6.1.5
|
the quantity of LNG that Seller expects to be available for unloading at the Buyer’s Facilities;
|
6.1.6
|
the quality composition of the LNG Cargo as loaded, and the qualities that Seller reasonably anticipates such LNG Cargo will possess at unloading, the latter being the “Expected LNG Quality”; and
|
6.1.7
|
any other information Buyer may reasonably require.
|
6.2
|
In addition to the Departure Notice, Seller or the master of the LNG Tanker shall send to Buyer written notices confirming the ETA of an LNG Tanker (or updating the ETA with respect to any change in the ETA equal to or greater than six (6) hours) including the following information (and additional information Buyer may reasonably require):
|
6.2.1
|
one hundred and twenty (120) hours prior to the ETA specified in the notice required by Clause C.6.1, unless the LNG Tanker’s loaded voyage is less than one hundred and twenty (120) hours;
|
6.2.2
|
ninety-six (96) hours prior to the most recently notified ETA, which notice shall include a crew list of LNG Tanker personnel unless the LNG Tanker’s loaded voyage is less than ninety-six (96) hours;
|
6.2.3
|
seventy-two (72) hours prior to the most recently notified ETA, which notice shall include a crew list of LNG Tanker’s personnel if a notice was not required to be given pursuant to Clause C.6.2.2;
|
6.2.4
|
forty-eight (48) hours prior to the most recently notified ETA, which notice must include the following information:
|
(a)
|
a list of services the LNG Tanker has scheduled while at the Unloading Port and the scheduled date and time of the services (such as bunkering, stores, waste removal, or other services from another vessel alongside the LNG Tanker while at the Unloading Port provided, however, these services are permitted and are available in the Buyer’s Facilities and the Unloading Port); and
|
(b)
|
a visitor list for personnel boarding the LNG Tanker from the berth at the Buyer’s Facilities;
|
6.2.5
|
twenty-four (24) hours prior to the most recently notified ETA;
|
6.2.6
|
twelve (12) hours prior to the most recently notified ETA;
|
6.2.7
|
NOR as provided in Clause C.7; and
|
6.2.8
|
notice of “Ready to Discharge” to be issued as soon as the LNG Tanker is “all fast” at berth.
|
6.3
|
In addition to the requirements of Clause C.6.2, Seller shall give other notices and information as may be required by Law.
|
7.1
|
Upon arrival of the LNG Tanker at the PBS, the master of the LNG Tanker or its agent shall notify Buyer that such LNG Tanker is fit in every way and ready to berth and to discharge LNG (“Notice of Readiness” or “NOR”). The master of the LNG Tanker or its agent is entitled to tender an NOR, and Buyer shall accept such NOR on any Day of the week and any hour of the Day. The NOR becomes effective as follows:
|
7.1.1
|
if the LNG Tanker tenders its NOR prior to the end of the Arrival Period, then at the later of (a) the time such LNG Tanker tenders its NOR or (b) the start of such LNG Tanker’s Arrival Period; provided, however, that, if such LNG Tanker tenders its NOR, berths at the Buyer’s Facilities, and initiates
|
7.1.2
|
if the LNG Tanker tenders its NOR after the end of the Arrival Period, then at such time (if ever) that Buyer notifies Seller pursuant to Clause C.7.3 that the LNG Tanker may proceed to the berth.
|
7.2
|
Subject to Clause C.7.4.1, Buyer shall berth an LNG Tanker which has tendered NOR before or during its Arrival Period promptly after Buyer determines such LNG Tanker will not interfere with berthing and loading or unloading of any other scheduled LNG tanker with a higher berthing priority in accordance with Clause C.7.3 but in no event later than the end of the Arrival Period allocated to such LNG Tanker; provided, however, that if Buyer does not berth such LNG Tanker by the end of the Arrival Period, but berths such LNG Tanker within thirty six (36) hours after the end of the Arrival Period, Seller’s sole recourse and remedy for Buyer’s failure to berth the LNG Tanker by the end of the Arrival Window is Demurrage pursuant to Clause C.10.1.1 and payment for excess boil-off pursuant to Clause C.10.1.2. If, as of the thirty sixth (36th) hour after the end of the Arrival Period, Buyer has not berthed the LNG Tanker, and such delay is not attributable to a reason that would result in an extension of the Allowed Laytime under Clause C.8.1, Buyer shall be deemed to have failed to take the Expected Delivery Quantity of the relevant LNG Cargo and the provisions of Section 5.2 shall apply.
|
7.3
|
Subject to (i) the rules of a Governmental Authority; (ii) the rules specified in the Marine Terminal Manual; and (iii) decisions taken by Pilots with respect to the berthing of LNG tankers in determining the berthing sequence, upon receipt of Seller’s NOR, Buyer or Buyer’s Operator shall notify Seller to proceed to berth in accordance with the following assigned berthing priority:
|
7.3.1
|
first, among those LNG tankers tendering NOR within the Arrival Period, and as between such LNG tankers, berthing priority is to the LNG tanker whose Arrival Period is the first to occur;
|
7.3.2
|
second, among those LNG tankers tendering NOR prior to the commencement of the Arrival Period, and as between such LNG tankers, berthing priority is on a “first come, first served” basis; and
|
7.3.3
|
third, among those LNG tankers tendering NOR after the end of the Arrival Period, and as between such LNG tankers, berthing priority is on a “first come, first served” basis.
|
7.4
|
Subject to the foregoing Clause C.7.3, Buyer shall use reasonable efforts to berth, as soon as practicable:
|
7.4.1
|
an LNG Tanker that tenders NOR prior to the Arrival Period; provided, however, that Buyer is not obligated to berth such LNG Tanker prior to the
|
7.4.2
|
an LNG Tanker that tenders NOR after the end of the Arrival Period; provided, however, that (a) Buyer is not obligated to berth such LNG Tanker after the end of the Arrival Period if such berthing would affect the ability of other LNG tankers arriving within their arrival periods, or prior to the commencement of their arrival periods, to proceed to berth, and (b) Buyer shall have no obligation use such efforts to berth an LNG Tanker that tenders NOR more than thirty six (36) hours after the end of its Arrival Period; provided, further, that if, as of the thirty sixth (36th) hour after the end of the Arrival Period, the LNG Tanker has not tendered NOR, and such delay is not attributable to (i) Buyer or Buyer’s Operator, (ii) a Governmental Authority except where the reason for the delay was within Seller’s, Transporter’s, the LNG Tanker’s, or the master, crew, owner or operator of such LNG Tanker’s reasonable control, or (iii) Force Majeure, Seller shall be deemed to have failed to make available the Expected Delivery Quantity of the relevant LNG Cargo and the provisions of Section 5.3 shall apply.
|
7.5
|
Notwithstanding the foregoing provisions of this Clause C.7, if Buyer, acting as a Reasonable and Prudent Operator, determines that the berthing of the LNG Tanker would affect the safe operations of the Buyer’s Facilities, then Buyer may refuse to allow the LNG Tanker to proceed to berth.
|
7.6
|
If Buyer’s Operator does not follow the normal industry practice of “first come, first served” with respect to LNG tankers, each of which arrives at the Unloading Port not on schedule, then Buyer, in the same manner as specified in Clauses C.10.1.1 and C.10.1.2, shall compensate Seller for Demurrage (LNG Tanker rate per day) for the period of such delay and any excess boil-off that results from Buyer’s Operator’s decision to allow any other LNG tanker not on schedule to berth prior to Seller’s LNG Tanker.
|
8.1
|
“Allowed Laytime” shall mean the allotted unloading time as set forth in the Confirmation Memorandum. Allowed Laytime shall be extended as reasonably required to overcome delays in the unloading of the LNG Cargo due to any of the following:
|
8.1.1
|
reasons attributable to Seller; the LNG Tanker; the master, crew, owner or operator of such LNG Tanker; or any provider of Marine Services or other services for which the LNG Tanker or Seller is responsible;
|
8.1.2
|
reasons attributable to a Governmental Authority (including Government Authority-mandated repairs to an LNG Tanker at the berth) except where the
|
8.1.3
|
Force Majeure;
|
8.1.4
|
nighttime transit or berthing restrictions notified by Buyer in advance of the Arrival Period that actually delay the LNG Tanker from proceeding to berth or berthing immediately following NOR;
|
8.1.5
|
vessel traffic within the approach channel of the Unloading Port;
|
8.1.6
|
Adverse Weather Conditions affecting Buyer’s Facilities or the Unloading Port;
|
8.1.7
|
occupancy of the berth by (a) another LNG Tanker of Seller; or (b) another LNG tanker where that occupancy is due to reasons attributable to Force Majeure or Adverse Weather Conditions; and
|
8.1.8
|
delays associated with limited tidal windows for the approach channels to an Unloading Port, but solely to the extent that such tidal windows actually delay the LNG Tanker from proceeding to berth immediately following NOR.
|
8.2
|
“Used Laytime” means the period of time, stated in hours, that begins and ends as follows:
|
8.2.1
|
Used Laytime begins when the NOR becomes effective pursuant to Clause C.7.
|
8.2.2
|
Used Laytime ends when all discharge and return lines have been disconnected, and the LNG Tanker’s master has received all necessary clearances to depart from the Unloading Port.
|
8.2.3
|
Reasonable actual transit time (taking into consideration current conditions in the approach channel of the Unloading Port and the size of the LNG Tanker) required to move the LNG Tanker from the PBS (upon receipt of Buyer’s authorization to proceed to berth) to “all fast” will not count as Used Laytime; but any time following the effectiveness of NOR during which the LNG Tanker (a) waits for Buyer or Buyer’s Operator to notify the LNG Tanker to proceed to berth; or (b) is delayed in transit from the PBS to the berth, will count as Used Laytime.
|
9.1
|
Upon receiving notice to proceed to berth, an LNG Tanker shall proceed to berth and become “all fast”, commence unloading, complete unloading, and shall use reasonable efforts, acting as a Reasonable and Prudent Operator, to vacate the berth promptly following disconnecting of the LNG unloading arms and emptying of deck
|
9.1.1
|
an LNG Tanker is not ready for unloading or commencement of unloading and is not expected to unload or commence unloading within six (6) hours;
|
9.1.2
|
the unloading process is interrupted for more than six (6) hours; or
|
9.1.3
|
completion of unloading and necessary pre-departure activities of the LNG Tanker has not been achieved nor can reasonably be expected to be achieved within the Allowed Laytime.
|
9.2
|
If an LNG Tanker that has not been allowed to berth (or that has vacated the berth and proceeded to sea pursuant to Clause C.9.1) is ready for unloading, then Seller shall, if Seller desires the LNG Tanker to return to the berth, notify Buyer by tendering an NOR (which supersedes any previous NOR), in which case, Clauses C.7 and C.10 apply and a new Allowed Laytime shall commence.
|
10.1
|
Except as otherwise provided in Section 5.2, the remedies provided in this Clause C.10 are Seller’s exclusive sole and exclusive remedies for any delay by Buyer or Buyer’s Operator in berthing and unloading an LNG Tanker. Seller shall invoice Buyer (in accordance with Section 8.3) for any boil-off or demurrage due pursuant to this Clause C.10, and Buyer shall pay such invoice in accordance with Section 8.5.3.
|
10.1.1
|
If Used Laytime exceeds Allowed Laytime (as the same may be extended pursuant to Clause C.8.1), then for the period of time that Used Laytime exceeds Allowed Laytime, Buyer shall pay to Seller, as liquidated damages, demurrage at a daily rate (pro-rata for any portion of a day) specified in the Confirmation Memorandum (“Demurrage”) until the earlier of (a) the end
|
10.1.2
|
If (a) the LNG Tanker tenders its NOR prior to or during the Arrival Period and is delayed in berthing or commencement of unloading (including a delay pending notification by Buyer that it will not take an LNG Cargo for reasons that are not excused pursuant to an Agreement); or if unloading is interrupted, in each case for reasons that would not result in an extension of Allowed Laytime pursuant to Clause C.8.1; and (b) as a result, the commencement of unloading is delayed beyond the effective time of the NOR by an amount of time which, when added to the amount of time of any interruptions in unloading, exceeds twenty-four (24) hours, then Buyer shall pay to Seller an amount, on account of excess boil-off, equal to the following: (i) the Contract Price, per MMBtu, applicable to the relevant LNG Cargo, multiplied by (ii) the Boil-Off Rate applicable to the LNG Cargo, as specified in the Confirmation Memorandum, multiplied by (iii) the hours by which (A) the time between the effective time of the NOR and (I) the commencement of unloading of such LNG Tanker (increased by any period of time following the commencement of unloading during which unloading has stopped) or (II) if unloading does not commence and Buyer becomes liable to Seller pursuant to Section 5.2 with respect to such LNG Cargo then the time at which Buyer becomes so liable, exceeds (B) twenty-four (24) hours.
|
10.2
|
If the Gross Heating Value of LNG to be made available by Seller hereunder is higher than the specifications set forth in the Confirmation Memorandum by reason of boil-off occurring during a delay in unloading an LNG Tanker of more than forty eight (48) hours after the NOR is effective, and such delay is attributable to Buyer or Buyer’s Operator then such LNG will be deemed to have met the LNG Specifications pursuant to Section 6.1 and as set forth in the applicable Confirmation Memorandum regarding Gross Heating Value.
|
11.1
|
The remedies provided in this Clause C.11 are Buyer’s sole and exclusive remedies for Seller’s excess berth occupancy. Buyer shall invoice Seller as provided in Section 8.3 for any boil-off or demurrage due pursuant to this Clause C.11, and Seller shall pay such invoice in accordance with Section 8.5.3.
|
11.2
|
If, for reasons attributable to Seller or the LNG Tanker (i) an LNG Tanker delays in vacating the berth after unloading ends and return lines have been finally disconnected and the LNG Tanker is cleared by Buyer’s Operator for departure; and (ii) as a result of the unavailability of the berth, Buyer makes a payment to any Third Party for demurrage or for excess boil-off with respect to another LNG tanker, then Seller shall pay to Buyer, as liquidated damages, the demurrage and excess boil-off charges paid by Buyer with respect to the vessels of any other supplier whose arrival at the Buyer’s Facilities is delayed as a result of the excess berth occupancy, provided
|
13.1
|
Measurement and testing shall be conducted in accordance with Exhibit D.
|
13.2
|
Verification of accuracy of the measuring devices shall be conducted in accordance with the following provisions.
|
13.2.1
|
Accuracy of devices used will be tested and verified at the request of either Seller or Buyer, including the request by Seller or Buyer to verify accuracy of its own devices. Each of Seller and Buyer are entitled to inspect at any time the measurement devices installed by the other Party (or the Transporter) if the other Party is notified in advance. Either Party shall notify the other Party of tests of its measurement devices requested by other customers or suppliers, and may notify other customers or suppliers of the tests requested by the other Party. Testing shall be performed only when both Buyer and Seller are represented or have received adequate advance notice thereof, using methods recommended by the manufacturer or any other recognized method mutually agreed to by Buyer and Seller. At the request of either Buyer or Seller, an Independent Surveyor mutually agreed upon by Buyer and Seller shall witness and verify any test. If, after notice, Buyer or Seller fails to have a representative present, then the results of the test shall nevertheless be considered accurate until the next test. Permissible tolerances shall be as defined herein or as defined in the applicable standards referenced herein.
|
13.2.2
|
If at the time of verification a measuring instrument used for measuring the quality or quantity of LNG being unloaded at the Unloading Port is found to result in errors of one-half percent (0.5%) or less of the energy being measured, then the equipment’s previous measurements shall be considered accurate and such equipment shall be adjusted as necessary. If at the time of verification a measuring instrument is found to result in errors of more than one-half percent (0.5%) of the energy being measured, then the equipment’s previous measurements shall be brought to a zero (0) difference by comparison with calibration results for any period known definitively or agreed to have been affected by such error, and the calculations made during said period shall be corrected accordingly. If the period during which such
|
13.2.3
|
Buyer shall bear all costs and expenses for testing and verifying Buyer’s measurement devices, and Seller shall bear all costs and expenses for testing and verifying Seller’s measurement devices (including, the LNG Tanker’s measurement devices); provided, however, that if Seller or Buyer requests a test and is not the owner of or responsible for the measurement device being tested, then the requesting Party shall bear the expense of tests (including the cost of the Independent Surveyor, if requested pursuant to Clause C.13.2.1) if the inaccuracy is found to result in errors of one-half percent (0.5%) or less of the energy being measured.
|
13.3
|
Within three (3) Days after completion of unloading of an LNG Cargo, Buyer shall send to Seller a report of the results of the measurements performed pursuant to Exhibit D.
|
13.4
|
Buyer and Seller shall each preserve for at least three hundred sixty-five (365) Days the test data, charts, and other similar records relating to the equipment referred to in Exhibit D.
|
13.5
|
Buyer and Seller shall mutually agree on the selection of the Independent Surveyor, and each shall equally bear the fees and charges of the Independent Surveyor, except in the circumstances described in Clause C.13.2.3.
|
14.1
|
Without prejudice to any liability that may arise or be imposed pursuant to the Marine Terminal Liability Regime or other agreement referenced in Clause C.14.3, Seller releases Buyer Group from liability to Seller incident to all Claims and Losses, brought by any Person, for: (i) injury to, illness, or death of any employee of Seller; or (ii) damage to or loss of any LNG Tanker, which injury, illness, death, damage, or loss arises out of, is incident to, or results from a Marine Incident occurring as a result of the performance or failure to perform this Agreement by Buyer, Buyer’s Operator, or any of their respective Affiliates, shareholders, officers, directors, employees, designees, representatives, and agents.
|
14.2
|
Without prejudice to any liability that may arise or be imposed pursuant to the Marine Terminal Liability Regime or other agreement referenced in Clause C.14.3, Buyer releases Seller Group from liability to Buyer incident to all Claims and Losses, brought by any Person for: (i) injury to, illness or death of any employee of Buyer; or (ii) damage to or loss of any Buyer’s Facilities, which injury, illness, death, damage, or loss arises out of, is incident to, or results from any Marine Incident occurring as a result of the performance or failure to perform this Agreement by
|
14.3
|
Seller shall cause the master of each LNG Tanker transporting an LNG Cargo pursuant to an Agreement to execute, or otherwise agree to be bound by, the terms of the Marine Terminal Liability Regime (or similar document establishing the liability relationship between the LNG Tanker and the port facilities) if:
|
14.3.1
|
(a) the Marine Terminal Liability Regime (i) is consistent with the Law (and with marine terminal liability regimes and conditions of use typically used elsewhere in the LNG industry), and (ii) treats Transporter in a nondiscriminatory manner in comparison to other owners and charterers of LNG vessels that use or transit such Unloading Port; and (b) Transporter is readily able to obtain, on commercially reasonable terms, full P&I indemnity cover from a P&I Club that is a member with full entry in the International Group of P&I Clubs, and such P&I indemnity will cover all Claims and Losses pursuant to such Marine Terminal Liability Regime in relation to delivery of LNG Cargoes at the Unloading Port. Buyer warrants that the Marine Terminal Liability Regime for any Unloading Port at which Buyer requests Seller to make available an LNG Cargo will, at the time Seller makes available the LNG Cargo, meet the requirements specified in this Clause C.14.3.1 and will not prevent Seller or Transporter from obtaining P&I full indemnity cover as described in this Clause C.14.3.1; or
|
14.3.2
|
Buyer has provided Seller a copy of the Marine Terminal Liability Regime, as indicated in the Confirmation Memorandum, and no material changes have been made to the Marine Terminal Liability Regime since its delivery to Seller.
|
14.4
|
If the Marine Terminal Liability Regime at an Unloading Port to which Seller is required to make available an LNG Cargo is inconsistent with the provisions of this Agreement (including the requirements specified in Clause C.14.3), then (i) the master of the relevant LNG Tanker will not be required to execute, or otherwise be bound by, the terms of the Marine Terminal Liability Regime; and (ii) Seller will be deemed to have “made available” the LNG Cargo at the Unloading Port for all purposes, including with respect to the fulfillment of Seller’s delivery obligations pursuant to Section 5.3 and with respect to Buyer’s purchase obligations pursuant to Section 5.2.
|
D.1 -
|
MEASUREMENT OF QUANTITY OF LNG DELIVERED
|
1.1
|
The volume of LNG delivered from the Seller’s Facilities (in respect of an FOB Sale) or received at the Buyer’s Facilities (in respect of an Ex-Ship Sale) shall be measured in metric units by gauging the liquid in the tanks of each LNG Tanker. Seller (in the case of an Ex-Ship Sale) or Buyer (in the case of an FOB Sale) shall cause the list and trim of the LNG Tanker to be measured at the same time as the liquid level, pressure, and temperature readings of the tanks of the LNG Tanker are secured. Seller (in the case of an Ex-Ship Sale) or Buyer (in the case of an FOB Sale) shall cause the first gauging to be made after the master of the LNG Tanker has given notice of Ready to Load or Ready to Discharge (as the case may be), cessation of Natural Gas burning, and confirmation of stoppage of all spray pumps and compressors and shut-off of Natural Gas master valve to the LNG Tanker’s boilers or any other Natural Gas consuming unit on the LNG Tanker until after the second gauging (unless necessary for compliance with environmental regulations which require the consumption of Natural Gas during the LNG Tanker loading or unloading operations and/or upon mutual agreement of the Parties, in which case, Natural Gas consumed during loading or unloading shall be taken into account in the calculations pursuant to Clause D.5 of this Exhibit D.), Seller (in the case of an Ex-Ship Sale) or Buyer (in the case of an FOB Sale) shall cause the second gauging operation to be made immediately after the completion of loading or unloading (and confirmation of shut-off of the vapor manifold emergency shutdown valve and Natural Gas master valve to the LNG Tanker’s boilers, or dual fuel machinery, or other Natural Gas consumer on the LNG Tanker). Measurements prior to commencement of loading or unloading and after completion of loading or unloading will be carried out based on the LNG Tanker’s condition upon arrival at the berth (depending on whether the LNG Tanker arrives with deck piping full or deck piping empty). As significant volumes of LNG may remain in the LNG Tanker’s manifold and crossover, Seller (in the case of an Ex-Ship Sale) or Buyer (in the case of an FOB Sale) shall cause gauging to be performed with these lines in the same condition prior to commencement of loading or unloading and again after completion of loading or unloading. If the LNG Tanker’s manifold and crossover lines are empty (warm) when the measurement is taken before commencement of loading or unloading, then they will be emptied prior to the measurement following the completion of loading or unloading. If the crossover lines are liquid-filled (cold) when the measurement is taken before commencement of loading or unloading, then they must remain full (cold) until the measurement is taken following the completion of loading or unloading. Representatives of Buyer and Seller are entitled to be present at the gaugings. If emergency shut-down testing commences when the transfer piping is in a warm condition, such testing shall take place prior to shut-off of the Natural Gas master valve. If emergency shut-down testing commences while the transfer piping
|
1.2
|
Seller (in the case of an Ex-Ship Sale) or Buyer (in the case of an FOB Sale) shall cause the amount of vapor returned from an LNG Tanker during loading or sent to an LNG Tanker during unloading to be determined by calculating the difference in the liquid volume in the tanks of the LNG Tanker at the initial gauging compared to the final gauging and correcting it for the average temperature and absolute pressure of the vapor in the tanks of the LNG Tanker on final gauging. The results shall then be applied to the vapor displacement calculation illustrated below in Clause D.5.3.
|
1.3
|
Seller (in the case of an Ex-Ship Sale) or Buyer (in the case of an FOB Sale) shall furnish to the other Party evidence of calibration of the LNG tanks of each LNG Tanker for volume against level by a qualified Independent Surveyor, calibration authority, or contractor.
|
1.4
|
Seller (in the case of an Ex-Ship Sale) or Buyer (in the case of an FOB Sale) shall ensure tank gauge tables for each LNG tank of each LNG Tanker are available onboard such LNG Tanker. Such tank gauge tables shall include sounding tables, correction tables for list and trim, volume corrections to tank service temperature, density correction, and other necessary corrections, and shall indicate volumes in Cubic Meters (expressed to the nearest thousandth), with tank depths expressed in meters (to the nearest hundredth).
|
1.5
|
Seller (in the case of an Ex-Ship Sale) or Buyer (in the case of an FOB Sale) is entitled to audit the other Party’s records and tables that are relevant to the determination of the measurements and calculations referred to in this Clause D.1, upon notice and at reasonable times.
|
1.6
|
If the LNG tanks of any LNG Tanker suffer distortion of such nature as to create a reasonable doubt regarding the validity of the tank gauge tables described herein (or any subsequent calibration provided for herein), then Seller (in the case of Ex-Ship Sales) or Buyer (in the case of FOB Sales) shall cause the recalibration of the damaged tanks, and the LNG Tanker shall not transport any LNG Cargo until appropriate corrections are made. If mutually agreed between Seller’s and Buyer’s representatives, then recalibration of damaged tanks can be deferred until the next time when the damaged tanks are warmed for any reason, and any corrections to the prior tank gauge tables shall be made from the time the distortion occurred. If the initial time of distortion cannot be determined, then Buyer and Seller shall mutually agree on the time period for retrospective adjustments.
|
2.1
|
All Persons responsible for issuing and certifying the device calibrations and gauge tables for an LNG Tanker shall be certified by the applicable Governmental Authority and classification society rules. The devices provided for in this Exhibit D shall be
|
2.2
|
Each LNG tank of each LNG Tanker shall be equipped with a main and an auxiliary liquid level-gauging device. The measurement accuracy of the main liquid level gauging devices shall be plus or minus seven decimal five (+/- 7.5) millimeters and of the auxiliary liquid level gauging devices shall be plus or minus ten (+/- 10) millimeters or better. The level from the main and auxiliary gauging devices in each LNG tank shall be logged or printed.
|
2.3
|
Each LNG Tanker shall be equipped with a list-gauging device and a trim-gauging device. List and trim measurements shall be made using devices with accuracy of plus zero decimal five percent (+ 0.5%) of full span, and no worse than zero decimal zero five (0.05) degrees for list and zero decimal zero one (0.01) meters for trim.
|
2.4
|
Each LNG tank of each LNG Tanker shall be equipped with a minimum of five pairs of temperature-gauging devices located on or near the vertical axis of such LNG tank. The temperature-gauging devices shall be installed at various locations from the top to the bottom of each LNG tank. The temperatures in each LNG tank shall be logged or printed. In the temperature range of negative one hundred and sixty five degrees Centigrade (- 165° C) to negative one hundred and forty five degrees Centigrade (- 145° C), the accuracy shall be plus zero decimal two degrees Centigrade (+ 0.2° C). In the temperature range of negative one hundred and forty five degrees Centigrade (- 145° C) to forty degrees Centigrade (+ 40° C), the accuracy must be plus one decimal five degrees Centigrade (+ 1.5° C).
|
2.5
|
Each LNG tank of each LNG Tanker shall have one absolute pressure-gauging device. The measurement accuracy of the pressure-gauging device shall be plus or minus one percent (+/- 1%) of full-scale and in no case greater than plus ten (+ 10) millibar. The pressure in each LNG tank shall be logged or printed.
|
2.6
|
Gauging devices shall be verified for accuracy, and any inaccuracy of a device exceeding the permissible tolerance shall require correction of recordings and computations in accordance with this Exhibit D. Seller (in the case of an Ex-Ship Sale) or Buyer (in the case of an FOB Sale) shall verify the accuracy of gauging devices by providing sufficient documentation thereof to the other Party in each of the following circumstances: (a) if Seller (in the case of an FOB Sale) or Buyer (in the case of an Ex-Ship Sale), acting as a Reasonable and Prudent Operator, requests the verification due to changes in the accuracy of custody transfer measurements related to the specific LNG Tanker in question; (b) during each LNG Tanker dry docking; or (c) at least once every five years.
|
3.1
|
Liquid levels in each tank shall be determined pursuant to the then current ISO 13398 Section 6.2. Measurement of the liquid level in each LNG tank of each LNG Tanker shall be made to the nearest millimeter by using the main liquid level-gauging device referred to in Clause D.2. Should the main device fail, the auxiliary device shall be used. At least five (5) readings shall be made in close succession within a span of seconds. The arithmetic average of the readings shall be deemed the liquid level. The arithmetic average shall be calculated to the nearest zero decimal one (0.1) millimeter and be rounded to the nearest millimeter. The main device and the auxiliary device readings shall be read and recorded consecutively and without interruption.
|
3.2
|
At the same time as the liquid level is measured, the temperature of the liquid and of the vapor in the LNG Tanker shall be determined by using the temperature-gauging devices referred to in Clause D.2. To determine the temperature of liquid and vapor in the LNG Tanker, one (1) reading shall be taken at each temperature-gauging device in each LNG tank. An arithmetic average to nearest two (2) decimal places of such readings in each tank with respect to vapor, for those readings taken of vapor, and liquid, for those readings taken of liquid, shall be deemed the final temperature of vapor and liquid, respectively, for such tank. The arithmetic average of all tanks with respect to vapor and liquid temperatures rounded to the nearest zero decimal one degree Centigrade (0.1° C). shall be the final vapor temperature and liquid temperature in the LNG Tanker.
|
3.3
|
At the same time as the liquid level is measured, the absolute pressure in each LNG tank shall be measured to the nearest one millibar by using the pressure-gauging device referred to in Clause D.2. The determination of the absolute pressure in each LNG tank of each LNG Tanker shall be made by taking one reading of the pressure-gauging device in each LNG tank and then taking an arithmetic average of all such readings. The arithmetic average shall be calculated to the nearest zero decimal one (0.1) millibar and rounded to the nearest one millibar.
|
3.4
|
As the liquid level is measured, the list and trim of the LNG Tanker shall be measured by taking one reading from the list and trim devices. The list and trim shall be measured to the nearest zero decimal one (0.1) degree for list and the nearest zero decimal zero two (0.02) meter for trim (or, in each case, more precisely if the applicable LNG Tanker is so equipped and capable).
|
3.5
|
If the measurements referred to in this Clause D.3 become impossible to perform due to a failure of gauging devices, then alternative gauging procedures shall be determined by mutual agreement between Buyer and Seller in consultation with the Independent Surveyor.
|
3.6
|
The volume of LNG transferred, stated in Cubic Meters to the nearest zero decimal zero zero one (0.001) Cubic Meter, shall be determined by (a) using the tank gauge
|
3.7
|
Natural Gas consumed by the LNG Tanker during loading or unloading shall be taken into account in accordance with the formula in Clause D.5.3 of this Exhibit D for the Btu calculation of the quantity of LNG loaded or unloaded.
|
D.4 -
|
DETERMINATION OF COMPOSITION OF LNG LOADED OR UNLOADED
|
4.1
|
LNG sampling during transferring shall be performed in accordance with the protocol employed by the Loading Port or Unloading Port, as applicable, which shall be in accordance with relevant International Standards, and may be either continuous or discontinuous.
|
4.2
|
If any Dispute as to the accuracy of any analysis is raised, any LNG samples collected shall be retained until Buyer and Seller mutually agree to retain it no longer.
|
4.3
|
Tests for trace contaminants shall be performed in accordance with the procedures utilized at the Loading Port or Unloading Port, as applicable, which shall be in accordance with relevant International Standards.
|
D.5 -
|
DETERMINATION OF QUANTITY OF LNG LOADED OR UNLOADED
|
5.1
|
The density of LNG shall be calculated using the revised Klosek and McKinley method and using the formulas:
|
D =
|
the density to four (4) significant figures of the LNG unloaded, stated in kilograms per Cubic Meter at temperature TL;
|
Xi =
|
the mol fraction, to the nearest fourth (4th) decimal place, of component i from the composition obtained pursuant to Clause D.4;
|
Mi =
|
the molecular weight of component i as specified in the then current GPA Publication 2145 (Physical Constants);
|
Vi =
|
the molar volume, to the nearest sixth (6th) decimal place, of component i, stated in Cubic Meters per kilo mol at temperature TL and obtained by linear interpolation of the data specified in the then current National Bureau of Standards Interagency Report 77-867;
|
Xm =
|
the mol fraction, to the nearest fourth (4th) decimal place, of methane from the composition obtained pursuant to Clause D.4;
|
Xn =
|
the mol fraction, to the nearest fourth (4th) decimal place, of nitrogen from the composition obtained pursuant to Clause D.4;
|
K1 =
|
the volume correction factor derived from the values specified in the then current National Bureau of Standards Interagency Report 77-867; and
|
K2 =
|
the volume correction factor derived from the values specified in the then current National Bureau of Standards Interagency Report 77-867.
|
5.2
|
The Heating Value (mass basis) of LNG, stated in Btu per lbm, shall be calculated by use of the formula:
|
P =
|
Heating Value of LNG, stated in Btu per lbm;
|
Hi =
|
Heating Value of component i, stated in Btu per lbm as specified in the then current GPA Publication 2145 (Physical Constants);
|
Xi =
|
the mol fraction, to the nearest fourth (4th) decimal place, of component i from the composition obtained pursuant to Clause D.4; and
|
Mi =
|
the molecular weight of component i as specified in the then current GPA Publication 2145 (Physical Constants).
|
Hv =
|
the Heating Value, stated in Btu per cubic foot;
|
Xi =
|
the mol fraction, to the nearest fourth (4th) decimal place, of component i from the composition obtained pursuant to Clause D.4; and
|
Hvi =
|
the Heating Value of component i, stated in Btu per cubic foot, as specified in the then current GPA Publication 2145 (Physical Constants).
|
5.3
|
The quantity of energy loaded or unloaded shall be computed using the following formula and applying the method of rounding specified in Clause D.5.4:
|
Q =
|
the quantity of LNG loaded or unloaded (as the case may be), stated in Btu;
|
V =
|
the volume of the LNG loaded or unloaded (as the case may be), stated in Cubic Meters, obtained pursuant to Clause D.3;
|
D =
|
the density of the LNG, stated in kilograms per Cubic Meter, as calculated pursuant to this Clause D.5;
|
P =
|
the Heating Value of the LNG, stated in Btu per lbm, as calculated pursuant to this Clause D.5; and
|
QR =
|
the Quantity of the vapor, stated in Btu, which displaced the volume of the LNG loaded or unloaded. QR shall be computed by use of the following formula:
|
TV =
|
the average temperature of the vapor in the tanks of the LNG Tanker after completion of loading or unloading (as the case may be), stated in degrees Centigrade to the nearest zero decimal one (0.1) degree C;
|
Pa =
|
the absolute pressure of the vapor in the tanks of the LNG Tanker after completion of loading or unloading (as the case may be), stated in kPa; and
|
QBOG
|
= the quantity of boil-off gas in Btu consumed by the LNG Tanker during loading or unloading, calculated as follows:
|
V2
|
= the quantity of Natural Gas consumed by the LNG Tanker during loading or unloading (as calculated pursuant to the below formula), stated in kg and rounded to the nearest kg; and
|
HVf
|
= the heating value of the Natural Gas consumed (assumed 100% methane) stated in Btu per pound mass at Standard Conditions (sixty degrees Fahrenheit (60º F), one four decimal six nine six (14.696) psia and equivalent to one five decimal six zero degrees Centigrade (15.60º C) and one zero one decimal three two five (101.325) kPa pursuant to the then current GPA 2145-03 where heating value of methane (fuel as ideal gas) shall be twenty three thousand eight hundred ninety two (23892) Btu per pound mass.
|
V2
|
= the quantity of Natural Gas consumed by the LNG Tanker during loading or unloading, stated in kg;
|
Vf
|
= the reading of Natural Gas Consumption Meter on board the LNG Tanker after the completion of loading or unloading, stated in kg; and
|
Vi
|
= the reading of Natural Gas Consumption Meter on board the LNG Tanker before the start of loading or unloading, stated in kg.
|
5.4
|
Rounding
|
5.5
|
The following conversions shall be used:
|
6.1
|
by using the registration of any check meter or meters if installed and accurately registering, or in the absence thereof;
|
6.2
|
by correcting the error, if such error is ascertainable by calibration, test, or mathematical calculation; or
|
6.3
|
if the methods specified in Sections 6.1 or 6.2 are not available, then by estimating the quantity of LNG loaded or unloaded by another agreed method.
|
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(1)
|
Seller is developing a liquefied natural gas (“LNG”) liquefaction terminal on the Calcasieu River, south of Lake Charles, Louisiana;
|
(2)
|
On or about the Effective Date, Buyer or Buyer’s Affiliate has entered into an equity capital contribution agreement with Seller’s Affiliate, Driftwood Holdings LP, a Delaware limited partnership (the “Partnership”);
|
(3)
|
Buyer desires to be engaged in the purchase of LNG at Seller’s liquefaction terminal and transportation of such LNG to one or more Discharge Terminals; and
|
(4)
|
Seller and Buyer desire to execute this definitive agreement setting out the Parties’ respective rights and obligations in relation to the sale and purchase of excess LNG quantities.
|
1.
|
Definitions and Interpretation
|
1.1
|
Definitions
|
AAA:
|
as defined in Section 20.1.2;
|
Acceptable Credit Rating:
|
two (2) Credit Ratings that are each equal to or better than the following: (i) Baa3 by Moody’s Investors Service, Inc., (ii) BBB- by Standard & Poor’s Rating Services, a division of McGraw-Hill Companies, (iii) BBB- by Fitch Ratings, Inc., or (iv) any comparable Credit Ratings by any other nationally recognized statistical rating organizations registered with the U.S. Securities and Exchange Commission, including any successors to Moody’s Investors Service, Inc., Standard & Poor’s Rating Services, or Fitch Ratings, Inc.;
|
Acceptable Guarantor:
|
an Affiliate of Assignee Buyer that has an Acceptable Credit Rating;
|
ACQ:
|
as defined in Section 5.1.1;
|
Actual Laytime:
|
as defined in Section 7.12.2;
|
Adjusted Annual Contract
Quantity or AACQ:
|
as defined in Section 5.2;
|
Adverse Weather Conditions:
|
weather or sea conditions actually experienced or reasonably forecasted at or near the Driftwood LNG Terminal that are sufficiently severe: (i) to prevent an LNG Tanker from proceeding to berth, or loading or departing from berth, in accordance with one or more of the following: (a) regulations published by a Governmental Authority; (b) an Approval; or (c) an order of a Pilot; (ii) to cause an actual determination by the master of an LNG Tanker that it is unsafe for such LNG Tanker to berth, load, or depart from berth; or (iii) to prevent or severely limit the production of LNG at the Driftwood LNG Terminal;
|
Affiliate:
|
with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with such Person; for purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) means the direct or indirect ownership of fifty percent (50%) or more of the voting rights in a Person or the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; for purposes of this Agreement, (i) Seller, the Partnership and all Seller Affiliates that are wholly-owned by the Partnership shall be deemed not to be Affiliates of Buyer, (ii) Buyer, its ultimate parent company, and all Buyer Affiliates that are wholly-owned by the same ultimate parent company shall be deemed not to be Affiliates of Seller, (iii) references to Affiliates of the Partnership shall only include Affiliates that are subsidiaries of the Partnership, and (iv) Tellurian Inc. and its wholly-owned Affiliates shall be deemed not to be Affiliates of the Partnership or its wholly-owned Affiliates, and vice versa;
|
Agreement:
|
this agreement, including the Exhibits hereto, as the same may be amended, modified or replaced from time to time;
|
Allotted Laytime:
|
as defined in Section 7.12.1;
|
Allowed Laytime:
|
as defined in Section 7.13.2(a);
|
Annual Delivery Program or ADP:
|
as defined in Section 8.2.3;
|
Anti-Corruption Law:
|
any of the U.S. Foreign Corrupt Practices Act, the OECD convention on anti-bribery, the U.K. Bribery Act of 2010, E.U. and E.U. member country anti-bribery and corruption laws, and any other corruption or similar statute, regulation, order or convention binding on the applicable Person, as each may be amended from time to time, and including any implementing regulations promulgated pursuant thereto;
|
Applicable Laws:
|
in relation to matters covered by this Agreement, all applicable laws, statutes, rules, regulations, ordinances, codes, standards and rules of common law, and judgments, decisions, interpretations, orders, directives, injunctions, writs, decrees, stipulations, or awards of any applicable Governmental Authority or duly authorized official, court or arbitrator thereof, in each case, now existing or which may be enacted or issued after the Effective Date;
|
Approvals:
|
any and all permits (including work permits), franchises, authorizations, approvals, grants, licenses, visas, waivers, exemptions, consents, permissions, registrations, decrees, privileges, variances, validations, confirmations or orders granted by or filed with any Governmental Authority, including the Export Authorizations;
|
Assignee Buyer:
|
as defined in Section 15.3.2;
|
Bankruptcy Event:
|
with respect to any Person: (i) such Person’s suspension of payment of, or request to any court for a moratorium on payment of, all or a substantial part of such Person’s debts, (ii) such Person’s making of a general assignment, compromise or any composition with or for the benefit of its creditors except to the extent otherwise permitted by Section 21, (iii) any petition or filing under the bankruptcy or other insolvency laws of any jurisdiction, or consent by answer by such Person to the filing against it, seeking relief or reorganization or arrangement (by way of voluntary arrangement, scheme of arrangement or otherwise) or any other similar petition or filing in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iv) any order or filing under the laws of any jurisdiction seeking the winding up, bankruptcy, liquidation, dissolution, custodianship or administration of such Person or any substantial part of such Person’s property, (v) any order under the bankruptcy or insolvency laws of any jurisdiction: (a) constituting an order for relief with respect to such Person; (b) approving a petition for relief or reorganization or any other petition in bankruptcy or insolvency law with respect to such Person; or (c) approving any petition filed in bankruptcy or insolvency law against such Person, or (vi) the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager or other similar officer in respect of such Person or any substantial part of such Person’s property;
|
Btu:
|
the amount of heat equal to one thousand fifty-five decimal zero five six (1,055.056) Joules;
|
Business Day:
|
any Day (other than Saturdays, Sundays and national holidays in the United States of America) on which commercial banks are normally open to conduct business in London, England and the United States of America;
|
Buyer:
|
as defined in the Preamble;
|
Buyer Taxes:
|
as defined in Section 11.3;
|
Cargo DoP Payment:
|
as defined in Section 5.6.2;
|
Cargo DoP Quantity:
|
as defined in Section 5.6.2;
|
Cargo Shortfall Payment:
|
as defined in Section 5.7.3;
|
Cargo Shortfall Quantity:
|
as defined in Section 5.7.2;
|
Claim:
|
all claims, demands, legal proceedings, or actions that may exist, arise, or be threatened currently or in the future at any time following the Effective Date, whether or not of a type contemplated by any Party, and whether based on federal, state, local, statutory or common law or any other Applicable Law;
|
Class A Additional Issuance Notice:
|
any notice pursuant to the Partnership Agreement requesting funding in respect of the construction of the Phase 1 Project or related Partnership expenses or for general Partnership matters other than the construction of the Phase 2 Project or Phase 3 Project and related Partnership expenses;
|
Class A Units:
|
interests in the Partnership denoted as “Class A Units” under the Partnership Agreement;
|
Composite ADP:
|
as defined in Section 8.2.4;
|
Composite Ninety Day Schedule:
|
as defined in Section 8.4.2;
|
Confidential Information:
|
as defined in Section 18.1;
|
Connecting Pipeline:
|
HGAP, the Driftwood Pipeline and any pipeline as may be directly interconnected to the Driftwood LNG Terminal;
|
Contract Year:
|
as defined in Section 4.4;
|
Credit Rating:
|
a credit rating in respect of the senior, unsecured, long-term debt (not supported by third-party credit enhancement) of a Person;
|
CY:
|
as defined in Section 5.1.1;
|
Date of Full Operations:
|
as defined in Section 4.3.1;
|
Date of Substantial Completion:
|
as defined in Section 4.2.1;
|
Day:
|
a period of twenty-four (24) consecutive hours starting at 00:00 hours local time in Calcasieu Parish, Louisiana;
|
De-Bottlenecking:
|
“de-bottlenecking” enhancements or modifications in respect of a Phase Project (including a Plant) with the intention of enhancing the overall production capacity of the Driftwood LNG Terminal relative to the Tested Capacity of the Driftwood LNG Terminal prior to the implementation of such enhancements or modifications; provided, however, that De-Bottlenecking shall not include (a) any construction within the scope of an EPC Contract, or (b) any ordinary course maintenance or general upkeep designed to maintain or re-establish the previously-established Tested Capacity of the Driftwood LNG Terminal;
|
De-Bottlenecking Contributions:
|
as defined in the Partnership Agreement;
|
De-Bottlenecking Total Quantity:
|
the total quantity of LNG (in MMBtu) available for scheduling by LNG buyers in connection with a De-Bottlenecking project, which shall be calculated as (a) prior to determining the Tested Capacity of the Driftwood LNG Terminal following the completion of such De-Bottlenecking project, Seller’s good faith estimate of such quantity, and (b) at all times following such Tested Capacity determination, the difference between such Tested Capacity determination and the Tested Capacity of the Driftwood LNG Terminal prior to the completion of such De-Bottlenecking project;
|
Delivery Point:
|
as defined in Section 6.1;
|
Delivery Window:
|
a twenty-four (24) hour period starting at 6:00 a.m. Central Time on a specified Day and ending twenty-four (24) consecutive hours thereafter that is allocated to Buyer under the ADP or Ninety Day Schedule, as applicable;
|
Demurrage Event:
|
as defined in Section 7.12.3;
|
Demurrage Rate:
|
as defined in Section 7.12.3;
|
Direct Agreement:
|
as defined in Section 21.4.2;
|
Discharge Terminal:
|
with respect to each cargo of LNG taken or scheduled to be taken by Buyer pursuant to this Agreement, the facilities intended by Buyer to be utilized for the unloading, reception, discharge, storage, treatment (if necessary), and regasification of the LNG and the processing and send-out of Gas or regasified LNG, and other relevant infrastructure, including marine facilities (such as breakwaters and tugs) for the safe passage to berth of LNG Tankers, terminal facilities for the berthing and discharging of LNG Tankers, LNG storage tanks and the regasification plant;
|
Dispute:
|
any dispute or difference of whatsoever nature arising under, out of, in connection with or in relation (in any manner whatsoever) to this Agreement or the subject matter of this Agreement, including (a) any dispute or difference concerning the initial or continuing existence of this Agreement or any provision of it, or as to whether this Agreement or any provision of it is invalid, illegal or unenforceable (whether initially or otherwise); or (b) any dispute or claim which is ancillary or connected, in each case in any manner whatsoever, to the foregoing;
|
Driftwood LNG Terminal:
|
the facilities that Seller intends to construct, own and operate (or have operated on its behalf) in Calcasieu Parish, Louisiana, on the Calcasieu River, including the Gas pretreatment and processing facilities, liquefaction facility, storage tanks, utilities, terminal facilities, and associated port and marine facilities, and all other related facilities both inside and outside the LNG plant, inclusive of all Plants;
|
Driftwood Marine Operations Manual:
|
as defined in Section 7.8;
|
Driftwood Pipeline:
|
that certain Gas pipeline that Driftwood LNG Pipeline LLC intends to construct, own and operate (or have operated on its behalf), and which will interconnect the Driftwood LNG Terminal with other Gas pipelines in Louisiana;
|
Driftwood Project:
|
the Phase 1 Project, Phase 2 Project and Phase 3 Project, collectively;
|
Effective Date:
|
as defined in the Preamble;
|
Electronic Transmission:
|
any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process;
|
EPC Contract:
|
each of the Phase 1 EPC Contract, Phase 2 EPC Contract, Phase 3 EPC Contract and Phase 4 EPC Contract;
|
ETA:
|
with respect to an LNG Tanker, the estimated time of arrival of such LNG Tanker at the PBS;
|
Excess Boil-Off Event:
|
as defined in Section 7.12.4;
|
Excluded Terms:
|
as defined in Section 9.3;
|
Expert:
|
a Person agreed upon or appointed in accordance with Section 20.2.1;
|
Export Authorizations:
|
as defined in Section 2.1;
|
Export Control and Sanctions Laws:
|
export control and sanctions laws and regulations of the United States of America, including the Export Administration Regulations, 15 C.F.R. Parts 730 et seq., and economic sanctions administered by the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC), 31 C.F.R. Part 500 et seq.;
|
Estimated Monthly LNG Margin:
|
as defined in Section 9.1;
|
Facilities Charge:
|
as defined in Section 9.1;
|
Final Contract Year:
|
as defined in Section 4.4(b);
|
Final Coverage Amount:
|
as defined in Section 9.2;
|
Final Debt Service Costs:
|
as defined in Section 9.2;
|
Final Invoice:
|
as defined in Section 10.1.8(b);
|
Final Net Gas Costs:
|
as defined in Section 9.2;
|
Final Transfer Price:
|
as defined in Section 9.2;
|
First Contract Year:
|
as defined in Section 4.4(a);
|
Force Majeure:
|
as defined in Section 14.1;
|
FTA Export Authorization:
|
an order from the Office of Fossil Energy of the U.S. Department of Energy granting to Seller or any other Person acting as agent on behalf of Seller the authorization to export LNG delivered pursuant to this Agreement by vessel from the Driftwood LNG Terminal to countries that have entered into a free trade agreement with the United States of America requiring the national treatment for trade in natural gas for a specific term, as the same may be supplemented, amended, modified, changed, superseded or replaced from time to time;
|
Full Operations:
|
as defined in Section 4.3.2;
|
Gas:
|
any hydrocarbon or mixture of hydrocarbons consisting predominantly of methane that is in a gaseous state;
|
General Partner:
|
Driftwood GP Holdings LLC, a Delaware limited liability company, in its capacity as the general partner of the Partnership, or any successor thereto;
|
General Partner LLC Agreement:
|
that certain Second Amended and Restated Limited Liability Company Agreement of the General Partner dated on or about the Effective Date, as the same may be amended or restated from time to time;
|
Governmental Authority:
|
any national, regional, state, or local government, or any subdivision, agency, commission or authority thereof (including any maritime authorities, port authority or any quasi-governmental agency), having jurisdiction over a Party (or any Affiliate or direct or indirect owner thereof), a Connecting Pipeline, Gas in a Connecting Pipeline or the Driftwood LNG Terminal, the Driftwood LNG Terminal, LNG in the Driftwood LNG Terminal, an LNG Tanker, LNG or Gas in an LNG Tanker, a Transporter, the last disembarkation port of an LNG Tanker, a Discharge Terminal, or any Gas pipeline which interconnects with a Connecting Pipeline and which transports Gas to or from a Connecting Pipeline, as the case may be, and acting within its legal authority;
|
Gross Heating Value:
|
the quantity of heat expressed in Btu produced by the complete combustion in air of one (1) cubic foot of anhydrous gas, at a temperature of sixty (60) degrees Fahrenheit and at an absolute pressure of fourteen decimal six nine six (14.696) pounds per square inch, with the air at the same temperature and pressure as the gas, after cooling the products of the combustion to the initial temperature of the gas and air, and after condensation of the water formed by combustion;
|
Guarantor:
|
any Acceptable Guarantor executing a Guaranty for delivery to Seller hereunder to the extent required hereunder;
|
Guaranty:
|
an irrevocable payment guaranty, in a form reasonably acceptable to Seller, which is executed by a Guarantor in favor of Seller;
|
HGAP:
|
that certain Gas pipeline that Haynesville Global Access Pipeline LLC intends to construct, own and operate (or have operated on its behalf);
|
HH:
|
as defined in Section 9.1;
|
ICC:
|
as defined in Section 20.2.1;
|
Indemnified Party:
|
as defined in Section 15.4(a);
|
Indemnifying Party:
|
as defined in Section 15.4(a);
|
International LNG Terminal Standards:
|
to the extent not inconsistent with the express requirements of this Agreement, the international standards and practices applicable to the design, construction, equipment, operation or maintenance of LNG liquefaction terminals, established by the following (such standards to apply in the following order of priority): (i) a Governmental Authority having jurisdiction over the Driftwood LNG Terminal, Seller, or Seller’s operator; (ii) the Society of International Gas Tanker and Terminal Operators (to the extent applicable); (iii) the Oil Companies International Marine Forum (OCIMF) (to the extent applicable) and (iv) any other internationally recognized non-governmental agency or organization with whose standards and practices it is customary for Reasonable and Prudent Operators of LNG liquefaction terminals, to comply, provided, however, that in the event of a conflict between any of the priorities noted above, the priority with the lowest roman numeral noted above shall prevail;
|
International LNG Vessel Standards:
|
the standards and practices from time to time in force applicable to the ownership, design, equipment, operation or maintenance of LNG vessels established by: (i) a Governmental Authority having jurisdiction over the LNG vessel in the Loading Port; (ii) the International Maritime Organization (IMO); (iii) the classification society of the LNG vessel, provided such classification society is a member of the International Association of Classification Societies Ltd. (IACS); (iv) the Oil Companies International Marine Forum (OCIMF); (v) the Society of International Gas Tanker and Terminal Operators (SIGTTO); and (vi) any other internationally recognized agency or non-governmental organization with whose standards and practices it is customary for Reasonable and Prudent Operators of LNG vessels similar to those applicable to this Agreement, to comply, provided, however, that in the event of a conflict between any of the priorities noted above, the priority with the lowest roman numeral noted above shall prevail;
|
International Standards:
|
(i) with respect to Buyer, the International LNG Vessel Standards; (ii) with respect to Seller, the International LNG Terminal Standards;
|
In-Transit Final Notice:
|
as defined in Section 7.9.3(d);
|
In-Transit First Notice:
|
as defined in Section 7.9.2;
|
In-Transit Fourth Notice:
|
as defined in Section 7.9.3(c);
|
In-Transit Second Notice:
|
as defined in Section 7.9.3(a);
|
In-Transit Third Notice:
|
as defined in Section 7.9.3(b);
|
Lender:
|
any Person, other than a shareholder of either Party, duly authorized in its principal place of business to lend monies, to finance or to provide financial support in any form in respect of the Driftwood LNG Terminal or any other facilities under development by Seller or its Affiliates, including any commercial bank, export credit agency, funding agency, bondholder, institutional investor, insurance company, underwriter, or similar institution in relation to the provision of finance or financial support;
|
Lenders’ Agent:
|
as defined in Section 21.4.1;
|
LIBOR:
|
the rate per annum equal to the London Interbank Offer Rate as administered by ICE Benchmark Administration Limited (or any Person which takes over the administration of that rate) for three (3) month deposits in USD as published at or about 11:00 a.m. London time on any London Banking Day;
|
Limited Partner:
|
each Person identified as a “Limited Partner” on Schedule 1 of the Partnership Agreement and any other Person admitted to the Partnership as a Limited Partner in accordance with the terms of the Partnership Agreement, in each case, to the extent such Person holds units in the Partnership;
|
LNG:
|
Gas in a liquid state at or below its point of boiling and at or near atmospheric pressure;
|
LNG Marketing Agreement:
|
that certain LNG marketing agreement, dated on or before the Effective Date, entered into by the Parties;
|
LNG Tanker(s):
|
an ocean-going vessel suitable for transporting LNG which complies with the requirements of this Agreement and which Buyer uses or causes to be used, or intends to use or to be used, in connection with this Agreement;
|
Loading Port:
|
the port where the Driftwood LNG Terminal is located, or the port at an alternate supply source pursuant to Section 3.1.2;
|
London Banking Day:
|
any Day (other than Saturdays, Sundays and national holidays in London, England) on which banks are normally open to conduct business in London, England;
|
Loss:
|
any and all losses, liabilities, damages, costs, judgments, settlements and expenses (whether or not resulting from Claims by Third Parties), including interest and penalties with respect thereto and reasonable attorneys’ and accountants’ fees and expenses;
|
Made Available Quantity:
|
as defined in Section 9.2;
|
Measurement Dispute:
|
as defined in Section 20.2.1;
|
Mitigation Sale:
|
as defined in Section 5.7.5;
|
Mitigation Sale Payment:
|
as defined in Section 5.7.6;
|
MMBtu:
|
one million (1,000,000) Btus;
|
Month:
|
each period of time which starts at 00:00 local time in Lake Charles, Louisiana, on the first Day of each calendar month and ends at 24:00 local time in Lake Charles, Louisiana, on the last Day of the same calendar month;
|
Month M:
|
as defined in Section 9.1;
|
MTPA:
|
million tonnes per annum;
|
Ninety Day Schedule:
|
as defined in Section 8.4.1;
|
Non-FTA Export Authorization:
|
an order from the Office of Fossil Energy of the U.S. Department of Energy granting to Seller or any other Person acting as agent on behalf of Seller the authorization to export LNG delivered pursuant to this Agreement by vessel from the Driftwood LNG Terminal to countries that have not entered into a free trade agreement with the United States of America requiring the national treatment for trade in natural gas, which currently has or in the future develops the capacity to import LNG, and with which trade is not prohibited by United States of America law or policy, for a specific term, as the same may be supplemented, amended, modified, changed, superseded or replaced from time to time;
|
Notice of Readiness or NOR:
|
the notice of readiness issued by the master of an LNG Tanker or its agent in accordance with Section 7.10.1;
|
Off-Spec LNG:
|
as defined in Section 12.3.1;
|
Operational Tolerance:
|
as defined in Section 5.6.3;
|
Opex Costs:
|
as defined in Section 9.1;
|
Opex Costs Carryover:
|
as defined in Section 9.1;
|
Original Buyer:
|
Tellurian Trading UK Ltd., and not any successor or assign thereof;
|
Other LNG SPA:
|
as defined in Section 9.3;
|
P&I Club:
|
a Protection and Indemnity Club that is a member of the International Group of P&I Clubs;
|
P&I Insurance:
|
as defined in Section 15.6(b);
|
Partnership:
|
as defined in the Recitals;
|
Partnership Agreement:
|
that certain First Amended and Restated Limited Partnership Agreement of the Partnership;
|
Partnership Buyer:
|
each Person that is a party to a long-term LNG sale and purchase agreement with Seller;
|
Party:
|
Buyer or Seller, and Parties means both Buyer and Seller;
|
Payment Business Day:
|
each Day that is a Business Day on which commercial banks are normally open to conduct business in London, England);
|
Payor:
|
as defined in Section 11.4;
|
PBS:
|
the customary Pilot boarding station at the Loading Port where the Pilot boards the LNG Tanker, as determined by the applicable Governmental Authority or other entity with authority to regulate transit and berthing of vessels at the Loading Port;
|
Person:
|
any individual, corporation, partnership, limited liability company, trust, unincorporated organization or other legal entity, including any Governmental Authority;
|
Phase 1 EPC Contract:
|
that certain Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Driftwood LNG Phase 1 Liquefaction Facility, between Driftwood LNG LLC and Bechtel Oil, Gas and Chemicals, Inc., dated November 10, 2017;
|
Phase 1 FID:
|
a positive final investment decision by the General Partner on behalf of the Partnership in respect of the Phase 1 Project, as declared by the General Partner in accordance with the General Partner LLC Agreement, provided that Phase 1 FID may be qualified with respect to certain Pipelines and related infrastructure that will ultimately be part of the Phase 1 Project (including the Pipelines and related infrastructure described in clause (c) of the definition of Phase 1 Project below) as being subject to relevant regulatory, permitting, right of way, procurement, or similar requirements;
|
Phase 1 Plants:
|
each of Plant 1, Plant 2 and Plant 3;
|
Phase 1 Project:
|
collectively, Plant 1, Plant 2, Plant 3, associated facilities and associated Project Pipelines and Production Facilities, which shall include (a) Plant 1, Plant 2 and Plant 3 and the related infrastructure for production of sixteen decimal five six (16.56) MTPA of LNG, (b) the Driftwood Pipeline and related infrastructure, and (c) the Permian Global Access Pipeline and related infrastructure - PGAP (approx. two (2) Bcf/d capacity) or for the latter, any other equivalent asset allowing the Partnership and its Affiliates to access competitive Gas prices in the Permian Basin;
|
Phase 2 EPC Contract:
|
that certain Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Driftwood LNG Phase 2 Liquefaction Facility, between Driftwood LNG LLC and Bechtel Oil, Gas and Chemicals, Inc., dated November 10, 2017;
|
Phase 2 Project:
|
collectively, Plant 4, associated facilities and associated Project Pipelines and Production Facilities, for production of five decimal five two (5.52) MTPA of LNG once Plant 4 achieves Full Operations;
|
Phase 2 Project FID Date:
|
as defined in the Partnership Agreement;
|
Phase 3 EPC Contract:
|
that certain Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Driftwood LNG Phase 3 Liquefaction Facility, between Driftwood LNG LLC and Bechtel Oil, Gas and Chemicals, Inc., dated November 10, 2017;
|
Phase 3 Project:
|
collectively, Plant 5, associated facilities and associated Project Pipelines and Production Facilities, for production of five decimal five two (5.52) MTPA of LNG once Plant 5 achieves Full Operations;
|
Phase 3 Project FID Date:
|
as defined in the Partnership Agreement;
|
Phase 4 EPC Contract:
|
that certain Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Driftwood LNG Phase 4 Liquefaction Facility, between Driftwood LNG LLC and Bechtel Oil, Gas and Chemicals, Inc., dated November 10, 2017;
|
Phase Project:
|
the Phase 1 Project, Phase 2 Project or Phase 3 Project;
|
Pilot:
|
any Person engaged by Transporter to come on board the LNG Tanker to assist the master in pilotage, maneuvering, berthing and unberthing of such LNG Tanker;
|
Plant:
|
each of Plant 1, Plant 2, Plant 3, Plant 4 and Plant 5;
|
Plant 1:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 1 EPC Contract that is described thereunder as “LNG Plant 1”;
|
Plant 2:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 1 EPC Contract that is described thereunder as “LNG Plant 2”;
|
Plant 3:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 2 EPC Contract;
|
Plant 4:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 3 EPC Contract;
|
Plant 5:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 4 EPC Contract;
|
Port Charges:
|
all charges of whatsoever nature (including rates, tolls, dues, fees, and imposts of every description) in respect of an LNG Tanker entering or leaving the Loading Port or loading LNG, including wharfage fees, in-and-out fees, franchise fees, line handling charges, and charges imposed by tugs, the U.S. Coast Guard, a port authority, a harbor master, a Pilot, and any other authorized Person assisting an LNG Tanker to enter or leave the Loading Port, and further including port use fees, throughput fees and similar fees payable by users of the Loading Port (or by Seller or its operator on behalf of such users);
|
Port Liability Agreement:
|
an agreement for use of the port and marine facilities located at the Loading Port, to be entered into as described in Section 7.7.1;
|
Production Facilities:
|
Gas production, storage, processing, gathering, and midstream facilities, including acreage, wellbores, mineral interests, gas reserves, and related wells and leaseholds, and other similar hydrocarbon facilities acquired or to be acquired from time to time by the Partnership and its Affiliates;
|
Project Pipelines:
|
Gas pipelines to be constructed or acquired from time to time by the Partnership and its Affiliates;
|
Provisional Coverage Amount:
|
as defined in Section 9.1;
|
Provisional Debt Service Costs:
|
as defined in Section 9.1;
|
Provisional Invoice:
|
as defined in Section 10.1.8(a);
|
Provisional Net Gas Costs:
|
as defined in Section 9.1;
|
Provisional Transfer Price:
|
as defined in Section 9.1;
|
Reasonable and Prudent Operator:
|
a Person seeking in good faith to perform its contractual obligations, and in so doing, and in the general conduct of its undertaking, exercising that degree of skill, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced operator, complying with all applicable International Standards and practices and regulations and approvals of Governmental Authorities, engaged in the same type of undertaking under the same or similar circumstances and conditions;
|
Required Modification:
|
as defined in Section 7.3.2;
|
Round-Down Quantity:
|
as defined in Section 5.4;
|
SCF:
|
for Gas, the quantity of anhydrous Gas that occupies one (1) cubic foot of space at a temperature of sixty (60) degrees Fahrenheit and a pressure of fourteen decimal six nine six (14.696) pounds per square inch absolute;
|
Scheduled Cargo Quantity:
|
the quantity of LNG (in MMBtus) identified in the ADP or Ninety Day Schedule to be loaded onto an LNG Tanker in a Delivery Window in accordance with Section 8;
|
Seller:
|
as defined in the Preamble;
|
Seller Aggregate Liability:
|
as defined in Section 15.2.6(b);
|
Seller Liability Cap:
|
as defined in Section 15.2.6(c);
|
Seller Taxes:
|
as defined in Section 11.2;
|
SI:
|
the International System of Units;
|
SIRE:
|
Ship Inspection Report Exchange;
|
SIRE Accredited Inspector:
|
an inspector qualified by the OCIMF to inspect an LNG Tanker for the purpose of generating an inspection report for inclusion in OCIMF’s Ship Inspection Report Program;
|
Specifications:
|
as defined in Section 12.1;
|
Substantial Completion:
|
as defined in Section 4.2.2;
|
Suspension Fee:
|
as defined in Section 5.8.2;
|
Taxes:
|
all taxes, levies, duties, charges, withholdings and all other assessments (but excluding Port Charges), which may now or hereafter be enacted, levied or imposed, directly or indirectly, by a Governmental Authority, including income, value added, goods and services, sales and use, gross receipts, license, payroll, environmental, profits, severance, premium, franchise, property, ad valorem, excise, capital stock, import, stamp, transfer, withholding, employment, occupation, generation, privilege, utility, regulatory, energy, consumption, lease, filing, recording and activity taxes, levies, duties, fees, charges, and imposts and any sum charged by reference to energy value and/or carbon content (regardless of whether the quantum of the charge is calculated by reference to energy value and/or carbon content or by reference to sums payable under this Agreement or otherwise), together with any and all penalties, interest and additions thereto;
|
Tellurian Partnership Buyer:
|
Driftwood LP Holdings LLC, if a Partnership Buyer, or its Affiliate that is a Partnership Buyer;
|
Term:
|
as defined in Section 4.1.1;
|
Termination Event:
|
as defined in Section 19.2.1;
|
Tested Capacity:
|
a quantity, in MMBtu, determined in accordance with the Partnership Agreement;
|
Third Party:
|
a Person other than a Party;
|
Third Party Claim:
|
as defined in Section 15.4(a);
|
Tranche:
|
as defined in Section 5.3;
|
Transfer Price Ceiling:
|
an amount (in USD per MMBtu) equal to one hundred fifteen percent (115%) of HH, plus USD three decimal zero zero (US$3.00);
|
Transfer Taxes:
|
as defined in Section 11.5;
|
Transporter:
|
any Person who contracts with Buyer (or any Person taking delivery, at the Driftwood LNG Terminal, of LNG sold to Buyer hereunder), for purposes of providing or operating any of the LNG Tankers; and
|
USD or US$:
|
the lawful currency from time to time of the United States of America.
|
1.2
|
Interpretation
|
1.2.1
|
The titles, headings, and numbering in this Agreement are included for convenience only and will have no effect on the construction or interpretation of this Agreement.
|
1.2.2
|
References in this Agreement to Sections and Exhibits are to those of this Agreement unless otherwise indicated. References to this Agreement and to agreements and contractual instruments will be deemed to include all exhibits, schedules, appendices, annexes, and other attachments thereto and all subsequent amendments and other modifications to such instruments, to the extent such amendments and other modifications are not prohibited by the terms of this Agreement.
|
1.2.3
|
The word “include” or “including” will be deemed to be followed by “without limitation.” The term “will” has the same meaning as “shall,” and thus imposes an obligation.
|
1.2.4
|
Whenever the context so requires, the singular includes the plural and the plural includes the singular, and the gender of any pronoun includes the other gender.
|
1.2.5
|
Unless otherwise indicated, references to any statute, regulation or other law will be deemed to refer to such statute, regulation or other law as amended or any successor law.
|
1.2.6
|
Unless otherwise indicated, references to a Person shall include such Person’s successors and permitted assigns.
|
1.2.7
|
Unless otherwise indicated, any reference to a time of Day shall be to Central Time in the United States of America.
|
1.2.8
|
Approximate conversions of any unit of measurement contained in parenthesis following the primary unit of measurement included in Sections 1 through 25 of this Agreement are inserted as a matter of operational convenience only to show the approximate equivalent in such different measurement. The obligations of the Parties under Sections 1 through 25 of this Agreement will be undertaken in respect of the primary unit of measurement and not in respect of any such approximate conversion.
|
1.3
|
Replacement of Rates and Indices No Longer Available
|
1.3.1
|
If (a) a publication that contains a rate or index used in this Agreement ceases to be published for any reason or (b) such a rate or index ceases to exist, is materially modified, or no longer is used as a liquid trading point for Gas (as applicable), so as systematically to change its economic result, or is disaggregated, displaced or abandoned, for any reason, the Parties shall promptly discuss, with the aim of jointly selecting a rate or index or rates or
|
1.3.2
|
If the Parties fail to agree on a replacement rate or index within thirty (30) Days, the Parties may submit such issue to an Expert pursuant to Section 20.2, as amended by the provisions of this Section 1.3.2. Any Expert selected shall be instructed to select the published rate or index, or a combination of published rates or indices, with adjustments as necessary or appropriate, that most nearly preserves the intent and economic result of the original rates or indices. If the Parties are not able to agree upon an Expert within ten (10) Days after the receipt of the notice of request for expert determination, either Party may elect to refer the determination of the replacement rate or index for arbitration in accordance with Section 20.1.
|
1.3.3
|
If any rate used in this Agreement is not published for a particular date, but the publication containing such rate continues to be published and the rate itself continues to exist, the Parties shall use the published rate in effect for the date such rate was most recently published prior to the particular date, unless otherwise provided in this Agreement.
|
1.3.4
|
If any index used in this Agreement is not published for a particular date, but the publication containing such index continues to be published and the index itself continues to exist, the Parties shall use the published rate in effect for the date such rate was most recently published prior to the particular date, unless otherwise provided in this Agreement. If the index is subsequently published for the particular date, such published index will be substituted for the previously-used index and any calculations involving such index will be recalculated and the Parties will take any necessary actions based upon these revised calculations, including adjustments of amounts previously invoiced or paid.
|
1.3.5
|
If an incorrect value is published for any rate or index used in this Agreement and such error is corrected and published within ninety (90) Days of the date of the publication of such incorrect rate or index, such corrected rate or index will be substituted for the incorrect rate or index and any calculations involving such rate or index will be recalculated and the Parties will take any necessary actions based upon these revised calculations, including adjustments of amounts previously invoiced or paid.
|
2.
|
Approvals
|
2.1
|
Approvals
|
2.2
|
Change in Export Laws
|
3.
|
Subject Matter
|
3.1
|
Sale and Purchase of LNG
|
3.1.1
|
Seller shall sell and make available for delivery, or compensate Buyer if not made available for delivery, LNG in cargoes at the Delivery Point, and Buyer shall take and pay for, or compensate Seller if not taken, such LNG, in the quantities and at the prices set forth in and otherwise in accordance with and subject to the provisions of this Agreement.
|
3.1.2
|
Seller intends to load cargoes from the Driftwood LNG Terminal, but, upon not less than sixty (60) Days’ prior written notice and subject to the prior written consent of Buyer (such consent not to be unreasonably withheld or delayed), Seller may deliver cargoes to Buyer from any alternate source; provided, that:
|
(a)
|
LNG from such alternate source shall, when made available by Seller to Buyer, comply with the Specifications;
|
(b)
|
LNG from such alternate source shall comply with the specifications in Buyer’s relevant LNG sales contractual obligation(s) in the reasonable determination of Buyer;
|
(c)
|
Seller has agreed to reimburse Buyer an amount equal to Buyer’s reasonable estimate of the increased costs that would be incurred as a result of the delivery of LNG at such alternate source;
|
(d)
|
the delivery of LNG at an alternate source is necessitated by operational conditions affecting the Driftwood LNG Terminal that have reduced the capability of the Driftwood LNG Terminal to produce or load LNG;
|
(e)
|
the receipt of LNG at an alternate source will not affect the ability of LNG Tankers to perform such cargo receipts and deliveries and other cargo receipts and deliveries in a timely fashion and in accordance with Buyer’s contractual obligations, in the reasonable determination of Buyer;
|
(f)
|
the facilities at the alternate source are compatible with LNG Tankers and acceptable in the reasonable determination of Buyer;
|
(g)
|
any other condition reasonably imposed by Buyer has been satisfied by Seller to Buyer’s reasonable satisfaction; and
|
(h)
|
the alternate source and the voyage thereto do not present added risks or dangers to any LNG Tanker or personnel of Buyer or any Affiliate of Buyer in the reasonable determination of Buyer.
|
4.
|
Term
|
4.1
|
Term
|
4.1.1
|
Term. This Agreement shall enter into force and effect on the Effective Date and shall continue in force and effect until the thirtieth (30th) anniversary of the Date of Full Operations of the first Phase 1 Plant to achieve Full Operations, unless extended pursuant to Section 4.1.2 (the “Term”).
|
4.1.2
|
Extension of Term.
|
(a)
|
At any time not later than the date that is three (3) years prior to the then-current expiration date of this Agreement, Buyer may give notice to Seller electing to extend the then-current Term by an additional ten (10) years beyond the then-current Term, provided that:
|
(i)
|
the sum of the ACQ hereunder and the annual contract quantities of all other Partnership Buyers during the entire extension period is equal to or greater than two hundred eighty-seven million nine hundred seventy-eight thousand four hundred (287,978,400) MMBtu; and
|
(ii)
|
Seller is able, by the exercise of reasonable efforts, to maintain in effect all Approvals necessary for the continued operation of the Driftwood LNG Terminal during the entire extension period.
|
(b)
|
Buyer may exercise its extension right pursuant to Section 4.1.2(a) up to four (4) times, for an aggregate extension of up to forty (40) years in ten (10)-year increments.
|
(c)
|
The terms and conditions of this Agreement during any extension period pursuant to this Section 4.1.2 shall be the same as those prior to such extension period.
|
4.2
|
Date of Substantial Completion
|
4.2.1
|
The Day Buyer is notified by Seller as the day on which a Plant achieves Substantial Completion shall be the “Date of Substantial Completion” for such Plant.
|
4.2.2
|
For all purposes of this Agreement, “Substantial Completion” of a Plant shall mean “Substantial Completion” of the “Project” that includes such Plant, in accordance with the EPC Contract pursuant to which such Plant is to be constructed (where “Project” and “Substantial Completion” are defined according to such EPC Contract). Seller shall provide prompt written notice to Buyer in the event that the terms of any EPC Contract are amended in a manner that alters the manner in which the Date of Substantial Completion of Plant 1, Plant 2 or Plant 3 is determined under such EPC Contract.
|
4.3
|
Date of Full Operations
|
4.3.1
|
The Day occurring three hundred and sixty-five (365) Days after the Date of Substantial Completion of a Plant, or any earlier date during such three hundred sixty-five (365)-Day period as elected by Seller and notified by Seller with not less than one hundred eighty (180) Days’ prior notice, shall be the “Date of Full Operations” for such Plant.
|
4.3.2
|
For all purposes of this Agreement, a Plant shall be considered to have achieved “Full Operations” as of the Date of Full Operations of such Plant.
|
4.3.3
|
If Seller elects an early Date of Full Operations of a Plant pursuant to Section 4.3.1, then, if applicable, Seller shall issue an ADP, or, as applicable, a revised ADP, that includes any additional cargo loadings required as a result thereof, with Seller using reasonable efforts to accommodate Buyer’s requests in respect thereof and making any changes in full-cargo lots.
|
4.4
|
Contract Year
|
(a)
|
the first Contract Year is the period of time beginning on the Date of Full Operations of the first Phase 1 Plant to achieve Full Operations
|
(b)
|
the final Contract Year is the period of time beginning on the January 1st immediately preceding the final Day of the Term and ending on the final Day of the Term (the “Final Contract Year”).
|
5.
|
Quantities
|
5.1
|
ACQ
|
5.1.1
|
ACQ. Buyer’s annual contract quantity of LNG (in MMBtu) under this Agreement (“ACQ”) for any given Contract Year (“CY”) shall be a quantity calculated by Seller that equals:
|
(a)
|
Seller’s forecast of the Driftwood LNG Terminal’s LNG production (taking into consideration major scheduled maintenance) in CY (in MMBtu), as determined by Seller acting as a Reasonable and Prudent Operator; plus
|
(b)
|
the expected in-tank LNG inventory at the Driftwood LNG Terminal from the Contract Year immediately prior to CY; minus
|
(c)
|
the sum of all adjusted annual contract quantities under all other LNG sale and purchase agreements between Seller and Partnership Buyers for CY.
|
5.1.2
|
Measurement Units. The ACQ shall be expressed in MMBtus. All references in this Agreement to cargoes or other units are solely for operational convenience.
|
5.1.3
|
Intra-Year Additional Cargoes.
|
(a)
|
If at any time after issuance of the ADP for a Contract Year, but no earlier than sixty (60) Days prior to the first day of the estimated Delivery Window, Seller, acting as a Reasonable and Prudent Operator, determines that it is able to offer one or more additional full cargo lots to Buyer (and Seller is not contractually obligated to sell such cargoes to a Partnership Buyer or to sell such cargoes in a mitigation sale), then Seller shall notify Buyer of the proposed
|
(b)
|
If Seller’s notice includes any cargoes that have proposed Delivery Windows that begin at least thirty (30) Days after the date of such notice, then Seller shall be obligated to make available, and Buyer shall be obligated to take, each such cargo, and Seller shall issue a revised ADP or Ninety Day Schedule, as applicable, that includes each such cargo.
|
(c)
|
If Seller’s notice includes one or more cargoes that have proposed Delivery Windows that begin less than thirty (30) Days after the date of such notice, then Buyer shall have the right to elect whether to accept each such cargo. Within three (3) Business Days of receiving such notice, if Buyer has not yet accepted any such cargo, Buyer shall notify Seller whether Buyer accepts such cargo. If Buyer does not notify Seller that Buyer accepts any such cargo, or if Buyer notifies Seller that Buyer will not accept any such cargo, then neither Party shall have any further obligation to each other in respect of such cargo, and Seller may dispose of such cargo in its sole discretion and for its sole profit. If Buyer notifies Seller within three (3) Business Days of receiving Seller’s notice that Buyer accepts such cargo, then Seller shall be obligated to make available, and Buyer shall be obligated to take, such cargo, and Seller shall issue a revised ADP or Ninety Day Schedule, as applicable, that includes such cargo.
|
5.2
|
Adjusted Annual Contract Quantity
|
5.2.1
|
any intra-year cargoes scheduled pursuant to Section 5.1.3;
|
5.2.2
|
any Round-Down Quantity for the current Contract Year, determined in accordance with Section 5.4.
|
5.3
|
Seasonal Deliveries
|
5.3.1
|
the first (1st) Tranche shall be scheduled for delivery on a reasonably ratable basis throughout the months of January, February, March, October, November and December of the relevant Contract Year, taking into consideration planned maintenance at the Driftwood LNG Terminal; and
|
5.3.2
|
the second (2nd) Tranche shall be scheduled for delivery on a reasonably ratable basis throughout the months of April, May, June, July, August and September of the relevant Contract Year, taking into consideration planned maintenance at the Driftwood LNG Terminal.
|
5.4
|
Round-Down Quantities
|
5.5
|
[reserved]
|
5.6
|
Seller’s Delivery Obligation
|
5.6.1
|
During any Contract Year, Seller shall make available to Buyer the Scheduled Cargo Quantity with respect to each cargo scheduled in the ADP for such Contract Year, less;
|
(a)
|
any quantities of LNG not taken by Buyer for any reasons attributable to Buyer (other than quantities for which Buyer is excused pursuant to this Agreement from taking due to Seller’s breach of this Agreement), including quantities not taken by Buyer due to Force Majeure affecting Buyer;
|
(b)
|
any quantities of LNG not made available by Seller due to Force Majeure affecting Seller;
|
(c)
|
any quantities of LNG for which Buyer has provided a notice of suspension pursuant to Section 5.8; and
|
(d)
|
any cargo suspended pursuant to Section 19.1.
|
5.6.2
|
Except as otherwise excused in accordance with the provisions of this Agreement, if, during any Contract Year, for any reason other than those specified in Section 5.6.1, Seller does not make available the Scheduled Cargo Quantity with respect to any cargo identified in Section 5.6.1 then the amount by which the Scheduled Cargo Quantity for such cargo exceeds the quantity of LNG made available by Seller in relation to such cargo shall be
|
(a)
|
an amount equal to the actual, documented amount paid by Buyer for the purchase of a replacement quantity of LNG or Gas (not to exceed the MMBtu equivalent of the Cargo DoP Quantity), or, in respect of any Cargo DoP Quantity for which a replacement quantity has not been purchased by Buyer (Buyer having used commercially reasonable efforts to so purchase), the market price of LNG at such time at the cargo’s most recently documented destination, multiplied by the Cargo DoP Quantity; less
|
(b)
|
an amount equal to, initially, the Provisional Transfer Price for purposes of a Provisional Invoice, and thereafter the Final Transfer Price upon the determination thereof for purposes of the Final Invoice (in accordance with Section 10.1.3), multiplied by the Cargo DoP Quantity; plus
|
(c)
|
any actual, reasonable and verifiable incremental costs incurred by Buyer as a result of such failure; less
|
(d)
|
any actual, reasonable and verifiable savings obtained by Buyer as a result of such failure;
|
5.6.3
|
Notwithstanding the foregoing, if the Cargo DoP Quantity is within the operational tolerance of three percent (3%) of the Scheduled Cargo Quantity (“Operational Tolerance”) (such Operational Tolerance to be exercised by Seller only with respect to operational matters regarding the Driftwood LNG Terminal, and without regard commercial considerations), the Cargo DoP Payment shall be zero.
|
5.6.4
|
Buyer shall use reasonable efforts to mitigate Seller’s losses in accordance with this Section 5.6.
|
5.6.5
|
Notwithstanding the provisions of Section 15, nothing in this Section 5.6 shall limit Buyer’s right to:
|
(a)
|
recover demurrage pursuant to Section 7.12.3 and amounts in respect of boil-off pursuant to Section 7.12.4;
|
(b)
|
recover damages specified in Section 12.3 for delivery of Off-Spec LNG; or
|
(c)
|
terminate this Agreement in accordance with Section 19.
|
5.7
|
Buyer’s Purchase Obligation
|
5.7.1
|
During any Contract Year, Buyer shall take and pay for the Scheduled Cargo Quantity with respect to each cargo scheduled in the ADP for such Contract Year, less:
|
(a)
|
any quantities of LNG not made available by Seller for any reasons attributable to Seller (other than quantities for which Seller is excused pursuant to this Agreement from making available due to Buyer’s breach of this Agreement), including quantities not made available by Seller due to Force Majeure affecting Seller;
|
(b)
|
any quantities of LNG not taken by Buyer due to Force Majeure affecting Buyer;
|
(c)
|
any quantities of LNG for which Buyer has provided a notice of suspension pursuant to Section 5.8;
|
(d)
|
any quantities of LNG that the relevant LNG Tanker is not capable of loading due to Seller’s delivery of LNG that has a Gross Heating Value that is less than the value identified by Seller pursuant to Section 8.1.1; and
|
(e)
|
any quantities of Off-Spec LNG that Buyer is relieved from taking pursuant to Section 12.3.
|
5.7.2
|
If, with respect to any cargo identified in Section 5.7.1, Buyer does not take all or part of the Scheduled Cargo Quantity of such cargo, and such failure to take is not otherwise excused pursuant to Section 5.7.1, then the amount by which the Scheduled Cargo Quantity for such cargo exceeds the quantity of LNG taken by Buyer in relation to such cargo shall be the “Cargo Shortfall Quantity”.
|
5.7.3
|
Buyer shall pay Seller an amount equal to the Cargo Shortfall Quantity, multiplied by, initially, the Provisional Transfer Price for purposes of a Provisional Invoice, and thereafter the Final Transfer Price upon the determination thereof for purposes of the Final Invoice (in accordance with Section 10.1.4) (the “Cargo Shortfall Payment”). For purposes of calculating the Cargo Shortfall Payment, the Provisional Transfer Price and Final Transfer Price shall be determined as of the Month in which the applicable Delivery Window begins.
|
5.7.4
|
Notwithstanding the foregoing, if the Cargo Shortfall Quantity is within the Operational Tolerance (such Operational Tolerance to be exercised by Buyer only with respect to operational matters regarding the LNG Tanker, and without regard to commercial considerations), the Cargo Shortfall Payment shall be zero.
|
5.7.5
|
Seller shall offer the Cargo Shortfall Quantity to the Tellurian Partnership Buyer, which shall have the right in its discretion to accept or reject the offer of a Cargo Shortfall Quantity. If the Tellurian Partnership Buyer accepts such offer, then Buyer shall pay the Cargo Shortfall Payment in accordance with Section 10.2.4, and upon receipt of a payment from the Tellurian Partnership Buyer of the Final Transfer Price for the Cargo Shortfall Quantity, Seller shall, within ten (10) Days of Seller’s receipt of a payment from the Tellurian Partnership Buyer for the Cargo Shortfall Quantity, refund to Buyer an amount equal to such payment, not to exceed the Cargo Shortfall Payment. If the Tellurian Partnership Buyer rejects such offer, then subject to Section 5.7.7, Seller shall use reasonable efforts to sell or cause to be sold the Cargo Shortfall Quantity (whether as LNG or Gas) to a Third Party or multiple Third Parties through one or more sales (each such sale, a “Mitigation Sale”) generating a Mitigation Sale Payment. Seller shall not be obliged to effect or cause to be effected any Mitigation Sale under its third-party sales obligations if such sales obligations were effective at the time of the earlier to occur of (i) Buyer’s failure to take such LNG; or (ii) Buyer’s notice to Seller that it will not take such LNG.
|
5.7.6
|
If Seller sells or causes to be sold the Cargo Shortfall Quantity or any portion thereof in a Mitigation Sale, Seller shall, within ten (10) Days of Seller’s receipt of the final payment from a Mitigation Sale, refund to Buyer an amount (the “Mitigation Sale Payment”) equal to the lesser of (x) the Cargo Shortfall Payment in respect of the Cargo Shortfall Quantity (less any Mitigation Sale Payments already received pursuant to other Mitigation Sales in respect of the same Cargo Shortfall Quantity) and (y) an amount calculated as follows:
|
(a)
|
the proceeds of the Mitigation Sale; plus
|
(b)
|
any actual, reasonable and verifiable savings obtained by Seller as a result of the Mitigation Sale as opposed to the sale of LNG to Buyer, including savings associated with reduced or avoided costs and fuel gas for LNG production and other reduced or avoided costs; less
|
(c)
|
any actual, reasonable and verifiable incremental costs incurred by Seller as a result of the Mitigation Sale; less
|
(d)
|
any marketing fee owed by Seller to Buyer pursuant to the LNG Marketing Agreement.
|
5.7.7
|
Seller shall use reasonable efforts to mitigate Buyer’s losses in accordance with this Section 5.7; provided, however, that Seller, acting as a Reasonable and Prudent Operator, shall have the right at any time to take other actions, in lieu of a sale of LNG to the Tellurian Partnership Buyer or a Mitigation Sale, to mitigate the effects of a Cargo Shortfall Quantity, including reducing Gas quantities purchased or selling any previously purchased Gas quantities. Seller shall, as soon as reasonably possible and in any event within sixty (60) Business Days after the end of the applicable Delivery Window, calculate the effects of such actions on the amount of the refund to be made by Seller to Buyer in respect of the Cargo Shortfall Quantity, which shall be calculated as the net proceeds of any such actions, plus actual, reasonable and verifiable savings including savings associated with reduced or avoided costs, fuel gas for LNG production and any other third-party costs, less any actual, reasonable and verifiable incremental costs incurred by Seller as a result of taking such other mitigating actions. Notwithstanding the foregoing, such actions and any resulting refund determined by Seller shall not alleviate Buyer of its obligation to pay the Cargo Shortfall Payment in accordance with Section 5.7.3.
|
5.7.8
|
Any Mitigation Sale entered into by Seller with a Third Party pursuant to terms proposed to Seller by Buyer pursuant to the LNG Marketing Agreement shall be deemed to satisfy any obligation of Seller under this Agreement to mitigate Buyer’s losses pursuant to this Section 5.7.
|
5.8
|
Buyer’s Right to Suspend Deliveries
|
5.8.1
|
Subject to the remainder of this Section 5.8, Buyer may elect to suspend delivery of any cargo scheduled in the ADP by providing notice of such election to Seller on or prior to the twentieth (20th) Day of the Month that is two (2) Months prior to the Month in which the relevant cargo’s Delivery Window is scheduled to begin. If a cargo has been suspended pursuant to this Section 5.8.1, Seller shall be relieved of its obligation to make available such cargo to Buyer pursuant to Section 5.6.
|
5.8.2
|
Buyer shall pay a suspension fee (the “Suspension Fee”) for each cargo suspended pursuant to Section 5.8.1, in an amount equal to the lower of (a) the Scheduled Cargo Quantity of such cargo multiplied by an amount equal to USD three decimal zero zero (US$3.00) per MMBtu, plus or minus the applicable Facilities Charge in accordance with Exhibit B of the General Partner LLC Agreement; and (b) the Scheduled Cargo Quantity of such cargo, multiplied by an amount equal to the sum of the applicable Opex Costs, Final Debt Service Costs and Final Coverage Amount, plus or minus the applicable Facilities Charge in accordance with Exhibit B of the General Partner LLC Agreement. Buyer shall pay the Suspension Fee in accordance with Section 10.2.2.
|
6.
|
Delivery Point, Title and Risk, Destination
|
6.1
|
Delivery Point
|
6.2
|
Title and Risk
|
6.3
|
Destination
|
7.
|
Transportation and Loading
|
7.1
|
Transportation by Buyer
|
7.2
|
Driftwood LNG Terminal
|
7.2.1
|
During the period from the Effective Date and continuing through the Date of Full Operations of each Phase 1 Plant, Seller shall proceed diligently to construct, test, commission, maintain and operate such Plant in accordance with the standards and specifications set forth in Section 7.2.3 or cause the same to occur.
|
7.2.2
|
During the period from the Date of Full Operations of a Phase 1 Plant and continuing throughout the Term, Seller shall own, or have access to and use of, and maintain and operate or cause to be maintained and operated, the Driftwood LNG Terminal in accordance with the following: (a) the terms and conditions set forth in this Agreement; (b) Applicable Laws; (c) International Standards; and (d) to the extent not inconsistent with International Standards, such good and prudent practices as are generally followed in the LNG industry by Reasonable and Prudent Operators of similar LNG liquefaction terminals.
|
7.2.3
|
The Driftwood LNG Terminal shall include the following:
|
(a)
|
systems for communications with LNG Tankers;
|
(b)
|
at least one berth, capable of berthing and mooring an LNG Tanker having a displacement of no more than one hundred forty-nine thousand (149,000) tons, an overall length of no more than one thousand thirty-four (1,034) feet (approximately three hundred fifteen (315) meters), a beam of no more than one hundred sixty-four (164) feet (approximately fifty (50) meters), and a draft of no more than forty (40) feet (approximately twelve (12) meters), which LNG Tankers can safely reach, and safely depart, fully laden, and at which LNG Tankers can lie safely berthed and load at all states of the tide safely afloat;
|
(c)
|
lighting sufficient to permit loading operations by day or by night, to the extent permitted by Governmental Authorities (it being acknowledged, however, that Seller shall in no event be obligated to allow nighttime berthing operations at the Driftwood LNG Terminal if Seller determines that such operations during nighttime hours could pose safety or operational risks to the Driftwood LNG Terminal, an LNG Tanker, or a Third Party);
|
(d)
|
facilities capable of loading LNG at an approximate rate of up to twelve thousand (12,000) cubic meters per hour at the Delivery Point, with three (3) LNG loading arms each having a reasonable operating envelope to allow for ship movement in accordance with International Standards;
|
(e)
|
a vapor return line system of sufficient capacity to allow for transfer of Gas necessary for safe LNG loading operations to take place at the allocated rates described in Section 7.2.3(d);
|
(f)
|
a suitable gangway allowing access to each LNG Tanker from the Driftwood LNG Terminal;
|
(g)
|
emergency shut down system capable of interconnecting with an LNG Tanker at berth;
|
(h)
|
LNG storage facilities;
|
(i)
|
LNG liquefaction facilities;
|
(j)
|
qualified and competent personnel, fluent in English to coordinate with the LNG Tanker during loading operations; and
|
(k)
|
facilities for the sampling and analysis of LNG.
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7.2.4
|
Services and facilities not provided by Seller include the following: (a) facilities and loading lines for liquid or gaseous nitrogen to service an LNG Tanker; (b) facilities for providing bunkers; (c) facilities for the handling and delivery to the LNG Tanker of ship’s stores, provisions and spare parts; and (d) nitrogen rejection. Buyer shall be required to obtain towing, escort, line handling, and pilot services as described in Section 7.5.3.
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7.3
|
Compatibility of the Driftwood LNG Terminal with LNG Tankers
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7.3.1
|
Buyer shall ensure, at no cost to Seller, that each of the LNG Tankers is fully compatible with the general specifications set forth in Section 7.2.3 and any modifications made to the Driftwood LNG Terminal that are Required Modifications. Should an LNG Tanker fail materially either to be compatible with the Driftwood LNG Terminal, or to be in compliance with the provisions of Sections 7.5 and 7.6, Buyer shall not employ such LNG Tanker until it has been modified to be so compatible or to so comply.
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7.3.2
|
During the period from the Date of Full Operations of a Phase 1 Plant and continuing throughout the Term, Seller shall be entitled to modify the Driftwood LNG Terminal in any manner whatsoever, provided that: (w) such modifications do not render the Driftwood LNG Terminal noncompliant with International Standards; (x) such modifications do not render the Driftwood LNG Terminal incompatible with an LNG Tanker that is compatible with the general specifications set forth in Section 7.2.3; (y) such modifications, once finalized, do not reduce the ability of Seller to make available LNG in accordance with the terms of this Agreement; and (z) such modifications do not otherwise conflict with Seller’s obligations hereunder. Notwithstanding
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7.3.3
|
In the event the LNG Tanker fails to be compatible with the Driftwood LNG Terminal due to a modification to the Driftwood LNG Terminal that is not a Required Modification, the actual and documented costs and expenses incurred by Buyer solely as a result of such modification, including as a result of delays in the berthing of the LNG Tanker at the Driftwood LNG Terminal, repositioning of the LNG Tanker, and of the modifications of the LNG Tanker directly caused by such modification shall be reimbursed by Seller to Buyer.
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7.4
|
Buyer Inspection Rights in Respect of the Driftwood LNG Terminal
|
7.4.1
|
Upon giving reasonable advance notice and obtaining Seller’s prior written consent, which consent shall not be unreasonably withheld or delayed, a reasonable number of Buyer’s designated representatives may from time to time (including during the period of construction of the Driftwood LNG Terminal), (x) not more often than once every calendar quarter or (y) following a material change to the Driftwood LNG Terminal (excluding during the period of construction of the Driftwood LNG Terminal), inspect the operation of the Driftwood LNG Terminal, and not more often than once every five (5) years, audit the health and safety policies, procedures and records of the Driftwood LNG Terminal, of Seller and of operator of the Driftwood LNG Terminal. Such inspection or audit shall occur between 8:00 a.m. Central Time and 5:00 p.m. Central Time on a Business Day scheduled by Seller. Seller shall use commercially reasonable efforts to schedule the inspection or audit on the date requested by Buyer. Any such inspection or audit shall be at Buyer’s sole risk and expense. In conjunction with any such inspection or audit, Seller shall provide, and shall procure that its Affiliates provide, Buyer reasonable access at reasonable times and places (taking into consideration schedule impact) to (a) relevant personnel in order to discuss the progress of the construction of the Driftwood LNG Terminal and the operation and maintenance of the Driftwood LNG Terminal (as applicable) and (b) relevant documentation, if any, available to Seller in support of such discussions. Buyer (and its designees) shall carry out any such inspection or audit without any interference with or hindrance to the safe and efficient operation of the Driftwood LNG Terminal. Buyer’s right to inspect and audit the Driftwood LNG Terminal shall be limited to verifying Seller’s compliance with Seller’s obligations under this Agreement. No inspection or audit (or lack thereof) of the Driftwood LNG Terminal by Buyer hereunder, or any requests or observations made to Seller or its representatives by or on behalf of Buyer in connection with any such inspection or audit, shall (i)
|
7.4.2
|
Buyer shall indemnify and hold Seller and its Affiliates harmless from any Claims and Losses resulting from Buyer’s inspection or audit of the Driftwood LNG Terminal pursuant to Section 7.4.1.
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7.4.3
|
Buyer shall have the right to reject the Driftwood LNG Terminal if it does not comply materially with the provisions of Section 7, provided that:
|
(a)
|
neither the exercise nor the non-exercise of such right shall reduce the responsibility of Seller to Buyer in respect of the Driftwood LNG Terminal and its operation, nor increase Buyer’s responsibilities to Buyer or Third Parties for the same; and
|
(b)
|
without prejudice to Section 14, Seller’s obligations under this Agreement shall not be excused or suspended by reason of the Driftwood LNG Terminal failing to comply materially with the provisions of this Agreement.
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7.5
|
LNG Tankers
|
7.5.1
|
Buyer shall cause each LNG Tanker to comply with the requirements of this Section 7.5 and the requirements of Section 7.6 in all respects.
|
7.5.2
|
Each LNG Tanker shall comply with all Applicable Laws and International LNG Vessel Standards, including those that relate to seaworthiness, design, safety, environmental protection and navigation, and shall obtain all Approvals required by Governmental Authorities, in each case to enable such LNG Tanker to enter, leave and carry out all required operations at the Driftwood LNG Terminal. Each LNG Tanker shall at all times have on board valid documentation evidencing all such Approvals. Each LNG Tanker shall at all times be in possession of valid documents of compliance and safety management certificates, and shall have an effective management system in operation and an emergency response plan that addresses all identified risks and provides proper controls for dealing with these risks.
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7.5.3
|
Buyer shall be required to obtain towing, escort, line handling, and pilot services, in accordance with this Section 7.5.3. Seller shall cause an Affiliate of Seller to procure tug services at the Driftwood LNG Terminal from a competent and experienced tug services provider. As soon as reasonably practicable after the Affiliate has so contracted for tug services, Seller shall notify Buyer thereof. Prior to the arrival of any LNG Tanker at the Loading Port, Buyer shall cause Transporter or the master of each LNG Tanker (acting on behalf of the ship-owner and charterer) making use of the port or marine
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7.5.4
|
Buyer shall pay or cause to be paid: (a) all Port Charges directly to the appropriate Person (including reimbursing Seller for any documented Port Charges paid by Seller or Seller’s operator on Buyer’s behalf); and (b) all documented charges payable by reason of any LNG Tanker having to shift from berth at the Driftwood LNG Terminal as a result of the action or inaction of Buyer.
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7.5.5
|
Each LNG Tanker must satisfy the following requirements:
|
(a)
|
Except as otherwise mutually agreed in writing by the Parties, each LNG Tanker shall be compatible with the specifications of the Driftwood LNG Terminal identified in Section 7.2.3 and any modifications to the Driftwood LNG Terminal pursuant to Section 7.3.2, and shall be of a sufficient size to load the applicable Scheduled Cargo Quantity. If Buyer’s LNG Tanker is not capable of loading the applicable Scheduled Cargo Quantity, Buyer shall be deemed to have failed to take the shortfall quantity and the provisions of Sections 5.7.2 to 5.7.8 shall apply, except that Buyer shall not be deemed to have failed to take a shortfall quantity and the provisions of Sections 5.7.2 to 5.7.8 shall not apply if the volume equivalent of the Scheduled Cargo Quantity at the nominated Gross Heating Value has been loaded.
|
(b)
|
Except as otherwise agreed in writing by Seller, which agreement shall not be unreasonably withheld or delayed, each LNG Tanker shall have a gross volumetric capacity between one hundred twenty-five thousand (125,000) cubic meters and two hundred sixteen thousand (216,000) cubic meters.
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(c)
|
Each LNG Tanker shall be, in accordance with International Standards, (i) fit in every way for the safe loading, handling and carrying of LNG in bulk at atmospheric pressure; (ii) tight, staunch, strong and otherwise seaworthy; and (iii) equipped with facilities for mooring and unmooring and with cargo handling and storage systems (including instrumentation) necessary for the safe loading, handling, carrying and measuring of LNG, in each case in good order and condition.
|
(d)
|
Each LNG Tanker shall at all times be maintained in class with any classification society that is a member of International Association of Classification Societies Ltd. (IACS) and that has experience in the classification of LNG vessels.
|
(e)
|
Each LNG Tanker shall have been constructed to all applicable International Standards (including the International Code for the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk).
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(f)
|
Each LNG Tanker shall comply with, and shall be fully equipped, supplied, operated, and maintained to comply with, all applicable International Standards and Applicable Laws, including those that relate to seaworthiness, design, safety, environmental protection, navigation, and other operational matters, and all procedures, permits, and approvals of Governmental Authorities for LNG vessels that are required for the transportation and loading of LNG at the Loading Port. Unless approved by Seller in writing, which approval shall not be unreasonably withheld or delayed, an LNG Tanker shall be prohibited from engaging in any maintenance, repair or in-water surveys while berthed at the Driftwood LNG Terminal. Each LNG Tanker shall comply fully with the guidelines of any Governmental Authority of the United States of America.
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(g)
|
The officers and crew of each LNG Tanker shall have the ability, experience, licenses and training commensurate with the performance of their duties in accordance with internationally accepted standards with which it is customary for Reasonable and Prudent Operators of LNG vessels to comply and as required by Governmental Authorities and any labor organization having jurisdiction over the LNG Tanker or her crew. Without in any way
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(h)
|
Each LNG Tanker shall have communication equipment complying with applicable regulations of Governmental Authorities and permitting such LNG Tanker to be in constant communication with the Driftwood LNG Terminal, the Vessel Traffic Information System (VTIS) and other vessels in the area.
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(i)
|
Provided that the Driftwood LNG Terminal supplies a vapor return line meeting the requirements of Section 7.2.3(e), each LNG Tanker shall be capable of loading a full cargo of LNG in a maximum of nineteen (19) hours, in addition to any time for the connecting, cooling, draining, purging and disconnecting of liquid arms.
|
(j)
|
Each LNG Tanker shall procure and maintain Hull and Machinery Insurance and P&I Insurance in accordance with Section 15.6.
|
7.6
|
LNG Tanker Inspections; LNG Tanker Vetting Procedures; Right to Reject LNG Tanker
|
7.6.1
|
During the Term, on prior reasonable notice to Buyer, Seller may, at its sole risk, send its qualified representatives to inspect during normal working hours any LNG Tanker as Seller may consider necessary to ascertain whether the LNG Tanker complies with this Agreement. Seller shall bear all the costs and expenses in connection with any inspection conducted hereunder. Any such inspection may include, as far as is practicable having regard to the LNG Tanker’s operational schedule, examination of the records related to the LNG Tanker’s hull, cargo and ballast tanks, machinery, boilers, auxiliaries and equipment; examination of the LNG Tanker’s deck, engine and official log books; review of records of surveys by the LNG Tanker’s classification society and relevant Governmental Authorities; and review of the LNG Tanker’s operating procedures and performance of surveys, both in port and at sea. Additionally, each LNG Tanker shall have been inspected and reported upon by a SIRE Accredited Inspector within six (6) Months of the time of its initial use at the Driftwood LNG Terminal, and each LNG Tanker shall be reported upon by a SIRE Accredited Inspector once every twelve (12) Months for the first ten (10) years of such LNG Tanker’s useful life and once every six (6) Months thereafter, and each inspection report of such SIRE Accredited Inspector shall show, to the reasonable satisfaction of Seller, no material deficiencies in the safety or operability of such LNG Tanker. Any inspection carried out pursuant to this Section 7.6.1: (a) shall not interfere with, or hinder, any LNG Tanker’s safe and efficient construction or operation; and (b) shall not entitle Seller or any of its representatives to make
|
7.6.2
|
Seller shall indemnify and hold Buyer and its Affiliates harmless from any Claims and Losses resulting from Seller’s inspection of any LNG Tanker pursuant to Section 7.6.1.
|
7.6.3
|
Buyer shall comply with all LNG Tanker vetting procedures, as set forth in the Driftwood Marine Operations Manual.
|
7.6.4
|
Seller shall have the right to reject any LNG vessel that Buyer intends to use to take delivery of LNG hereunder at the Driftwood LNG Terminal if such LNG vessel does not comply materially with the provisions of Section 7, provided that:
|
(a)
|
neither the exercise nor the non-exercise of such right shall reduce the responsibility of Buyer to Seller in respect of such LNG vessel and her operation, nor increase Seller’s responsibilities to Buyer or Third Parties for the same; and
|
(b)
|
Buyer’s obligations under this Agreement shall not be excused or suspended by reason of Buyer’s inability (pursuant to the foregoing) to use a vessel as an LNG Tanker.
|
7.7
|
Port Liability Agreement
|
7.7.1
|
Buyer shall cause Transporter or the master of each LNG Tanker (acting on behalf of the ship-owner and charterer) making use of the port or marine facilities at the Loading Port on behalf of Buyer, to execute a Port Liability Agreement prior to such LNG Tanker’s arrival at the Loading Port. Seller shall engage in good faith consultation with Buyer in the development of the form of the Port Liability Agreement and shall act as a Reasonable and Prudent Operator in developing the form of the Port Liability Agreement. The Port Liability Agreement shall treat Transporter in a non-discriminatory manner in comparison to all other owners and charterers of LNG vessels that use or transit the Loading Port. In the event the master of an LNG Tanker fails to execute the Port Liability Agreement, Buyer shall indemnify and hold Seller and its Affiliates harmless from any Claims brought against, or Losses incurred by Seller or any of its Affiliates arising from such failure. If, as a result of Transporter executing the Port Liability Agreement, Transporter is liable to the LNG Tanker’s P&I Club for an additional premium for the LNG Tanker’s P&I indemnity coverage, and if Buyer is liable to Transporter for such additional premium, then Seller shall pay Buyer for such additional
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7.7.2
|
Subject to Section 7.7.1 and without prejudice to the terms of the Port Liability Agreement and the obligations of Buyer or its Affiliate pursuant to the Partnership Agreement and any equity capital contribution agreement with the Partnership, Seller releases Buyer, its Affiliates and their respective shareholders and members, officers, directors, employees, designees, representatives, and agents from liability to Seller incident to all Claims and Losses that may exist, arise or be threatened currently or in the future at any time following the Effective Date and whether or not of a type contemplated by either Party at any time, brought by any Person for injury to, illness or death of any employee of Seller, or for damage to or loss of the Driftwood LNG Terminal, which injury, illness, death, damage or loss arises out of, is incident to, or results from the performance or failure to perform this Agreement by Buyer, or any of its Affiliates, shareholders and members, officers, directors, employees, designees, representatives and agents.
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7.7.3
|
Subject to Section 7.7.1 and without prejudice to the terms of Section 12 or the Port Liability Agreement, Buyer releases Seller, its Affiliates, and their respective shareholders, officers, members, directors, employees, designees, representatives, and agents from liability to Buyer incident to all Claims and Losses that may exist, arise or be threatened currently or in the future at any time following the Effective Date and whether or not of a type contemplated by either Party at any time, brought by any Person for injury to, illness or death of any employee of Buyer or its Affiliates, or for damage to or loss of any LNG Tanker, which injury, illness, death, damage or loss arises out of, is incident to, or results from the performance or failure to perform this Agreement by Seller or its Affiliates, shareholders officers, members, directors, employees, designees, representatives and agents.
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7.7.4
|
The initial form of Port Liability Agreement developed in accordance with Section 7.7.1 may be amended from time to time without consent of Buyer only if after any such amendment the revised terms of such Port Liability Agreement: (a) do not negatively impact Buyer’s ability to perform its obligations or exercise its rights under this Agreement, (b) treat Transporter in a non-discriminatory manner in comparison to all other owners and charterers of LNG vessels that use or transit the Loading Port, and (c) do not prevent any Transporter from obtaining full P&I indemnity coverage from a P&I Club, and such P&I indemnity will cover all Claims and Losses pursuant to such Port Liability Agreement in relation to use of the Loading Port by an LNG Tanker. Seller shall promptly notify Buyer upon any amendment to the Port Liability Agreement and shall provide a copy of the amended Port Liability Agreement to Buyer.
|
7.8
|
Driftwood Marine Operations Manual
|
7.9
|
Loading of LNG Tankers
|
7.9.1
|
Except as otherwise specifically provided, the terms of this Section 7.9 shall apply to all LNG Tankers calling at the Driftwood LNG Terminal.
|
7.9.2
|
Not later than twenty (20) Days prior to the ETA, Buyer shall notify, or cause the master of the LNG Tanker to notify, Seller of the information specified below (“In-Transit First Notice”):
|
(a)
|
name of the LNG Tanker, the volume of LNG onboard at the time the relevant notice is issued and the operator and owner of such LNG Tanker;
|
(b)
|
any operational deficiencies in the LNG Tanker that may affect either its performance at the Driftwood LNG Terminal or its approach to or departure from the Driftwood LNG Terminal;
|
(c)
|
whether the LNG Tanker will require cool-down service upon arrival at the Driftwood LNG Terminal, and, if so, the quantity of LNG (in cubic meters) estimated to be required for such cool-down service;
|
(d)
|
whether the LNG Tanker will require gas-up service upon arrival at the Driftwood LNG Terminal; and
|
(e)
|
the ETA.
|
7.9.3
|
With respect to each LNG Tanker scheduled to call at the Driftwood LNG Terminal, Buyer shall give, or cause the master of the LNG Tanker to give, to Seller the following notices. Each such notice shall include details of any significant change in the information provided pursuant to Section 7.9.2 (as updated pursuant to subsequent notices) since the immediately preceding notice was given (including, subject to Sections 7.6 and 8.3, any change to the LNG Tanker):
|
(a)
|
A second notice (“In-Transit Second Notice”), which shall be sent ninety-six (96) hours prior to the ETA set forth in the In-Transit First Notice or as soon as practicable prior to such ETA if the sea time between the point of departure of the LNG Tanker and the Loading Port is less than ninety-six (96) hours, stating the LNG Tanker’s then ETA. If, thereafter, such ETA changes by more than six (6) hours, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Seller notice of the corrected ETA;
|
(b)
|
A third notice (“In-Transit Third Notice”), which shall be sent forty-eight (48) hours prior to the ETA set forth in the In-Transit Second Notice (as corrected), confirming or amending such ETA. If, thereafter, such ETA changes by more than six (6) hours, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Seller notice of the corrected ETA;
|
(c)
|
A fourth notice (“In-Transit Fourth Notice”), which shall be sent twenty-four (24) hours prior to the ETA set forth in the In-Transit Third Notice (as corrected), confirming or amending such ETA. If, thereafter, such ETA changes by more than three (3) hours, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Seller notice of the corrected ETA;
|
(d)
|
A fifth notice (“In-Transit Final Notice”), which shall be sent twelve (12) hours prior to the ETA set forth in the In-Transit Fourth Notice (as corrected), confirming or amending such ETA. If, thereafter, such ETA changes by more than one (1) hour, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Seller notice of the corrected ETA; and
|
(e)
|
An NOR, which shall be given at the time prescribed in Section 7.10.
|
7.9.4
|
Except where prohibited by any applicable Governmental Authority or International Standards, Buyer shall have the right to cause an LNG Tanker to burn Gas as fuel during operations at the Driftwood LNG Terminal (including while conducting cargo loading operations). Any quantity of Gas
|
7.9.5
|
Seller shall have a right to use or dispose of, or cause to be used or disposed of, all Gas returned to the Driftwood LNG Terminal during cool-down or gas-up operations without compensation to Buyer. Seller shall have a right to use or dispose of, or cause to be used or disposed of, all Gas returned to the Driftwood LNG Terminal during loading operations, provided that Gas returned to the Driftwood LNG Terminal during loading shall be deducted for determining the quantity loaded for Buyer’s account in accordance with Paragraph 11(c)(ii) of Exhibit A and the formula set out in Paragraph 12.4 of Exhibit A.
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7.10
|
Notice of Readiness
|
7.10.1
|
The master of an LNG Tanker or such master’s agent shall tender the NOR to Seller upon arrival at the PBS or any customary anchorage location for LNG vessels seeking to transit the Calcasieu ship channel, provided that such LNG Tanker has received all required Approvals from the relevant Governmental Authorities (including security clearance from the US Coast Guard) that are required to transit to a berth of the Driftwood LNG Terminal, and is ready, willing, and able, to proceed to berth and load LNG or to commence cool-down or gas-up operations (as applicable).
|
7.10.2
|
A valid NOR given under Section 7.10.1 shall become effective as follows:
|
(a)
|
For an LNG Tanker that tenders its NOR according to Section 7.10.1 at any time prior to or during the Delivery Window allocated to such LNG Tanker, an NOR shall become effective when the LNG Tanker is all fast at a berth of the Driftwood LNG Terminal and has received all required Approvals from the relevant Governmental Authorities (including security clearance from the US Coast Guard); and
|
(b)
|
For an LNG Tanker that tenders its NOR according to Section 7.10.1 at any time after the expiration of the Delivery Window, an NOR shall become effective when, after Seller has notified the LNG Tanker that Seller is ready to receive the LNG Tanker, the LNG Tanker is all fast at a berth of the Driftwood LNG Terminal and has received all required Approvals from the relevant Governmental Authorities (including security clearance from the US Coast Guard).
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7.11
|
Berthing Assignment
|
7.11.1
|
Seller shall berth or caused to be berthed an LNG Tanker which has tendered NOR before or during its Delivery Window promptly after Seller determines
|
7.11.2
|
For each delivery window period, Seller shall determine or cause to be determined the berthing priority among LNG vessels which have tendered NOR before or during their scheduled delivery window as follows:
|
(a)
|
The first berthing priority for a delivery window period shall be for an LNG vessel scheduled for such delivery window period. Priority within this group shall be given to the LNG vessel which has first tendered to Seller its NOR. Once an LNG vessel achieves a first berthing priority pursuant to this Section 7.11.2(a) or 7.11.2(c), such LNG vessel shall maintain such priority until such LNG vessel is berthed, so long as its tendered NOR does not become invalid pursuant to Section 7.13.1;
|
(b)
|
The second berthing priority for a delivery window period shall be for an LNG vessel scheduled for arrival before such delivery window period, which tendered to Seller its NOR prior to or during its scheduled delivery window but which was unable to proceed to berth for reasons not attributable to Buyer, the Transporter, the LNG Tanker
|
(c)
|
The third berthing priority for a delivery window period shall be for an LNG vessel scheduled for arrival after such delivery window period. Priority within this group shall be given to the LNG vessel which has first tendered to Seller its NOR. An LNG vessel with third berthing priority pursuant to this Section 7.11.2(c) will achieve a first berthing priority on its scheduled delivery window pursuant to Section 7.11.2(a) if such LNG vessel has not been berthed prior to such date, so long as its tendered NOR does not become invalid pursuant to Section 7.13.1.
|
7.11.3
|
If an LNG Tanker tenders NOR after the end of its Delivery Window, Seller shall use reasonable efforts to berth or cause to be berthed such LNG Tanker as soon as reasonably practical; provided, however, that, unless otherwise agreed with Buyer, Seller shall have no obligation to use such efforts to berth or cause to be berthed an LNG Tanker that tenders NOR more than forty-eight (48) hours after the end of its Delivery Window. If, as of the forty-eighth (48th) hour after the end of the Delivery Window, the LNG Tanker has not tendered NOR, and such delay is not attributable to a reason that would result in an extension of Allowed Laytime under Sections 7.13.2(a)(i)-(viii), Buyer shall be deemed to have failed to take delivery of the Scheduled Cargo Quantity of the relevant cargo and the provisions of Sections 5.7.2 to 5.7.8 shall apply.
|
7.12
|
Berth Laytime
|
7.12.1
|
The allotted laytime for each LNG Tanker (“Allotted Laytime”) shall be thirty (30) hours, as extended by any period of delay that is caused by:
|
(a)
|
reasons attributable to a Governmental Authority, Buyer, the Transporter, the LNG Tanker or its master, crew, owner or operator or any Third Party outside of the reasonable control of Seller, Seller’s Affiliates or the operator of the Driftwood LNG Terminal, including security clearance review by the US Coast Guard;
|
(b)
|
Force Majeure or Adverse Weather Conditions;
|
(c)
|
unscheduled curtailment or temporary discontinuation of operations at the Driftwood LNG Terminal necessary for reasons of safety, except to the extent such unscheduled curtailment or temporary discontinuation of operations is due to Seller’s failure to operate and maintain its facilities as a Reasonable and Prudent Operator;
|
(d)
|
time at berth during any cool-down pursuant to Sections 7.16.1(a) and (c);
|
(e)
|
time at berth during any gas-up pursuant to Section 7.17;
|
(f)
|
nighttime transit restrictions, if applicable;
|
(g)
|
time to transit from the PBS or anchorage location, as applicable, to a berth of the Driftwood LNG Terminal, in the event Actual Laytime commences pursuant to Section 7.12.2(a)(1); and
|
(h)
|
any other interruption impacting the Loading Port, including the unavailability or delay of Pilot services, tugs, and other similar interruptions, to the extent such interruptions are not caused by reasons attributable to Seller or the operator of the Driftwood LNG Terminal.
|
7.12.2
|
The actual laytime for each LNG Tanker (“Actual Laytime”) shall commence (a) if a valid NOR was given pursuant to Section 7.10.1 prior to or during the Delivery Window for such LNG Tanker, the earlier of (1) twelve (12) hours after the later of the start of the Delivery Window and the time that such valid NOR was given pursuant to Section 7.10.1, and (2) when the NOR is effective, or (b) in all other cases, when the NOR is effective, and shall end when (i) the last loading arm of the Driftwood LNG Terminal has been disconnected from the LNG Tanker, (ii) the cargo documents are on board of the LNG Tanker and (iii) Seller or its operator has cleared the LNG Tanker for departure.
|
7.12.3
|
In the event Actual Laytime exceeds Allotted Laytime (as extended pursuant to Section 7.12.1) (“Demurrage Event”), Seller shall pay to Buyer as liquidated damages demurrage in USD (which shall be prorated for a portion of a Day) at a rate equal to the Demurrage Rate. The “Demurrage Rate” initially shall be USD eighty thousand (US$80,000) per Day and shall be revised by Seller each Contract Year ending in five (5) or zero (0) (e.g., 2025 and 2030) to reflect the average of three quotes, each received from a different ship broker, for then-current long-term LNG vessel charter rates. Seller shall determine such revised Demurrage Rate and notify Buyer of such revised Demurrage Rate at least thirty (30) days prior to the start of such Contract Year ending in five (5) or zero (0), as applicable, and such revised Demurrage Rate shall be effective starting on the first day of such Contract Year ending in five (5) or zero (0), as applicable, and continuing for five (5) years until subsequently revised pursuant to this Section 7.12.3. If a Demurrage Event occurs, Buyer shall invoice Seller for such demurrage within ninety (90) Days pursuant to Section 10.1.5.
|
7.12.4
|
In the event (a) an LNG Tanker is delayed in berthing at the Driftwood LNG Terminal or commencement of LNG loading due to an event occurring at or near the Driftwood LNG Terminal (including at the berth) and for a reason that would not result in an extension of Allotted Laytime under Section 7.12.1, and (b) as a result thereof, the commencement of LNG loading is delayed beyond twenty-four (24) hours after the LNG Tanker (i) has either tendered a valid NOR or berthed and (ii) is cleared by the Governmental Authorities to commence loading (“Excess Boil-Off Event”), Seller shall pay Buyer as liquidated damages an amount, on account of excess boil-off. The amount payable shall equal (x) the total number of full hours by which commencement of LNG loading is delayed beyond the aforementioned twenty-four (24) hour period, multiplied by (y) initially, the Provisional Transfer Price for purposes of a Provisional Invoice, and thereafter the Final Transfer Price upon the determination thereof for purposes of the Final Invoice (in accordance with Section 10.1.6), multiplied by (z) a quantity in MMBtu equal to (A) the guaranteed daily ballast rate of boil-off of such LNG Tanker pursuant to Form B of the relevant charterparty or similar description provided by the LNG Tanker’s owner in the relevant charterparty, divided by (B) twenty-four (24) hours per Day, multiplied by (C) the cargo containment capacity of such LNG Tanker (in MMBtu), provided that in no event shall such quantity of MMBtu exceed the quantity of LNG onboard the LNG Tanker at the time it issued its valid NOR. Buyer shall invoice Seller for such excess boil-off within ninety (90) Days after the applicable event, pursuant to Section 10.1.5.
|
7.13
|
LNG Tanker Not Ready for LNG Loading; Excess Laytime
|
7.13.1
|
Except in the event Seller provides a cool-down service under Section 7.16.1(b), if any LNG Tanker previously believed to be ready for LNG loading is determined to be not ready after being berthed for reasons not attributable to Seller or Seller’s Affiliates or the operator of the Driftwood LNG Terminal, the NOR shall be invalid, and Seller may direct the LNG Tanker’s master to vacate the berth and proceed to anchorage, whether or not other LNG vessels are awaiting the berth, unless it appears reasonably certain to Seller that such LNG Tanker can be made ready without disrupting the overall berthing schedule of the Driftwood LNG Terminal or operations of the Driftwood LNG Terminal. When an unready LNG Tanker at anchorage becomes ready for LNG loading, its master shall notify Seller. If, as a result of such LNG Tanker not being ready to berth for reasons not attributable to Seller or Seller’s Affiliate or the operator of the Driftwood LNG Terminal, Buyer fails to take a cargo, the provisions of Sections 5.7.2 to 5.7.8 shall apply. If, as a result of such LNG Tanker not being ready to berth for reasons attributable to Seller or Seller’s Affiliates, Buyer fails to take a cargo, Seller shall be deemed to have failed to make available such cargo and the provisions of Sections 5.6.2 to 5.6.4 shall apply.
|
7.13.2
|
The following shall apply with respect to berthing:
|
(a)
|
An LNG Tanker shall complete LNG loading and vacate the berth as soon as possible but not later than thirty (30) hours from the time the LNG Tanker is all fast at the berth and has received all required Approvals from the relevant Governmental Authorities (including security clearance from the US Coast Guard). Such thirty (30) hour-period (“Allowed Laytime”) shall be extended by any period of delay that is caused by:
|
(i)
|
reasons attributable to a Governmental Authority, Seller, the operator of the Driftwood LNG Terminal or any Third Party outside the reasonable control of Buyer, the Transporter, the LNG Tanker or its master, crew, owner or operator;
|
(ii)
|
Force Majeure or Adverse Weather Conditions;
|
(iii)
|
unscheduled curtailment or temporary discontinuation of operations at the Driftwood LNG Terminal necessary for reasons of safety, except to the extent such unscheduled curtailment or temporary discontinuation of operations is attributable to Buyer, the Transporter, the LNG Tanker or its master, crew, owner or operator;
|
(iv)
|
time at berth during any cool-down pursuant to Sections 7.16.1(a)-(c);
|
(v)
|
time at berth during any gas-up pursuant to Section 7.17;
|
(vi)
|
nighttime transit restrictions, if applicable;
|
(vii)
|
tidal restrictions; and
|
(viii)
|
any other interruption impacting the Loading Port, including the unavailability or delay of Pilot services, tugs, and other similar interruptions, to the extent such interruptions are not caused by reasons attributable to Buyer, the Transporter, the LNG Tanker or its master, crew, owner or operator.
|
(b)
|
If an LNG Tanker fails to depart at the end of its Allowed Laytime (as extended pursuant to Sections 7.13.2(a)(i)-(viii)), another LNG vessel is awaiting the berth and the LNG Tanker’s continued occupancy of the berth will disrupt the overall berthing schedule of the Driftwood LNG Terminal or operations of the Driftwood LNG Terminal, Seller may direct the LNG Tanker to vacate the berth and proceed to sea at utmost dispatch.
|
(c)
|
If an LNG Tanker fails to depart the berth at the end of its Allowed Laytime (as extended pursuant to Sections 7.13.2(a)(i)-(viii)) and as a result the subsequent LNG vessel is prevented from or delayed in loading, Buyer shall reimburse Seller for any and all actual documented demurrage or excess boil-off that Seller becomes contractually obligated to pay to any Third Party with respect to such subsequent LNG vessel, as a result of the LNG Tanker not completing LNG loading and vacating the berth as required by this Section 7.13.2; provided that Buyer shall not be required to reimburse Seller for any amounts based on a demurrage rate or excess boil-off rate in excess of those specified in Section 7.12.3 and Section 7.12.4, as applicable. Seller shall invoice Buyer for any amounts due under this Section 7.13.2(c) pursuant to Section 10.1.5 within ninety (90) Days after the relevant Delivery Window.
|
(d)
|
In the event an LNG Tanker fails to vacate the berth pursuant to this Section 7.13 and Buyer is not taking actions to cause it to vacate the berth, Seller may effect such removal at the expense of Buyer.
|
7.14
|
LNG Loadings at the Driftwood LNG Terminal
|
7.14.1
|
Seller shall cooperate with Transporters (or their agents) and with the master of each LNG Tanker to facilitate the continuous and efficient loading of LNG hereunder.
|
7.14.2
|
During LNG loading, Seller shall take receipt of, through the Driftwood LNG Terminal vapor return line, Gas in such quantities as are necessary for the safe loading of LNG at such rates, pressures and temperatures as may be required by the design of the LNG Tanker or any standard operating practices of such LNG Tanker, provided such practices conform to International LNG Vessel Standards.
|
7.14.3
|
Promptly after completion of loading of each cargo, Seller shall send or cause to be sent to Buyer a certificate of origin, certificate of quantity, certificate of quality, cargo manifest and bill of lading, together with such other documents concerning the cargo as may reasonably be requested by Buyer.
|
7.14.4
|
Buyer, in cooperation with Seller, shall cause the LNG Tanker to depart safely and expeditiously from the berth upon completion of LNG loading.
|
7.15
|
Cooperation
|
7.16
|
Cool-Down of LNG Tankers
|
7.16.1
|
Buyer shall be solely responsible for ensuring that each LNG Tanker elected by Buyer for taking a cargo arrives at the Driftwood LNG Terminal cold and in a state of readiness. Notwithstanding the foregoing and subject to Section 7.16.2, Seller shall provide cool-down service to LNG Tankers at Buyer’s request as follows:
|
(a)
|
Seller shall use reasonable efforts (taking into account availability of sufficient berth time) to accept Buyer’s request to provide cool-down service for any LNG Tanker, subject to Buyer requesting such cool-down service by notice to Seller as far in advance of the relevant cargo’s Delivery Window as is reasonably practicable but in no case less than thirty (30) Days before the relevant cargo’s Delivery Window, provided that Seller shall accept Buyer’s request to provide a cool-down service if (i) Buyer makes such request by notice at the time Buyer proposes its schedule of receipt of cargoes pursuant to Section 8.1.2 for the relevant Contract Year or (ii) at the time of the request, the Composite ADP for the relevant Contract Year indicates sufficient available berth time to accommodate such cool-down service. Seller shall have no obligation pursuant to this Section 7.16.1(a) to provide cool-down services for more than one (1) LNG Tanker during any two (2) consecutive Contract Years (provided that any cool-down services which may be agreed to be provided as a result of mitigation of a Force Majeure event shall not be counted towards such limitation). Buyer shall pay Seller for all LNG provided by Seller for cooling such LNG Tankers in an amount equal to the quantity of LNG provided, multiplied by initially, the Provisional Transfer Price for purposes of a Provisional Invoice, and thereafter the Final Transfer Price upon the determination thereof for purposes of the Final Invoice (in accordance with Section 10.1.5).
|
(b)
|
Seller shall provide cool-down service without payment to any LNG Tankers requiring cool-down solely as a result of a delay caused by Seller, but only if such LNG Tanker made no other call between the original Delivery Window and the requested cool-down time.
|
(c)
|
Seller shall use reasonable efforts, contingent on the availability of sufficient berth time and facilities status, to provide cool-down service at any time other than as described in Sections 7.16.1(a)-(b)
|
7.16.2
|
The following shall apply to any cool-down service provided by Seller pursuant to Section 7.16.1:
|
(a)
|
the MMBtu content of the total liquid quantities delivered for cooling, measured before evaporation, shall be determined by reference to the relevant LNG Tanker’s cool-down tables;
|
(b)
|
the Parties will determine by mutual agreement the rates and pressures for delivery of LNG for cool-down, but always in full accordance with safe operating parameters and procedures established by Seller;
|
(c)
|
LNG provided during cool down by Seller pursuant to Section 7.16.1 shall not be applied against the Scheduled Cargo Quantity for the relevant cargo; and
|
(d)
|
unless cool-down services are agreed to be provided in the mitigation of Force Majeure, cool-down service shall not be provided during January, February, March, October, November or December of any Contract Year, provided that if Buyer requests cool-down service during such period, then Seller shall use commercially reasonable efforts to provide cool-down service during such period.
|
7.17
|
Gas-Up of LNG Tankers
|
7.17.1
|
Seller shall use reasonable efforts to obtain all relevant Approvals needed to allow Seller to offer gas-up service to LNG Tankers at the Driftwood LNG Terminal.
|
7.17.2
|
Notwithstanding the first sentence of Section 7.16.1 and subject to Section 7.17.3, to the extent Seller has all relevant Approvals needed to offer gas-up service to LNG Tankers at the Driftwood LNG Terminal and such services is otherwise permitted under Applicable Law, Seller shall provide gas-up service to LNG Tankers at Buyer’s request as follows:
|
(a)
|
Buyer’s request for gas-up service in respect of an LNG Tanker shall be provided at the same time that Buyer requests cool-down service in respect of such LNG Tanker pursuant to Section 7.16.
|
(b)
|
Seller shall use reasonable efforts (taking into account availability of sufficient berth time) to accept Buyer’s request to provide gas-up service for any LNG Tanker, subject to Buyer requesting such gas-up service by notice to Seller as far in advance of the relevant cargo’s Delivery Window as is reasonably practicable but in no case less than thirty (30) Days before the relevant cargo’s Delivery Window, provided that Seller shall accept Buyer’s request to provide a gas-up service if (i) Buyer makes such request by notice at the time Buyer proposes its schedule of receipt of cargoes pursuant to Section 8.1.2 for the relevant Contract Year or (ii) at the time of the request, the Composite ADP for the relevant Contract Year indicates sufficient available berth time to accommodate such gas-up service.
|
(c)
|
Seller shall use reasonable efforts, contingent on the availability of sufficient berth time and facilities status, to provide gas-up service at any time other than as described in Section 7.17.2(b) upon request by Buyer, provided that Seller shall have no obligation to provide such gas-up service if doing so would interfere with a scheduled Delivery Window of Buyer or a scheduled delivery window of any other Person or would adversely affect the ability of Seller to perform its other obligations under this Agreement and other LNG sale and purchase agreements or to operate the Driftwood LNG Terminal in accordance with all Approvals and Applicable Law.
|
7.17.3
|
The following shall apply to any gas-up service provided by Seller pursuant to Section 7.17.2:
|
(a)
|
the Parties will determine by mutual agreement the rates and pressures for delivery of Gas for gas-up service, but always in full accordance with safe operating parameters and procedures established by Seller;
|
(b)
|
gas-up service shall only be provided to an LNG Tanker that is also entitled to receive, and is receiving, immediately after such gas-up service, cool-down service pursuant to Section 7.16;
|
(c)
|
without prejudice to any amounts owed by Buyer for cool-down service provided pursuant to Section 7.16 to an LNG Tanker that also receives gas-up service pursuant to this Section 7.17, Buyer shall not be obligated to make a payment to Seller for gas-up service;
|
(d)
|
gas-up service shall not be provided during January, February, March, October, November or December of any Contract Year, provided that
|
(e)
|
gas-up service shall only be available for LNG Tankers under nitrogen purge, provided that the Parties, acting reasonably, will discuss the acceptance of LNG Tankers under inert gas, if Buyer can demonstrate unavailability of nitrogen and if Seller is able to accommodate, including taking into consideration operational and regulatory requirements (in the case of regulatory requirements, as reasonably provided by Seller).
|
8.
|
Annual Delivery Program
|
8.1
|
Programming Information
|
8.1.1
|
No later than one hundred ninety-five (195) Days before the start of each Contract Year, Seller shall provide Buyer with Seller’s good faith estimate of the Gross Heating Value of LNG to be delivered during such Contract Year.
|
8.1.2
|
No later than one hundred forty (140) Days before the start of each Contract Year, Seller shall provide Buyer with the estimated ACQ for such Contract Year.
|
8.1.3
|
No later than one hundred twenty-five (125) Days before the start of each Contract Year, Buyer shall notify Seller of Buyer’s proposed schedule of receipt of cargoes for each Month of such Contract Year. Such schedule shall identify sufficient proposed cargoes in order to schedule the full AACQ, and such AACQ shall be distributed across the Contract Year in accordance with Section 5.3. Buyer’s notice shall include the following information:
|
(a)
|
the LNG Tanker (if known) for each proposed cargo;
|
(b)
|
the Scheduled Cargo Quantity for each proposed cargo;
|
(c)
|
the proposed Delivery Window for each cargo; and
|
(d)
|
any other information that may affect annual scheduling.
|
8.1.4
|
Seller shall call a one- or two-day scheduling meeting of Seller and all Partnership Buyers to occur no earlier than one hundred twenty-four (124) Days before the start of each Contract Year and no later than seventy (70) Days before the start of such Contract Year, by providing at least thirty (30)
|
8.1.5
|
Seller will then notify Buyer no less than ninety-three (93) Days before the start of such Contract Year of Seller’s proposed schedule of cargoes to be made available in each Month of such Contract Year, exercising reasonable efforts to adopt Buyer’s proposed schedule of receipts requested in accordance with Section 8.1.2; provided that (x) if Buyer fails to deliver the notice according to Section 8.1.2, Seller may nevertheless propose a schedule according to the terms of this Section 8.1.5, and (y) Seller shall have the right to modify Buyer’s proposed schedule to the extent required to ensure that the entire AACQ is scheduled and to comply with the other requirements of this Agreement, including the terms of Section 5.3. Such notice shall include the following information:
|
(a)
|
the proposed AACQ for the Contract Year;
|
(b)
|
the proposed Round-Down Quantity (if any) for the Contract Year;
|
(c)
|
for each cargo:
|
(i)
|
the LNG Tanker (if specified by Buyer);
|
(ii)
|
the Scheduled Cargo Quantity, if any, specified in the notice sent by Buyer pursuant to Section 8.1.2; and
|
(iii)
|
the proposed Delivery Window; and
|
(d)
|
any other information that may affect annual scheduling.
|
8.2
|
Determination of Annual Delivery Program
|
8.2.1
|
No later than ten (10) Days after receipt of Seller’s proposed schedule provided under Section 8.1.5, Buyer shall notify Seller if Buyer desires to consult with Seller regarding the proposed schedule. Seller shall, no later than fifteen (15) Days after receipt of Buyer’s notice, meet and consult with Buyer.
|
8.2.2
|
If, prior to the date that is sixty-eight (68) Days before the start of a Contract Year, the Parties have agreed on a schedule of deliveries for such Contract Year, then Seller shall issue the delivery schedule agreed by the Parties. If the Parties are unable to agree on a schedule of deliveries for such Contract
|
8.2.3
|
The schedule for deliveries of LNG during the Contract Year established pursuant to this Section 8.2, as amended from time to time in accordance with Section 8.3, is the “Annual Delivery Program” or “ADP”. If Seller fails to issue the schedule provided for in Sections 8.1.5 or 8.2.2, if applicable, then the schedule proposed by Buyer under Section 8.1.2 shall be the ADP for the relevant Contract Year.
|
8.2.4
|
Seller shall combine the ADP with the annual delivery programs of all other Partnership Buyers and provide to Buyer a combined schedule (the “Composite ADP”) showing all delivery windows and scheduled cargo quantities that have been committed by Seller, along with available, uncommitted loading windows at the Driftwood LNG Terminal. Seller shall promptly update the Composite ADP as the ADP is changed pursuant to Section 8.3 or other Partnership Buyers’ annual delivery programs are changed pursuant to their respective LNG sale and purchase agreements.
|
8.2.5
|
All references in Section 8.1 and this Section 8.2 to a specific number of Days prior to the start of a Contract Year shall be construed to mean, for purposes of the First Contract Year, as such number of Days prior to the anticipated Date of Full Operations for Plant 1 as revised by any acceleration thereof by Seller pursuant to Section 4.3.1. In the event of such acceleration, Seller shall be deemed to be in compliance with Section 8.1.1 for purposes of the First Contract Year so long as Seller provides the notice required by Section 8.1.1 at the same time Seller provides notice of such acceleration.
|
8.3
|
Changes to Annual Delivery Program
|
8.3.1
|
Subject to the remainder of this Section 8.3, either Party may request by notice a change in the ADP or Ninety Day Schedule for a Contract Year for any reason.
|
8.3.2
|
As soon as possible after notice has been received pursuant to this Section 8.3, the Parties shall consult with one another in order to examine whether such ADP or Ninety Day Schedule can be revised to accommodate such proposed change(s). Neither Party shall unreasonably withhold or delay its consent to revise the ADP or Ninety Day Schedule in accordance with changes proposed by the other Party; provided that neither Party shall be under any obligation to consent thereto if:
|
(a)
|
in the case of Seller, (i) Seller is unable to agree after the exercise of reasonable efforts to any necessary changes in its arrangements with other Partnership Buyers, (ii) the requested change would impose additional costs (unless Buyer agrees to reimburse such costs) or risks upon Seller, or (iii) the requested change would increase the total quantities scheduled hereunder or decrease the total quantities scheduled hereunder; or
|
(b)
|
in the case of Buyer, (i) Buyer is unable to agree after the exercise of reasonable efforts to any necessary changes in its arrangements with Transporter or Buyer’s customers, (ii) the requested change would impose additional costs (unless Seller agrees to reimburse such costs) or risks upon Buyer, or (iii) the requested change would increase the total quantities scheduled hereunder or decrease the total quantities scheduled hereunder.
|
8.3.3
|
A Party shall not withhold or delay its consent to revise the ADP or Ninety Day Schedule if the proposed change: (a) complies with the terms of this Agreement and Applicable Laws; (b) by the exercise of reasonable efforts on the part of such Party, does not create a material adverse impact on health, safety, environment or the operations of such Party; (c) does not result in unreimbursed increased costs or decreased revenues to such Party; and (d) results in no change to the total quantities scheduled hereunder.
|
8.3.4
|
Upon a scheduling change pursuant to this Section 8.3, the ADP and, if applicable, the Ninety Day Schedule shall be amended accordingly and an updated ADP and, if applicable, an updated Ninety Day Schedule shall promptly be provided in writing by Seller to Buyer.
|
8.4
|
Ninety Day Schedule
|
8.4.1
|
No later than the twentieth (20th) Day of each Month, Seller shall issue a forward plan of deliveries for the three (3)-Month period commencing on the first (1st) Day of the following Month thereafter (e.g., the Ninety Day Schedule for the three (3)-Month period commencing on May 1st shall be issued no later than the twentieth (20th) Day of April) (such plan, as amended from time to time in accordance with procedures set forth in this Agreement, the “Ninety Day Schedule”). The Ninety Day Schedule shall set forth by cargo the forecast pattern of deliveries, including the Delivery Window, LNG Tanker and Scheduled Cargo Quantity for each cargo. In the absence of agreement between the Parties otherwise, the Ninety Day Schedule will maintain the Scheduled Cargo Quantities and Delivery Windows as identified in the Annual Delivery Program.
|
8.4.2
|
Seller shall combine the Ninety Day Schedule with the ninety day schedules of all other Partnership Buyers and provide to Buyer a combined schedule (the “Composite Ninety Day Schedule”) showing all delivery windows and scheduled cargo quantities that have been committed by Seller, along with available, uncommitted loading windows at the Driftwood LNG Terminal. Seller shall promptly update the Composite Ninety Day Schedule as the Ninety Day Schedule is changed pursuant to Section 8.3 or 8.4.1 or other Partnership Buyers’ ninety day schedules are changed pursuant to their respective LNG sale and purchase agreements.
|
9.
|
Transfer Price; Uniform LNG SPAs
|
9.1
|
Provisional Transfer Price
|
Provisional Transfer Price =
|
the lesser of:
|
(a)
|
115% HH + $3.00/MMBtu;
|
(b)
|
HH + [***];
|
9.2
|
Final Transfer Price
|
(a)
|
115% HH + $3.00/MMBtu;
|
(b)
|
HH + [***];
|
9.3
|
Uniform LNG SPAs
|
10.
|
Invoicing and Payment
|
10.1
|
Invoices
|
10.1.1
|
Invoices for Cargoes. Invoices for each cargo made available by Seller and taken by Buyer, together with relevant supporting documents including a certificate of quantity loaded and all relevant information in respect of calculations of the Provisional Transfer Price and the Final Transfer Price as may be reasonably required by Buyer, shall be prepared and delivered by Seller to Buyer promptly following each Delivery Window and receipt of the final inspection certificate applicable to the loading of such cargo. The Provisional Invoice amount shall be the Provisional Transfer Price, multiplied by the quantity of LNG loaded on the LNG Tanker as calculated pursuant to Section 13.5. Each such Provisional Invoice shall be followed by a Final Invoice pursuant to Section 10.1.8(b) as soon as reasonably possible and in any event not later than sixty (60) Business Days after the first Day of Month M for such cargo; the Final Invoice amount shall be the Final Transfer Price, multiplied by the quantity of LNG loaded on the LNG Tanker as calculated pursuant to Section 13.5.
|
10.1.2
|
Invoices for Suspension Fees. Invoices for Suspension Fees shall be prepared and delivered by Seller to Buyer following Seller’s receipt of Buyer’s suspension notice pursuant to Section 5.8.1 for the suspended cargos. Each such invoice shall be, initially, a Provisional Invoice pursuant to Section 10.1.8(a), which shall be followed by a Final Invoice pursuant to Section 10.1.8(b).
|
10.1.3
|
Invoices for Cargo DoP Payments. Invoices for Cargo DoP Payments owed to Buyer by Seller shall be prepared by Buyer and delivered to Seller promptly following the Delivery Window of each affected cargo, and Seller shall give Buyer all reasonable assistance reasonably requested by Buyer in providing relevant information necessary to calculate the Cargo DoP Payments. Each such invoice shall be, initially, a Provisional Invoice pursuant to Section 10.1.8(a), which shall be followed by a Final Invoice pursuant to Section 10.1.8(b).
|
10.1.4
|
Invoices for Cargo Shortfall Payments. Invoices for Cargo Shortfall Payments owed to Seller by Buyer shall be prepared by Seller and delivered to Buyer promptly following the Delivery Window for each affected cargo. Each such invoice shall be, initially, a Provisional Invoice pursuant to Section
|
10.1.5
|
Invoices for Various Sums Due. In the event that any sums are due from one Party to the other Party under Section 7.5.4(b), 7.12.3, 7.12.4, 7.13.2(c), 7.16.1, 10.3.3, 10.4.1, 11.5, 12.3.1, or 12.3.2 of this Agreement, the Party to whom such sums are owed shall furnish an invoice therefor, describing in reasonable detail the basis for such invoice and providing relevant documents supporting the calculation thereof. To the extent Section 10.1.8(a)(i), (ii) or (iii) apply to such invoice, such invoice shall be, initially, a Provisional Invoice pursuant to Section 10.1.8(a), which shall be followed by a Final Invoice pursuant to Section 10.1.8(b).
|
10.1.6
|
Invoices for Other Sums Due. In the event that any sums are due from one Party to the other Party under this Agreement, other than for a reason addressed in Section 10.1.1 through 10.1.5, the Party to whom such sums are owed shall furnish an invoice therefor, describing in reasonable detail the basis for such invoice and providing relevant documents supporting the calculation thereof. To the extent Section 10.1.8(a)(i), (ii) or (iii) apply to such invoice, such invoice shall be, initially, a Provisional Invoice pursuant to Section 10.1.8(a), which shall be followed by a Final Invoice pursuant to Section 10.1.8(b).
|
10.1.7
|
Notice. Invoices shall be sent in accordance with Section 24.
|
10.1.8
|
Provisional Invoices.
|
(a)
|
In the event (i) an invoice required to be issued hereunder includes a calculation based on the Provisional Transfer Price or any portion thereof and the information required to calculate the Final Transfer Price or portion thereof is not available; (ii) a rate or index used in the calculation of an amount is not available on a temporary or permanent basis; or (iii) any other relevant information necessary to compute an invoice is not available, the invoicing Party may issue a provisional invoice (“Provisional Invoice”) in an amount calculated, in the case of subsection (i), based on the temporary estimated terms described in the applicable definition or definitions in Section 9.1, in the case of subsection (ii) of this Section 10.1.8(a), in accordance with Section 1.3, and, in the case of subsection (iii) of this Section 10.1.8(a), based on the best estimate of the unavailable information by the Party issuing the Provisional Invoice. A Provisional Invoice shall be deemed to be an invoice issued pursuant to Section 10.1.1 through 10.1.4, as applicable, for the purposes of the payment obligations of Seller or Buyer, as applicable, and shall
|
(b)
|
If a Provisional Invoice has been issued, the invoicing Party shall issue a final invoice reflecting any credit or debit, as applicable, to the Provisional Invoice as soon as reasonably practicable after the information necessary to compute the final amount of the payment has been obtained by such Party (“Final Invoice”). The settlement amount for a Final Invoice shall equal the difference between the amount of the Provisional Invoice and the amount of the Final Invoice, and such settlement amount shall be applied in the next invoice issued pursuant to Section 10.1.1 as a payment to the applicable Party or, if earlier, upon the termination of this Agreement.
|
(c)
|
If a Final Invoice has previously been issued in respect of a Provisional Invoice, the invoicing Party shall have a right to issue a revised Final Invoice reflecting any further credit or debit, as applicable, to the Final Invoice as soon as reasonably practicable after the information necessary to compute the final amount of the payment has been obtained by such Party. The settlement amount for a revised Final Invoice shall equal the difference between the amount of the Final Invoice and the amount of the revised Final Invoice, and such settlement amount shall be applied in the next invoice issued pursuant to Section 10.1.1 as a payment to the applicable Party or, if earlier, upon the termination of this Agreement.
|
10.2
|
Payment
|
10.2.1
|
Payments for Cargoes. Invoices issued in accordance with Section 10.1.1 for cargoes made available and taken shall become due and payable by Buyer on the tenth (10th) Day after the date on which Buyer received such invoice.
|
10.2.2
|
Payments for Suspension Fees. Invoices issued in accordance with Section 10.1.2 shall become due and payable by Buyer on the later of (a) the day on which the Delivery Window of the suspended cargo was scheduled to begin, and (b) ten (10) Days after Buyer receives Seller’s invoice.
|
10.2.3
|
Cargo DoP Payments. Invoices issued in accordance with Section 10.1.3 shall become due and payable on the tenth (10th) Day following receipt by Seller.
|
10.2.4
|
Cargo Shortfall Payments. Invoices issued to Buyer in accordance with Section 10.1.4 shall become due and payable on the tenth (10th) Day
|
10.2.5
|
Payments for Other Sums Due. An invoice issued pursuant to Section 10.1.5 or 10.1.6 shall be paid by the paying Party thereunder not later than twenty (20) Days after receipt of such invoice.
|
10.2.6
|
Payment Method. All invoices shall be settled by payment in USD of the sum due by wire transfer of immediately available funds to an account with the bank designated by the other Party in accordance with Section 10.2.7.
|
10.2.7
|
Designated Bank. Each Party shall designate a bank in a location reasonably acceptable to the other Party for payments under this Agreement. Initially a Party shall designate its bank by notice to the other Party prior to the later of (a) the date thirty (30) Days after the Effective Date and (b) the Date of Substantial Completion of Plant 1, and thereafter not less than thirty (30) Days before any redesignation is to be effective.
|
10.2.8
|
Payment Date. If any invoice issued pursuant to Section 10.1 would result in a Party being required to make a payment on a Day that is not a Payment Business Day, then the due date for such invoice shall be the immediately succeeding Payment Business Day.
|
10.3
|
Disputed Invoice
|
10.3.1
|
Payment Pending Dispute. Absent manifest error, each Party invoiced pursuant to Section 10.1.1, 10.1.2, 10.1.3, 10.1.4, or 10.1.5 shall pay all disputed and undisputed amounts due under such invoice without netting or offsetting. In the case of manifest error, the correct amount shall be paid disregarding such error, and necessary correction and consequent adjustment shall be made within five (5) Business Days after agreement or determination of the correct amount.
|
10.3.2
|
Timing. Except with respect to Sections 1.3, 10.3.4, and 14, any invoice may be contested by the receiving Party only pursuant to Section 10.5 or if, within a period of thirteen (13) Months after its receipt thereof, that Party serves notice to the other Party questioning the correctness of such invoice. Subject to Section 10.5, if no such notice is served, the invoice shall be deemed correct and accepted by both Parties.
|
10.3.3
|
Interest. The Party who invoiced and received payment of a sum, subsequently determined not to have been payable under this Agreement to such Party, shall pay interest to the other Party on such amount, at a rate per annum equal to two percent (2%) above LIBOR (as in effect on the Day when
|
10.3.4
|
Measurement or Analyzing Errors. Any errors found in an invoice or credit note which are caused by the inaccuracy of any measuring or analyzing equipment or device shall be corrected in accordance with Exhibit A hereto, as applicable, and shall be settled in the same manner as is set out above in this Section 10.3.
|
10.4
|
Delay in Payment
|
10.4.1
|
Interest. If either Party fails to make payment of any sum as and when due under this Agreement, it shall pay interest thereon to the other Party at a rate per annum equal to two percent (2%) above LIBOR (as in effect on the Day when such sum was originally due) on and from the Day when payment was due until the date of payment, provided that, without prejudice to the other terms of this Agreement, if such period lasts longer than ninety (90) Days, the applicable LIBOR rate for each successive term of ninety (90) Days during that period shall be that in effect on the first (1st) Day of that ninety (90) Day period. Interest shall accrue from Day to Day and be calculated on the basis of a three hundred sixty (360) Day year.
|
10.4.2
|
Costs and Expenses. Subject to Section 20.1.12, each Party shall bear its own costs (including attorneys’ or experts’ fees or costs) in respect of enforcement of such Party’s rights in any Dispute proceeding as a result of the other Party failing to perform or failing timely to perform its obligations under this Agreement including failing timely to make any payment in accordance with this Agreement.
|
10.5
|
Audit Rights
|
11.
|
Taxes
|
11.1
|
Responsibility
|
11.2
|
Seller Taxes
|
(a)
|
solely on account of the corporate existence of Seller or its Affiliates;
|
(b)
|
in respect of the property, revenue, income, or profits of Seller or its Affiliates (other than Taxes required to be deducted or withheld by Buyer from or in respect of any payments (whether in cash or in kind) under this Agreement);
|
(c)
|
subject to Section 11.5, in the United States of America or any political subdivision thereof, that may be levied or assessed upon the export, loading, storage, processing, transfer, transport, ownership of title, or delivery of LNG, up to and at the Delivery Point; and
|
(d)
|
payable by Buyer by reason of a failure by Seller to properly deduct, withhold or pay any Taxes described in Section 11.4.
|
11.3
|
Buyer Taxes
|
(a)
|
solely on account of the corporate existence of Buyer or its Affiliates;
|
(b)
|
in respect of the property, revenue, income, or profits of Buyer or its Affiliates (other than Taxes required to be deducted or withheld by
|
(c)
|
in the United States of America (or any political subdivision thereof) or in any jurisdiction in which any of Buyer’s Discharge Terminals are located (or any political subdivision thereof), or any jurisdiction through which any LNG Tanker transits or on which any LNG Tanker calls (or any political subdivision thereof), in each case that may be levied or assessed upon the sale, use, purchase, import, unloading, export, loading, storage, processing, transfer, transport, ownership of title, receipt or delivery of LNG after the Delivery Point; and
|
(d)
|
payable by Seller by reason of a failure by Buyer to properly deduct, withhold or pay any Taxes described in Section 11.4.
|
11.4
|
Withholding Taxes
|
11.5
|
Transfer Taxes
|
11.6
|
Mitigation and Cooperation
|
11.7
|
Refunds
|
12.
|
Quality
|
12.1
|
Specification
|
12.2
|
Determining LNG Specifications
|
12.3
|
Off-Specification LNG
|
12.3.1
|
If Seller, acting as a Reasonable and Prudent Operator, determines prior to loading of a cargo that the LNG is expected not to comply with the Specifications (“Off-Spec LNG”) upon loading, Seller shall, as soon as reasonably practicable, suspend loading and shall give notice to Buyer of the extent of the expected variance as soon as practicable (but in no case later than the commencement of loading of the cargo), and:
|
(a)
|
Buyer shall use reasonable efforts, including coordinating with the Transporter and the operator of the Discharge Terminal, to accept such LNG where the LNG would be acceptable to the Transporter and the operator of the Discharge Terminal, each of them acting in their sole discretion (unless Transporter or such operator is Buyer or
|
(b)
|
if Buyer can accept delivery of such cargo, then Buyer shall take delivery of such cargo, and Seller shall reimburse Buyer for all reasonable documented direct costs incurred by Buyer (including direct costs owed to any Affiliate of Buyer, Transporter, and the operator of the Discharge Terminal) in transporting and treating such Off-Spec LNG to meet the Specifications (or to otherwise make such LNG marketable); provided, however, the Seller’s liability shall not exceed twenty percent (20%) of the Transfer Price Ceiling for such cargo, multiplied by the quantity (in MMBtu) of the Off-Spec LNG; and
|
(c)
|
if Buyer determines in good faith that it cannot, using reasonable efforts, receive such cargo, or that Buyer anticipates that it might be liable for costs that would not otherwise be reimbursed pursuant to Section 12.3.1(b), then Buyer shall be entitled to reject such cargo by giving Seller notice of rejection within forty-eight (48) hours of the Buyer’s receipt of Seller’s notice, and Buyer shall be relieved of its obligation to load such cargo, Seller shall be deemed to have failed to make available such cargo and Section 5.6.2 shall apply in respect of such cargo.
|
12.3.2
|
If Off-Spec LNG is delivered to Buyer without Buyer being made aware of the fact that such Off-Spec LNG does not comply with the Specifications, or without Buyer being made aware of the actual extent to which such Off-Spec LNG does not comply with the Specifications, then upon Buyer or Seller becoming aware that the LNG is Off-Spec LNG and following prompt notice thereof to the other Party, Seller shall immediately suspend loading operations (if applicable) pending a determination by Buyer and:
|
(a)
|
if Buyer is able, using reasonable efforts, to transport and treat the Off-Spec LNG to meet the Specifications (or to otherwise make such LNG marketable) within the cost limitations set forth in this Section 12.3.2(a), then Buyer shall notify Seller as soon as practicable to resume loading (if applicable) and Seller shall reimburse Buyer for all reasonable documented direct costs and expenses incurred by Buyer (including direct costs owed to any Affiliate of Buyer, Transporter, and the operator of the Discharge Terminal) in transporting and treating such Off-Spec LNG received at the Discharge Terminal to meet the Specifications (or to otherwise make
|
(b)
|
if Buyer determines in good faith that it cannot, using reasonable efforts, transport and treat such Off-Spec LNG to meet the Specifications (or to make such LNG marketable) within the cost limitations set forth in Section 12.3.2(a), then: (i) Buyer shall be entitled to reject such Off-Spec LNG by giving Seller notice of such rejection as soon as practicable, and in any case within ninety-six (96) hours after (A) Seller notifies Buyer that such LNG is Off-Spec LNG and the actual extent to which such Off-Spec LNG does not comply with the Specifications or (B) Buyer becomes aware that such LNG is Off-Spec LNG, whichever occurs first; (ii) Buyer shall be entitled to dispose of the loaded portion of such Off-Spec LNG (or regasified LNG produced therefrom) in any manner that Buyer, acting in accordance with the standards of a Reasonable and Prudent Operator, deems appropriate; and (iii) Seller shall reimburse Buyer in respect of and indemnify and hold Buyer harmless from all direct loss, damages, costs and expenses incurred by Buyer, any Affiliate of Buyer, Transporter or the operator of the Discharge Terminal (if, and only to the extent that, Buyer is contractually liable to such operator) as a result of the delivery of such Off-Spec LNG, including in connection with the handling, treatment or safe disposal of such Off-Spec LNG or other LNG being held at the Discharge Terminal or being carried onboard the LNG Tanker which was contaminated by it, cleaning or clearing the LNG Tanker and Discharge Terminal, and damage caused to the LNG Tanker and Discharge Terminal.
|
12.3.3
|
If Buyer rejects a cargo in accordance with Section 12.3.1(c) or 12.3.2(b), Seller shall be deemed to have failed to make available such cargo, and the Scheduled Cargo Quantity for such cargo shall be treated as a Cargo DoP Quantity resulting in a Cargo DoP Payment under Section 5.6.2. If Buyer accepts a cargo of Off-Spec LNG in accordance with Section 12.3.1(b) or transports and treats a cargo of Off-Spec LNG in accordance with Section 12.3.2(a), Seller shall be deemed to have satisfied its obligation to make available such LNG to Buyer for purposes of Section 5.6.1.
|
13.
|
Measurements and Tests
|
13.1
|
LNG Measurement and Tests
|
13.2
|
Parties to Supply Devices
|
13.2.1
|
Buyer shall supply, operate and maintain, or cause to be supplied, operated and maintained, suitable gauging devices for the LNG tanks of the LNG Tanker, as well as pressure and temperature measuring devices, in accordance with Section 13.3 and Exhibit A, and any other measurement, gauging or testing devices which are incorporated in the structure of such LNG Tanker or customarily maintained on shipboard.
|
13.2.2
|
Seller shall supply, operate and maintain, or cause to be supplied, operated and maintained, devices required for collecting samples and for determining quality and composition of the delivered LNG, in accordance with Section 13.3 and Exhibit A, and any other measurement, gauging or testing devices which are necessary to perform the measurement and testing required hereunder at the Loading Port.
|
13.3
|
Selection of Devices
|
13.4
|
Tank Gauge Tables of LNG Tanker
|
13.5
|
Gauging and Measuring LNG Volumes Loaded
|
13.6
|
Samples for Quality Analysis
|
13.7
|
Quality Analysis
|
13.8
|
Operating Procedures
|
13.8.1
|
Prior to carrying out measurements, gauging and analyses hereunder, the Party responsible for such operations shall notify the designated representative(s) of the other Party, allowing such representative(s) a reasonable opportunity to be present for all operations and computations; provided, however, that the absence of such representative(s) after notification and reasonable opportunity to attend shall not affect the validity of any operation or computation thereupon performed.
|
13.8.2
|
At the request of either Party, any measurements, gauging and/or analyses provided for in Sections 13.5, 13.6, 13.7 and 13.10.1 shall be witnessed and verified by an independent surveyor agreed in writing by the Parties. The results of verifications and records of measurement shall be maintained in accordance with the terms of Exhibit A.
|
13.9
|
MMBtu Quantity Delivered
|
13.10
|
Verification of Accuracy and Correction for Error
|
13.10.1
|
Each Party shall test and verify the accuracy of its devices at intervals to be agreed between the Parties. In the case of gauging devices of the LNG Tanker, such tests and verifications shall take place during each scheduled dry-docking, provided that the interval between such dry dockings shall not exceed five (5) years. Indications from any redundant determining devices should be reported to the Parties for verification purposes. Each Party shall have the right to inspect and if a Party reasonably questions the accuracy of any device, to require the testing or verification of the accuracy of such device in accordance with the terms of Exhibit A.
|
13.10.2
|
Permissible tolerances of the measurement, gauging and testing devices shall be as described in Exhibit A.
|
13.11
|
Costs and Expenses
|
13.11.1
|
Except as provided in this Section 13.11, all costs and expenses for testing and verifying measurement, gauging or testing devices shall be borne by the Party whose devices are being tested and verified; provided, however, that representatives of the Parties attending such tests and verifications shall do so at the cost and risk of the Party they represent.
|
13.11.2
|
In the event that a Party inspects or requests the testing/verification of any of the other Party’s devices on an exceptional basis in each case as provided in Section 13.10.1, the Party requesting the testing/verification shall bear all costs thereof; provided, however, that in the event that such testing or verification discloses that the other Party’s devices fail to comply with the requirements of this Agreement, all costs and expenses for such testing and verification of the devices that failed to comply shall be borne by the Party whose devices were tested.
|
13.11.3
|
The costs of the independent surveyor:
|
(a)
|
requested by a Party in accordance with Section 13.8.2 or paragraph 3(a) of Exhibit A shall be borne by the requesting Party; and
|
(b)
|
referred to in Section 13.9 shall be borne equally by Buyer and Seller.
|
14.
|
Force Majeure
|
14.1
|
Force Majeure
|
14.1.1
|
Force Majeure may include circumstances of the following kind, provided that such circumstances satisfy the definition of Force Majeure set forth above:
|
(a)
|
acts of God, a Governmental Authority, or a public enemy;
|
(b)
|
subject to Section 14.6, strikes, lockout, or other industrial action;
|
(c)
|
wars, blockades or civil disturbances of any kind; epidemics, actual or reasonably forecasted adverse weather or sea conditions, fires, explosions, arrests and restraints of governments or people; acts of terrorism, acts of piracy and serious threat of piracy;
|
(d)
|
the breakdown or failure of, freezing of, breakage or accident to, or the necessity for making repairs or alterations to any facilities or equipment;
|
(e)
|
in respect of Seller: (i) loss of, accidental damage to, or inaccessibility to or inoperability of (x) the Driftwood LNG Terminal or any Connecting Pipeline or (y) the liquefaction and loading facilities at the alternate source agreed by the Parties pursuant to Section 3.1.2 but only with respect to those cargoes which Buyer has agreed may be supplied from such alternate source, and subject to Section 14.2.4; and (ii) any event that would constitute an event of force majeure under an agreement between Seller and the operator or operators of any Connecting Pipeline for Gas transportation services, provided however, that an event of force majeure affecting a party to any such agreement shall constitute Force Majeure under this Agreement only to the extent such event meets the definition of Force Majeure in this Section 14.1;
|
(f)
|
in respect of Buyer, events affecting the ability of any LNG Tanker to receive and transport LNG including the unavailability of tug services, subject to Section 14.2.3; and
|
(g)
|
the withdrawal, denial, or expiration of, or failure to obtain, any Approval.
|
14.1.2
|
Nothing in this Section 14.1 shall be construed to require a Party to observe a higher standard of conduct than that required of a Reasonable and Prudent Operator as a condition to claiming the existence of Force Majeure.
|
14.2
|
Limitations on Force Majeure
|
14.2.1
|
Indemnity and Payment Obligations. Notwithstanding Section 14.1, no Force Majeure shall relieve, suspend, or otherwise excuse either Party from performing any obligation to indemnify, reimburse, hold harmless or otherwise pay the other Party under this Agreement.
|
14.2.2
|
Events Not Force Majeure. The following events shall not constitute Force Majeure:
|
(a)
|
a Party’s inability to finance its obligations under this Agreement or the unavailability of funds to pay amounts when due in the currency of payment;
|
(b)
|
the unavailability of, or any event affecting, any facilities at or associated with any loading port or unloading port (or downstream of an unloading port) other than the Driftwood LNG Terminal or any alternate source agreed by the Parties pursuant to Section 3.1.2;
|
(c)
|
the ability of Seller or Buyer to obtain better economic terms for LNG or Gas from an alternative supplier or buyer, as applicable;
|
(d)
|
changes in either Party’s market factors, default of payment obligations or other commercial, financial or economic conditions, including failure or loss of any of Buyer’s or Seller’s Gas, LNG or electric power markets;
|
(e)
|
breakdown or failure of plant or equipment caused by normal wear and tear or by a failure to properly maintain such plant or equipment;
|
(f)
|
the non-availability or lack of economically obtainable Gas reserves;
|
(g)
|
in the case of Seller, any event arising from an action or omission of (i) any Affiliate of Seller, (ii) the contractor or sub-contractor or agent of Seller or Affiliate of Seller, or (iii) the operator of the Driftwood LNG Terminal, in each case to the extent that, had Seller taken such action or experienced such event, such event would not constitute Force Majeure pursuant to the provisions of this Section 14;
|
(h)
|
in the case of Buyer, any event arising from an action or omission of (i) any Affiliate of Buyer, (ii) any customer of Buyer scheduled to take delivery of LNG from Buyer at the Driftwood LNG Terminal, (iii) the contractor or sub-contractor or agent of Buyer or Affiliate of Buyer, (iv) the operator of any part of any Discharge Terminal or (v) any Transporter, in each case to the extent that, had Buyer taken such action or experienced such event, such event would not constitute Force Majeure pursuant to the provisions of this Section 14; and
|
(i)
|
the loss of interruptible or secondary firm transportation service on a Connecting Pipeline or any pipeline upstream of a Connecting Pipeline unless the cause of such loss was an event that would satisfy the definition of Force Majeure hereunder and primary in-the-path
|
14.2.3
|
LNG Tankers.
|
(a)
|
Force Majeure relief in respect of Buyer for an event described in Section 14.1.1(f) affecting a specific LNG Tanker shall only be available with respect to cargoes that are scheduled to be transported on such LNG Tanker in the applicable Ninety Day Schedule or ADP for such Contract Year, or (to the extent that the ADP for the following Contract Year has been issued by Seller) in the ADP for the following Contract Year.
|
(b)
|
With respect to any particular cargo, Buyer shall not be entitled to claim Force Majeure relief for an event affecting the LNG Tanker nominated for such cargo if such LNG Tanker was affected by, or should reasonably have been expected by Buyer or its customer utilizing such LNG Tanker (in each case acting as a Reasonable and Prudent Operator) to be affected by, such Force Majeure event at the time it was nominated by Buyer pursuant to Section 8.1.2 or Section 8.3, as applicable, for the relevant cargo.
|
14.2.4
|
Alternative Sources. Force Majeure relief in respect of Seller for an event described in Section 14.1.1(e) affecting an alternate LNG source or facility thereat agreed between the Parties pursuant to Section 3.1.2 shall (a) only be available with respect to the cargo that is scheduled to be loaded at the Loading Port of such facility in the ADP or applicable Ninety Day Schedule for such Contract Year or, to the extent that the ADP for the following Contract Year has been issued, in the ADP for such following Contract Year and (b) not be available for an event affecting such alternate LNG source or facility thereat if such alternate LNG source or facility thereat was affected by such Force Majeure at the time it was nominated by Seller pursuant to Section 3.1.2 for the applicable cargo.
|
14.3
|
Notification
|
14.3.1
|
the estimated period during which performance may be prevented, interfered with or delayed, including, to the extent known or ascertainable, the estimated extent of such reduction in performance;
|
14.3.2
|
the particulars of the program to be implemented to resume normal performance under this Agreement; and
|
14.3.3
|
the anticipated quantity of LNG scheduled in the ADP for a Contract Year that will not be made available or taken, as the case may be, by reason of Force Majeure.
|
14.4
|
Measures
|
14.5
|
No Extension of Term
|
14.6
|
Settlement of Industrial Disturbances
|
15.
|
Liabilities and Indemnification
|
15.1
|
General
|
15.2
|
Limitations on Liability
|
15.2.1
|
Incidental and Consequential Losses. Neither Party shall be liable to the other Party hereunder as a result of any act or omission in the course of or in connection with the performance of this Agreement, for or in respect of:
|
(a)
|
any indirect, incidental, consequential or exemplary losses;
|
(b)
|
any loss of income or profits;
|
(c)
|
except as expressly provided in this Agreement, any failure of performance or delay in performance to the extent relieved by the application of Force Majeure in accordance with Section 14; or
|
(d)
|
except as expressly provided in this Agreement, any losses arising from any claim, demand or action made or brought against the other Party by a Third Party.
|
15.2.2
|
Exclusive Remedies. A Party’s sole liability, and the other Party’s exclusive remedy, arising under or in connection with Sections 5.6, 5.7, 5.8, 7.12.3, 7.12.4, 7.13.2(c) and 12.3 and this Section 15 shall be as set forth in each such provision, respectively.
|
15.2.3
|
Liquidated Damages. The Parties agree that it would be impracticable to determine accurately the extent of the loss, damage and expenditure that either Party would have in the circumstances described in Sections 5.6, 5.7, 5.8, 7.12.3 and 7.12.4. Accordingly, the Parties have estimated and agreed in advance that the sole liability, and exclusive remedy for such circumstances shall be as provided in those Sections, and neither Party shall have additional liability as a result of any such circumstances. Each amount described in or determined by the provisions of Sections 5.6, 5.7, 5.8, 7.12.3 and 7.12.4 is intended to represent a genuine pre-estimate by the Parties as to the loss or damage likely to be suffered by the Party receiving the payment or benefit in each such circumstance. Each Party waives any right to claim or assert, in any arbitration or expert determination pursuant to Section 20 in any action with respect to this Agreement, that any of the exclusive remedies set forth in Sections 5.6, 5.7, 5.8, 7.12.3 and 7.12.4 do not represent a genuine pre-estimate by the Parties as to the loss or damage likely to be suffered by the Party receiving the payment or benefit in each such circumstance or otherwise are not valid and enforceable damages.
|
15.2.4
|
Express Remedies. The Parties agree that Section 15.2.1 shall not impair a Party’s obligation to pay the amounts specified in, or the validity of or limitations imposed by, Sections 5.6, 5.7, 5.8, 7.12.3, 7.12.4, 7.13.2(c) and 12.3. Neither Party shall have a right to make a claim for actual damages (whether direct or indirect) or other non-specified damages under any
|
15.2.5
|
Remedies in Contract. Except with respect to claims for injunctive relief under Sections 18 and 20.1.11, a Party’s sole remedy against the other Party for nonperformance or breach of this Agreement or for any other claim of whatsoever nature arising out of or in relation to this Agreement shall be in contract and no Party shall be liable to another Party (or its Affiliates and contractors and their respective members, directors, officers, employees and agents) in respect of any damages or losses suffered or claims which arise out of, under or in any alleged breach of statutory duty or tortious act or omission or otherwise.
|
15.2.6
|
Seller Aggregate Liability for Certain Events.
|
(a)
|
Notwithstanding any provision herein to the contrary, the maximum Seller Aggregate Liability as of any given date in respect of any occurrence or series of occurrences shall not exceed the Seller Liability Cap.
|
(b)
|
“Seller Aggregate Liability” shall mean, as of any date of determination, any and all liability of Seller to Buyer under this Agreement, excluding (i) any Seller liabilities under this Agreement for which Seller has already made payment to Buyer as of such date and (ii) any liability caused by the gross negligence or willful misconduct of the Partnership, Seller, any other Affiliate of the Partnership, the General Partner or Seller’s Affiliates.
|
(c)
|
The “Seller Liability Cap”, as of any given time of determination, shall be an amount (in USD) equal to USD one hundred million (US$100,000,000), multiplied by the ACQ at such time, divided by fifty-two million one hundred seventy thousand (52,170,000) MMBtu.
|
15.2.7
|
EXCEPT FOR WARRANTIES OF TITLE AND NO LIENS OR ENCUMBRANCES, AND SUBJECT TO THE PROVISIONS OF THIS AGREEMENT CONCERNING THE QUALITY OF LNG TO BE DELIVERED UNDER THIS AGREEMENT, SELLER EXPRESSLY NEGATES ANY WARRANTY WITH RESPECT TO LNG DELIVERED UNDER THIS AGREEMENT, WRITTEN OR ORAL, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY WITH RESPECT TO CONFORMITY TO SAMPLES, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.
|
15.3
|
Buyer’s Credit; Credit Support
|
15.3.1
|
At all times prior to any assignment of this Agreement by Original Buyer, Original Buyer shall have no obligation to maintain any credit rating or provide any guaranty, letter of credit or other credit support in connection with this Agreement; provided that, if required for financing, Buyer shall use its commercial reasonable efforts to provide information or documents confirming its ability to perform its financial obligations under this Agreement.
|
15.3.2
|
If Buyer assigns or novates this Agreement to a Third Party who is not an Affiliate of Original Buyer (such Third Party, the “Assignee Buyer”) and if in connection with such assignment or novation Lenders require in accordance with Section 21.2.2(c) that Assignee Buyer have an Acceptable Credit Rating or a Guaranty be provided to Seller prior to such novation or assignment, then at all times following such assignment or novation (including following any subsequent assignments or novations thereafter), and only then, the following terms of this Section 15.3.2 shall apply:
|
(a)
|
Assignee Buyer shall at all times on and after such assignment or novation maintain an Acceptable Credit Rating or provide or cause to be provided a Guaranty. In the event any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder no longer has an Acceptable Credit Rating or is otherwise no longer an Acceptable Guarantor, Assignee Buyer shall provide a replacement Guaranty or, if unable to comply with the requirements of a Guaranty because no Guarantor exists, an alternative credit support reasonably acceptable to Lenders at all times. Any Guaranty or alternative credit support required to be delivered to Seller pursuant to this Section 15.3.2(a) shall be delivered within thirty (30) Days of such requirement arising.
|
(b)
|
If Assignee Buyer, or Assignee Buyer’s Guarantor, merges or consolidates, sells all or substantially all of its assets, or novates or assigns this Agreement or the Guaranty, as applicable, then the surviving entity, asset purchaser or assignee, as the case may be, shall either have and maintain an Acceptable Credit Rating or assume in writing or by operation of law the obligations of Assignee Buyer or Assignee Buyer’s Guarantor, as applicable. In the event the foregoing conditions are not satisfied, Assignee Buyer shall provide a replacement Guaranty or, if unable to comply with the requirements of a Guaranty because no Guarantor exists, an alternative credit support reasonably acceptable to Lenders at all times. Any Guaranty or alternative credit support required to be delivered to Seller pursuant
|
15.4
|
Third Party Liability
|
(a)
|
If any Third Party shall notify either Party (the “Indemnified Party”) with respect to any matter (a “Third Party Claim”) that may give rise to a claim for indemnification against the other Party (the “Indemnifying Party”) under this Section 15 or elsewhere in this Agreement, then the Indemnified Party shall promptly notify the Indemnifying Party thereof in writing; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is materially prejudiced.
|
(b)
|
The Indemnifying Party will have the right to defend against the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying Party notifies the Indemnified Party in writing within fifteen (15) Days after the Indemnified Party has given notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against any damages the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim; (ii) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third Party Claim and fulfill its indemnification obligations hereunder; (iii) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief; (iv) settlement of, or an adverse judgment with respect to, the Third Party Claim is not in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice materially adverse to the continuing business interests of the Indemnified Party; and (v) the Indemnifying Party conducts the defense of the Third Party Claim actively and diligently.
|
(c)
|
So long as the Indemnifying Party is conducting the defense of the Third Party Claim in accordance with Section 15.4(b): (i) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim; (ii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (which
|
(d)
|
In the event any of the conditions in Section 15.4(b) is or becomes unsatisfied, or a conflict arises, with regard to the Third Party Claim, between the Indemnified Party and the Indemnifying Party in respect of such Third Party Claim the Indemnified Party may defend against the Third Party Claim in any manner it reasonably may deem appropriate.
|
(e)
|
If either Party gives notice to the other Party of a Third Party Claim pursuant to the provisions of Section 15.4(a) and the notified Party does not give notice that it will indemnify the notifying Party in the manner set out in Section 15.4(b), the notifying Party shall nevertheless send copies of all pleadings and other documents filed in any such Third Party lawsuit to the notified Party and such notified Party may have the right to participate in the defense of the Third Party Claim in any manner permitted by Applicable Law.
|
15.5
|
Seller’s Insurance
|
15.5.1
|
Seller shall obtain and maintain or cause to be obtained and maintained:
|
(a)
|
insurance for the Driftwood LNG Terminal to the extent required by Applicable Law, and
|
(b)
|
additional insurance, as is reasonably necessary, against such other risks and at such levels as a Reasonable and Prudent Operator of a liquefaction terminal would obtain.
|
15.5.2
|
Seller shall obtain or cause to be obtained the insurance required by Section 15.5.1 from a reputable insurer (or insurers) reasonably believed to have adequate financial reserves. Seller shall exercise its best efforts, or shall cause the applicable insured Person to use its best efforts, to collect any amount due under such insurance policies.
|
15.6
|
Buyer’s Insurance
|
(a)
|
Hull and Machinery Insurance shall be placed and maintained with reputable marine underwriters; and
|
(b)
|
Protection & Indemnity Insurance (“P&I Insurance”) shall be placed and maintained with full P&I indemnity cover in the ordinary course from a P&I Club, and such LNG Tanker shall be entered for insurance with a P&I Club, including pollution liability standard for LNG vessel and Certificate of Financial Responsibility.
|
16.
|
Safety
|
16.1
|
General
|
16.2
|
Third Parties
|
17.
|
Exchange of Information
|
18.
|
Confidentiality
|
18.1
|
Duty of Confidentiality
|
(a)
|
already known to the recipient from sources other than the other Party;
|
(b)
|
already in the public domain (other than as a result of a breach of the terms of this Section 18.1); or
|
(c)
|
independently developed by the recipient;
|
18.2
|
Permitted Disclosures
|
18.2.1
|
The Confidential Information, which either Party receives from the other, may be disclosed by such Party:
|
(a)
|
to any Person who is such Party’s legal counsel, other professional consultant or adviser, Transporter, insurer, accountant or construction contractor; provided that such disclosure is solely to assist the purpose for which such Person was so engaged;
|
(b)
|
if required and to the extent required by the rules of any recognized stock exchange or agency established in connection therewith upon which the securities of such Party or a company falling within Section 18.2.1(f) are quoted;
|
(c)
|
as may be required under federal or state securities or “Blue Sky” Applicable Laws;
|
(d)
|
if required and to the extent required by the U.S. Department of Energy;
|
(e)
|
without limiting Section 18.2.1(c) or (d), if required and to the extent required by any Applicable Laws, or such Party becomes legally required (by oral questions, interrogatories, request for information or documents, orders issued by any Governmental Authority or any other process) to disclose such information, or to the extent necessary to enforce Section 20.1or 20.2 or any arbitration award or binding decision of an Expert (including by filing Confidential Information in proceedings before a court or other competent judicial authority) or to enforce other rights of a party to the Dispute; provided that such Party shall, to the extent practicable, give prior notice to the other
|
(f)
|
to any of its Affiliates or shareholders (or any company involved in the provision of advice to any such Affiliate or shareholder for the purposes of this Agreement) and any employee of that Party or of a company to which disclosure is permitted pursuant to this Section 18.2.1(f);
|
(g)
|
to any bona fide intended assignees of a Party’s interests under this Agreement;
|
(h)
|
to any Third Party as reasonably necessary for the performance of a Party’s obligations under this Agreement;
|
(i)
|
to any arbitrator appointed in accordance with Section 20.1.4, to any Expert appointed pursuant to Section 20.2.1, or to any other party to an arbitration or Expert proceeding arising under or in connection with this Agreement, or to any witnesses appearing in an arbitration under Section 20.1or in an Expert proceeding under Section 20.2; or
|
(j)
|
to any Person reasonably required to see such Confidential Information, including the Lenders, in connection with any bona fide financing or offering or sale of securities by Seller, Buyer or any Affiliate or shareholder of any of the foregoing, to comply with the disclosure or other requirements of Applicable Law or of financial institutions or other participants (including rating agencies) in such financing, offering or sale.
|
18.2.2
|
The Party making the disclosure shall ensure that any Person listed in Section 18.2.1(a), (f), (g), (h), (i) or (j) to which it makes the disclosure (excluding any legal counsel, arbitrator or Expert already bound by confidentiality obligations) undertakes to hold such Confidential Information subject to confidentiality obligations equivalent to those set out in Section 18.1. In the case of a disclosure to an employee made in accordance with Section 18.2.1(f), the undertaking shall be given by the company on its own behalf and in respect of all its employees.
|
18.2.3
|
Seller may disclose to the other Partnership Buyers Confidential Information related to scheduling, operations and other relevant technical information to comply with Seller’s performance of Section 8, but only to the extent necessary to ensure the effective implementation thereof.
|
18.2.4
|
No press release concerning the execution of this Agreement or resolution of any Disputes shall be issued unless agreed by the Parties.
|
18.3
|
Confidential Information Remedy
|
18.4
|
Duration of Confidentiality
|
19.
|
Default and Termination
|
19.1
|
Right to Suspend Performance
|
19.1.1
|
Seller Right to Suspend. If (a) Seller has not received payment in respect of any amounts due under any invoice(s) under this Agreement totaling in excess of USD fifteen million (US$15,000,000) within five (5) Business Days after the due date thereof, (b) any Termination Event in favor of a Seller right to terminate has arisen, or (c) (i) Buyer or its Affiliate is a Defaulting Partner (as defined in the Partnership Agreement) pursuant to Section 4.3(c)(i) of the Partnership Agreement and the Default Forfeiture Units (as defined in the Partnership Agreement) are Class A Units issued to such Defaulting Partner pursuant to the equity capital contribution agreement entered into by such Defaulting Partner in respect of the Phase 1 Project or (ii) Buyer or its Affiliate is a Defaulting Partner (as defined in the Partnership Agreement) pursuant to Section 4.3(c)(ii) of the Partnership Agreement, then without prejudice to any other rights and remedies of Seller arising under this Agreement or by Applicable Laws or otherwise, upon giving five (5) Business Days’ notice to Buyer:
|
(a)
|
Seller may suspend delivery of any or all subsequent cargoes until (a) the amounts outstanding under such invoice(s) and interest thereon have been paid in full, (b) the circumstances constituting the Termination Event have been fully remedied or have ceased to apply or (c) Buyer or its Affiliate, as applicable, is no longer a Defaulting Partner (as defined in the Partnership Agreement), as the case may be.
|
(b)
|
In the event of such suspension, Buyer shall not be relieved of any of its obligations under this Agreement, and the provisions of Sections 5.7.2 to 5.7.8 shall apply with respect to each cargo scheduled in the Annual Delivery Program or Ninety Day Schedule which is not delivered during the suspension.
|
(c)
|
During the period that such suspension is effective, Seller shall have no obligation to make available LNG to Buyer.
|
19.1.2
|
Buyer Right to Suspend. Without prejudice to its rights under the Termination Event set out in Section 19.2.1(j), if a Bankruptcy Event has occurred with respect to Seller, Buyer shall be entitled to suspend by written notice to Seller the performance of its obligations under this Agreement to take and pay for LNG, until such Bankruptcy Event is no longer occurring with respect to Seller. Buyer’s right to suspend shall not excuse Buyer from paying for LNG taken prior to the suspension.
|
19.2
|
Elective Termination
|
19.2.1
|
Termination Events. The following circumstances (each, a “Termination Event”) shall give rise to the right for the specified Party (and only the specified Party) to terminate this Agreement:
|
(a)
|
by Seller, if Buyer fails to pay or cause to be paid any amount or amounts in the aggregate due under this Agreement that are in excess of USD fifty million (US$50,000,000), for a period of ten (10) Days or more following the due date of the relevant invoice;
|
(b)
|
by Seller, if Buyer fails to comply with Section 15.3 or 21;
|
(c)
|
by Seller, violation by Buyer of Section 25.1;
|
(d)
|
by the non-violating Party, if a Party violates Section 25.2(b) or breaches the representation and warranty in Section 25.5;
|
(e)
|
by Seller, if (i) Buyer or any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder fails to execute any Direct Agreement with Seller’s or its Affiliate’s respective Lenders within sixty (60) Days after Seller’s request thereof, provided that such Direct Agreement complies with the requirements in Sections 21.4.2(a) to (g), or (ii) in connection with any financing, Buyer fails to provide to the Lenders and the Lenders’ Agent any legal opinion that complies with the requirements in Section 21.4.1 within sixty (60) Days after Seller’s request thereof;
|
(f)
|
by Seller, if a Bankruptcy Event has occurred with respect to Buyer or any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder;
|
(g)
|
by Seller, if (i) Buyer or its Affiliate is a Defaulting Partner (as defined in the Partnership Agreement) pursuant to Section 4.3(c)(i) of the Partnership Agreement and the Default Forfeiture Units (as defined in the Partnership Agreement) are Class A Units issued to such Defaulting Partner pursuant to the equity capital contribution agreement entered into by such Defaulting Partner in respect of the Phase 1 Project, and the General Partner exercises its rights pursuant to the Partnership Agreement to cause all such Class A Units to be redeemed or forfeited in accordance with the Partnership Agreement or (ii) Buyer or its Affiliate is a Defaulting Partner (as defined in the Partnership Agreement) pursuant to Section 4.3(c)(ii) of the Partnership Agreement, and the General Partner exercises its rights pursuant to the Partnership Agreement to cause all of such Defaulting Partner’s Class A Units to be redeemed or forfeited in accordance with the Partnership Agreement;
|
(h)
|
by either Party, if Buyer’s or its Affiliate’s entire interest in the Partnership is redeemed pursuant to Section 4.17 of the Partnership Agreement;
|
(i)
|
by Seller, if Buyer’s or its Affiliate’s entire interest in the Partnership is redeemed pursuant to Section 4.8 of the Partnership Agreement;
|
(j)
|
by Buyer, if a Bankruptcy Event has occurred in respect of Seller;
|
(k)
|
by Buyer, if each of the following conditions have been satisfied: (i) the amount of indebtedness for purposes of constructing the Phase 1 Project (including any such indebtedness that has been refinanced from time to time) has been paid in full, (ii) Buyer or its Affiliate has contributed to the Partnership its entire capital commitment for the Phase 1 Project and (iii) one (1) or more events of Force Majeure affecting Seller prevent Seller from making available an aggregate quantity of LNG equal to or greater than fifty percent (50%) of the AACQ during any given twelve (12) Month period;
|
(l)
|
by Buyer, if each of the following conditions have been satisfied: (i) the amount of indebtedness for purposes of constructing the Phase 1 Project (including any such indebtedness that has been refinanced from time to time) has been paid in full, (ii) Buyer or its Affiliate has contributed to the Partnership its entire capital commitment for the Phase 1 Project, and (iii) Seller fails to make available an aggregate amount of LNG in accordance with Section 5.6 resulting in Cargo
|
19.2.2
|
Notice of Termination Event. Upon the occurrence of any Termination Event, the terminating Party may give notice thereof to the other Party, specifying in reasonable detail the nature of such Termination Event.
|
19.2.3
|
Timing of Elective Termination. Except with respect to the Termination Events described in Section 19.2.4, at any time after the expiry of a period of forty-five (45) Days after the terminating Party gave notice of a Termination Event pursuant to Section 19.2.2, unless the circumstances constituting the Termination Event have been fully remedied or have ceased to apply, the terminating Party may terminate this Agreement with immediate effect by giving notice of such termination to the other Party.
|
19.2.4
|
Certain Termination Events. Upon the occurrence of a Termination Event described in Section 19.2.1(b), (c), (d), (e), (f), (g), (h), (i), (j), (k) or (l), the terminating Party’s notice pursuant to Section 19.2.2 shall terminate this Agreement immediately.
|
19.3
|
Rights Accrued Prior to Termination
|
(a)
|
the rights and liabilities of the Parties accrued prior to or as a result of such termination; and
|
(b)
|
claims for breaches of Section 18 that occur during the three (3) year period after termination of this Agreement.
|
19.4
|
Liability in Connection with Certain Termination Rights
|
19.5
|
Final Reconciliation
|
19.6
|
Survival
|
20.
|
Dispute Resolution and Governing Law
|
20.1
|
Dispute Resolution
|
20.1.1
|
Arbitration. Any Dispute (other than a Dispute submitted to an Expert under Section 20.2.1) shall be exclusively and definitively resolved through final and binding arbitration, it being the intention of the Parties that this is a broad form arbitration agreement designed to encompass all possible claims and disputes under this Agreement.
|
20.1.2
|
Rules. The arbitration shall be conducted in accordance with the International Arbitration Rules of the American Arbitration Association (“AAA”) (as then in effect).
|
20.1.3
|
Number of Arbitrators. The arbitral tribunal shall consist of three (3) arbitrators, who shall endeavor to complete the final hearing in the arbitration within six (6) Months after the appointment of the last arbitrator.
|
20.1.4
|
Method of Appointment of the Arbitrators. If there are only two (2) parties to the Dispute, then each party to the Dispute shall appoint one (1) arbitrator within thirty (30) Days of the filing of the arbitration, and the two arbitrators so appointed shall select the presiding arbitrator within thirty (30) Days after the latter of the two arbitrators has been appointed by the parties to the Dispute. If a party to the Dispute fails to appoint its party-appointed arbitrator or if the two party-appointed arbitrators cannot reach an agreement on the presiding arbitrator within the applicable time period, then the AAA shall serve as the appointing authority and shall appoint the remainder of the three arbitrators not yet appointed. If the arbitration is to be conducted by three arbitrators and there are more than two parties to the Dispute, then within thirty (30) Days of the filing of the arbitration, all claimants shall jointly appoint one arbitrator and all respondents shall jointly appoint one arbitrator, and the two arbitrators so appointed shall select the presiding arbitrator within thirty (30) Days after the latter of the two arbitrators has been appointed by the parties to the Dispute. For the purposes of appointing arbitrators under this Section 20, (a) Buyer, any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder and all Persons whose interest in this Agreement derives from them shall be considered as one party; and (b) Seller and all Persons whose interest in this Agreement derives from Seller shall be considered as one party. If either all claimants or all respondents fail to make a joint appointment of an arbitrator, or if the party-
|
20.1.5
|
Consolidation. If multiple arbitration proceedings are initiated under this Agreement, any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder, one or more other LNG sale and purchase agreements entered into by Seller, one or more equity capital contribution agreements entered into by the Partnership, the Partnership Agreement, the General Partner LLC Agreement, any management and advisory services agreement entered into by the Partnership or the LNG Marketing Agreement, the subject matters of which are related by common questions of law or fact and which could result in conflicting awards or obligations, then any party to any such dispute may request prior to the appointment of the arbitrators for such multiple or subsequent disputes that all such proceedings be consolidated into a single arbitral proceeding. Such request shall be directed to the AAA, which shall consolidate appropriate proceedings into a single proceeding unless consolidation would result in undue delay for the arbitration of the disputes.
|
20.1.6
|
Place of Arbitration. Unless otherwise agreed by all parties to the Dispute, the place of arbitration shall be New York, New York.
|
20.1.7
|
Language. The arbitration proceedings shall be conducted in the English language, and the arbitrators shall be fluent in the English language.
|
20.1.8
|
Entry of Judgment. The award of the arbitral tribunal shall be final and binding. Judgment on the award of the arbitral tribunal may be entered and enforced by any court of competent jurisdiction. The Parties agree that service of process for any action to enforce an award may be accomplished according to the procedures of Section 24, as well as any other procedure authorized by law.
|
20.1.9
|
Notice. All notices required for any arbitration proceeding shall be deemed properly given if given in accordance with Section 24.
|
20.1.10
|
Qualifications and Conduct of the Arbitrators. All arbitrators shall be and remain at all times wholly impartial, and, once appointed, no arbitrator shall have any ex parte communications with any of the parties to the Dispute concerning the arbitration or the underlying Dispute other than communications directly concerning the selection of the presiding arbitrator, where applicable.
|
20.1.11
|
Interim Measures. Any party to the Dispute may apply to a court in New York, New York, for interim measures (a) prior to the constitution of the
|
20.1.12
|
Costs and Attorneys’ Fees. The arbitral tribunal is authorized to award costs of the arbitration in its award, including: (a) the fees and expenses of the arbitrators; (b) the costs of assistance required by the tribunal, including its experts; (c) the fees and expenses of the administrator; (d) the reasonable costs for legal representation of a successful party; and (e) any such costs incurred in connection with an application for interim or emergency relief and to allocate those costs between the parties to the Dispute. The costs of the arbitration proceedings, including attorneys’ fees, shall be borne in the manner determined by the arbitral tribunal.
|
20.1.13
|
Interest. The award shall include pre-award and post-award interest, as determined by the arbitral tribunal, from the date of any default or other breach of this Agreement until the arbitral award is paid in full. Interest shall accrue at a rate per annum equal to two percent (2%) above LIBOR (as in effect on the Day such award was issued) on and from the Day when such award was issued until the date of its repayment, provided that, without prejudice to the other terms of this Agreement, if such period lasts longer than ninety (90) Days, the applicable LIBOR rate for each successive term of ninety (90) Days during that period shall be that in effect on the first (1st) Day of that ninety (90) Day period. Interest shall accrue from Day to Day and be calculated on the basis of a three hundred sixty (360) Day year.
|
20.1.14
|
Currency of Award. The arbitral award shall be made and payable in USD, free of any Tax or other deduction.
|
20.1.15
|
Waiver of Challenge to Decision or Award. To the extent permitted by law, the Parties hereby waive any right to appeal from or challenge any arbitral decision or award, or to oppose enforcement of any such decision or award before a court or any Governmental Authority, except with respect to
|
20.1.16
|
Confidentiality. Any arbitration or Expert determination relating to a Dispute (including an arbitral award, a settlement resulting from an arbitral award, documents exchanged or produced during an arbitration or Expert proceeding, and memorials, briefs or other documents prepared for the arbitration or Expert proceeding) shall be Confidential Information subject to the confidentiality provisions of Section 18; provided, however, that breach of such confidentiality provisions shall not void any settlement, determination or award.
|
20.2
|
Expert Determination
|
20.2.1
|
General. In the event of any disagreement between the Parties regarding a measurement under Exhibit A hereto or any other Dispute which the Parties agree to submit to an Expert (in either case, a “Measurement Dispute”), the Parties hereby agree that such Measurement Dispute shall be resolved by an Expert selected as provided in this Section 20.2.1. The Expert is not an arbitrator of the Measurement Dispute and shall not be deemed to be acting in an arbitral capacity. The Party desiring an expert determination shall give the other Party notice of the request for such determination. If the Parties are unable to agree upon an Expert within ten (10) Days after receipt of the notice of request for an expert determination, then, upon the request of either of the Parties, the International Centre for Expertise of the International Chamber of Commerce (“ICC”) shall appoint such Expert and shall administer such expert determination through the ICC’s Rules for Expertise. The Expert shall be and remain at all times wholly impartial, and, once appointed, the Expert shall have no ex parte communications with either of the Parties concerning the expert determination or the underlying Measurement Dispute. The Parties shall cooperate fully in the expeditious conduct of such expert determination and provide the Expert with access to all facilities, books, records, documents, information and personnel necessary to make a fully informed decision in an expeditious manner. Before issuing a final decision, the Expert shall issue a draft report and allow the Parties to comment on it. The Expert shall endeavor to resolve the Measurement Dispute within thirty (30) Days (but no later than sixty (60) Days) after his appointment, taking into account the circumstances requiring an expeditious resolution of the matter in dispute.
|
20.2.2
|
Final and Binding. The Expert’s decision shall be final and binding on the Parties unless challenged in an arbitration pursuant to Section 20.1 within thirty (30) Days of the date the Expert’s decision. If challenged, (a) the decision shall remain binding and be implemented unless and until finally replaced by an award of the arbitrators; (b) the decision shall be entitled to
|
20.2.3
|
Arbitration of Expert Determination. In the event that a Party requests expert determination for a Measurement Dispute which raises issues that require determination of other matters in addition to correct measurement under Exhibit A hereto, then either Party may elect to refer the entire Measurement Dispute for arbitration under Section 20.1.1. In such case, the arbitrators shall be competent to make any measurement determination that is part of a Dispute. An expert determination not referred to arbitration shall proceed and shall not be stayed during the pendency of an arbitration.
|
20.3
|
Governing Law
|
20.4
|
Immunity
|
20.4.1
|
Each Party, to the maximum extent permitted by Applicable Law, as to itself and its assets, hereby irrevocably, unconditionally, knowingly and intentionally waives any and all rights of immunity (sovereign or otherwise) and agrees not to claim, or assert any immunity with respect to the matters covered by this Agreement in any arbitration, Expert proceeding, or other action with respect to this Agreement, whether arising by statute or otherwise, that it may have or may subsequently acquire, including rights under the doctrines of sovereign immunity and act of state, immunity from legal process (including service of process or notice, pre-judgment or pre-award attachment, attachment in aid of execution, or otherwise), immunity from jurisdiction or judgment of any court, arbitrator, Expert or tribunal (including any objection or claim on the basis of inconvenient forum), and immunity from enforcement or execution of any award or judgment or any other remedy.
|
20.4.2
|
Each Party hereby irrevocably, unconditionally, knowingly and intentionally:
|
(a)
|
agrees that the execution, delivery and performance by such Party of this Agreement constitute private and commercial acts rather than public or governmental acts; and
|
(b)
|
consents in respect of the enforcement of any judgment against such Party in any such proceedings in any jurisdiction and to the giving of any relief or the issue of any process in connection with such proceedings (including the making, enforcement or execution of any
|
21.
|
Successors; Assignments
|
21.1
|
Successors
|
21.2
|
Assignment by Buyer
|
21.2.1
|
Early Assignments. Buyer may not novate or assign this Agreement to any Person other than an Affiliate of Buyer prior to the time that the Date of Substantial Completion for each of the Phase 1 Plants has occurred.
|
21.2.2
|
Prior Written Consent. At any time after the Date of Substantial Completion for each of the Phase 1 Plants has occurred, Buyer may novate or assign this Agreement in its entirety to another Person, for the remainder of the Term, upon the prior written consent of Seller (which consent shall not be unreasonably withheld or delayed), provided that:
|
(a)
|
Lenders have provided prior written consent to such novation or assignment;
|
(b)
|
such assignee or novatee assumes all of the obligations of Buyer under this Agreement commencing as of the date of the novation or assignment by execution of a copy of this Agreement in its own name (countersigned by Seller) or by execution of a binding assignment and assumption agreement which is enforceable by Seller; and
|
(c)
|
if required by Lenders, such assignee or novatee has an Acceptable Credit Rating or a Guaranty is provided to Seller prior to such novation or assignment.
|
21.2.3
|
Without Prior Consent to Affiliates. At any time, so long as Buyer is Original Buyer or an Affiliate of Original Buyer, Buyer may novate or assign this Agreement in its entirety, for the remainder of the Term, without Seller’s prior consent, to an Affiliate of Buyer, provided that:
|
(a)
|
Lenders have provided prior written consent to such novation or assignment;
|
(b)
|
such Affiliate assignee or novatee assumes all of the obligations of Buyer under this Agreement commencing as of the date of the novation or assignment by execution of a copy of this Agreement in
|
(c)
|
performance of this Agreement by Seller with such Affiliate assignee or novatee would comply with Applicable Laws and all relevant Approvals.
|
21.2.4
|
Further Obligations. Upon a novation or assignment in whole by Buyer in accordance with this Section 21.2, the assignor or novator shall be released from all further obligations, duties and liabilities under this Agreement, other than any obligations, duties and liabilities arising prior to the date of effectiveness of such novation or assignment
|
21.3
|
Assignment by Seller
|
21.4
|
Seller Financing
|
21.4.1
|
Lender Financing. Seller and its Affiliates shall have the right to obtain financing (including non-recourse or limited recourse financing) from Lenders. In connection with any financing or refinancing obtained by Seller or its Affiliates, Buyer shall, if so requested by Seller, deliver to Seller’s or its Affiliate’s Lenders or the agent acting on behalf of any such Lenders (“Lenders’ Agent”) certified copies of its corporate charter and by-laws, resolutions, incumbency certificates, financial statements and other financial information, and such other items or information upon the reasonable request by Lenders or Lenders’ Agent. Buyer shall, at Seller’s cost, also provide to the Lenders and Lenders’ Agent legal opinions in form and substance and from counsel reasonably acceptable to the Lenders.
|
21.4.2
|
Assignment as Security. Buyer further acknowledges and agrees that Seller may collaterally assign, transfer, or otherwise encumber, all or any of its rights, benefits and obligations under this Agreement to such Lenders or Lenders’ Agent as security for Seller’s obligations or its Affiliate’s obligations to Lenders. Accordingly, upon Seller’s request pursuant to a notice hereunder and at Seller’s cost, Buyer shall enter into, and if Buyer is Assignee Buyer, then Assignee Buyer shall cause any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder to enter into, one or more direct agreements or consent agreements (each, a “Direct Agreement”) pursuant to which Buyer or such guarantor, as applicable:
|
(a)
|
consents to the collateral assignment of Seller’s or its Affiliate’s rights and obligations under this Agreement or the guaranty, as applicable,
|
(b)
|
provides representations and warranties that this Agreement or the guaranty, as applicable, is in full force and effect and has not been modified or amended and that there are no defaults existing under this Agreement or the guaranty, as applicable;
|
(c)
|
in the case of Buyer, provides representations and warranties regarding the corporate existence of Buyer, its authority to enter into and perform this Agreement and that this Agreement is the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, and in the case of guarantor, provides representations and warranties regarding the corporate existence of guarantor, its authority to enter into and perform the guaranty and that the guaranty is the legal, valid and binding obligation of guarantor, enforceable against guarantor in accordance with its terms;
|
(d)
|
agrees to make payments of amounts owed under this Agreement or the guaranty, as applicable, to one or more accounts as notified by Lenders’ Agent from time to time;
|
(e)
|
in the case of Buyer, agrees to give Lenders and Lenders’ Agent notice of and an opportunity to cure any default by Seller under this Agreement;
|
(f)
|
agrees to modify or clarify provisions of this Agreement or the guaranty, as applicable, as reasonably requested by the Lenders or the Lenders’ Agent; and
|
(g)
|
agrees to other undertakings that are normal and customary in financings or refinancings of the type entered into by Seller or its Affiliates and the Lenders.
|
21.4.3
|
Assignment or Novation to Lenders. Seller may novate or assign this Agreement in its entirety, for the remainder of the Term, without Buyer’s prior consent, to Seller’s Lenders or its Affiliate’s Lenders or the relevant Lenders’ Agent and to any other designee or nominee of such Lenders (including a purchaser at any foreclosure sale or any assignee or transferee under any instrument of assignment or transfer in lieu of foreclosure)
|
22.
|
Contract Language
|
23.
|
Miscellaneous
|
23.1
|
Disclaimer of Agency
|
23.2
|
Entire Agreement
|
23.3
|
Third Party Beneficiaries
|
23.4
|
Amendments and Waiver
|
23.5
|
Exclusion
|
23.6
|
Further Assurances
|
23.7
|
Severability
|
24.
|
Notices
|
24.1
|
Form of Notice
|
24.1.1
|
Except where otherwise specifically provided in this Agreement, all notices, requests, consents, proposals, approvals and statements shall be in writing and in English, and if properly addressed to the recipient in the manner required by Sections 24.1.2 and 24.2, shall be deemed to have been properly given or delivered: (i) on the date of actual delivery when personally delivered to the intended recipient or when delivered to the intended recipient by a reputable courier delivery service; or (ii) on the date specified in Section 24.2.2, if by Electronic Transmission, provided that if such Electronic Transmission is directed after 5:00 p.m. (local time of the recipient) or on a day that is not a Business Day, then on the next succeeding Business Day after the date specified in Section 24.2.2.
|
24.1.2
|
A non-electronic document is deemed to be properly addressed, in each case, if to Buyer or Seller, to the address of such Person as set forth in this Section 24.1.2, or, in each case, to such other address or addresses as the addressee may have specified by written notice given to the other Party in the manner contemplated by Section 24.1.1.
|
24.2
|
Electronic Transmission
|
24.2.1
|
Without limiting the manner by which notice otherwise may be given effectively to Parties pursuant to Section 24.1, any notice under any provision of this Agreement shall be effective if given by a form of Electronic Transmission.
|
24.2.2
|
Notice given pursuant to Section 24.2.1 will be deemed delivered on the date on which it is directed to the electronic mail address set forth in Section 24.1.2, or to such other electronic mail address as the addressee previously may have specified by written notice given to the other Party in the manner contemplated by Section 24.1.1.
|
24.2.3
|
Buyer and Seller hereby consent to receive notices by Electronic Transmission at the electronic mail address set forth in Section 24.1.2.
|
25.
|
Trade Law Compliance
|
25.1
|
Trade Law Compliance
|
25.1.1
|
Each Party agrees to comply with the Export Authorizations, including incorporating into any resale contract for LNG sold under this Agreement the necessary conditions to ensure compliance with the Export Authorizations. Buyer shall promptly provide to Seller all information in
|
25.1.2
|
Without limiting the foregoing, the following provisions are included in this Agreement in accordance with the requirements of the Export Authorizations, and Buyer shall include, and require any direct or indirect buyer of LNG sold hereunder for whom Seller acts as agent in connection with one or more Export Authorizations to include, the following provisions in any agreement or other contract for the sale or transfer of LNG exported pursuant to any Export Authorization:
|
(a)
|
Buyer acknowledges and agrees that it will resell or transfer LNG purchased hereunder for delivery only to countries identified in Ordering Paragraph B of DOE/FE Order No. 3968, issued February 28, 2017, in FE Docket No. 16-144-LNG, and/or to purchasers that have agreed in writing to limit their direct or indirect resale or transfer of such LNG to such countries. Buyer further commits to cause a report to be provided to Driftwood LNG LLC that identifies the country (or countries) into which the LNG or natural gas was actually delivered and/or received for end use, and to include in any resale
|
(b)
|
Buyer acknowledges and agrees that it will resell or transfer LNG, purchased hereunder for delivery only to countries identified in Ordering Paragraph F of DOE/FE Order No. 4373, issued May 2, 2019, in FE Docket No. 16-144-LNG, and/or to purchasers that have agreed in writing to limit their direct or indirect resale or transfer of such natural gas or LNG to such countries. Buyer further commits to cause a report to be provided to Driftwood LNG LLC that identifies the country (or countries) into which the LNG was actually delivered, and to include in any resale contract for such LNG the necessary conditions to ensure that Driftwood LNG LLC is made aware of all such actual destination countries.
|
25.2
|
Compliance with Law
|
25.3
|
Commercial Activities
|
25.4
|
Records
|
25.5
|
Representation and Warranty
|
25.5.1
|
in the performance of this Agreement and the activities contemplated herein, neither such Party, nor any of its officers, directors, employees, agents or other representatives have taken any action, or omitted to take any action, which would (i) violate any applicable Anti-Corruption Law, any applicable Export Control and Sanctions Laws or any other Applicable Law applicable to such Party, or (ii) cause the other Party to be in violation of any Anti-Corruption Law or Export Control and Sanctions Law applicable to the other Party; and
|
25.5.2
|
without limiting the foregoing, neither such Party nor any of its directors, managers, officers, employees, agents, contractors or Affiliates has paid any fees, commissions, or rebates to any employee, officer, or agent of the other Party or any of its Affiliates or has provided or caused to be provided to any of them any gifts or entertainment of significant cost or value in connection with this Agreement in order to influence or induce any actions or inactions in connection with the commercial activities of the other Party hereunder.
|
25.6
|
Buyer Indemnity
|
SELLER:
|
|
BUYER:
|
DRIFTWOOD LNG LLC
|
|
TELLURIAN TRADING UK LTD.
|
|
|
|
Name:
|
|
Name:
|
Title:
|
|
Title:
|
QBOG
|
= the quantity of boil-off gas in MJ consumed by the LNG Tanker during loading, calculated as follows:
|
V2
|
= the quantity of Gas consumed by the LNG Tanker during loading (as calculated pursuant to the below formula), stated in kg and rounded to the nearest kg; and
|
55.575 =
|
the heating value of the vapor (assumed to be 100% of methane) stated in MJ/kg at standard reference conditions (15˚C, 1.01325 bar) for both combustion & metering references (tables below).
|
V2
|
= the quantity of Gas consumed by the LNG Tanker during loading, stated in kg;
|
Vf
|
= the reading of Natural Gas Consumption Meter on board the LNG Tanker after the completion of loading, stated in kg; and
|
Vi
|
= the reading of Natural Gas Consumption Meter on board the LNG Tanker before the start of loading, stated in kg.
|
Molecular
Mass of
Mixture
|
-150°C
|
-154°C
|
-158°C
|
-160°C
|
-162°C
|
-166°C
|
-170°C
|
16.0
|
-0.000012
|
-0.000010
|
-0.000009
|
-0.000009
|
-0.000008
|
-0.000007
|
-0.000007
|
16.5
|
0.000135
|
0.000118
|
0.000106
|
0.000100
|
0.000094
|
0.000086
|
0.000078
|
17.0
|
0.000282
|
0.000245
|
0.000221
|
0.000209
|
0.000197
|
0.000179
|
0.000163
|
17.2
|
0.000337
|
0.000293
|
0.000261
|
0.000248
|
0.000235
|
0.000214
|
0.000195
|
17.4
|
0.000392
|
0.000342
|
0.000301
|
0.000287
|
0.000274
|
0.000250
|
0.000228
|
17.6
|
0.000447
|
0.000390
|
0.000342
|
0.000327
|
0.000312
|
0.000286
|
0.000260
|
17.8
|
0.000502
|
0.000438
|
0.000382
|
0.000366
|
0.000351
|
0.000321
|
0.000293
|
18.0
|
0.000557
|
0.000486
|
0.000422
|
0.000405
|
0.000389
|
0.000357
|
0.000325
|
18.2
|
0.000597
|
0.000526
|
0.000460
|
0.000441
|
0.000423
|
0.000385
|
0.000349
|
18.4
|
0.000637
|
0.000566
|
0.000499
|
0.000477
|
0.000456
|
0.000412
|
0.000373
|
18.6
|
0.000677
|
0.000605
|
0.000537
|
0.000513
|
0.000489
|
0.000440
|
0.000397
|
18.8
|
0.000717
|
0.000645
|
0.000575
|
0.000548
|
0.000523
|
0.000467
|
0.000421
|
19.0
|
0.000757
|
0.000685
|
0.000613
|
0.000584
|
0.000556
|
0.000494
|
0.000445
|
19.2
|
0.000800
|
0.000724
|
0.000649
|
0.000619
|
0.000589
|
0.000526
|
0.000474
|
19.4
|
0.000844
|
0.000763
|
0.000685
|
0.000653
|
0.000622
|
0.000558
|
0.000503
|
19.6
|
0.000888
|
0.000803
|
0.000721
|
0.000688
|
0.000655
|
0.000590
|
0.000532
|
19.8
|
0.000932
|
0.000842
|
0.000757
|
0.000722
|
0.000688
|
0.000622
|
0.000561
|
20.0
|
0.000976
|
0.000881
|
0.000793
|
0.000757
|
0.000721
|
0.000654
|
0.000590
|
25.0
|
0.001782
|
0.001619
|
0.001475
|
0.001407
|
0.001339
|
0.001220
|
0.001116
|
30.0
|
0.002238
|
0.002043
|
0.001867
|
0.001790
|
0.001714
|
0.001567
|
0.001435
|
Molecular
Mass of
Mixture
|
-150°C
|
-154°C
|
-158°C
|
-160°C
|
-162°C
|
-166°C
|
-170°C
|
16.0
|
-0.000039
|
-0.000031
|
-0.000024
|
-0.000021
|
-0.000017
|
-0.000012
|
-0.000009
|
16.5
|
0.000315
|
0.000269
|
0.000196
|
0.000178
|
0.000162
|
0.000131
|
0.000101
|
17.0
|
0.000669
|
0.000568
|
0.000416
|
0.000377
|
0.000341
|
0.000274
|
0.000210
|
17.2
|
0.000745
|
0.000630
|
0.000478
|
0.000436
|
0.000397
|
0.000318
|
0.000246
|
17.4
|
0.000821
|
0.000692
|
0.000540
|
0.000495
|
0.000452
|
0.000362
|
0.000282
|
17.6
|
0.000897
|
0.000754
|
0.000602
|
0.000554
|
0.000508
|
0.000406
|
0.000318
|
17.8
|
0.000973
|
0.000816
|
0.000664
|
0.000613
|
0.000564
|
0.000449
|
0.000354
|
18.0
|
0.001049
|
0.000878
|
0.000726
|
0.000672
|
0.000620
|
0.000493
|
0.000390
|
18.2
|
0.001116
|
0.000939
|
0.000772
|
0.000714
|
0.000658
|
0.000530
|
0.000425
|
18.4
|
0.001184
|
0.001000
|
0.000819
|
0.000756
|
0.000696
|
0.000567
|
0.000460
|
18.6
|
0.001252
|
0.001061
|
0.000865
|
0.000799
|
0.000735
|
0.000605
|
0.000496
|
18.8
|
0.001320
|
0.001121
|
0.000912
|
0.000841
|
0.000773
|
0.000642
|
0.000531
|
19.0
|
0.001388
|
0.001182
|
0.000958
|
0.000883
|
0.000811
|
0.000679
|
0.000566
|
19.2
|
0.001434
|
0.001222
|
0.000998
|
0.000920
|
0.000844
|
0.000708
|
0.000594
|
19.4
|
0.001480
|
0.001262
|
0.001038
|
0.000956
|
0.000876
|
0.000737
|
0.000623
|
19.6
|
0.001526
|
0.001302
|
0.001078
|
0.000992
|
0.000908
|
0.000765
|
0.000652
|
19.8
|
0.001573
|
0.001342
|
0.001118
|
0.001029
|
0.000941
|
0.000794
|
0.000681
|
20.0
|
0.001619
|
0.001382
|
0.001158
|
0.001065
|
0.000973
|
0.000823
|
0.000709
|
25.0
|
0.002734
|
0.002374
|
0.002014
|
0.001893
|
0.001777
|
0.001562
|
0.001383
|
30.0
|
0.003723
|
0.003230
|
0.002806
|
0.002631
|
0.002459
|
0.002172
|
0.001934
|
Re:
|
Treatment of Driftwood Holdings LP as a Partnership for U.S. Federal Income Tax Purposes
|
TABLE OF CONTENTS
|
||
|
|
|
THE PARTNER:
|
|
|
|
DRIFTWOOD LP HOLDINGS LLC
|
|
|
|
|
|
By:
|
|
Name:
|
Meg A. Gentle
|
Title:
|
President and Chief Executive Officer
|
THE PARTNERSHIP:
|
|
|
|
DRIFTWOOD HOLDINGS LP
|
|
|
|
|
|
By:
|
|
Name:
|
R. Keith Teague
|
Title:
|
Chief Executive Officer
|
Date
|
Required Capital Contribution
|
First Funding Date
|
30% of Capital Commitment
|
10 months after Phase 1 Project FID Date
|
10% of Capital Commitment
|
17 months after Phase 1 Project FID Date
|
20% of Capital Commitment
|
27 months after Phase 1 Project FID Date
|
20% of Capital Commitment
|
42 months after Phase 1 Project FID Date
|
20% of Capital Commitment
|
|
|
Page
|
|
|
|
|
|
|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
|||
|
(1)
|
Seller is developing a liquefied natural gas (“LNG”) liquefaction terminal on the Calcasieu River, south of Lake Charles, Louisiana;
|
(2)
|
On or about the Effective Date, Buyer or Buyer’s Affiliate has entered into an equity capital contribution agreement with Seller’s Affiliate, Driftwood Holdings LP, a Delaware limited partnership (the “Partnership”);
|
(3)
|
Buyer desires to be engaged in the purchase of LNG at Seller’s liquefaction terminal and transportation of such LNG to one or more Discharge Terminals; and
|
(4)
|
Seller and Buyer desire to execute this definitive agreement setting out the Parties’ respective rights and obligations in relation to the sale and purchase of LNG.
|
1.
|
Definitions and Interpretation
|
1.1
|
Definitions
|
AAA:
|
as defined in Section 20.1.2;
|
Acceptable Credit Rating:
|
two (2) Credit Ratings that are each equal to or better than the following: (i) Baa3 by Moody’s Investors Service, Inc., (ii) BBB- by Standard & Poor’s Rating Services, a division of McGraw-Hill Companies, (iii) BBB- by Fitch Ratings, Inc., or (iv) any comparable Credit Ratings by any other nationally recognized statistical rating organizations registered with the U.S. Securities and Exchange Commission, including any successors to Moody’s Investors Service, Inc., Standard & Poor’s Rating Services, or Fitch Ratings, Inc.;
|
Acceptable Guarantor:
|
an Affiliate of Assignee Buyer that has an Acceptable Credit Rating;
|
ACQ:
|
as defined in Section 5.1.1;
|
Actual Laytime:
|
as defined in Section 7.12.2;
|
Quantity or AACQ:
|
as defined in Section 5.2;
|
Adverse Weather Conditions:
|
weather or sea conditions actually experienced or reasonably forecasted at or near the Driftwood LNG Terminal that are sufficiently severe: (i) to prevent an LNG Tanker from proceeding to berth, or loading or departing from berth, in accordance with one or more of the following: (a) regulations published by a Governmental Authority; (b) an Approval; or (c) an order of a Pilot; (ii) to cause an actual determination by the master of an LNG Tanker that it is unsafe for such LNG Tanker to berth, load, or depart from berth; or (iii) to prevent or severely limit the production of LNG at the Driftwood LNG Terminal;
|
Affiliate:
|
with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with such Person; for purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) means the direct or indirect ownership of fifty percent (50%) or more of the voting rights in a Person or the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; for purposes of this Agreement, (i) Seller, the Partnership and all Seller Affiliates that are wholly-owned by the Partnership shall be deemed not to be Affiliates of Buyer, (ii) Buyer, its ultimate parent company, and all Buyer Affiliates that are wholly-owned by the same ultimate parent company shall be deemed not to be Affiliates of Seller, (iii) references to Affiliates of the Partnership shall only include Affiliates that are subsidiaries of the Partnership, and (iv) Tellurian Inc. and its wholly-owned Affiliates shall be deemed not to be Affiliates
|
Agreement:
|
this agreement, including the Exhibits hereto, as the same may be amended, modified or replaced from time to time;
|
Allotted Laytime:
|
as defined in Section 7.12.1;
|
Allowed Laytime:
|
as defined in Section 7.13.2(a);
|
Annual Delivery Program or ADP:
|
as defined in Section 8.2.3;
|
Anti-Corruption Law:
|
any of the U.S. Foreign Corrupt Practices Act, the OECD convention on anti-bribery, the U.K. Bribery Act of 2010, E.U. and E.U. member country anti-bribery and corruption laws, and any other corruption or similar statute, regulation, order or convention binding on the applicable Person, as each may be amended from time to time, and including any implementing regulations promulgated pursuant thereto;
|
Applicable Laws:
|
in relation to matters covered by this Agreement, all applicable laws, statutes, rules, regulations, ordinances, codes, standards and rules of common law, and judgments, decisions, interpretations, orders, directives, injunctions, writs, decrees, stipulations, or awards of any applicable Governmental Authority or duly authorized official, court or arbitrator thereof, in each case, now existing or which may be enacted or issued after the Effective Date;
|
Approvals:
|
any and all permits (including work permits), franchises, authorizations, approvals, grants, licenses, visas, waivers, exemptions, consents, permissions, registrations, decrees, privileges, variances, validations, confirmations or orders granted by or filed with any Governmental Authority, including the Export Authorizations;
|
Assignee Buyer:
|
as defined in Section 15.3.2;
|
Bankruptcy Event:
|
with respect to any Person: (i) such Person’s suspension of payment of, or request to any court for a moratorium on payment of, all or a substantial part
|
Btu:
|
the amount of heat equal to one thousand fifty-five decimal zero five six (1,055.056) Joules;
|
Business Day:
|
any Day (other than Saturdays, Sundays and national holidays in the United States of America) on which commercial banks are normally open to conduct business in the United States of America;
|
Buyer:
|
as defined in the Preamble;
|
Buyer Taxes:
|
as defined in Section 11.3;
|
Cargo DoP Payment:
|
as defined in Section 5.6.2;
|
Cargo DoP Quantity:
|
as defined in Section 5.6.2;
|
Cargo Shortfall Payment:
|
as defined in Section 5.7.3;
|
Cargo Shortfall Quantity:
|
as defined in Section 5.7.2;
|
Claim:
|
all claims, demands, legal proceedings, or actions that may exist, arise, or be threatened currently or in the future at any time following the Effective Date, whether or not of a type contemplated by any Party, and whether based on federal, state, local, statutory or common law or any other Applicable Law;
|
Class A Additional Issuance Notice:
|
any notice pursuant to the Partnership Agreement requesting funding in respect of the construction of the Phase 1 Project or related Partnership expenses or for general Partnership matters other than the construction of the Phase 2 Project or Phase 3 Project and related Partnership expenses;
|
Class A Units:
|
interests in the Partnership denoted as “Class A Units” under the Partnership Agreement;
|
Composite ADP:
|
as defined in Section 8.2.4;
|
Composite Ninety Day Schedule:
|
as defined in Section 8.4.2;
|
Confidential Information:
|
as defined in Section 18.1;
|
Connecting Pipeline:
|
HGAP, the Driftwood Pipeline and any pipeline as may be directly interconnected to the Driftwood LNG Terminal;
|
Contract Year:
|
as defined in Section 4.4;
|
Credit Rating:
|
a credit rating in respect of the senior, unsecured, long-term debt (not supported by third-party credit enhancement) of a Person;
|
Date of Full Operations:
|
as defined in Section 4.3.1;
|
Date of Substantial Completion:
|
as defined in Section 4.2.1;
|
Day:
|
a period of twenty-four (24) consecutive hours starting at 00:00 hours local time in Calcasieu Parish, Louisiana;
|
De-Bottlenecking:
|
“de-bottlenecking” enhancements or modifications in respect of a Phase Project (including a Plant) with the
|
De-Bottlenecking Contributions:
|
as defined in the Partnership Agreement;
|
De-Bottlenecking Total Quantity:
|
the total quantity of LNG (in MMBtu) available for scheduling by LNG buyers in connection with a De-Bottlenecking project, which shall be calculated as (a) prior to determining the Tested Capacity of the Driftwood LNG Terminal following the completion of such De-Bottlenecking project, Seller’s good faith estimate of such quantity, and (b) at all times following such Tested Capacity determination, the difference between such Tested Capacity determination and the Tested Capacity of the Driftwood LNG Terminal prior to the completion of such De-Bottlenecking project;
|
Delivery Point:
|
as defined in Section 6.1;
|
Delivery Window:
|
a twenty-four (24) hour period starting at 6:00 a.m. Central Time on a specified Day and ending twenty-four (24) consecutive hours thereafter that is allocated to Buyer under the ADP or Ninety Day Schedule, as applicable;
|
Demurrage Event:
|
as defined in Section 7.12.3;
|
Demurrage Rate:
|
as defined in Section 7.12.3;
|
Direct Agreement:
|
as defined in Section 21.4.2;
|
Discharge Terminal:
|
with respect to each cargo of LNG taken or scheduled to be taken by Buyer pursuant to this Agreement, the facilities intended by Buyer to be utilized for the unloading, reception, discharge, storage, treatment (if necessary), and regasification of the LNG and the processing and send-out of Gas or regasified LNG,
|
Dispute:
|
any dispute or difference of whatsoever nature arising under, out of, in connection with or in relation (in any manner whatsoever) to this Agreement or the subject matter of this Agreement, including (a) any dispute or difference concerning the initial or continuing existence of this Agreement or any provision of it, or as to whether this Agreement or any provision of it is invalid, illegal or unenforceable (whether initially or otherwise); or (b) any dispute or claim which is ancillary or connected, in each case in any manner whatsoever, to the foregoing;
|
Driftwood LNG Terminal:
|
the facilities that Seller intends to construct, own and operate (or have operated on its behalf) in Calcasieu Parish, Louisiana, on the Calcasieu River, including the Gas pretreatment and processing facilities, liquefaction facility, storage tanks, utilities, terminal facilities, and associated port and marine facilities, and all other related facilities both inside and outside the LNG plant, inclusive of all Plants;
|
Driftwood Marine Operations Manual:
|
as defined in Section 7.8;
|
Driftwood Pipeline:
|
that certain Gas pipeline that Driftwood LNG Pipeline LLC intends to construct, own and operate (or have operated on its behalf), and which will interconnect the Driftwood LNG Terminal with other Gas pipelines in Louisiana;
|
Driftwood Project:
|
the Phase 1 Project, Phase 2 Project and Phase 3 Project, collectively;
|
Effective Date:
|
as defined in the Preamble;
|
Electronic Transmission:
|
any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process;
|
EPC Contract:
|
each of the Phase 1 EPC Contract, Phase 2 EPC Contract, Phase 3 EPC Contract and Phase 4 EPC Contract;
|
ETA:
|
with respect to an LNG Tanker, the estimated time of arrival of such LNG Tanker at the PBS;
|
Excess Boil-Off Event:
|
as defined in Section 7.12.4;
|
Excess LNG SPA:
|
that certain Excess LNG Sale and Purchase Agreement, dated on or before the Effective Date, between the Parties;
|
Excluded Terms:
|
as defined in Section 9.3;
|
Expert:
|
a Person agreed upon or appointed in accordance with Section 20.2.1;
|
Export Authorizations:
|
as defined in Section 2.1;
|
Export Control and Sanctions Laws:
|
export control and sanctions laws and regulations of the United States of America, including the Export Administration Regulations, 15 C.F.R. Parts 730 et seq., and economic sanctions administered by the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC), 31 C.F.R. Part 500 et seq.;
|
Estimated Monthly LNG Margin:
|
as defined in Section 9.1;
|
Facilities Charge:
|
as defined in Section 9.1;
|
Final Contract Year:
|
as defined in Section 4.4(b);
|
Final Coverage Amount:
|
as defined in Section 9.2;
|
Final Debt Service Costs:
|
as defined in Section 9.2;
|
Final Invoice:
|
as defined in Section 10.1.8(b);
|
Final Net Gas Costs:
|
as defined in Section 9.2;
|
Final Transfer Price:
|
as defined in Section 9.2;
|
First Contract Year:
|
as defined in Section 4.4(a);
|
Force Majeure:
|
as defined in Section 14.1;
|
FTA Export Authorization:
|
an order from the Office of Fossil Energy of the U.S. Department of Energy granting to Seller or any other Person acting as agent on behalf of Seller the authorization to export LNG delivered pursuant to this Agreement by vessel from the Driftwood LNG Terminal to countries that have entered into a free trade agreement with the United States of America requiring the national treatment for trade in natural gas for a specific term, as the same may be supplemented, amended, modified, changed, superseded or replaced from time to time;
|
Full Operations:
|
as defined in Section 4.3.2;
|
Gas:
|
any hydrocarbon or mixture of hydrocarbons consisting predominantly of methane that is in a gaseous state;
|
General Partner:
|
Driftwood GP Holdings LLC, a Delaware limited liability company, in its capacity as the general partner of the Partnership, or any successor thereto;
|
General Partner LLC Agreement:
|
that certain Second Amended and Restated Limited Liability Company Agreement of the General Partner dated on or about the Effective Date, as the same may be amended or restated from time to time;
|
Governmental Authority:
|
any national, regional, state, or local government, or any subdivision, agency, commission or authority thereof (including any maritime authorities, port authority or any quasi-governmental agency), having jurisdiction over a Party (or any Affiliate or direct or indirect owner thereof), a Connecting Pipeline, Gas in a Connecting Pipeline or the Driftwood LNG Terminal, the Driftwood LNG Terminal, LNG in the Driftwood LNG Terminal, an LNG Tanker, LNG or Gas in an LNG Tanker, a Transporter, the last disembarkation port of an LNG Tanker, a Discharge Terminal, or any Gas pipeline which interconnects with a Connecting Pipeline and which transports Gas to or from a Connecting Pipeline, as the case may be, and acting within its legal authority;
|
Gross Heating Value:
|
the quantity of heat expressed in Btu produced by the complete combustion in air of one (1) cubic foot of anhydrous gas, at a temperature of sixty (60) degrees
|
Guarantor:
|
any Acceptable Guarantor executing a Guaranty for delivery to Seller hereunder to the extent required hereunder;
|
Guaranty:
|
an irrevocable payment guaranty, in a form reasonably acceptable to Seller, which is executed by a Guarantor in favor of Seller;
|
HGAP:
|
that certain Gas pipeline that Haynesville Global Access Pipeline LLC intends to construct, own and operate (or have operated on its behalf);
|
HH:
|
as defined in Section 9.1;
|
ICC:
|
as defined in Section 20.2.1;
|
Indemnified Party:
|
as defined in Section 15.4(a);
|
Indemnifying Party:
|
as defined in Section 15.4(a);
|
International LNG Terminal Standards:
|
to the extent not inconsistent with the express requirements of this Agreement, the international standards and practices applicable to the design, construction, equipment, operation or maintenance of LNG liquefaction terminals, established by the following (such standards to apply in the following order of priority): (i) a Governmental Authority having jurisdiction over the Driftwood LNG Terminal, Seller, or Seller’s operator; (ii) the Society of International Gas Tanker and Terminal Operators (to the extent applicable); (iii) the Oil Companies International Marine Forum (OCIMF) (to the extent applicable) and (iv) any other internationally recognized non-governmental agency or organization with whose standards and practices it is customary for Reasonable and Prudent Operators of LNG liquefaction terminals, to comply, provided, however, that in the event of a conflict between any of the
|
International LNG Vessel Standards:
|
the standards and practices from time to time in force applicable to the ownership, design, equipment, operation or maintenance of LNG vessels established by: (i) a Governmental Authority having jurisdiction over the LNG vessel in the Loading Port; (ii) the International Maritime Organization (IMO); (iii) the classification society of the LNG vessel, provided such classification society is a member of the International Association of Classification Societies Ltd. (IACS); (iv) the Oil Companies International Marine Forum (OCIMF); (v) the Society of International Gas Tanker and Terminal Operators (SIGTTO); and (vi) any other internationally recognized agency or non-governmental organization with whose standards and practices it is customary for Reasonable and Prudent Operators of LNG vessels similar to those applicable to this Agreement, to comply, provided, however, that in the event of a conflict between any of the priorities noted above, the priority with the lowest roman numeral noted above shall prevail;
|
International Standards:
|
(i) with respect to Buyer, the International LNG Vessel Standards; (ii) with respect to Seller, the International LNG Terminal Standards;
|
In-Transit Final Notice:
|
as defined in Section 7.9.3(d);
|
In-Transit First Notice:
|
as defined in Section 7.9.2;
|
In-Transit Fourth Notice:
|
as defined in Section 7.9.3(c);
|
In-Transit Second Notice:
|
as defined in Section 7.9.3(a);
|
In-Transit Third Notice:
|
as defined in Section 7.9.3(b);
|
Lender:
|
any Person, other than a shareholder of either Party, duly authorized in its principal place of business to lend monies, to finance or to provide financial support in any form in respect of the Driftwood LNG Terminal or any other facilities under development by Seller or its Affiliates, including any commercial bank, export credit agency, funding agency, bondholder,
|
Lenders’ Agent:
|
as defined in Section 21.4.1;
|
LIBOR:
|
the rate per annum equal to the London Interbank Offer Rate as administered by ICE Benchmark Administration Limited (or any Person which takes over the administration of that rate) for three (3) month deposits in USD as published at or about 11:00 a.m. London time on any London Banking Day;
|
Limited Partner:
|
each Person identified as a “Limited Partner” on Schedule 1 of the Partnership Agreement and any other Person admitted to the Partnership as a Limited Partner in accordance with the terms of the Partnership Agreement, in each case, to the extent such Person holds units in the Partnership;
|
LNG:
|
Gas in a liquid state at or below its point of boiling and at or near atmospheric pressure;
|
LNG Marketing Agreement:
|
that certain LNG marketing agreement, dated on or before the Effective Date, entered into by the Parties;
|
LNG Tanker(s):
|
an ocean-going vessel suitable for transporting LNG which complies with the requirements of this Agreement and which Buyer uses or causes to be used, or intends to use or to be used, in connection with this Agreement;
|
Loading Port:
|
the port where the Driftwood LNG Terminal is located, or the port at an alternate supply source pursuant to Section 3.1.2;
|
London Banking Day:
|
any Day (other than Saturdays, Sundays and national holidays in London, England) on which banks are normally open to conduct business in London, England;
|
Loss:
|
any and all losses, liabilities, damages, costs, judgments, settlements and expenses (whether or not resulting from Claims by Third Parties), including interest and penalties with respect thereto and
|
Made Available Quantity:
|
as defined in Section 9.2;
|
Major Scheduled Maintenance Quantity:
|
as defined in Section 5.5;
|
Measurement Dispute:
|
as defined in Section 20.2.1;
|
Mitigation Sale:
|
as defined in Section 5.7.5;
|
Mitigation Sale Payment:
|
as defined in Section 5.7.6;
|
MMBtu:
|
one million (1,000,000) Btus;
|
Month:
|
each period of time which starts at 00:00 local time in Lake Charles, Louisiana, on the first Day of each calendar month and ends at 24:00 local time in Lake Charles, Louisiana, on the last Day of the same calendar month;
|
Month M:
|
as defined in Section 9.1;
|
MTPA:
|
million tonnes per annum;
|
Ninety Day Schedule:
|
as defined in Section 8.4.1;
|
Non-FTA Export Authorization:
|
an order from the Office of Fossil Energy of the U.S. Department of Energy granting to Seller or any other Person acting as agent on behalf of Seller the authorization to export LNG delivered pursuant to this Agreement by vessel from the Driftwood LNG Terminal to countries that have not entered into a free trade agreement with the United States of America requiring the national treatment for trade in natural gas, which currently has or in the future develops the capacity to import LNG, and with which trade is not prohibited by United States of America law or policy, for a specific term, as the same may be supplemented, amended, modified, changed, superseded or replaced from time to time;
|
Notice of Readiness or NOR:
|
the notice of readiness issued by the master of an LNG Tanker or its agent in accordance with Section 7.10.1;
|
Off-Spec LNG:
|
as defined in Section 12.3.1;
|
Operational Tolerance:
|
as defined in Section 5.6.3;
|
Opex Costs:
|
as defined in Section 9.1;
|
Opex Costs Carryover:
|
as defined in Section 9.1;
|
Original Buyer:
|
Tellurian Trading UK Ltd., and not any successor or assign thereof;
|
Other LNG SPA:
|
as defined in Section 9.3;
|
P&I Club:
|
a Protection and Indemnity Club that is a member of the International Group of P&I Clubs;
|
P&I Insurance:
|
as defined in Section 15.6(b);
|
Partnership:
|
as defined in the Recitals;
|
Partnership Agreement:
|
that certain First Amended and Restated Limited Partnership Agreement of the Partnership;
|
Partnership Buyer:
|
each Person that is a party to a long-term LNG sale and purchase agreement with Seller;
|
Party:
|
Buyer or Seller, and Parties means both Buyer and Seller;
|
Payment Business Day:
|
each Day that is a Business Day on which commercial banks are normally open to conduct business in London, England);
|
Payor:
|
as defined in Section 11.4;
|
PBS:
|
the customary Pilot boarding station at the Loading Port where the Pilot boards the LNG Tanker, as determined by the applicable Governmental Authority or other entity with authority to regulate transit and berthing of vessels at the Loading Port;
|
Person:
|
any individual, corporation, partnership, limited liability company, trust, unincorporated organization or other legal entity, including any Governmental Authority;
|
Phase 1 EPC Contract:
|
that certain Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Driftwood LNG Phase 1 Liquefaction Facility,
|
Phase 1 FID:
|
a positive final investment decision by the General Partner on behalf of the Partnership in respect of the Phase 1 Project, as declared by the General Partner in accordance with the General Partner LLC Agreement, provided that Phase 1 FID may be qualified with respect to certain Pipelines and related infrastructure that will ultimately be part of the Phase 1 Project (including the Pipelines and related infrastructure described in clause (c) of the definition of Phase 1 Project below) as being subject to relevant regulatory, permitting, right of way, procurement, or similar requirements;
|
Phase 1 Plants:
|
each of Plant 1, Plant 2 and Plant 3;
|
Phase 1 Project:
|
collectively, Plant 1, Plant 2, Plant 3, associated facilities and associated Project Pipelines and Production Facilities, which shall include (a) Plant 1, Plant 2 and Plant 3 and the related infrastructure for production of sixteen decimal five six (16.56) MTPA of LNG, (b) the Driftwood Pipeline and related infrastructure, and (c) the Permian Global Access Pipeline and related infrastructure – PGAP (approx. two (2) Bcf/d capacity) or for the latter, any other equivalent asset allowing the Partnership and its Affiliates to access competitive Gas prices in the Permian Basin;
|
Phase 2 EPC Contract:
|
that certain Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Driftwood LNG Phase 2 Liquefaction Facility, between Driftwood LNG LLC and Bechtel Oil, Gas and Chemicals, Inc., dated November 10, 2017;
|
Phase 2 Project:
|
collectively, Plant 4, associated facilities and associated Project Pipelines and Production Facilities, for production of five decimal five two (5.52) MTPA of LNG once Plant 4 achieves Full Operations;
|
Phase 2 Project FID Date:
|
as defined in the Partnership Agreement;
|
Phase 3 EPC Contract:
|
that certain Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the
|
Phase 3 Project:
|
collectively, Plant 5, associated facilities and associated Project Pipelines and Production Facilities, for production of five decimal five two (5.52) MTPA of LNG once Plant 5 achieves Full Operations;
|
Phase 3 Project FID Date:
|
as defined in the Partnership Agreement;
|
Phase 4 EPC Contract:
|
that certain Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Driftwood LNG Phase 4 Liquefaction Facility, between Driftwood LNG LLC and Bechtel Oil, Gas and Chemicals, Inc., dated November 10, 2017;
|
Phase Project:
|
the Phase 1 Project, Phase 2 Project or Phase 3 Project;
|
Pilot:
|
any Person engaged by Transporter to come on board the LNG Tanker to assist the master in pilotage, maneuvering, berthing and unberthing of such LNG Tanker;
|
Plant:
|
each of Plant 1, Plant 2, Plant 3, Plant 4 and Plant 5;
|
Plant 1:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 1 EPC Contract that is described thereunder as “LNG Plant 1”;
|
Plant 2:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 1 EPC Contract that is described thereunder as “LNG Plant 2”;
|
Plant 3:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 2 EPC Contract;
|
Plant 4:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 3 EPC Contract;
|
Plant 5:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 4 EPC Contract;
|
Port Charges:
|
all charges of whatsoever nature (including rates, tolls, dues, fees, and imposts of every description) in respect of an LNG Tanker entering or leaving the Loading Port or loading LNG, including wharfage fees, in-and-out fees, franchise fees, line handling charges, and charges imposed by tugs, the U.S. Coast Guard, a port authority, a harbor master, a Pilot, and any other authorized Person assisting an LNG Tanker to enter or leave the Loading Port, and further including port use fees, throughput fees and similar fees payable by users of the Loading Port (or by Seller or its operator on behalf of such users);
|
Port Liability Agreement:
|
an agreement for use of the port and marine facilities located at the Loading Port, to be entered into as described in Section 7.7.1;
|
Preliminary AACQ:
|
as defined in Section 5.4.1;
|
Production Facilities:
|
Gas production, storage, processing, gathering, and midstream facilities, including acreage, wellbores, mineral interests, gas reserves, and related wells and leaseholds, and other similar hydrocarbon facilities acquired or to be acquired from time to time by the Partnership and its Affiliates;
|
Project Pipelines:
|
Gas pipelines to be constructed or acquired from time to time by the Partnership and its Affiliates;
|
Provisional Coverage Amount:
|
as defined in Section 9.1;
|
Provisional Debt Service Costs:
|
as defined in Section 9.1;
|
Provisional Invoice:
|
as defined in Section 10.1.8(a);
|
Provisional Net Gas Costs:
|
as defined in Section 9.1;
|
Provisional Transfer Price:
|
as defined in Section 9.1;
|
Reasonable and Prudent Operator:
|
a Person seeking in good faith to perform its contractual obligations, and in so doing, and in the general conduct of its undertaking, exercising that degree of skill, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced operator, complying with all applicable International Standards and
|
Required Modification:
|
as defined in Section 7.3.2;
|
Round-Down Quantity:
|
as defined in Section 5.4.3;
|
Round-Up Quantity:
|
as defined in Section 5.4.2;
|
SCF:
|
for Gas, the quantity of anhydrous Gas that occupies one (1) cubic foot of space at a temperature of sixty (60) degrees Fahrenheit and a pressure of fourteen decimal six nine six (14.696) pounds per square inch absolute;
|
Scheduled Cargo Quantity:
|
the quantity of LNG (in MMBtus) identified in the ADP or Ninety Day Schedule to be loaded onto an LNG Tanker in a Delivery Window in accordance with Section 8;
|
Seller:
|
as defined in the Preamble;
|
Seller Aggregate Liability:
|
as defined in Section 15.2.6(b);
|
Seller Liability Cap:
|
as defined in Section 15.2.6(c);
|
Seller Taxes:
|
as defined in Section 11.2;
|
SI:
|
the International System of Units;
|
SIRE:
|
Ship Inspection Report Exchange;
|
SIRE Accredited Inspector:
|
an inspector qualified by the OCIMF to inspect an LNG Tanker for the purpose of generating an inspection report for inclusion in OCIMF’s Ship Inspection Report Program;
|
Specifications:
|
as defined in Section 12.1;
|
Stub Quantity:
|
as defined in Section 5.4.1;
|
Substantial Completion:
|
as defined in Section 4.2.2;
|
Suspension Fee:
|
as defined in Section 5.8.2;
|
Taxes:
|
all taxes, levies, duties, charges, withholdings and all other assessments (but excluding Port Charges), which may now or hereafter be enacted, levied or imposed, directly or indirectly, by a Governmental Authority, including income, value added, goods and services, sales and use, gross receipts, license, payroll, environmental, profits, severance, premium, franchise, property, ad valorem, excise, capital stock, import, stamp, transfer, withholding, employment, occupation, generation, privilege, utility, regulatory, energy, consumption, lease, filing, recording and activity taxes, levies, duties, fees, charges, and imposts and any sum charged by reference to energy value and/or carbon content (regardless of whether the quantum of the charge is calculated by reference to energy value and/or carbon content or by reference to sums payable under this Agreement or otherwise), together with any and all penalties, interest and additions thereto;
|
Tellurian Partnership Buyer:
|
Driftwood LP Holdings LLC, if a Partnership Buyer, or its Affiliate that is a Partnership Buyer;
|
Term:
|
as defined in Section 4.1.1;
|
Termination Event:
|
as defined in Section 19.2.1;
|
Tested Capacity:
|
a quantity, in MMBtu, determined in accordance with the Partnership Agreement;
|
Third Party:
|
a Person other than a Party;
|
Third Party Claim:
|
as defined in Section 15.4(a);
|
Tranche:
|
as defined in Section 5.3;
|
Transfer Price Ceiling:
|
an amount (in USD per MMBtu) equal to one hundred fifteen percent (115%) of HH, plus USD three decimal zero zero (US$3.00);
|
Transfer Taxes:
|
as defined in Section 11.5;
|
Transporter:
|
any Person who contracts with Buyer (or any Person taking delivery, at the Driftwood LNG Terminal, of LNG sold to Buyer hereunder), for purposes of providing or operating any of the LNG Tankers; and
|
USD or US$:
|
the lawful currency from time to time of the United States of America.
|
1.2
|
Interpretation
|
1.2.1
|
The titles, headings, and numbering in this Agreement are included for convenience only and will have no effect on the construction or interpretation of this Agreement.
|
1.2.2
|
References in this Agreement to Sections and Exhibits are to those of this Agreement unless otherwise indicated. References to this Agreement and to agreements and contractual instruments will be deemed to include all exhibits, schedules, appendices, annexes, and other attachments thereto and all subsequent amendments and other modifications to such instruments, to the extent such amendments and other modifications are not prohibited by the terms of this Agreement.
|
1.2.3
|
The word “include” or “including” will be deemed to be followed by “without limitation.” The term “will” has the same meaning as “shall,” and thus imposes an obligation.
|
1.2.4
|
Whenever the context so requires, the singular includes the plural and the plural includes the singular, and the gender of any pronoun includes the other gender.
|
1.2.5
|
Unless otherwise indicated, references to any statute, regulation or other law will be deemed to refer to such statute, regulation or other law as amended or any successor law.
|
1.2.6
|
Unless otherwise indicated, references to a Person shall include such Person’s successors and permitted assigns.
|
1.2.7
|
Unless otherwise indicated, any reference to a time of Day shall be to Central Time in the United States of America.
|
1.2.8
|
Approximate conversions of any unit of measurement contained in parenthesis following the primary unit of measurement included in Sections 1 through 25 of this Agreement are inserted as a matter of operational convenience only to show the approximate equivalent in such different measurement. The obligations of the Parties under Sections 1 through 25 of this Agreement will be undertaken in respect of the primary unit of measurement and not in respect of any such approximate conversion.
|
1.3
|
Replacement of Rates and Indices No Longer Available
|
1.3.1
|
If (a) a publication that contains a rate or index used in this Agreement ceases to be published for any reason or (b) such a rate or index ceases to exist, is materially modified, or no longer is used as a liquid trading point for Gas (as applicable), so as systematically to change its economic result, or is disaggregated, displaced or abandoned, for any reason, the Parties shall promptly discuss, with the aim of jointly selecting a rate or index or rates or indices to be used in place of such rates and indices that maintains the intent and economic effect of those original rates or indices.
|
1.3.2
|
If the Parties fail to agree on a replacement rate or index within thirty (30) Days, the Parties may submit such issue to an Expert pursuant to Section 20.2, as amended by the provisions of this Section 1.3.2. Any Expert selected shall be instructed to select the published rate or index, or a combination of published rates or indices, with adjustments as necessary or appropriate, that most nearly preserves the intent and economic result of the original rates or indices. If the Parties are not able to agree upon an Expert within ten (10) Days after the receipt of the notice of request for expert determination, either Party may elect to refer the determination of the replacement rate or index for arbitration in accordance with Section 20.1.
|
1.3.3
|
If any rate used in this Agreement is not published for a particular date, but the publication containing such rate continues to be published and the rate itself continues to exist, the Parties shall use the published rate in effect for the date such rate was most recently published prior to the particular date, unless otherwise provided in this Agreement.
|
1.3.4
|
If any index used in this Agreement is not published for a particular date, but the publication containing such index continues to be published and the index itself continues to exist, the Parties shall use the published rate in effect for the date such rate was most recently published prior to the particular date, unless otherwise provided in this Agreement. If the index is subsequently published for the particular date, such published index will be substituted for the previously-used index and any calculations involving such index will be recalculated and the Parties will take any necessary actions based upon these revised calculations, including adjustments of amounts previously invoiced or paid.
|
1.3.5
|
If an incorrect value is published for any rate or index used in this Agreement and such error is corrected and published within ninety (90) Days of the date of the publication of such incorrect rate or index, such corrected rate or index will be substituted for the incorrect rate or index and any calculations involving such rate or index will be recalculated and the Parties will take any necessary actions based upon these revised calculations, including adjustments of amounts previously invoiced or paid.
|
2.
|
Approvals
|
2.1
|
Approvals
|
2.2
|
Change in Export Laws
|
3.
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Subject Matter
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3.1
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Sale and Purchase of LNG
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3.1.1
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Seller shall sell and make available for delivery, or compensate Buyer if not made available for delivery, LNG in cargoes at the Delivery Point, and Buyer shall take and pay for, or compensate Seller if not taken, such LNG, in the quantities and at the prices set forth in and otherwise in accordance with and subject to the provisions of this Agreement.
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3.1.2
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Seller intends to load cargoes from the Driftwood LNG Terminal, but, upon not less than sixty (60) Days’ prior written notice and subject to the prior written consent of Buyer (such consent not to be unreasonably withheld or delayed), Seller may deliver cargoes to Buyer from any alternate source; provided, that:
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(a)
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LNG from such alternate source shall, when made available by Seller to Buyer, comply with the Specifications;
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(b)
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LNG from such alternate source shall comply with the specifications in Buyer’s relevant LNG sales contractual obligation(s) in the reasonable determination of Buyer;
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(c)
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Seller has agreed to reimburse Buyer an amount equal to Buyer’s reasonable estimate of the increased costs that would be incurred as a result of the delivery of LNG at such alternate source;
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(d)
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the delivery of LNG at an alternate source is necessitated by operational conditions affecting the Driftwood LNG Terminal that have reduced the capability of the Driftwood LNG Terminal to produce or load LNG;
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(e)
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the receipt of LNG at an alternate source will not affect the ability of LNG Tankers to perform such cargo receipts and deliveries and other cargo receipts and deliveries in a timely fashion and in accordance with Buyer’s contractual obligations, in the reasonable determination of Buyer;
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(f)
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the facilities at the alternate source are compatible with LNG Tankers and acceptable in the reasonable determination of Buyer;
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(g)
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any other condition reasonably imposed by Buyer has been satisfied by Seller to Buyer’s reasonable satisfaction; and
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(h)
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the alternate source and the voyage thereto do not present added risks or dangers to any LNG Tanker or personnel of Buyer or any Affiliate of Buyer in the reasonable determination of Buyer.
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4.
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Term
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4.1
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Term
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4.1.1
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Term. This Agreement shall enter into force and effect on the Effective Date and shall continue in force and effect until the thirtieth (30th) anniversary of the Date of Full Operations of the first Phase 1 Plant to achieve Full Operations, unless extended pursuant to Section 4.1.2 (the “Term”).
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4.1.2
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Extension of Term.
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(a)
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At any time not later than the date that is three (3) years prior to the then-current expiration date of this Agreement, Buyer may give notice to Seller electing to extend the then-current Term by an additional ten (10) years beyond the then-current Term, provided that:
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(i)
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the sum of the ACQ hereunder and the annual contract quantities of all other Partnership Buyers during the entire
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(ii)
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Seller is able, by the exercise of reasonable efforts, to maintain in effect all Approvals necessary for the continued operation of the Driftwood LNG Terminal during the entire extension period.
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(b)
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Buyer may exercise its extension right pursuant to Section 4.1.2(a) up to four (4) times, for an aggregate extension of up to forty (40) years in ten (10)-year increments.
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(c)
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The terms and conditions of this Agreement during any extension period pursuant to this Section 4.1.2 shall be the same as those prior to such extension period.
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4.2
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Date of Substantial Completion
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4.2.1
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The Day Buyer is notified by Seller as the day on which a Plant achieves Substantial Completion shall be the “Date of Substantial Completion” for such Plant.
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4.2.2
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For all purposes of this Agreement, “Substantial Completion” of a Plant shall mean “Substantial Completion” of the “Project” that includes such Plant, in accordance with the EPC Contract pursuant to which such Plant is to be constructed (where “Project” and “Substantial Completion” are defined according to such EPC Contract). Seller shall provide prompt written notice to Buyer in the event that the terms of any EPC Contract are amended in a manner that alters the manner in which the Date of Substantial Completion of Plant 1, Plant 2 or Plant 3 is determined under such EPC Contract.
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4.3
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Date of Full Operations
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4.3.1
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The Day occurring three hundred and sixty-five (365) Days after the Date of Substantial Completion of a Plant, or any earlier date during such three hundred sixty-five (365)-Day period as elected by Seller and notified by Seller with not less than one hundred eighty (180) Days’ prior notice, shall be the “Date of Full Operations” for such Plant.
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4.3.2
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For all purposes of this Agreement, a Plant shall be considered to have achieved “Full Operations” as of the Date of Full Operations of such Plant.
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4.3.3
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If Seller elects an early Date of Full Operations of a Plant pursuant to Section 4.3.1, then:
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(a)
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the ACQ shall be adjusted according to Section 5.1.4; and
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(b)
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if applicable, Seller shall issue an ADP, or, as applicable, a revised ADP, that includes any additional cargo loadings required as a result thereof, with Seller using reasonable efforts to accommodate Buyer’s requests in respect thereof and making any changes in full-cargo lots (with any quantity that cannot be scheduled due to the full-cargo lot requirement being deemed a Round-Down Quantity or Round-Up Quantity, as applicable, carried forward to the next Contract Year).
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4.4
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Contract Year
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(a)
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the first Contract Year is the period of time beginning on the Date of Full Operations of the first Phase 1 Plant to achieve Full Operations and ending on December 31st of the same calendar year (the “First Contract Year”); and
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(b)
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the final Contract Year is the period of time beginning on the January 1st immediately preceding the final Day of the Term and ending on the final Day of the Term (the “Final Contract Year”).
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5.
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Quantities
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5.1
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ACQ
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5.1.1
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ACQ. Subject to Sections 5.1.2, 5.1.3 and 5.1.4, Buyer’s annual contract quantity of LNG under this Agreement (“ACQ”) for any given Contract Year shall be one hundred four million three hundred forty thousand (104,340,000) MMBtu.
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5.1.2
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Additional Capital Calls.
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(a)
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If the Partnership issues any Class A Additional Issuance Notice in respect of the construction of the Phase 1 Project or related Partnership Expenses (as defined in the Partnership Agreement) pursuant to Section 4.3(e)(ii)(A)(1) of the Partnership Agreement (excluding any Class A Additional Issuance Notice in respect of De-Bottlenecking Contributions), then the ACQ shall be adjusted up or down, as applicable, to equal one hundred four million three hundred forty thousand (104,340,000) MMBtu, multiplied by a fraction having as numerator the number of Class A Units held by Buyer or its Affiliate (as calculated immediately after any changes to the number of Class A Units held by Buyer or its Affiliate in connection with such Class A Additional Issuance, including any Unsubscribed Units (as defined in the Partnership Agreement) purchased by Buyer or its Affiliate
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(b)
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If the Partnership issues any Class A Additional Issuance Notice in respect of De-Bottlenecking Contributions pursuant to Section 4.3(e)(ii)(A)(1) of the Partnership Agreement (and only such provision), then the ACQ, as previously adjusted (if any) pursuant to Section 5.1.2(a) or (c) or this Section 5.1.2(b), shall be increased for all purposes of this Agreement starting with the Contract Year in which the relevant De-Bottlenecking project is completed, by a quantity equal to the De-Bottlenecking Total Quantity, multiplied by the number of Class A Units issued to Buyer or its Affiliate in connection with such De-Bottlenecking Contributions, divided by the total number of Class A Units issued to Buyer or its Affiliate and any other Limited Partners in connection with such De-Bottlenecking Contributions; provided that for the year in which the applicable De-Bottlenecking project is completed, such ACQ increase shall be pro-rated based on the number of Days after such completion, compared to the total number of Days in the underlying Contract Year.
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(c)
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If the Partnership or its Affiliates undertake any De-Bottlenecking project that is not funded by De-Bottlenecking Contributions, then the ACQ, as previously adjusted (if any) pursuant to Section 5.1.2(a) or (b) or this Section 5.1.2(c), shall be increased for all purposes of this Agreement starting with the Contract Year in which the relevant De-Bottlenecking project is completed, by a quantity equal to the De-Bottlenecking Total Quantity, multiplied by the number of Class A Units held by Buyer or its Affiliate, divided by the total number of Class A Units; provided that for the year in which the applicable De-Bottlenecking project is completed, such ACQ increase shall be pro-rated based on the number of Days after such completion, compared to the total number of Days in the underlying Contract Year.
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(d)
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If the ACQ is adjusted pursuant to Section 5.1.2(a), (b) or (c), Seller shall, always in accordance with the ratability principles set out in Section 5.3, issue a revised ADP and Ninety Day Schedule that
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(e)
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Any adjustments to the ACQ pursuant to Section 5.1.2(a), (b) or (c) shall be applied prior to any prorating pursuant to one or both of Sections 5.1.3 and 5.1.4.
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(f)
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If the Partnership or its Affiliates undertake any De-Bottlenecking project that is funded by De-Bottlenecking Contributions pursuant to Section 4.3(e)(ii)(A)(2) or (3) of the Partnership Agreement, Buyer’s ACQ shall not be adjusted hereunder as a result thereof.
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5.1.3
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First and Final Contract Years. The ACQ for the First Contract Year and Final Contract Year shall be pro-rated based on the number of days in each such Contract Year. If the ACQ of the First Contract Year is to be pro-rated pursuant to this Section 5.1.3 and Section 5.1.4, the ACQ shall first be pro-rated pursuant to Section 5.1.4 assuming the First Contract Year is a full calendar year, and then such ACQ shall be pro-rated pursuant to this Section 5.1.3.
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5.1.4
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Start-Up.
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(a)
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The ACQ during the period of time from the Date of Full Operations of the first Phase 1 Plant to achieve Full Operations until the Date of Full Operations of the second Phase 1 Plant to achieve Full Operations shall be one third (1/3) of the ACQ that would otherwise apply hereunder, pro-rated for the number of days in such period.
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(b)
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The ACQ during the period of time from the Date of Full Operations of the second Phase 1 Plant to achieve Full Operations until the Date of Full Operations of the third Phase 1 Plant to achieve Full Operations shall be two thirds (2/3) of the ACQ that would otherwise apply hereunder, pro-rated for the number of days in such period.
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5.1.5
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Measurement Units. The ACQ shall be expressed in MMBtus. All references in this Agreement to cargoes or other units are solely for operational convenience.
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5.2
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Adjusted Annual Contract Quantity
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5.2.1
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any Round-Up Quantity for such Contract Year, determined in accordance with Section 5.4.2; and
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5.2.2
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any Round-Down Quantity for the previous Contract Year, determined in accordance with Section 5.4.3, and carried forward to the current Contract Year;
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5.2.3
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any Major Scheduled Maintenance Quantities for such Contract Year, if any, determined in accordance with Section 5.5;
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5.2.4
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any Round-Up Quantity taken in the previous Contract Year, determined in accordance with Section 5.4.2, and carried forward as a deduction to the current Contract Year; and
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5.2.5
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any Round-Down Quantity for the current Contract Year, determined in accordance with Section 5.4.3.
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5.3
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Seasonal Deliveries
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5.3.1
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the first (1st) Tranche shall be scheduled for delivery on a reasonably ratable basis throughout the months of January, February, March, October, November and December of the relevant Contract Year, taking into consideration planned maintenance at the Driftwood LNG Terminal; and
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5.3.2
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the second (2nd) Tranche shall be scheduled for delivery on a reasonably ratable basis throughout the months of April, May, June, July, August and September of the relevant Contract Year, taking into consideration planned maintenance at the Driftwood LNG Terminal.
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5.4
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Round-Up/Round-Down Quantities
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5.4.1
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If, during the development of the Annual Delivery Program for a Contract Year, it appears that the delivery during such Contract Year of the ACQ plus
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5.4.2
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If the other Party, through the use of reasonable efforts, is able to schedule the delivery or receipt, as applicable, of the additional LNG, then the difference between the AACQ and the Preliminary AACQ shall be the “Round-Up Quantity” for such Contract Year; provided, however, that the Round-Up Quantity shall be less than a full cargo lot.
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5.4.3
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If the other Party, despite its exercise of reasonable efforts, is not able to schedule the delivery or receipt, as applicable, of the additional LNG, or if neither Party requests a Round-Up Quantity pursuant to Section 8.1.4(b) or 8.2.1, as applicable, then the Stub Quantity shall be the “Round-Down Quantity” for such Contract Year; provided, however, that the Round-Down Quantity shall be less than a full cargo lot.
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5.5
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Major Scheduled Maintenance
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5.5.1
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Seller may only exercise its right to such reduction in a Contract Year to the extent Seller determines, as a Reasonable and Prudent Operator, that major scheduled maintenance is required for operational reasons;
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5.5.2
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Seller shall notify Buyer of its exercise of, and the amount of, Major Scheduled Maintenance Quantity pursuant to Section 8.1.1(b);
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5.5.3
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the Major Scheduled Maintenance Quantity reduction elected by Seller during any Contract Year may not exceed seven decimal five percent (7.5%) of the ACQ for such Contract Year; and
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5.5.4
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the cumulative amount of all Major Scheduled Maintenance Quantity reductions elected by Seller pursuant to this Section 5.5 shall not exceed twenty-five percent (25%) of the ACQ during any six (6) consecutive Contract Years.
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5.6
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Seller’s Delivery Obligation
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5.6.1
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During any Contract Year, Seller shall make available to Buyer the Scheduled Cargo Quantity with respect to each cargo scheduled in the ADP for such Contract Year, less;
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(a)
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any quantities of LNG not taken by Buyer for any reasons attributable to Buyer (other than quantities for which Buyer is excused pursuant to this Agreement from taking due to Seller’s breach of this Agreement), including quantities not taken by Buyer due to Force Majeure affecting Buyer;
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(b)
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any quantities of LNG not made available by Seller due to Force Majeure affecting Seller;
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(c)
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any quantities of LNG for which Buyer has provided a notice of suspension pursuant to Section 5.8; and
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(d)
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any cargo suspended pursuant to Section 19.1.
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5.6.2
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Except as otherwise excused in accordance with the provisions of this Agreement, if, during any Contract Year, for any reason other than those specified in Section 5.6.1, Seller does not make available the Scheduled Cargo Quantity with respect to any cargo identified in Section 5.6.1 then the amount by which the Scheduled Cargo Quantity for such cargo exceeds the quantity of LNG made available by Seller in relation to such cargo shall be the “Cargo DoP Quantity”. Seller shall make a payment to Buyer for the Cargo DoP Quantity in an amount equal to:
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(a)
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an amount equal to the actual, documented amount paid by Buyer for the purchase of a replacement quantity of LNG or Gas (not to exceed the MMBtu equivalent of the Cargo DoP Quantity), or, in respect of any Cargo DoP Quantity for which a replacement quantity has not been purchased by Buyer (Buyer having used commercially reasonable efforts to so purchase), the market price of LNG at such time at the cargo’s most recently documented destination, multiplied by the Cargo DoP Quantity; less
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(b)
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an amount equal to, initially, the Provisional Transfer Price for purposes of a Provisional Invoice, and thereafter the Final Transfer Price upon the determination thereof for purposes of the Final Invoice (in accordance with Section 10.1.3), multiplied by the Cargo DoP Quantity; plus
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(c)
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any actual, reasonable and verifiable incremental costs incurred by Buyer as a result of such failure; less
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(d)
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any actual, reasonable and verifiable savings obtained by Buyer as a result of such failure;
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5.6.3
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Notwithstanding the foregoing, if the Cargo DoP Quantity is within the operational tolerance of three percent (3%) of the Scheduled Cargo Quantity (“Operational Tolerance”) (such Operational Tolerance to be exercised by Seller only with respect to operational matters regarding the Driftwood LNG Terminal, and without regard commercial considerations), the Cargo DoP Payment shall be zero.
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5.6.4
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Buyer shall use reasonable efforts to mitigate Seller’s losses in accordance with this Section 5.6.
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5.6.5
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Notwithstanding the provisions of Section 15, nothing in this Section 5.6 shall limit Buyer’s right to:
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(a)
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recover demurrage pursuant to Section 7.12.3 and amounts in respect of boil-off pursuant to Section 7.12.4;
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(b)
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recover damages specified in Section 12.3 for delivery of Off-Spec LNG; or
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(c)
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terminate this Agreement in accordance with Section 19.
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5.7
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Buyer’s Purchase Obligation
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5.7.1
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During any Contract Year, Buyer shall take and pay for the Scheduled Cargo Quantity with respect to each cargo scheduled in the ADP for such Contract Year, less:
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(a)
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any quantities of LNG not made available by Seller for any reasons attributable to Seller (other than quantities for which Seller is excused
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(b)
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any quantities of LNG not taken by Buyer due to Force Majeure affecting Buyer;
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(c)
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any quantities of LNG for which Buyer has provided a notice of suspension pursuant to Section 5.8;
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(d)
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any quantities of LNG that the relevant LNG Tanker is not capable of loading due to Seller’s delivery of LNG that has a Gross Heating Value that is less than the value identified by Seller pursuant to Section 8.1.1(a); and
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(e)
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any quantities of Off-Spec LNG that Buyer is relieved from taking pursuant to Section 12.3.
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5.7.2
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If, with respect to any cargo identified in Section 5.7.1, Buyer does not take all or part of the Scheduled Cargo Quantity of such cargo, and such failure to take is not otherwise excused pursuant to Section 5.7.1, then the amount by which the Scheduled Cargo Quantity for such cargo exceeds the quantity of LNG taken by Buyer in relation to such cargo shall be the “Cargo Shortfall Quantity”.
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5.7.3
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Buyer shall pay Seller an amount equal to the Cargo Shortfall Quantity, multiplied by, initially, the Provisional Transfer Price for purposes of a Provisional Invoice, and thereafter the Final Transfer Price upon the determination thereof for purposes of the Final Invoice (in accordance with Section 10.1.4) (the “Cargo Shortfall Payment”). For purposes of calculating the Cargo Shortfall Payment, the Provisional Transfer Price and Final Transfer Price shall be determined as of the Month in which the applicable Delivery Window begins.
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5.7.4
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Notwithstanding the foregoing, if the Cargo Shortfall Quantity is within the Operational Tolerance (such Operational Tolerance to be exercised by Buyer only with respect to operational matters regarding the LNG Tanker, and without regard to commercial considerations), the Cargo Shortfall Payment shall be zero.
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5.7.5
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Seller shall offer the Cargo Shortfall Quantity to the Tellurian Partnership Buyer, which shall have the right in its discretion to accept or reject the offer of a Cargo Shortfall Quantity. If the Tellurian Partnership Buyer accepts such offer, then Buyer shall pay the Cargo Shortfall Payment in accordance with Section 10.2.4, and upon receipt of a payment from the Tellurian Partnership Buyer of the Final Transfer Price for the Cargo Shortfall Quantity,
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5.7.6
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If Seller sells or causes to be sold the Cargo Shortfall Quantity or any portion thereof in a Mitigation Sale, Seller shall, within ten (10) Days of Seller’s receipt of the final payment from a Mitigation Sale, refund to Buyer an amount (the “Mitigation Sale Payment”) equal to the lesser of (x) the Cargo Shortfall Payment in respect of the Cargo Shortfall Quantity (less any Mitigation Sale Payments already received pursuant to other Mitigation Sales in respect of the same Cargo Shortfall Quantity) and (y) an amount calculated as follows:
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(a)
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the proceeds of the Mitigation Sale; plus
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(b)
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any actual, reasonable and verifiable savings obtained by Seller as a result of the Mitigation Sale as opposed to the sale of LNG to Buyer, including savings associated with reduced or avoided costs and fuel gas for LNG production and other reduced or avoided costs; less
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(c)
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any actual, reasonable and verifiable incremental costs incurred by Seller as a result of the Mitigation Sale; less
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(d)
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any marketing fee owed by Seller to Buyer pursuant to the LNG Marketing Agreement.
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5.7.7
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Seller shall use reasonable efforts to mitigate Buyer’s losses in accordance with this Section 5.7; provided, however, that Seller, acting as a Reasonable and Prudent Operator, shall have the right at any time to take other actions, in lieu of a sale of LNG to the Tellurian Partnership Buyer or a Mitigation Sale, to mitigate the effects of a Cargo Shortfall Quantity, including reducing Gas quantities purchased or selling any previously purchased Gas quantities. Seller shall, as soon as reasonably possible and in any event within sixty (60) Business Days after the end of the applicable Delivery Window, calculate the effects of such actions on the amount of the refund to be made by Seller to Buyer in respect of the Cargo Shortfall Quantity, which shall be calculated as the net proceeds of any such actions, plus actual, reasonable and verifiable
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5.7.8
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Any Mitigation Sale entered into by Seller with a Third Party pursuant to terms proposed to Seller by Buyer pursuant to the LNG Marketing Agreement shall be deemed to satisfy any obligation of Seller under this Agreement to mitigate Buyer’s losses pursuant to this Section 5.7.
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5.8
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Buyer’s Right to Suspend Deliveries
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5.8.1
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Subject to the remainder of this Section 5.8, Buyer may elect to suspend delivery of any cargo scheduled in the ADP by providing notice of such election to Seller on or prior to the twentieth (20th) Day of the Month that is two (2) Months prior to the Month in which the relevant cargo’s Delivery Window is scheduled to begin. If a cargo has been suspended pursuant to this Section 5.8.1, Seller shall be relieved of its obligation to make available such cargo to Buyer pursuant to Section 5.6.
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5.8.2
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Buyer shall pay a suspension fee (the “Suspension Fee”) for each cargo suspended pursuant to Section 5.8.1, in an amount equal to the lower of (a) the Scheduled Cargo Quantity of such cargo multiplied by an amount equal to USD three decimal zero zero (US$3.00) per MMBtu, plus or minus the applicable Facilities Charge in accordance with Exhibit B of the General Partner LLC Agreement; and (b) the Scheduled Cargo Quantity of such cargo, multiplied by an amount equal to the sum of the applicable Opex Costs, Final Debt Service Costs and Final Coverage Amount, plus or minus the applicable Facilities Charge in accordance with Exhibit B of the General Partner LLC Agreement. Buyer shall pay the Suspension Fee in accordance with Section 10.2.2.
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6.
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Delivery Point, Title and Risk, Destination
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6.1
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Delivery Point
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6.2
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Title and Risk
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6.3
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Destination
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7.
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Transportation and Loading
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7.1
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Transportation by Buyer
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7.2
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Driftwood LNG Terminal
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7.2.1
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During the period from the Effective Date and continuing through the Date of Full Operations of each Phase 1 Plant, Seller shall proceed diligently to construct, test, commission, maintain and operate such Plant in accordance with the standards and specifications set forth in Section 7.2.3 or cause the same to occur.
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7.2.2
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During the period from the Date of Full Operations of a Phase 1 Plant and continuing throughout the Term, Seller shall own, or have access to and use of, and maintain and operate or cause to be maintained and operated, the Driftwood LNG Terminal in accordance with the following: (a) the terms and conditions set forth in this Agreement; (b) Applicable Laws; (c) International Standards; and (d) to the extent not inconsistent with International Standards, such good and prudent practices as are generally followed in the LNG industry by Reasonable and Prudent Operators of similar LNG liquefaction terminals.
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7.2.3
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The Driftwood LNG Terminal shall include the following:
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(a)
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systems for communications with LNG Tankers;
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(b)
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at least one berth, capable of berthing and mooring an LNG Tanker having a displacement of no more than one hundred forty-nine thousand (149,000) tons, an overall length of no more than one
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(c)
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lighting sufficient to permit loading operations by day or by night, to the extent permitted by Governmental Authorities (it being acknowledged, however, that Seller shall in no event be obligated to allow nighttime berthing operations at the Driftwood LNG Terminal if Seller determines that such operations during nighttime hours could pose safety or operational risks to the Driftwood LNG Terminal, an LNG Tanker, or a Third Party);
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(d)
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facilities capable of loading LNG at an approximate rate of up to twelve thousand (12,000) cubic meters per hour at the Delivery Point, with three (3) LNG loading arms each having a reasonable operating envelope to allow for ship movement in accordance with International Standards;
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(e)
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a vapor return line system of sufficient capacity to allow for transfer of Gas necessary for safe LNG loading operations to take place at the allocated rates described in Section 7.2.3(d);
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(f)
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a suitable gangway allowing access to each LNG Tanker from the Driftwood LNG Terminal;
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(g)
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emergency shut down system capable of interconnecting with an LNG Tanker at berth;
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(h)
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LNG storage facilities;
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(i)
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LNG liquefaction facilities;
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(j)
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qualified and competent personnel, fluent in English to coordinate with the LNG Tanker during loading operations; and
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(k)
|
facilities for the sampling and analysis of LNG.
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7.2.4
|
Services and facilities not provided by Seller include the following: (a) facilities and loading lines for liquid or gaseous nitrogen to service an LNG Tanker; (b) facilities for providing bunkers; (c) facilities for the handling and delivery to the LNG Tanker of ship’s stores, provisions and
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7.3
|
Compatibility of the Driftwood LNG Terminal with LNG Tankers
|
7.3.1
|
Buyer shall ensure, at no cost to Seller, that each of the LNG Tankers is fully compatible with the general specifications set forth in Section 7.2.3 and any modifications made to the Driftwood LNG Terminal that are Required Modifications. Should an LNG Tanker fail materially either to be compatible with the Driftwood LNG Terminal, or to be in compliance with the provisions of Sections 7.5 and 7.6, Buyer shall not employ such LNG Tanker until it has been modified to be so compatible or to so comply.
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7.3.2
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During the period from the Date of Full Operations of a Phase 1 Plant and continuing throughout the Term, Seller shall be entitled to modify the Driftwood LNG Terminal in any manner whatsoever, provided that: (w) such modifications do not render the Driftwood LNG Terminal noncompliant with International Standards; (x) such modifications do not render the Driftwood LNG Terminal incompatible with an LNG Tanker that is compatible with the general specifications set forth in Section 7.2.3; (y) such modifications, once finalized, do not reduce the ability of Seller to make available LNG in accordance with the terms of this Agreement; and (z) such modifications do not otherwise conflict with Seller’s obligations hereunder. Notwithstanding the foregoing, Seller may modify the Driftwood LNG Terminal in a manner that would render it incompatible with an LNG Tanker if such modification is required by and is made pursuant to a change in Applicable Laws, a change in required Approvals, or a change in International Standards (each such modification, a “Required Modification”).
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7.3.3
|
In the event the LNG Tanker fails to be compatible with the Driftwood LNG Terminal due to a modification to the Driftwood LNG Terminal that is not a Required Modification, the actual and documented costs and expenses incurred by Buyer solely as a result of such modification, including as a result of delays in the berthing of the LNG Tanker at the Driftwood LNG Terminal, repositioning of the LNG Tanker, and of the modifications of the LNG Tanker directly caused by such modification shall be reimbursed by Seller to Buyer.
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7.4
|
Buyer Inspection Rights in Respect of the Driftwood LNG Terminal
|
7.4.1
|
Upon giving reasonable advance notice and obtaining Seller’s prior written consent, which consent shall not be unreasonably withheld or delayed, a reasonable number of Buyer’s designated representatives may from time to time (including during the period of construction of the Driftwood LNG Terminal), (x) not more often than once every calendar quarter or (y) following a material change to the Driftwood LNG Terminal (excluding during the period of construction of the Driftwood LNG Terminal), inspect
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7.4.2
|
Buyer shall indemnify and hold Seller and its Affiliates harmless from any Claims and Losses resulting from Buyer’s inspection or audit of the Driftwood LNG Terminal pursuant to Section 7.4.1.
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7.4.3
|
Buyer shall have the right to reject the Driftwood LNG Terminal if it does not comply materially with the provisions of Section 7, provided that:
|
(a)
|
neither the exercise nor the non-exercise of such right shall reduce the responsibility of Seller to Buyer in respect of the Driftwood LNG Terminal and its operation, nor increase Buyer’s responsibilities to Buyer or Third Parties for the same; and
|
(b)
|
without prejudice to Section 14, Seller’s obligations under this Agreement shall not be excused or suspended by reason of the Driftwood LNG Terminal failing to comply materially with the provisions of this Agreement.
|
7.5
|
LNG Tankers
|
7.5.1
|
Buyer shall cause each LNG Tanker to comply with the requirements of this Section 7.5 and the requirements of Section 7.6 in all respects.
|
7.5.2
|
Each LNG Tanker shall comply with all Applicable Laws and International LNG Vessel Standards, including those that relate to seaworthiness, design, safety, environmental protection and navigation, and shall obtain all Approvals required by Governmental Authorities, in each case to enable such LNG Tanker to enter, leave and carry out all required operations at the Driftwood LNG Terminal. Each LNG Tanker shall at all times have on board valid documentation evidencing all such Approvals. Each LNG Tanker shall at all times be in possession of valid documents of compliance and safety management certificates, and shall have an effective management system in operation and an emergency response plan that addresses all identified risks and provides proper controls for dealing with these risks.
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7.5.3
|
Buyer shall be required to obtain towing, escort, line handling, and pilot services, in accordance with this Section 7.5.3. Seller shall cause an Affiliate of Seller to procure tug services at the Driftwood LNG Terminal from a competent and experienced tug services provider. As soon as reasonably practicable after the Affiliate has so contracted for tug services, Seller shall notify Buyer thereof. Prior to the arrival of any LNG Tanker at the Loading Port, Buyer shall cause Transporter or the master of each LNG Tanker (acting on behalf of the ship-owner and charterer) making use of the port or marine facilities at the Loading Port on behalf of Buyer, to enter into a tug services agreement with the designated Affiliate of Seller for Buyer’s procurement, at its sole risk and expense, of tug services at the Driftwood LNG Terminal, which tug services shall include towing and escort services. Such agreement shall provide that the fees for tug services shall be paid by the Transporter to the designated Affiliate of Seller. Fees and other significant terms of the tug services agreement shall be in line with those at similar liquefaction facilities located on the United States Gulf Coast. In the event the Transporter or the master of an LNG Tanker fails to execute a tug services agreement that complies with the requirements of this Section 7.5.3, Seller may refuse to make LNG available and in such event, Buyer shall be deemed to have failed to take the applicable Scheduled Cargo Quantity, and Sections 5.7.2 to 5.7.8 shall apply. Seller shall cause line handling services to be provided at the Driftwood LNG Terminal for Buyer’s procurement at Buyer’s sole risk and expense. Pilot services shall be obtained by Buyer in accordance with the requirements of Governmental Authorities. Without prejudice to Seller’s obligations to secure towing, escort, line handling, and pilot services in accordance with this Section 7.5.3, Seller and its designated Affiliate procuring the tug services shall have no liability to Buyer for the performance
|
7.5.4
|
Buyer shall pay or cause to be paid: (a) all Port Charges directly to the appropriate Person (including reimbursing Seller for any documented Port Charges paid by Seller or Seller’s operator on Buyer’s behalf); and (b) all documented charges payable by reason of any LNG Tanker having to shift from berth at the Driftwood LNG Terminal as a result of the action or inaction of Buyer.
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7.5.5
|
Each LNG Tanker must satisfy the following requirements:
|
(a)
|
Except as otherwise mutually agreed in writing by the Parties, each LNG Tanker shall be compatible with the specifications of the Driftwood LNG Terminal identified in Section 7.2.3 and any modifications to the Driftwood LNG Terminal pursuant to Section 7.3.2, and shall be of a sufficient size to load the applicable Scheduled Cargo Quantity. If Buyer’s LNG Tanker is not capable of loading the applicable Scheduled Cargo Quantity, Buyer shall be deemed to have failed to take the shortfall quantity and the provisions of Sections 5.7.2 to 5.7.8 shall apply, except that Buyer shall not be deemed to have failed to take a shortfall quantity and the provisions of Sections 5.7.2 to 5.7.8 shall not apply if the volume equivalent of the Scheduled Cargo Quantity at the nominated Gross Heating Value has been loaded.
|
(b)
|
Except as otherwise agreed in writing by Seller, which agreement shall not be unreasonably withheld or delayed, each LNG Tanker shall have a gross volumetric capacity between one hundred twenty-five thousand (125,000) cubic meters and two hundred sixteen thousand (216,000) cubic meters.
|
(c)
|
Each LNG Tanker shall be, in accordance with International Standards, (i) fit in every way for the safe loading, handling and carrying of LNG in bulk at atmospheric pressure; (ii) tight, staunch, strong and otherwise seaworthy; and (iii) equipped with facilities for mooring and unmooring and with cargo handling and storage systems (including instrumentation) necessary for the safe loading, handling, carrying and measuring of LNG, in each case in good order and condition.
|
(d)
|
Each LNG Tanker shall at all times be maintained in class with any classification society that is a member of International Association of Classification Societies Ltd. (IACS) and that has experience in the classification of LNG vessels.
|
(e)
|
Each LNG Tanker shall have been constructed to all applicable International Standards (including the International Code for the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk).
|
(f)
|
Each LNG Tanker shall comply with, and shall be fully equipped, supplied, operated, and maintained to comply with, all applicable International Standards and Applicable Laws, including those that relate to seaworthiness, design, safety, environmental protection, navigation, and other operational matters, and all procedures, permits, and approvals of Governmental Authorities for LNG vessels that are required for the transportation and loading of LNG at the Loading Port. Unless approved by Seller in writing, which approval shall not be unreasonably withheld or delayed, an LNG Tanker shall be prohibited from engaging in any maintenance, repair or in-water surveys while berthed at the Driftwood LNG Terminal. Each LNG Tanker shall comply fully with the guidelines of any Governmental Authority of the United States of America.
|
(g)
|
The officers and crew of each LNG Tanker shall have the ability, experience, licenses and training commensurate with the performance of their duties in accordance with internationally accepted standards with which it is customary for Reasonable and Prudent Operators of LNG vessels to comply and as required by Governmental Authorities and any labor organization having jurisdiction over the LNG Tanker or her crew. Without in any way limiting the foregoing, the master, chief engineer, all cargo engineers and all deck officers shall be fluent in written and oral English and shall maintain all records and provide all reports with respect to the LNG Tanker in English.
|
(h)
|
Each LNG Tanker shall have communication equipment complying with applicable regulations of Governmental Authorities and permitting such LNG Tanker to be in constant communication with the Driftwood LNG Terminal, the Vessel Traffic Information System (VTIS) and other vessels in the area.
|
(i)
|
Provided that the Driftwood LNG Terminal supplies a vapor return line meeting the requirements of Section 7.2.3(e), each LNG Tanker shall be capable of loading a full cargo of LNG in a maximum of nineteen (19) hours, in addition to any time for the connecting, cooling, draining, purging and disconnecting of liquid arms.
|
(j)
|
Each LNG Tanker shall procure and maintain Hull and Machinery Insurance and P&I Insurance in accordance with Section 15.6.
|
7.6
|
LNG Tanker Inspections; LNG Tanker Vetting Procedures; Right to Reject LNG Tanker
|
7.6.1
|
During the Term, on prior reasonable notice to Buyer, Seller may, at its sole risk, send its qualified representatives to inspect during normal working hours any LNG Tanker as Seller may consider necessary to ascertain whether the LNG Tanker complies with this Agreement. Seller shall bear all the costs and expenses in connection with any inspection conducted hereunder. Any such inspection may include, as far as is practicable having regard to the LNG Tanker’s operational schedule, examination of the records related to the LNG Tanker’s hull, cargo and ballast tanks, machinery, boilers, auxiliaries and equipment; examination of the LNG Tanker’s deck, engine and official log books; review of records of surveys by the LNG Tanker’s classification society and relevant Governmental Authorities; and review of the LNG Tanker’s operating procedures and performance of surveys, both in port and at sea. Additionally, each LNG Tanker shall have been inspected and reported upon by a SIRE Accredited Inspector within six (6) Months of the time of its initial use at the Driftwood LNG Terminal, and each LNG Tanker shall be reported upon by a SIRE Accredited Inspector once every twelve (12) Months for the first ten (10) years of such LNG Tanker’s useful life and once every six (6) Months thereafter, and each inspection report of such SIRE Accredited Inspector shall show, to the reasonable satisfaction of Seller, no material deficiencies in the safety or operability of such LNG Tanker. Any inspection carried out pursuant to this Section 7.6.1: (a) shall not interfere with, or hinder, any LNG Tanker’s safe and efficient construction or operation; and (b) shall not entitle Seller or any of its representatives to make any request or recommendation directly to Transporter except through Buyer. No inspection (or lack thereof) of an LNG Tanker hereunder shall: (i) modify or amend Buyer’s obligations, representations, warranties, and covenants hereunder; or (ii) constitute an acceptance or waiver by Seller of Buyer’s obligations hereunder.
|
7.6.2
|
Seller shall indemnify and hold Buyer and its Affiliates harmless from any Claims and Losses resulting from Seller’s inspection of any LNG Tanker pursuant to Section 7.6.1.
|
7.6.3
|
Buyer shall comply with all LNG Tanker vetting procedures, as set forth in the Driftwood Marine Operations Manual.
|
7.6.4
|
Seller shall have the right to reject any LNG vessel that Buyer intends to use to take delivery of LNG hereunder at the Driftwood LNG Terminal if such LNG vessel does not comply materially with the provisions of Section 7, provided that:
|
(a)
|
neither the exercise nor the non-exercise of such right shall reduce the responsibility of Buyer to Seller in respect of such LNG vessel
|
(b)
|
Buyer’s obligations under this Agreement shall not be excused or suspended by reason of Buyer’s inability (pursuant to the foregoing) to use a vessel as an LNG Tanker.
|
7.7
|
Port Liability Agreement
|
7.7.1
|
Buyer shall cause Transporter or the master of each LNG Tanker (acting on behalf of the ship-owner and charterer) making use of the port or marine facilities at the Loading Port on behalf of Buyer, to execute a Port Liability Agreement prior to such LNG Tanker’s arrival at the Loading Port. Seller shall engage in good faith consultation with Buyer in the development of the form of the Port Liability Agreement and shall act as a Reasonable and Prudent Operator in developing the form of the Port Liability Agreement. The Port Liability Agreement shall treat Transporter in a non-discriminatory manner in comparison to all other owners and charterers of LNG vessels that use or transit the Loading Port. In the event the master of an LNG Tanker fails to execute the Port Liability Agreement, Buyer shall indemnify and hold Seller and its Affiliates harmless from any Claims brought against, or Losses incurred by Seller or any of its Affiliates arising from such failure. If, as a result of Transporter executing the Port Liability Agreement, Transporter is liable to the LNG Tanker’s P&I Club for an additional premium for the LNG Tanker’s P&I indemnity coverage, and if Buyer is liable to Transporter for such additional premium, then Seller shall pay Buyer for such additional premium, but only to the extent such additional premium relates to such LNG Tanker calling at the Loading Port.
|
7.7.2
|
Subject to Section 7.7.1 and without prejudice to the terms of the Port Liability Agreement and the obligations of Buyer or its Affiliate pursuant to the Partnership Agreement and any equity capital contribution agreement with the Partnership, Seller releases Buyer, its Affiliates and their respective shareholders and members, officers, directors, employees, designees, representatives, and agents from liability to Seller incident to all Claims and Losses that may exist, arise or be threatened currently or in the future at any time following the Effective Date and whether or not of a type contemplated by either Party at any time, brought by any Person for injury to, illness or death of any employee of Seller, or for damage to or loss of the Driftwood LNG Terminal, which injury, illness, death, damage or loss arises out of, is incident to, or results from the performance or failure to perform this Agreement by Buyer, or any of its Affiliates, shareholders and members, officers, directors, employees, designees, representatives and agents.
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7.7.3
|
Subject to Section 7.7.1 and without prejudice to the terms of Section 12 or the Port Liability Agreement, Buyer releases Seller, its Affiliates, and their
|
7.7.4
|
The initial form of Port Liability Agreement developed in accordance with Section 7.7.1 may be amended from time to time without consent of Buyer only if after any such amendment the revised terms of such Port Liability Agreement: (a) do not negatively impact Buyer’s ability to perform its obligations or exercise its rights under this Agreement, (b) treat Transporter in a non-discriminatory manner in comparison to all other owners and charterers of LNG vessels that use or transit the Loading Port, and (c) do not prevent any Transporter from obtaining full P&I indemnity coverage from a P&I Club, and such P&I indemnity will cover all Claims and Losses pursuant to such Port Liability Agreement in relation to use of the Loading Port by an LNG Tanker. Seller shall promptly notify Buyer upon any amendment to the Port Liability Agreement and shall provide a copy of the amended Port Liability Agreement to Buyer.
|
7.8
|
Driftwood Marine Operations Manual
|
7.9
|
Loading of LNG Tankers
|
7.9.1
|
Except as otherwise specifically provided, the terms of this Section 7.9 shall apply to all LNG Tankers calling at the Driftwood LNG Terminal.
|
7.9.2
|
Not later than twenty (20) Days prior to the ETA, Buyer shall notify, or cause the master of the LNG Tanker to notify, Seller of the information specified below (“In-Transit First Notice”):
|
(a)
|
name of the LNG Tanker, the volume of LNG onboard at the time the relevant notice is issued and the operator and owner of such LNG Tanker;
|
(b)
|
any operational deficiencies in the LNG Tanker that may affect either its performance at the Driftwood LNG Terminal or its approach to or departure from the Driftwood LNG Terminal;
|
(c)
|
whether the LNG Tanker will require cool-down service upon arrival at the Driftwood LNG Terminal, and, if so, the quantity of LNG (in cubic meters) estimated to be required for such cool-down service;
|
(d)
|
whether the LNG Tanker will require gas-up service upon arrival at the Driftwood LNG Terminal; and
|
(e)
|
the ETA.
|
7.9.3
|
With respect to each LNG Tanker scheduled to call at the Driftwood LNG Terminal, Buyer shall give, or cause the master of the LNG Tanker to give, to Seller the following notices. Each such notice shall include details of any significant change in the information provided pursuant to Section 7.9.2 (as updated pursuant to subsequent notices) since the immediately preceding notice was given (including, subject to Sections 7.6 and 8.3, any change to the LNG Tanker):
|
(a)
|
A second notice (“In-Transit Second Notice”), which shall be sent ninety-six (96) hours prior to the ETA set forth in the In-Transit First Notice or as soon as practicable prior to such ETA if the sea time between the point of departure of the LNG Tanker and the Loading Port is less than ninety-six (96) hours, stating the LNG Tanker’s then ETA. If, thereafter, such ETA changes by more than six (6) hours, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Seller notice of the corrected ETA;
|
(b)
|
A third notice (“In-Transit Third Notice”), which shall be sent forty-eight (48) hours prior to the ETA set forth in the In-Transit Second Notice (as corrected), confirming or amending such ETA. If, thereafter, such ETA changes by more than six (6) hours, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Seller notice of the corrected ETA;
|
(c)
|
A fourth notice (“In-Transit Fourth Notice”), which shall be sent twenty-four (24) hours prior to the ETA set forth in the In-Transit Third Notice (as corrected), confirming or amending such ETA. If, thereafter, such ETA changes by more than three (3) hours, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Seller notice of the corrected ETA;
|
(d)
|
A fifth notice (“In-Transit Final Notice”), which shall be sent twelve (12) hours prior to the ETA set forth in the In-Transit Fourth Notice (as corrected), confirming or amending such ETA. If, thereafter, such ETA changes by more than one (1) hour, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Seller notice of the corrected ETA; and
|
(e)
|
An NOR, which shall be given at the time prescribed in Section 7.10.
|
7.9.4
|
Except where prohibited by any applicable Governmental Authority or International Standards, Buyer shall have the right to cause an LNG Tanker to burn Gas as fuel during operations at the Driftwood LNG Terminal (including while conducting cargo loading operations). Any quantity of Gas burned as fuel pursuant to this Section 7.9.4 shall be taken into account for purposes of determining the quantity of LNG loaded in accordance with Exhibit A.
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7.9.5
|
Seller shall have a right to use or dispose of, or cause to be used or disposed of, all Gas returned to the Driftwood LNG Terminal during cool-down or gas-up operations without compensation to Buyer. Seller shall have a right to use or dispose of, or cause to be used or disposed of, all Gas returned to the Driftwood LNG Terminal during loading operations, provided that Gas returned to the Driftwood LNG Terminal during loading shall be deducted for determining the quantity loaded for Buyer’s account in accordance with Paragraph 11(c)(ii) of Exhibit A and the formula set out in Paragraph 12.4 of Exhibit A.
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7.10
|
Notice of Readiness
|
7.10.1
|
The master of an LNG Tanker or such master’s agent shall tender the NOR to Seller upon arrival at the PBS or any customary anchorage location for LNG vessels seeking to transit the Calcasieu ship channel, provided that such
|
7.10.2
|
A valid NOR given under Section 7.10.1 shall become effective as follows:
|
(a)
|
For an LNG Tanker that tenders its NOR according to Section 7.10.1 at any time prior to or during the Delivery Window allocated to such LNG Tanker, an NOR shall become effective when the LNG Tanker is all fast at a berth of the Driftwood LNG Terminal and has received all required Approvals from the relevant Governmental Authorities (including security clearance from the US Coast Guard); and
|
(b)
|
For an LNG Tanker that tenders its NOR according to Section 7.10.1 at any time after the expiration of the Delivery Window, an NOR shall become effective when, after Seller has notified the LNG Tanker that Seller is ready to receive the LNG Tanker, the LNG Tanker is all fast at a berth of the Driftwood LNG Terminal and has received all required Approvals from the relevant Governmental Authorities (including security clearance from the US Coast Guard).
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7.11
|
Berthing Assignment
|
7.11.1
|
Seller shall berth or caused to be berthed an LNG Tanker which has tendered NOR before or during its Delivery Window promptly after Seller determines such LNG Tanker will not interfere with berthing and loading of any other scheduled LNG vessel with a higher berthing priority but in no event later than the end of the Delivery Window allocated to such LNG Tanker; provided, however, that if Seller does not berth or cause to be berthed such LNG Tanker by the end of the Delivery Window, (a) Seller shall use reasonable efforts to berth or cause to be berthed such LNG Tanker within forty-eight (48) hours after the end of its Delivery Window, (b) Buyer shall use reasonable efforts to cause the LNG Tanker to remain at the PBS or applicable anchorage location for the Driftwood LNG Terminal, and (c) Buyer’s sole recourse and remedy during such period of time for Seller’s failure to berth or cause to be berthed the LNG Tanker by the end of the Delivery Window shall be demurrage pursuant to Section 7.12.3, payment for excess boil-off pursuant to Section 7.12.4 and provision by Seller of a cool-down pursuant to Section 7.16.1(b). If (i) at any time during such forty-eight (48) hour period, Buyer is no longer able, having used reasonable efforts, to cause the LNG Tanker to remain at the PBS or applicable anchorage location, or (ii) the forty-eight (48) hour period expires, and in either case Seller has not berthed or caused to be berthed the LNG Tanker, and such delay is not attributable to a reason that would result in an extension of Allotted Laytime under Section 7.12.1,
|
7.11.2
|
For each delivery window period, Seller shall determine or cause to be determined the berthing priority among LNG vessels which have tendered NOR before or during their scheduled delivery window as follows:
|
(a)
|
The first berthing priority for a delivery window period shall be for an LNG vessel scheduled for such delivery window period. Priority within this group shall be given to the LNG vessel which has first tendered to Seller its NOR. Once an LNG vessel achieves a first berthing priority pursuant to this Section 7.11.2(a) or 7.11.2(c), such LNG vessel shall maintain such priority until such LNG vessel is berthed, so long as its tendered NOR does not become invalid pursuant to Section 7.13.1;
|
(b)
|
The second berthing priority for a delivery window period shall be for an LNG vessel scheduled for arrival before such delivery window period, which tendered to Seller its NOR prior to or during its scheduled delivery window but which was unable to proceed to berth for reasons not attributable to Buyer, the Transporter, the LNG Tanker or its master, crew, owner or operator. Priority within this group shall be given to the LNG vessel which has first tendered to Seller its NOR; and
|
(c)
|
The third berthing priority for a delivery window period shall be for an LNG vessel scheduled for arrival after such delivery window period. Priority within this group shall be given to the LNG vessel which has first tendered to Seller its NOR. An LNG vessel with third berthing priority pursuant to this Section 7.11.2(c) will achieve a first berthing priority on its scheduled delivery window pursuant to Section 7.11.2(a) if such LNG vessel has not been berthed prior to such date, so long as its tendered NOR does not become invalid pursuant to Section 7.13.1.
|
7.11.3
|
If an LNG Tanker tenders NOR after the end of its Delivery Window, Seller shall use reasonable efforts to berth or cause to be berthed such LNG Tanker as soon as reasonably practical; provided, however, that, unless otherwise agreed with Buyer, Seller shall have no obligation to use such efforts to berth or cause to be berthed an LNG Tanker that tenders NOR more than forty-eight (48) hours after the end of its Delivery Window. If, as of the forty-
|
7.12
|
Berth Laytime
|
7.12.1
|
The allotted laytime for each LNG Tanker (“Allotted Laytime”) shall be thirty (30) hours, as extended by any period of delay that is caused by:
|
(a)
|
reasons attributable to a Governmental Authority, Buyer, the Transporter, the LNG Tanker or its master, crew, owner or operator or any Third Party outside of the reasonable control of Seller, Seller’s Affiliates or the operator of the Driftwood LNG Terminal, including security clearance review by the US Coast Guard;
|
(b)
|
Force Majeure or Adverse Weather Conditions;
|
(c)
|
unscheduled curtailment or temporary discontinuation of operations at the Driftwood LNG Terminal necessary for reasons of safety, except to the extent such unscheduled curtailment or temporary discontinuation of operations is due to Seller’s failure to operate and maintain its facilities as a Reasonable and Prudent Operator;
|
(d)
|
time at berth during any cool-down pursuant to Sections 7.16.1(a) and (c);
|
(e)
|
time at berth during any gas-up pursuant to Section 7.17;
|
(f)
|
nighttime transit restrictions, if applicable;
|
(g)
|
time to transit from the PBS or anchorage location, as applicable, to a berth of the Driftwood LNG Terminal, in the event Actual Laytime commences pursuant to Section 7.12.2(a)(1); and
|
(h)
|
any other interruption impacting the Loading Port, including the unavailability or delay of Pilot services, tugs, and other similar interruptions, to the extent such interruptions are not caused by reasons attributable to Seller or the operator of the Driftwood LNG Terminal.
|
7.12.2
|
The actual laytime for each LNG Tanker (“Actual Laytime”) shall commence (a) if a valid NOR was given pursuant to Section 7.10.1 prior to or during the Delivery Window for such LNG Tanker, the earlier of (1) twelve (12) hours after the later of the start of the Delivery Window and the time
|
7.12.3
|
In the event Actual Laytime exceeds Allotted Laytime (as extended pursuant to Section 7.12.1) (“Demurrage Event”), Seller shall pay to Buyer as liquidated damages demurrage in USD (which shall be prorated for a portion of a Day) at a rate equal to the Demurrage Rate. The “Demurrage Rate” initially shall be USD eighty thousand (US$80,000) per Day and shall be revised by Seller each Contract Year ending in five (5) or zero (0) (e.g., 2025 and 2030) to reflect the average of three quotes, each received from a different ship broker, for then-current long-term LNG vessel charter rates. Seller shall determine such revised Demurrage Rate and notify Buyer of such revised Demurrage Rate at least thirty (30) days prior to the start of such Contract Year ending in five (5) or zero (0), as applicable, and such revised Demurrage Rate shall be effective starting on the first day of such Contract Year ending in five (5) or zero (0), as applicable, and continuing for five (5) years until subsequently revised pursuant to this Section 7.12.3. If a Demurrage Event occurs, Buyer shall invoice Seller for such demurrage within ninety (90) Days pursuant to Section 10.1.5.
|
7.12.4
|
In the event (a) an LNG Tanker is delayed in berthing at the Driftwood LNG Terminal or commencement of LNG loading due to an event occurring at or near the Driftwood LNG Terminal (including at the berth) and for a reason that would not result in an extension of Allotted Laytime under Section 7.12.1, and (b) as a result thereof, the commencement of LNG loading is delayed beyond twenty-four (24) hours after the LNG Tanker (i) has either tendered a valid NOR or berthed and (ii) is cleared by the Governmental Authorities to commence loading (“Excess Boil-Off Event”), Seller shall pay Buyer as liquidated damages an amount, on account of excess boil-off. The amount payable shall equal (x) the total number of full hours by which commencement of LNG loading is delayed beyond the aforementioned twenty-four (24) hour period, multiplied by (y) initially, the Provisional Transfer Price for purposes of a Provisional Invoice, and thereafter the Final Transfer Price upon the determination thereof for purposes of the Final Invoice (in accordance with Section 10.1.6), multiplied by (z) a quantity in MMBtu equal to (A) the guaranteed daily ballast rate of boil-off of such LNG Tanker pursuant to Form B of the relevant charterparty or similar description provided by the LNG Tanker’s owner in the relevant charterparty, divided by (B) twenty-four (24) hours per Day, multiplied by (C) the cargo containment capacity of such LNG Tanker (in MMBtu), provided that in no event shall such quantity of MMBtu exceed the quantity of LNG onboard
|
7.13
|
LNG Tanker Not Ready for LNG Loading; Excess Laytime
|
7.13.1
|
Except in the event Seller provides a cool-down service under Section 7.16.1(b), if any LNG Tanker previously believed to be ready for LNG loading is determined to be not ready after being berthed for reasons not attributable to Seller or Seller’s Affiliates or the operator of the Driftwood LNG Terminal, the NOR shall be invalid, and Seller may direct the LNG Tanker’s master to vacate the berth and proceed to anchorage, whether or not other LNG vessels are awaiting the berth, unless it appears reasonably certain to Seller that such LNG Tanker can be made ready without disrupting the overall berthing schedule of the Driftwood LNG Terminal or operations of the Driftwood LNG Terminal. When an unready LNG Tanker at anchorage becomes ready for LNG loading, its master shall notify Seller. If, as a result of such LNG Tanker not being ready to berth for reasons not attributable to Seller or Seller’s Affiliate or the operator of the Driftwood LNG Terminal, Buyer fails to take a cargo, the provisions of Sections 5.7.2 to 5.7.8 shall apply. If, as a result of such LNG Tanker not being ready to berth for reasons attributable to Seller or Seller’s Affiliates, Buyer fails to take a cargo, Seller shall be deemed to have failed to make available such cargo and the provisions of Sections 5.6.2 to 5.6.4 shall apply.
|
7.13.2
|
The following shall apply with respect to berthing:
|
(a)
|
An LNG Tanker shall complete LNG loading and vacate the berth as soon as possible but not later than thirty (30) hours from the time the LNG Tanker is all fast at the berth and has received all required Approvals from the relevant Governmental Authorities (including security clearance from the US Coast Guard). Such thirty (30) hour-period (“Allowed Laytime”) shall be extended by any period of delay that is caused by:
|
(i)
|
reasons attributable to a Governmental Authority, Seller, the operator of the Driftwood LNG Terminal or any Third Party outside the reasonable control of Buyer, the Transporter, the LNG Tanker or its master, crew, owner or operator;
|
(ii)
|
Force Majeure or Adverse Weather Conditions;
|
(iii)
|
unscheduled curtailment or temporary discontinuation of operations at the Driftwood LNG Terminal necessary for reasons of safety, except to the extent such unscheduled curtailment or temporary discontinuation of operations is
|
(iv)
|
time at berth during any cool-down pursuant to Sections 7.16.1(a)-(c);
|
(v)
|
time at berth during any gas-up pursuant to Section 7.17;
|
(vi)
|
nighttime transit restrictions, if applicable;
|
(vii)
|
tidal restrictions; and
|
(viii)
|
any other interruption impacting the Loading Port, including the unavailability or delay of Pilot services, tugs, and other similar interruptions, to the extent such interruptions are not caused by reasons attributable to Buyer, the Transporter, the LNG Tanker or its master, crew, owner or operator.
|
(b)
|
If an LNG Tanker fails to depart at the end of its Allowed Laytime (as extended pursuant to Sections 7.13.2(a)(i)-(viii)), another LNG vessel is awaiting the berth and the LNG Tanker’s continued occupancy of the berth will disrupt the overall berthing schedule of the Driftwood LNG Terminal or operations of the Driftwood LNG Terminal, Seller may direct the LNG Tanker to vacate the berth and proceed to sea at utmost dispatch.
|
(c)
|
If an LNG Tanker fails to depart the berth at the end of its Allowed Laytime (as extended pursuant to Sections 7.13.2(a)(i)-(viii)) and as a result the subsequent LNG vessel is prevented from or delayed in loading, Buyer shall reimburse Seller for any and all actual documented demurrage or excess boil-off that Seller becomes contractually obligated to pay to any Third Party with respect to such subsequent LNG vessel, as a result of the LNG Tanker not completing LNG loading and vacating the berth as required by this Section 7.13.2; provided that Buyer shall not be required to reimburse Seller for any amounts based on a demurrage rate or excess boil-off rate in excess of those specified in Section 7.12.3 and Section 7.12.4, as applicable. Seller shall invoice Buyer for any amounts due under this Section 7.13.2(c) pursuant to Section 10.1.5 within ninety (90) Days after the relevant Delivery Window.
|
(d)
|
In the event an LNG Tanker fails to vacate the berth pursuant to this Section 7.13 and Buyer is not taking actions to cause it to vacate the berth, Seller may effect such removal at the expense of Buyer.
|
7.14
|
LNG Loadings at the Driftwood LNG Terminal
|
7.14.1
|
Seller shall cooperate with Transporters (or their agents) and with the master of each LNG Tanker to facilitate the continuous and efficient loading of LNG hereunder.
|
7.14.2
|
During LNG loading, Seller shall take receipt of, through the Driftwood LNG Terminal vapor return line, Gas in such quantities as are necessary for the safe loading of LNG at such rates, pressures and temperatures as may be required by the design of the LNG Tanker or any standard operating practices of such LNG Tanker, provided such practices conform to International LNG Vessel Standards.
|
7.14.3
|
Promptly after completion of loading of each cargo, Seller shall send or cause to be sent to Buyer a certificate of origin, certificate of quantity, certificate of quality, cargo manifest and bill of lading, together with such other documents concerning the cargo as may reasonably be requested by Buyer.
|
7.14.4
|
Buyer, in cooperation with Seller, shall cause the LNG Tanker to depart safely and expeditiously from the berth upon completion of LNG loading.
|
7.15
|
Cooperation
|
7.16
|
Cool-Down of LNG Tankers
|
7.16.1
|
Buyer shall be solely responsible for ensuring that each LNG Tanker elected by Buyer for taking a cargo arrives at the Driftwood LNG Terminal cold and in a state of readiness. Notwithstanding the foregoing and subject to Section 7.16.2, Seller shall provide cool-down service to LNG Tankers at Buyer’s request as follows:
|
(a)
|
Seller shall use reasonable efforts (taking into account availability of sufficient berth time) to accept Buyer’s request to provide cool-down service for any LNG Tanker, subject to Buyer requesting such cool-down service by notice to Seller as far in advance of the relevant cargo’s Delivery Window as is reasonably practicable but in no case
|
(b)
|
Seller shall provide cool-down service without payment to any LNG Tankers requiring cool-down solely as a result of a delay caused by Seller, but only if such LNG Tanker made no other call between the original Delivery Window and the requested cool-down time.
|
(c)
|
Seller shall use reasonable efforts, contingent on the availability of sufficient berth time and facilities status, to provide cool-down service at any time other than as described in Sections 7.16.1(a)-(b) upon request by Buyer, provided that Buyer shall pay Seller for all LNG provided by Seller for cooling such LNG Tankers in an amount equal to the quantity of LNG provided, multiplied by initially, the Provisional Transfer Price for purposes of a Provisional Invoice, and thereafter the Final Transfer Price upon the determination thereof for purposes of the Final Invoice (in accordance with Section 10.1.5); provided, further, that Seller shall have no obligation to provide such cool-down service if doing so would interfere with a scheduled Delivery Window of Buyer or a scheduled delivery window of any other Person.
|
7.16.2
|
The following shall apply to any cool-down service provided by Seller pursuant to Section 7.16.1:
|
(a)
|
the MMBtu content of the total liquid quantities delivered for cooling, measured before evaporation, shall be determined by reference to the relevant LNG Tanker’s cool-down tables;
|
(b)
|
the Parties will determine by mutual agreement the rates and pressures for delivery of LNG for cool-down, but always in full accordance with safe operating parameters and procedures established by Seller;
|
(c)
|
LNG provided during cool down by Seller pursuant to Section 7.16.1 shall not be applied against the Scheduled Cargo Quantity for the relevant cargo; and
|
(d)
|
unless cool-down services are agreed to be provided in the mitigation of Force Majeure, cool-down service shall not be provided during January, February, March, October, November or December of any Contract Year, provided that if Buyer requests cool-down service during such period, then Seller shall use commercially reasonable efforts to provide cool-down service during such period.
|
7.17
|
Gas-Up of LNG Tankers
|
7.17.1
|
Seller shall use reasonable efforts to obtain all relevant Approvals needed to allow Seller to offer gas-up service to LNG Tankers at the Driftwood LNG Terminal.
|
7.17.2
|
Notwithstanding the first sentence of Section 7.16.1 and subject to Section 7.17.3, to the extent Seller has all relevant Approvals needed to offer gas-up service to LNG Tankers at the Driftwood LNG Terminal and such services is otherwise permitted under Applicable Law, Seller shall provide gas-up service to LNG Tankers at Buyer’s request as follows:
|
(a)
|
Buyer’s request for gas-up service in respect of an LNG Tanker shall be provided at the same time that Buyer requests cool-down service in respect of such LNG Tanker pursuant to Section 7.16.
|
(b)
|
Seller shall use reasonable efforts (taking into account availability of sufficient berth time) to accept Buyer’s request to provide gas-up service for any LNG Tanker, subject to Buyer requesting such gas-up service by notice to Seller as far in advance of the relevant cargo’s Delivery Window as is reasonably practicable but in no case less than thirty (30) Days before the relevant cargo’s Delivery Window, provided that Seller shall accept Buyer’s request to provide a gas-up service if (i) Buyer makes such request by notice at the time Buyer proposes its schedule of receipt of cargoes pursuant to Section 8.1.2 for the relevant Contract Year or (ii) at the time of the request, the Composite ADP for the relevant Contract Year indicates sufficient available berth time to accommodate such gas-up service.
|
(c)
|
Seller shall use reasonable efforts, contingent on the availability of sufficient berth time and facilities status, to provide gas-up service
|
7.17.3
|
The following shall apply to any gas-up service provided by Seller pursuant to Section 7.17.2:
|
(a)
|
the Parties will determine by mutual agreement the rates and pressures for delivery of Gas for gas-up service, but always in full accordance with safe operating parameters and procedures established by Seller;
|
(b)
|
gas-up service shall only be provided to an LNG Tanker that is also entitled to receive, and is receiving, immediately after such gas-up service, cool-down service pursuant to Section 7.16;
|
(c)
|
without prejudice to any amounts owed by Buyer for cool-down service provided pursuant to Section 7.16 to an LNG Tanker that also receives gas-up service pursuant to this Section 7.17, Buyer shall not be obligated to make a payment to Seller for gas-up service;
|
(d)
|
gas-up service shall not be provided during January, February, March, October, November or December of any Contract Year, provided that if Buyer requests gas-up service during such period, then Seller shall use commercially reasonable efforts to provide gas-up service during such period; and
|
(e)
|
gas-up service shall only be available for LNG Tankers under nitrogen purge, provided that the Parties, acting reasonably, will discuss the acceptance of LNG Tankers under inert gas, if Buyer can demonstrate unavailability of nitrogen and if Seller is able to accommodate, including taking into consideration operational and regulatory requirements (in the case of regulatory requirements, as reasonably provided by Seller).
|
8.
|
Annual Delivery Program
|
8.1
|
Programming Information
|
8.1.1
|
No later than one hundred ninety-five (195) Days before the start of each Contract Year, Seller shall provide Buyer with:
|
(a)
|
Seller’s good faith estimate of the Gross Heating Value of LNG to be delivered during such Contract Year; and
|
(b)
|
the Major Scheduled Maintenance Quantity for such Contract Year, if any.
|
8.1.2
|
No later than one hundred twenty-five (125) Days before the start of each Contract Year, Buyer shall notify Seller of Buyer’s proposed schedule of receipt of cargoes for each Month of such Contract Year. Such schedule shall identify sufficient proposed cargoes in order to schedule the full AACQ, and such AACQ shall be distributed across the Contract Year in accordance with Section 5.3. Buyer’s notice shall include the following information:
|
(a)
|
the LNG Tanker (if known) for each proposed cargo;
|
(b)
|
the Scheduled Cargo Quantity for each proposed cargo;
|
(c)
|
the proposed Delivery Window for each cargo;
|
(d)
|
Buyer’s request (if any) for a Round-Up Quantity for such Contract Year; and
|
(e)
|
any other information that may affect annual scheduling.
|
8.1.3
|
Seller shall call a one- or two-day scheduling meeting of Seller and all Partnership Buyers to occur no earlier than one hundred twenty-four (124) Days before the start of each Contract Year and no later than seventy (70) Days before the start of such Contract Year, by providing at least thirty (30) Days’ advance notice thereof to all Partnership Buyers. Unless otherwise agreed by Seller and all Partnership Buyers, the location of the meeting will be in Houston, Texas. Buyer shall use reasonable efforts to attend any such meeting notified by Seller. Any terms proposed, discussed or determined at such meeting shall not be binding on either Party except to the extent included in the Annual Delivery Program promulgated by Seller pursuant to Section 8.2.
|
8.1.4
|
Seller will then notify Buyer no less than ninety-three (93) Days before the start of such Contract Year of Seller’s proposed schedule of cargoes to be made available in each Month of such Contract Year, exercising reasonable
|
(a)
|
the proposed AACQ for the Contract Year;
|
(b)
|
the proposed Round-Up Quantity (if any) or Round-Down Quantity (if any) for the Contract Year;
|
(c)
|
any Round-Down Quantity not taken in the previous Contract Year and carried forward to the current Contract Year;
|
(d)
|
any Round-Up Quantity taken in the previous Contract Year and carried forward as a deduction in the current Contract Year;
|
(e)
|
the Major Scheduled Maintenance Quantity (if any) for the Contract Year identified by Seller pursuant to Section 8.1.1(b);
|
(f)
|
for each cargo:
|
(i)
|
the LNG Tanker (if specified by Buyer);
|
(ii)
|
the Scheduled Cargo Quantity, if any, specified in the notice sent by Buyer pursuant to Section 8.1.2; and
|
(iii)
|
the proposed Delivery Window; and
|
(g)
|
any other information that may affect annual scheduling.
|
8.2
|
Determination of Annual Delivery Program
|
8.2.1
|
No later than ten (10) Days after receipt of Seller’s proposed schedule provided under Section 8.1.4, Buyer shall notify Seller if Buyer desires to consult with Seller regarding the proposed schedule, including (a) if Seller has not requested a Round-Up Quantity pursuant to Section 8.1.4(b), whether Buyer desires to request a Round-Up Quantity in accordance with Section 5.4.2, or (b) if Seller has requested a Round-Up Quantity pursuant to Section 8.1.4(b), whether Buyer is unable, despite its exercise of reasonable efforts, to schedule the receipt of the additional LNG. Seller shall, no later than fifteen (15) Days after receipt of Buyer’s notice, meet and consult with Buyer.
|
8.2.2
|
If, prior to the date that is sixty-eight (68) Days before the start of a Contract Year, the Parties have agreed on a schedule of deliveries for such Contract Year, then Seller shall issue the delivery schedule agreed by the Parties. If the Parties are unable to agree on a schedule of deliveries for such Contract Year, then no later than sixty-eight (68) Days before the start of such Contract Year, Seller shall issue the delivery schedule for such Contract Year containing the information set forth in Section 8.1.4, modified to reflect any changes agreed by the Parties pursuant to Section 8.2.1 and to reflect any changes required by Section 5.4 to Seller’s proposal pursuant to Section 8.1.4(b) for a Round-Up Quantity or Round-Down Quantity. The schedule promulgated by Seller shall reflect the exercise of reasonable efforts by Seller to (i) assign to Buyer Delivery Windows that are as close as reasonably practicable to the Delivery Windows proposed by Buyer pursuant to Section 8.1.2, and (ii) specify the Scheduled Cargo Quantity with respect to each LNG Tanker as notified by Buyer pursuant to Section 8.1.2; provided, that Seller shall have the right to issue a schedule with different terms to the extent required to ensure that the entire AACQ is scheduled and to comply with the other requirements of this Agreement, including the terms of Section 5.3. Such schedule shall indicate which, if any, of the cargoes scheduled thereunder are in respect of Plant that has not yet achieved Full Operations and in such case shall indicate the applicable Plant. Seller shall provide for delivery of the AACQ in accordance with Section 5.3.
|
8.2.3
|
The schedule for deliveries of LNG during the Contract Year established pursuant to this Section 8.2, as amended from time to time in accordance with Section 8.3, is the “Annual Delivery Program” or “ADP”. If Seller fails to issue the schedule provided for in Sections 8.1.4 or 8.2.2, if applicable, then the schedule proposed by Buyer under Section 8.1.2 shall be the ADP for the relevant Contract Year.
|
8.2.4
|
Seller shall combine the ADP with the annual delivery programs of all other Partnership Buyers and provide to Buyer a combined schedule (the “Composite ADP”) showing all delivery windows and scheduled cargo quantities that have been committed by Seller, along with available, uncommitted loading windows at the Driftwood LNG Terminal. Seller shall promptly update the Composite ADP as the ADP is changed pursuant to Section 8.3 or other Partnership Buyers’ annual delivery programs are changed pursuant to their respective LNG sale and purchase agreements.
|
8.2.5
|
All references in Section 8.1 and this Section 8.2 to a specific number of Days prior to the start of a Contract Year shall be construed to mean, for purposes of the First Contract Year, as such number of Days prior to the anticipated Date of Full Operations for Plant 1 as revised by any acceleration thereof by Seller pursuant to Section 4.3.1. In the event of such acceleration, Seller shall be deemed to be in compliance with Section 8.1.1 for purposes
|
8.3
|
Changes to Annual Delivery Program
|
8.3.1
|
Subject to the remainder of this Section 8.3, either Party may request by notice a change in the ADP or Ninety Day Schedule for a Contract Year for any reason.
|
8.3.2
|
As soon as possible after notice has been received pursuant to this Section 8.3, the Parties shall consult with one another in order to examine whether such ADP or Ninety Day Schedule can be revised to accommodate such proposed change(s). Neither Party shall unreasonably withhold or delay its consent to revise the ADP or Ninety Day Schedule in accordance with changes proposed by the other Party; provided that neither Party shall be under any obligation to consent thereto if:
|
(a)
|
in the case of Seller, (i) Seller is unable to agree after the exercise of reasonable efforts to any necessary changes in its arrangements with other Partnership Buyers, (ii) the requested change would impose additional costs (unless Buyer agrees to reimburse such costs) or risks upon Seller, or (iii) the requested change would increase the total quantities scheduled hereunder or decrease the total quantities scheduled hereunder; or
|
(b)
|
in the case of Buyer, (i) Buyer is unable to agree after the exercise of reasonable efforts to any necessary changes in its arrangements with Transporter or Buyer’s customers, (ii) the requested change would impose additional costs (unless Seller agrees to reimburse such costs) or risks upon Buyer, or (iii) the requested change would increase the total quantities scheduled hereunder or decrease the total quantities scheduled hereunder.
|
8.3.3
|
A Party shall not withhold or delay its consent to revise the ADP or Ninety Day Schedule if the proposed change: (a) complies with the terms of this Agreement and Applicable Laws; (b) by the exercise of reasonable efforts on the part of such Party, does not create a material adverse impact on health, safety, environment or the operations of such Party; (c) does not result in unreimbursed increased costs or decreased revenues to such Party; and (d) results in no change to the total quantities scheduled hereunder.
|
8.3.4
|
Upon a scheduling change pursuant to this Section 8.3, the ADP and, if applicable, the Ninety Day Schedule shall be amended accordingly and an updated ADP and, if applicable, an updated Ninety Day Schedule shall promptly be provided in writing by Seller to Buyer.
|
8.4
|
Ninety Day Schedule
|
8.4.1
|
No later than the twentieth (20th) Day of each Month, Seller shall issue a forward plan of deliveries for the three (3)-Month period commencing on the first (1st) Day of the following Month thereafter (e.g., the Ninety Day Schedule for the three (3)-Month period commencing on May 1st shall be issued no later than the twentieth (20th) Day of April) (such plan, as amended from time to time in accordance with procedures set forth in this Agreement, the “Ninety Day Schedule”). The Ninety Day Schedule shall set forth by cargo the forecast pattern of deliveries, including the Delivery Window, LNG Tanker and Scheduled Cargo Quantity for each cargo. In the absence of agreement between the Parties otherwise, the Ninety Day Schedule will maintain the Scheduled Cargo Quantities and Delivery Windows as identified in the Annual Delivery Program.
|
8.4.2
|
Seller shall combine the Ninety Day Schedule with the ninety day schedules of all other Partnership Buyers and provide to Buyer a combined schedule (the “Composite Ninety Day Schedule”) showing all delivery windows and scheduled cargo quantities that have been committed by Seller, along with available, uncommitted loading windows at the Driftwood LNG Terminal. Seller shall promptly update the Composite Ninety Day Schedule as the Ninety Day Schedule is changed pursuant to Section 8.3 or 8.4.1 or other Partnership Buyers’ ninety day schedules are changed pursuant to their respective LNG sale and purchase agreements.
|
9.
|
Transfer Price; Uniform LNG SPAs
|
9.1
|
Provisional Transfer Price
|
Provisional Transfer Price =
|
the lesser of:
|
(a)
|
115% HH + $3.00/MMBtu;
|
(b)
|
HH + [***];
|
9.2
|
Final Transfer Price
|
(a)
|
115% HH + $3.00/MMBtu;
|
(b)
|
HH + [***];
|
9.3
|
Uniform LNG SPAs
|
10.
|
Invoicing and Payment
|
10.1
|
Invoices
|
10.1.1
|
Invoices for Cargoes. Invoices for each cargo made available by Seller and taken by Buyer, together with relevant supporting documents including a certificate of quantity loaded and all relevant information in respect of calculations of the Provisional Transfer Price and the Final Transfer Price as may be reasonably required by Buyer, shall be prepared and delivered by Seller to Buyer promptly following each Delivery Window and receipt of the final inspection certificate applicable to the loading of such cargo. The Provisional Invoice amount shall be the Provisional Transfer Price, multiplied by the quantity of LNG loaded on the LNG Tanker as calculated pursuant to Section 13.5. Each such Provisional Invoice shall be followed by a Final Invoice pursuant to Section 10.1.8(b) as soon as reasonably possible and in any event not later than sixty (60) Business Days after the first Day of Month M for such cargo; the Final Invoice amount shall be the Final Transfer Price, multiplied by the quantity of LNG loaded on the LNG Tanker as calculated pursuant to Section 13.5.
|
10.1.2
|
Invoices for Suspension Fees. Invoices for Suspension Fees shall be prepared and delivered by Seller to Buyer following Seller’s receipt of Buyer’s suspension notice pursuant to Section 5.8.1 for the suspended cargos. Each such invoice shall be, initially, a Provisional Invoice pursuant to Section 10.1.8(a), which shall be followed by a Final Invoice pursuant to Section 10.1.8(b).
|
10.1.3
|
Invoices for Cargo DoP Payments. Invoices for Cargo DoP Payments owed to Buyer by Seller shall be prepared by Buyer and delivered to Seller promptly following the Delivery Window of each affected cargo, and Seller shall give Buyer all reasonable assistance reasonably requested by Buyer in providing relevant information necessary to calculate the Cargo DoP Payments. Each such invoice shall be, initially, a Provisional Invoice pursuant to Section 10.1.8(a), which shall be followed by a Final Invoice pursuant to Section 10.1.8(b).
|
10.1.4
|
Invoices for Cargo Shortfall Payments. Invoices for Cargo Shortfall Payments owed to Seller by Buyer shall be prepared by Seller and delivered to Buyer promptly following the Delivery Window for each affected cargo. Each such invoice shall be, initially, a Provisional Invoice pursuant to Section 10.1.8(a), which shall be followed by a Final Invoice pursuant to Section 10.1.8(b). Invoices for any amounts owed to Buyer by Seller pursuant to Section 5.7.5, 5.7.6 or 5.7.7 shall be prepared by Seller and delivered to Buyer as soon as reasonably practicable.
|
10.1.5
|
Invoices for Various Sums Due. In the event that any sums are due from one Party to the other Party under Section 7.5.4(b), 7.12.3, 7.12.4, 7.13.2(c), 7.16.1, 10.3.3, 10.4.1, 11.5, 12.3.1, or 12.3.2 of this Agreement, the Party to whom such sums are owed shall furnish an invoice therefor, describing in reasonable detail the basis for such invoice and providing relevant documents supporting the calculation thereof. To the extent Section 10.1.8(a)(i), (ii) or (iii) apply to such invoice, such invoice shall be, initially, a Provisional Invoice pursuant to Section 10.1.8(a), which shall be followed by a Final Invoice pursuant to Section 10.1.8(b).
|
10.1.6
|
Invoices for Other Sums Due. In the event that any sums are due from one Party to the other Party under this Agreement, other than for a reason addressed in Section 10.1.1 through 10.1.5, the Party to whom such sums are owed shall furnish an invoice therefor, describing in reasonable detail the basis for such invoice and providing relevant documents supporting the calculation thereof. To the extent Section 10.1.8(a)(i), (ii) or (iii) apply to such invoice, such invoice shall be, initially, a Provisional Invoice pursuant to Section 10.1.8(a), which shall be followed by a Final Invoice pursuant to Section 10.1.8(b).
|
10.1.7
|
Notice. Invoices shall be sent in accordance with Section 24.
|
10.1.8
|
Provisional Invoices.
|
(a)
|
In the event (i) an invoice required to be issued hereunder includes a calculation based on the Provisional Transfer Price or any portion thereof and the information required to calculate the Final Transfer Price or portion thereof is not available; (ii) a rate or index used in
|
(b)
|
If a Provisional Invoice has been issued, the invoicing Party shall issue a final invoice reflecting any credit or debit, as applicable, to the Provisional Invoice as soon as reasonably practicable after the information necessary to compute the final amount of the payment has been obtained by such Party (“Final Invoice”). The settlement amount for a Final Invoice shall equal the difference between the amount of the Provisional Invoice and the amount of the Final Invoice, and such settlement amount shall be applied in the next invoice issued pursuant to Section 10.1.1 as a payment to the applicable Party or, if earlier, upon the termination of this Agreement.
|
(c)
|
If a Final Invoice has previously been issued in respect of a Provisional Invoice, the invoicing Party shall have a right to issue a revised Final Invoice reflecting any further credit or debit, as applicable, to the Final Invoice as soon as reasonably practicable after the information necessary to compute the final amount of the payment has been obtained by such Party. The settlement amount for a revised Final Invoice shall equal the difference between the amount of the Final Invoice and the amount of the revised Final Invoice, and such settlement amount shall be applied in the next invoice issued pursuant to Section 10.1.1 as a payment to the applicable Party or, if earlier, upon the termination of this Agreement.
|
10.2
|
Payment
|
10.2.1
|
Payments for Cargoes. Invoices issued in accordance with Section 10.1.1 for cargoes made available and taken shall become due and payable by Buyer on the tenth (10th) Day after the date on which Buyer received such invoice.
|
10.2.2
|
Payments for Suspension Fees. Invoices issued in accordance with Section 10.1.2 shall become due and payable by Buyer on the later of (a) the day on which the Delivery Window of the suspended cargo was scheduled to begin, and (b) ten (10) Days after Buyer receives Seller’s invoice.
|
10.2.3
|
Cargo DoP Payments. Invoices issued in accordance with Section 10.1.3 shall become due and payable on the tenth (10th) Day following receipt by Seller.
|
10.2.4
|
Cargo Shortfall Payments. Invoices issued to Buyer in accordance with Section 10.1.4 shall become due and payable on the tenth (10th) Day following receipt by Buyer. Amounts owed by Seller in accordance with Section 10.1.4 shall become due and payable on the tenth (10th) Day following Seller receiving the applicable corresponding payment from the Tellurian Partnership Buyer or pursuant to a Mitigation Sale, as applicable.
|
10.2.5
|
Payments for Other Sums Due. An invoice issued pursuant to Section 10.1.5 or 10.1.6 shall be paid by the paying Party thereunder not later than twenty (20) Days after receipt of such invoice.
|
10.2.6
|
Payment Method. All invoices shall be settled by payment in USD of the sum due by wire transfer of immediately available funds to an account with the bank designated by the other Party in accordance with Section 10.2.7.
|
10.2.7
|
Designated Bank. Each Party shall designate a bank in a location reasonably acceptable to the other Party for payments under this Agreement. Initially a Party shall designate its bank by notice to the other Party prior to the later of (a) the date thirty (30) Days after the Effective Date and (b) the Date of Substantial Completion of Plant 1, and thereafter not less than thirty (30) Days before any redesignation is to be effective.
|
10.2.8
|
Payment Date. If any invoice issued pursuant to Section 10.1 would result in a Party being required to make a payment on a Day that is not a Payment Business Day, then the due date for such invoice shall be the immediately succeeding Payment Business Day.
|
10.3
|
Disputed Invoice
|
10.3.1
|
Payment Pending Dispute. Absent manifest error, each Party invoiced pursuant to Section 10.1.1, 10.1.2, 10.1.3, 10.1.4, or 10.1.5 shall pay all disputed and undisputed amounts due under such invoice without netting or offsetting. In the case of manifest error, the correct amount shall be paid disregarding such error, and necessary correction and consequent adjustment shall be made within five (5) Business Days after agreement or determination of the correct amount.
|
10.3.2
|
Timing. Except with respect to Sections 1.3, 10.3.4, and 14, any invoice may be contested by the receiving Party only pursuant to Section 10.5 or if, within a period of thirteen (13) Months after its receipt thereof, that Party serves notice to the other Party questioning the correctness of such invoice. Subject to Section 10.5, if no such notice is served, the invoice shall be deemed correct and accepted by both Parties.
|
10.3.3
|
Interest. The Party who invoiced and received payment of a sum, subsequently determined not to have been payable under this Agreement to such Party, shall pay interest to the other Party on such amount, at a rate per annum equal to two percent (2%) above LIBOR (as in effect on the Day when such sum was originally paid) on and from the Day when such sum was originally paid until the date of its repayment, provided that, without prejudice to the other terms of this Agreement, if such period lasts longer than ninety (90) Days, the applicable LIBOR rate for each successive term of ninety (90) Days during that period shall be that in effect on the first (1st) Day of that ninety (90) Day period. Interest shall accrue from Day to Day and be calculated on the basis of a three hundred sixty (360) Day year.
|
10.3.4
|
Measurement or Analyzing Errors. Any errors found in an invoice or credit note which are caused by the inaccuracy of any measuring or analyzing equipment or device shall be corrected in accordance with Exhibit A hereto, as applicable, and shall be settled in the same manner as is set out above in this Section 10.3.
|
10.4
|
Delay in Payment
|
10.4.1
|
Interest. If either Party fails to make payment of any sum as and when due under this Agreement, it shall pay interest thereon to the other Party at a rate per annum equal to two percent (2%) above LIBOR (as in effect on the Day when such sum was originally due) on and from the Day when payment was due until the date of payment, provided that, without prejudice to the other terms of this Agreement, if such period lasts longer than ninety (90) Days, the applicable LIBOR rate for each successive term of ninety (90) Days during that period shall be that in effect on the first (1st) Day of that ninety
|
10.4.2
|
Costs and Expenses. Subject to Section 20.1.12, each Party shall bear its own costs (including attorneys’ or experts’ fees or costs) in respect of enforcement of such Party’s rights in any Dispute proceeding as a result of the other Party failing to perform or failing timely to perform its obligations under this Agreement including failing timely to make any payment in accordance with this Agreement.
|
10.5
|
Audit Rights
|
11.
|
Taxes
|
11.1
|
Responsibility
|
11.2
|
Seller Taxes
|
(a)
|
solely on account of the corporate existence of Seller or its Affiliates;
|
(b)
|
in respect of the property, revenue, income, or profits of Seller or its Affiliates (other than Taxes required to be deducted or withheld by Buyer from or in respect of any payments (whether in cash or in kind) under this Agreement);
|
(c)
|
subject to Section 11.5, in the United States of America or any political subdivision thereof, that may be levied or assessed upon the export, loading, storage, processing, transfer, transport, ownership of title, or delivery of LNG, up to and at the Delivery Point; and
|
(d)
|
payable by Buyer by reason of a failure by Seller to properly deduct, withhold or pay any Taxes described in Section 11.4.
|
11.3
|
Buyer Taxes
|
(a)
|
solely on account of the corporate existence of Buyer or its Affiliates;
|
(b)
|
in respect of the property, revenue, income, or profits of Buyer or its Affiliates (other than Taxes required to be deducted or withheld by Seller from or in respect of payments (whether in cash or in kind) under this Agreement);
|
(c)
|
in the United States of America (or any political subdivision thereof) or in any jurisdiction in which any of Buyer’s Discharge Terminals are located (or any political subdivision thereof), or any jurisdiction through which any LNG Tanker transits or on which any LNG Tanker calls (or any political subdivision thereof), in each case that may be levied or assessed upon the sale, use, purchase, import, unloading, export, loading, storage, processing, transfer, transport, ownership of title, receipt or delivery of LNG after the Delivery Point; and
|
(d)
|
payable by Seller by reason of a failure by Buyer to properly deduct, withhold or pay any Taxes described in Section 11.4.
|
11.4
|
Withholding Taxes
|
11.5
|
Transfer Taxes
|
11.6
|
Mitigation and Cooperation
|
11.7
|
Refunds
|
12.
|
Quality
|
12.1
|
Specification
|
Minimum Gross Heating Value
|
1000 Btu/SCF
|
Maximum Gross Heating Value
|
1150 Btu/SCF
|
Minimum methane (C1)
|
84.0 MOL%
|
Maximum H2S
|
0.25 grains per 100 SCF
|
Maximum Sulfur
|
1.35 grains per 100 SCF
|
Maximum N2
|
1.5 MOL%
|
Maximum Ethane (C2)
|
11 MOL%
|
Maximum Propane (C3)
|
3.5 MOL%
|
Maximum Butane (C4) and heavier
|
2 MOL%
|
12.2
|
Determining LNG Specifications
|
12.3
|
Off-Specification LNG
|
12.3.1
|
If Seller, acting as a Reasonable and Prudent Operator, determines prior to loading of a cargo that the LNG is expected not to comply with the Specifications (“Off-Spec LNG”) upon loading, Seller shall, as soon as reasonably practicable, suspend loading and shall give notice to Buyer of the
|
(a)
|
Buyer shall use reasonable efforts, including coordinating with the Transporter and the operator of the Discharge Terminal, to accept such LNG where the LNG would be acceptable to the Transporter and the operator of the Discharge Terminal, each of them acting in their sole discretion (unless Transporter or such operator is Buyer or an Affiliate of Buyer), and would not prejudice the safe and reliable operation of any LNG Tanker, the Discharge Terminal, and any downstream facilities being supplied regasified LNG; Buyer shall notify Seller within twenty-four (24) hours of receipt of Seller’s notice whether Buyer is so able to accept such LNG;
|
(b)
|
if Buyer can accept delivery of such cargo, then Buyer shall take delivery of such cargo, and Seller shall reimburse Buyer for all reasonable documented direct costs incurred by Buyer (including direct costs owed to any Affiliate of Buyer, Transporter, and the operator of the Discharge Terminal) in transporting and treating such Off-Spec LNG to meet the Specifications (or to otherwise make such LNG marketable); provided, however, the Seller’s liability shall not exceed twenty percent (20%) of the Transfer Price Ceiling for such cargo, multiplied by the quantity (in MMBtu) of the Off-Spec LNG; and
|
(c)
|
if Buyer determines in good faith that it cannot, using reasonable efforts, receive such cargo, or that Buyer anticipates that it might be liable for costs that would not otherwise be reimbursed pursuant to Section 12.3.1(b), then Buyer shall be entitled to reject such cargo by giving Seller notice of rejection within forty-eight (48) hours of the Buyer’s receipt of Seller’s notice, and Buyer shall be relieved of its obligation to load such cargo, Seller shall be deemed to have failed to make available such cargo and Section 5.6.2 shall apply in respect of such cargo.
|
12.3.2
|
If Off-Spec LNG is delivered to Buyer without Buyer being made aware of the fact that such Off-Spec LNG does not comply with the Specifications, or without Buyer being made aware of the actual extent to which such Off-Spec LNG does not comply with the Specifications, then upon Buyer or Seller becoming aware that the LNG is Off-Spec LNG and following prompt notice thereof to the other Party, Seller shall immediately suspend loading operations (if applicable) pending a determination by Buyer and:
|
(a)
|
if Buyer is able, using reasonable efforts, to transport and treat the Off-Spec LNG to meet the Specifications (or to otherwise make such LNG marketable) within the cost limitations set forth in this Section
|
(b)
|
if Buyer determines in good faith that it cannot, using reasonable efforts, transport and treat such Off-Spec LNG to meet the Specifications (or to make such LNG marketable) within the cost limitations set forth in Section 12.3.2(a), then: (i) Buyer shall be entitled to reject such Off-Spec LNG by giving Seller notice of such rejection as soon as practicable, and in any case within ninety-six (96) hours after (A) Seller notifies Buyer that such LNG is Off-Spec LNG and the actual extent to which such Off-Spec LNG does not comply with the Specifications or (B) Buyer becomes aware that such LNG is Off-Spec LNG, whichever occurs first; (ii) Buyer shall be entitled to dispose of the loaded portion of such Off-Spec LNG (or regasified LNG produced therefrom) in any manner that Buyer, acting in accordance with the standards of a Reasonable and Prudent Operator, deems appropriate; and (iii) Seller shall reimburse Buyer in respect of and indemnify and hold Buyer harmless from all direct loss, damages, costs and expenses incurred by Buyer, any Affiliate of Buyer, Transporter or the operator of the Discharge Terminal (if, and only to the extent that, Buyer is contractually liable to such operator) as a result of the delivery of such Off-Spec LNG, including in connection with the handling, treatment or safe disposal of such Off-Spec LNG or other LNG being held at the Discharge Terminal or being carried onboard the LNG Tanker which was contaminated by it, cleaning or clearing the LNG Tanker and Discharge Terminal, and damage caused to the LNG Tanker and Discharge Terminal.
|
12.3.3
|
If Buyer rejects a cargo in accordance with Section 12.3.1(c) or 12.3.2(b), Seller shall be deemed to have failed to make available such cargo, and the Scheduled Cargo Quantity for such cargo shall be treated as a Cargo DoP Quantity resulting in a Cargo DoP Payment under Section 5.6.2. If Buyer accepts a cargo of Off-Spec LNG in accordance with Section 12.3.1(b) or transports and treats a cargo of Off-Spec LNG in accordance with Section
|
13.
|
Measurements and Tests
|
13.1
|
LNG Measurement and Tests
|
13.2
|
Parties to Supply Devices
|
13.2.1
|
Buyer shall supply, operate and maintain, or cause to be supplied, operated and maintained, suitable gauging devices for the LNG tanks of the LNG Tanker, as well as pressure and temperature measuring devices, in accordance with Section 13.3 and Exhibit A, and any other measurement, gauging or testing devices which are incorporated in the structure of such LNG Tanker or customarily maintained on shipboard.
|
13.2.2
|
Seller shall supply, operate and maintain, or cause to be supplied, operated and maintained, devices required for collecting samples and for determining quality and composition of the delivered LNG, in accordance with Section 13.3 and Exhibit A, and any other measurement, gauging or testing devices which are necessary to perform the measurement and testing required hereunder at the Loading Port.
|
13.3
|
Selection of Devices
|
13.4
|
Tank Gauge Tables of LNG Tanker
|
13.5
|
Gauging and Measuring LNG Volumes Loaded
|
13.6
|
Samples for Quality Analysis
|
13.7
|
Quality Analysis
|
13.8
|
Operating Procedures
|
13.8.1
|
Prior to carrying out measurements, gauging and analyses hereunder, the Party responsible for such operations shall notify the designated representative(s) of the other Party, allowing such representative(s) a reasonable opportunity to be present for all operations and computations; provided, however, that the absence of such representative(s) after notification and reasonable opportunity to attend shall not affect the validity of any operation or computation thereupon performed.
|
13.8.2
|
At the request of either Party, any measurements, gauging and/or analyses provided for in Sections 13.5, 13.6, 13.7 and 13.10.1 shall be witnessed and verified by an independent surveyor agreed in writing by the Parties. The results of verifications and records of measurement shall be maintained in accordance with the terms of Exhibit A.
|
13.9
|
MMBtu Quantity Delivered
|
13.10
|
Verification of Accuracy and Correction for Error
|
13.10.1
|
Each Party shall test and verify the accuracy of its devices at intervals to be agreed between the Parties. In the case of gauging devices of the LNG Tanker, such tests and verifications shall take place during each scheduled dry-docking, provided that the interval between such dry dockings shall not exceed five (5) years. Indications from any redundant determining devices
|
13.10.2
|
Permissible tolerances of the measurement, gauging and testing devices shall be as described in Exhibit A.
|
13.11
|
Costs and Expenses
|
13.11.1
|
Except as provided in this Section 13.11, all costs and expenses for testing and verifying measurement, gauging or testing devices shall be borne by the Party whose devices are being tested and verified; provided, however, that representatives of the Parties attending such tests and verifications shall do so at the cost and risk of the Party they represent.
|
13.11.2
|
In the event that a Party inspects or requests the testing/verification of any of the other Party’s devices on an exceptional basis in each case as provided in Section 13.10.1, the Party requesting the testing/verification shall bear all costs thereof; provided, however, that in the event that such testing or verification discloses that the other Party’s devices fail to comply with the requirements of this Agreement, all costs and expenses for such testing and verification of the devices that failed to comply shall be borne by the Party whose devices were tested.
|
13.11.3
|
The costs of the independent surveyor:
|
(a)
|
requested by a Party in accordance with Section 13.8.2 or paragraph 3(a) of Exhibit A shall be borne by the requesting Party; and
|
(b)
|
referred to in Section 13.9 shall be borne equally by Buyer and Seller.
|
14.
|
Force Majeure
|
14.1
|
Force Majeure
|
14.1.1
|
Force Majeure may include circumstances of the following kind, provided that such circumstances satisfy the definition of Force Majeure set forth above:
|
(a)
|
acts of God, a Governmental Authority, or a public enemy;
|
(b)
|
subject to Section 14.6, strikes, lockout, or other industrial action;
|
(c)
|
wars, blockades or civil disturbances of any kind; epidemics, actual or reasonably forecasted adverse weather or sea conditions, fires, explosions, arrests and restraints of governments or people; acts of terrorism, acts of piracy and serious threat of piracy;
|
(d)
|
the breakdown or failure of, freezing of, breakage or accident to, or the necessity for making repairs or alterations to any facilities or equipment;
|
(e)
|
in respect of Seller: (i) loss of, accidental damage to, or inaccessibility to or inoperability of (x) the Driftwood LNG Terminal or any Connecting Pipeline or (y) the liquefaction and loading facilities at the alternate source agreed by the Parties pursuant to Section 3.1.2 but only with respect to those cargoes which Buyer has agreed may be supplied from such alternate source, and subject to Section 14.2.4; and (ii) any event that would constitute an event of force majeure under an agreement between Seller and the operator or operators of any Connecting Pipeline for Gas transportation services, provided however, that an event of force majeure affecting a party to any such agreement shall constitute Force Majeure under this Agreement only to the extent such event meets the definition of Force Majeure in this Section 14.1;
|
(f)
|
in respect of Buyer, events affecting the ability of any LNG Tanker to receive and transport LNG including the unavailability of tug services, subject to Section 14.2.3; and
|
(g)
|
the withdrawal, denial, or expiration of, or failure to obtain, any Approval.
|
14.1.2
|
Nothing in this Section 14.1 shall be construed to require a Party to observe a higher standard of conduct than that required of a Reasonable and Prudent Operator as a condition to claiming the existence of Force Majeure.
|
14.2
|
Limitations on Force Majeure
|
14.2.1
|
Indemnity and Payment Obligations. Notwithstanding Section 14.1, no Force Majeure shall relieve, suspend, or otherwise excuse either Party from performing any obligation to indemnify, reimburse, hold harmless or otherwise pay the other Party under this Agreement.
|
14.2.2
|
Events Not Force Majeure. The following events shall not constitute Force Majeure:
|
(a)
|
a Party’s inability to finance its obligations under this Agreement or the unavailability of funds to pay amounts when due in the currency of payment;
|
(b)
|
the unavailability of, or any event affecting, any facilities at or associated with any loading port or unloading port (or downstream of an unloading port) other than the Driftwood LNG Terminal or any alternate source agreed by the Parties pursuant to Section 3.1.2;
|
(c)
|
the ability of Seller or Buyer to obtain better economic terms for LNG or Gas from an alternative supplier or buyer, as applicable;
|
(d)
|
changes in either Party’s market factors, default of payment obligations or other commercial, financial or economic conditions, including failure or loss of any of Buyer’s or Seller’s Gas, LNG or electric power markets;
|
(e)
|
breakdown or failure of plant or equipment caused by normal wear and tear or by a failure to properly maintain such plant or equipment;
|
(f)
|
the non-availability or lack of economically obtainable Gas reserves;
|
(g)
|
in the case of Seller, any event arising from an action or omission of (i) any Affiliate of Seller, (ii) the contractor or sub-contractor or agent of Seller or Affiliate of Seller, or (iii) the operator of the Driftwood LNG Terminal, in each case to the extent that, had Seller taken such action or experienced such event, such event would not constitute Force Majeure pursuant to the provisions of this Section 14;
|
(h)
|
in the case of Buyer, any event arising from an action or omission of (i) any Affiliate of Buyer, (ii) any customer of Buyer scheduled to take delivery of LNG from Buyer at the Driftwood LNG Terminal, (iii) the contractor or sub-contractor or agent of Buyer or Affiliate of Buyer, (iv) the operator of any part of any Discharge Terminal or (v) any Transporter, in each case to the extent that, had Buyer taken such
|
(i)
|
the loss of interruptible or secondary firm transportation service on a Connecting Pipeline or any pipeline upstream of a Connecting Pipeline unless the cause of such loss was an event that would satisfy the definition of Force Majeure hereunder and primary in-the-path transportation service on such pipeline was also interrupted as a result of such event.
|
14.2.3
|
LNG Tankers.
|
(a)
|
Force Majeure relief in respect of Buyer for an event described in Section 14.1.1(f) affecting a specific LNG Tanker shall only be available with respect to cargoes that are scheduled to be transported on such LNG Tanker in the applicable Ninety Day Schedule or ADP for such Contract Year, or (to the extent that the ADP for the following Contract Year has been issued by Seller) in the ADP for the following Contract Year.
|
(b)
|
With respect to any particular cargo, Buyer shall not be entitled to claim Force Majeure relief for an event affecting the LNG Tanker nominated for such cargo if such LNG Tanker was affected by, or should reasonably have been expected by Buyer or its customer utilizing such LNG Tanker (in each case acting as a Reasonable and Prudent Operator) to be affected by, such Force Majeure event at the time it was nominated by Buyer pursuant to Section 8.1.2 or Section 8.3, as applicable, for the relevant cargo.
|
14.2.4
|
Alternative Sources. Force Majeure relief in respect of Seller for an event described in Section 14.1.1(e) affecting an alternate LNG source or facility thereat agreed between the Parties pursuant to Section 3.1.2 shall (a) only be available with respect to the cargo that is scheduled to be loaded at the Loading Port of such facility in the ADP or applicable Ninety Day Schedule for such Contract Year or, to the extent that the ADP for the following Contract Year has been issued, in the ADP for such following Contract Year and (b) not be available for an event affecting such alternate LNG source or facility thereat if such alternate LNG source or facility thereat was affected by such Force Majeure at the time it was nominated by Seller pursuant to Section 3.1.2 for the applicable cargo.
|
14.3
|
Notification
|
14.3.1
|
the estimated period during which performance may be prevented, interfered with or delayed, including, to the extent known or ascertainable, the estimated extent of such reduction in performance;
|
14.3.2
|
the particulars of the program to be implemented to resume normal performance under this Agreement; and
|
14.3.3
|
the anticipated quantity of LNG scheduled in the ADP for a Contract Year that will not be made available or taken, as the case may be, by reason of Force Majeure.
|
14.4
|
Measures
|
14.5
|
No Extension of Term
|
14.6
|
Settlement of Industrial Disturbances
|
15.
|
Liabilities and Indemnification
|
15.1
|
General
|
15.2
|
Limitations on Liability
|
15.2.1
|
Incidental and Consequential Losses. Neither Party shall be liable to the other Party hereunder as a result of any act or omission in the course of or in connection with the performance of this Agreement, for or in respect of:
|
(a)
|
any indirect, incidental, consequential or exemplary losses;
|
(b)
|
any loss of income or profits;
|
(c)
|
except as expressly provided in this Agreement, any failure of performance or delay in performance to the extent relieved by the application of Force Majeure in accordance with Section 14; or
|
(d)
|
except as expressly provided in this Agreement, any losses arising from any claim, demand or action made or brought against the other Party by a Third Party.
|
15.2.2
|
Exclusive Remedies. A Party’s sole liability, and the other Party’s exclusive remedy, arising under or in connection with Sections 5.6, 5.7, 5.8, 7.12.3, 7.12.4, 7.13.2(c) and 12.3 and this Section 15 shall be as set forth in each such provision, respectively.
|
15.2.3
|
Liquidated Damages. The Parties agree that it would be impracticable to determine accurately the extent of the loss, damage and expenditure that either Party would have in the circumstances described in Sections 5.6, 5.7, 5.8, 7.12.3 and 7.12.4. Accordingly, the Parties have estimated and agreed in advance that the sole liability, and exclusive remedy for such circumstances shall be as provided in those Sections, and neither Party shall have additional liability as a result of any such circumstances. Each amount described in or determined by the provisions of Sections 5.6, 5.7, 5.8, 7.12.3 and 7.12.4 is intended to represent a genuine pre-estimate by the Parties as to the loss or damage likely to be suffered by the Party receiving the payment or benefit in each such circumstance. Each Party waives any right to claim or assert, in any arbitration or expert determination pursuant to Section 20 in any action with respect to this Agreement, that any of the exclusive remedies set forth in Sections 5.6, 5.7, 5.8, 7.12.3 and 7.12.4 do not represent a genuine pre-estimate by the Parties as to the loss or damage likely to be suffered by the Party receiving the payment or benefit in each such circumstance or otherwise are not valid and enforceable damages.
|
15.2.4
|
Express Remedies. The Parties agree that Section 15.2.1 shall not impair a Party’s obligation to pay the amounts specified in, or the validity of or limitations imposed by, Sections 5.6, 5.7, 5.8, 7.12.3, 7.12.4, 7.13.2(c) and 12.3. Neither Party shall have a right to make a claim for actual damages (whether direct or indirect) or other non-specified damages under any
|
15.2.5
|
Remedies in Contract. Except with respect to claims for injunctive relief under Sections 18 and 20.1.11, a Party’s sole remedy against the other Party for nonperformance or breach of this Agreement or for any other claim of whatsoever nature arising out of or in relation to this Agreement shall be in contract and no Party shall be liable to another Party (or its Affiliates and contractors and their respective members, directors, officers, employees and agents) in respect of any damages or losses suffered or claims which arise out of, under or in any alleged breach of statutory duty or tortious act or omission or otherwise.
|
15.2.6
|
Seller Aggregate Liability for Certain Events.
|
(a)
|
Notwithstanding any provision herein to the contrary, the maximum Seller Aggregate Liability as of any given date in respect of any occurrence or series of occurrences shall not exceed the Seller Liability Cap.
|
(b)
|
“Seller Aggregate Liability” shall mean, as of any date of determination, any and all liability of Seller to Buyer under this Agreement, excluding (i) any Seller liabilities under this Agreement for which Seller has already made payment to Buyer as of such date and (ii) any liability caused by the gross negligence or willful misconduct of the Partnership, Seller, any other Affiliate of the Partnership, the General Partner or Seller’s Affiliates.
|
(c)
|
The “Seller Liability Cap”, as of any given time of determination, shall be an amount (in USD) equal to USD one hundred million (US$100,000,000), multiplied by the ACQ at such time, divided by fifty-two million one hundred seventy thousand (52,170,000) MMBtu.
|
15.2.7
|
EXCEPT FOR WARRANTIES OF TITLE AND NO LIENS OR ENCUMBRANCES, AND SUBJECT TO THE PROVISIONS OF THIS AGREEMENT CONCERNING THE QUALITY OF LNG TO BE DELIVERED UNDER THIS AGREEMENT, SELLER EXPRESSLY NEGATES ANY WARRANTY WITH RESPECT TO LNG DELIVERED UNDER THIS AGREEMENT, WRITTEN OR ORAL, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY WITH RESPECT TO CONFORMITY TO SAMPLES, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.
|
15.3
|
Buyer’s Credit; Credit Support
|
15.3.1
|
At all times prior to any assignment of this Agreement by Original Buyer, Original Buyer shall have no obligation to maintain any credit rating or provide any guaranty, letter of credit or other credit support in connection with this Agreement; provided that, if required for financing, Buyer shall use its commercial reasonable efforts to provide information or documents confirming its ability to perform its financial obligations under this Agreement.
|
15.3.2
|
If Buyer assigns or novates this Agreement to a Third Party who is not an Affiliate of Original Buyer (such Third Party, the “Assignee Buyer”) and if in connection with such assignment or novation Lenders require in accordance with Section 21.2.2(c) that Assignee Buyer have an Acceptable Credit Rating or a Guaranty be provided to Seller prior to such novation or assignment, then at all times following such assignment or novation (including following any subsequent assignments or novations thereafter), and only then, the following terms of this Section 15.3.2 shall apply:
|
(a)
|
Assignee Buyer shall at all times on and after such assignment or novation maintain an Acceptable Credit Rating or provide or cause to be provided a Guaranty. In the event any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder no longer has an Acceptable Credit Rating or is otherwise no longer an Acceptable Guarantor, Assignee Buyer shall provide a replacement Guaranty or, if unable to comply with the requirements of a Guaranty because no Guarantor exists, an alternative credit support reasonably acceptable to Lenders at all times. Any Guaranty or alternative credit support required to be delivered to Seller pursuant to this Section 15.3.2(a) shall be delivered within thirty (30) Days of such requirement arising.
|
(b)
|
If Assignee Buyer, or Assignee Buyer’s Guarantor, merges or consolidates, sells all or substantially all of its assets, or novates or assigns this Agreement or the Guaranty, as applicable, then the surviving entity, asset purchaser or assignee, as the case may be, shall either have and maintain an Acceptable Credit Rating or assume in writing or by operation of law the obligations of Assignee Buyer or Assignee Buyer’s Guarantor, as applicable. In the event the foregoing conditions are not satisfied, Assignee Buyer shall provide a replacement Guaranty or, if unable to comply with the requirements of a Guaranty because no Guarantor exists, an alternative credit support reasonably acceptable to Lenders at all times. Any Guaranty or alternative credit support required to be delivered to Seller pursuant
|
15.4
|
Third Party Liability
|
(a)
|
If any Third Party shall notify either Party (the “Indemnified Party”) with respect to any matter (a “Third Party Claim”) that may give rise to a claim for indemnification against the other Party (the “Indemnifying Party”) under this Section 15 or elsewhere in this Agreement, then the Indemnified Party shall promptly notify the Indemnifying Party thereof in writing; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is materially prejudiced.
|
(b)
|
The Indemnifying Party will have the right to defend against the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying Party notifies the Indemnified Party in writing within fifteen (15) Days after the Indemnified Party has given notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against any damages the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim; (ii) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third Party Claim and fulfill its indemnification obligations hereunder; (iii) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief; (iv) settlement of, or an adverse judgment with respect to, the Third Party Claim is not in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice materially adverse to the continuing business interests of the Indemnified Party; and (v) the Indemnifying Party conducts the defense of the Third Party Claim actively and diligently.
|
(c)
|
So long as the Indemnifying Party is conducting the defense of the Third Party Claim in accordance with Section 15.4(b): (i) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim; (ii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (which
|
(d)
|
In the event any of the conditions in Section 15.4(b) is or becomes unsatisfied, or a conflict arises, with regard to the Third Party Claim, between the Indemnified Party and the Indemnifying Party in respect of such Third Party Claim the Indemnified Party may defend against the Third Party Claim in any manner it reasonably may deem appropriate.
|
(e)
|
If either Party gives notice to the other Party of a Third Party Claim pursuant to the provisions of Section 15.4(a) and the notified Party does not give notice that it will indemnify the notifying Party in the manner set out in Section 15.4(b), the notifying Party shall nevertheless send copies of all pleadings and other documents filed in any such Third Party lawsuit to the notified Party and such notified Party may have the right to participate in the defense of the Third Party Claim in any manner permitted by Applicable Law.
|
15.5
|
Seller’s Insurance
|
15.5.1
|
Seller shall obtain and maintain or cause to be obtained and maintained:
|
(a)
|
insurance for the Driftwood LNG Terminal to the extent required by Applicable Law, and
|
(b)
|
additional insurance, as is reasonably necessary, against such other risks and at such levels as a Reasonable and Prudent Operator of a liquefaction terminal would obtain.
|
15.5.2
|
Seller shall obtain or cause to be obtained the insurance required by Section 15.5.1 from a reputable insurer (or insurers) reasonably believed to have adequate financial reserves. Seller shall exercise its best efforts, or shall cause the applicable insured Person to use its best efforts, to collect any amount due under such insurance policies.
|
15.6
|
Buyer’s Insurance
|
(a)
|
Hull and Machinery Insurance shall be placed and maintained with reputable marine underwriters; and
|
(b)
|
Protection & Indemnity Insurance (“P&I Insurance”) shall be placed and maintained with full P&I indemnity cover in the ordinary course from a P&I Club, and such LNG Tanker shall be entered for insurance with a P&I Club, including pollution liability standard for LNG vessel and Certificate of Financial Responsibility.
|
16.
|
Safety
|
16.1
|
General
|
16.2
|
Third Parties
|
17.
|
Exchange of Information
|
18.
|
Confidentiality
|
18.1
|
Duty of Confidentiality
|
(a)
|
already known to the recipient from sources other than the other Party;
|
(b)
|
already in the public domain (other than as a result of a breach of the terms of this Section 18.1); or
|
(c)
|
independently developed by the recipient;
|
18.2
|
Permitted Disclosures
|
18.2.1
|
The Confidential Information, which either Party receives from the other, may be disclosed by such Party:
|
(a)
|
to any Person who is such Party’s legal counsel, other professional consultant or adviser, Transporter, insurer, accountant or construction contractor; provided that such disclosure is solely to assist the purpose for which such Person was so engaged;
|
(b)
|
if required and to the extent required by the rules of any recognized stock exchange or agency established in connection therewith upon which the securities of such Party or a company falling within Section 18.2.1(f) are quoted;
|
(c)
|
as may be required under federal or state securities or “Blue Sky” Applicable Laws;
|
(d)
|
if required and to the extent required by the U.S. Department of Energy;
|
(e)
|
without limiting Section 18.2.1(c) or (d), if required and to the extent required by any Applicable Laws, or such Party becomes legally required (by oral questions, interrogatories, request for information or documents, orders issued by any Governmental Authority or any other process) to disclose such information, or to the extent necessary to enforce Section 20.1or 20.2 or any arbitration award or binding decision of an Expert (including by filing Confidential Information in proceedings before a court or other competent judicial authority) or to enforce other rights of a party to the Dispute; provided that such Party shall, to the extent practicable, give prior notice to the other
|
(f)
|
to any of its Affiliates or shareholders (or any company involved in the provision of advice to any such Affiliate or shareholder for the purposes of this Agreement) and any employee of that Party or of a company to which disclosure is permitted pursuant to this Section 18.2.1(f);
|
(g)
|
to any bona fide intended assignees of a Party’s interests under this Agreement;
|
(h)
|
to any Third Party as reasonably necessary for the performance of a Party’s obligations under this Agreement;
|
(i)
|
to any arbitrator appointed in accordance with Section 20.1.4, to any Expert appointed pursuant to Section 20.2.1, or to any other party to an arbitration or Expert proceeding arising under or in connection with this Agreement, or to any witnesses appearing in an arbitration under Section 20.1or in an Expert proceeding under Section 20.2; or
|
(j)
|
to any Person reasonably required to see such Confidential Information, including the Lenders, in connection with any bona fide financing or offering or sale of securities by Seller, Buyer or any Affiliate or shareholder of any of the foregoing, to comply with the disclosure or other requirements of Applicable Law or of financial institutions or other participants (including rating agencies) in such financing, offering or sale.
|
18.2.2
|
The Party making the disclosure shall ensure that any Person listed in Section 18.2.1(a), (f), (g), (h), (i) or (j) to which it makes the disclosure (excluding any legal counsel, arbitrator or Expert already bound by confidentiality obligations) undertakes to hold such Confidential Information subject to confidentiality obligations equivalent to those set out in Section 18.1. In the case of a disclosure to an employee made in accordance with Section 18.2.1(f), the undertaking shall be given by the company on its own behalf and in respect of all its employees.
|
18.2.3
|
Seller may disclose to the other Partnership Buyers Confidential Information related to scheduling, operations and other relevant technical information to comply with Seller’s performance of Section 8, but only to the extent necessary to ensure the effective implementation thereof.
|
18.2.4
|
No press release concerning the execution of this Agreement or resolution of any Disputes shall be issued unless agreed by the Parties.
|
18.3
|
Confidential Information Remedy
|
18.4
|
Duration of Confidentiality
|
19.
|
Default and Termination
|
19.1
|
Right to Suspend Performance
|
19.1.1
|
Seller Right to Suspend. If (a) Seller has not received payment in respect of any amounts due under any invoice(s) under this Agreement totaling in excess of USD fifteen million (US$15,000,000) within five (5) Business Days after the due date thereof, (b) any Termination Event in favor of a Seller right to terminate has arisen, or (c) (i) Buyer or its Affiliate is a Defaulting Partner (as defined in the Partnership Agreement) pursuant to Section 4.3(c)(i) of the Partnership Agreement and the Default Forfeiture Units (as defined in the Partnership Agreement) are Class A Units issued to such Defaulting Partner pursuant to the equity capital contribution agreement entered into by such Defaulting Partner in respect of the Phase 1 Project or (ii) Buyer or its Affiliate is a Defaulting Partner (as defined in the Partnership Agreement) pursuant to Section 4.3(c)(ii) of the Partnership Agreement, then without prejudice to any other rights and remedies of Seller arising under this Agreement or by Applicable Laws or otherwise, upon giving five (5) Business Days’ notice to Buyer:
|
(a)
|
Seller may suspend delivery of any or all subsequent cargoes until (a) the amounts outstanding under such invoice(s) and interest thereon have been paid in full, (b) the circumstances constituting the Termination Event have been fully remedied or have ceased to apply or (c) Buyer or its Affiliate, as applicable, is no longer a Defaulting Partner (as defined in the Partnership Agreement), as the case may be.
|
(b)
|
In the event of such suspension, Buyer shall not be relieved of any of its obligations under this Agreement, and the provisions of Sections 5.7.2 to 5.7.8 shall apply with respect to each cargo scheduled in the Annual Delivery Program or Ninety Day Schedule which is not delivered during the suspension.
|
(c)
|
During the period that such suspension is effective, Seller shall have no obligation to make available LNG to Buyer.
|
19.1.2
|
Buyer Right to Suspend. Without prejudice to its rights under the Termination Event set out in Section 19.2.1(j), if a Bankruptcy Event has occurred with respect to Seller, Buyer shall be entitled to suspend by written notice to Seller the performance of its obligations under this Agreement to take and pay for LNG, until such Bankruptcy Event is no longer occurring with respect to Seller. Buyer’s right to suspend shall not excuse Buyer from paying for LNG taken prior to the suspension.
|
19.2
|
Elective Termination
|
19.2.1
|
Termination Events. The following circumstances (each, a “Termination Event”) shall give rise to the right for the specified Party (and only the specified Party) to terminate this Agreement:
|
(a)
|
by Seller, if Buyer fails to pay or cause to be paid any amount or amounts in the aggregate due under this Agreement that are in excess of USD fifty million (US$50,000,000), for a period of ten (10) Days or more following the due date of the relevant invoice;
|
(b)
|
by Seller, if Buyer fails to comply with Section 15.3 or 21;
|
(c)
|
by Seller, violation by Buyer of Section 25.1;
|
(d)
|
by the non-violating Party, if a Party violates Section 25.2(b) or breaches the representation and warranty in Section 25.5;
|
(e)
|
by Seller, if (i) Buyer or any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder fails to execute any Direct Agreement with Seller’s or its Affiliate’s respective Lenders within sixty (60) Days after Seller’s request thereof, provided that such Direct Agreement complies with the requirements in Sections 21.4.2(a) to (g), or (ii) in connection with any financing, Buyer fails to provide to the Lenders and the Lenders’ Agent any legal opinion that complies with the requirements in Section 21.4.1 within sixty (60) Days after Seller’s request thereof;
|
(f)
|
by Seller, if a Bankruptcy Event has occurred with respect to Buyer or any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder;
|
(g)
|
by Seller, if (i) Buyer or its Affiliate is a Defaulting Partner (as defined in the Partnership Agreement) pursuant to Section 4.3(c)(i) of the Partnership Agreement and the Default Forfeiture Units (as defined in the Partnership Agreement) are Class A Units issued to such Defaulting Partner pursuant to the equity capital contribution agreement entered into by such Defaulting Partner in respect of the Phase 1 Project, and the General Partner exercises its rights pursuant to the Partnership Agreement to cause all such Class A Units to be redeemed or forfeited in accordance with the Partnership Agreement or (ii) Buyer or its Affiliate is a Defaulting Partner (as defined in the Partnership Agreement) pursuant to Section 4.3(c)(ii) of the Partnership Agreement, and the General Partner exercises its rights pursuant to the Partnership Agreement to cause all of such Defaulting Partner’s Class A Units to be redeemed or forfeited in accordance with the Partnership Agreement;
|
(h)
|
by either Party, if Buyer’s or its Affiliate’s entire interest in the Partnership is redeemed pursuant to Section 4.17 of the Partnership Agreement;
|
(i)
|
by Seller, if Buyer’s or its Affiliate’s entire interest in the Partnership is redeemed pursuant to Section 4.8 of the Partnership Agreement;
|
(j)
|
by Buyer, if a Bankruptcy Event has occurred in respect of Seller;
|
(k)
|
by Buyer, if each of the following conditions have been satisfied: (i) the amount of indebtedness for purposes of constructing the Phase 1 Project (including any such indebtedness that has been refinanced from time to time) has been paid in full, (ii) Buyer or its Affiliate has contributed to the Partnership its entire capital commitment for the Phase 1 Project and (iii) one (1) or more events of Force Majeure affecting Seller prevent Seller from making available an aggregate quantity of LNG equal to or greater than fifty percent (50%) of the AACQ during any given twelve (12) Month period;
|
(l)
|
by Buyer, if each of the following conditions have been satisfied: (i) the amount of indebtedness for purposes of constructing the Phase 1 Project (including any such indebtedness that has been refinanced from time to time) has been paid in full, (ii) Buyer or its Affiliate has contributed to the Partnership its entire capital commitment for the Phase 1 Project, and (iii) Seller fails to make available an aggregate amount of LNG in accordance with Section 5.6 resulting in Cargo
|
19.2.2
|
Notice of Termination Event. Upon the occurrence of any Termination Event, the terminating Party may give notice thereof to the other Party, specifying in reasonable detail the nature of such Termination Event.
|
19.2.3
|
Timing of Elective Termination. Except with respect to the Termination Events described in Section 19.2.4, at any time after the expiry of a period of forty-five (45) Days after the terminating Party gave notice of a Termination Event pursuant to Section 19.2.2, unless the circumstances constituting the Termination Event have been fully remedied or have ceased to apply, the terminating Party may terminate this Agreement with immediate effect by giving notice of such termination to the other Party.
|
19.2.4
|
Certain Termination Events. Upon the occurrence of a Termination Event described in Section 19.2.1(b), (c), (d), (e), (f), (g), (h), (i), (j), (k) or (l), the terminating Party’s notice pursuant to Section 19.2.2 shall terminate this Agreement immediately.
|
19.3
|
Rights Accrued Prior to Termination
|
(a)
|
the rights and liabilities of the Parties accrued prior to or as a result of such termination; and
|
(b)
|
claims for breaches of Section 18 that occur during the three (3) year period after termination of this Agreement.
|
19.4
|
Liability in Connection with Certain Termination Rights
|
19.5
|
Final Reconciliation
|
19.6
|
Survival
|
20.
|
Dispute Resolution and Governing Law
|
20.1
|
Dispute Resolution
|
20.1.1
|
Arbitration. Any Dispute (other than a Dispute submitted to an Expert under Section 20.2.1) shall be exclusively and definitively resolved through final and binding arbitration, it being the intention of the Parties that this is a broad form arbitration agreement designed to encompass all possible claims and disputes under this Agreement.
|
20.1.2
|
Rules. The arbitration shall be conducted in accordance with the International Arbitration Rules of the American Arbitration Association (“AAA”) (as then in effect).
|
20.1.3
|
Number of Arbitrators. The arbitral tribunal shall consist of three (3) arbitrators, who shall endeavor to complete the final hearing in the arbitration within six (6) Months after the appointment of the last arbitrator.
|
20.1.4
|
Method of Appointment of the Arbitrators. If there are only two (2) parties to the Dispute, then each party to the Dispute shall appoint one (1) arbitrator within thirty (30) Days of the filing of the arbitration, and the two arbitrators so appointed shall select the presiding arbitrator within thirty (30) Days after the latter of the two arbitrators has been appointed by the parties to the Dispute. If a party to the Dispute fails to appoint its party-appointed arbitrator or if the two party-appointed arbitrators cannot reach an agreement on the presiding arbitrator within the applicable time period, then the AAA shall serve as the appointing authority and shall appoint the remainder of the three arbitrators not yet appointed. If the arbitration is to be conducted by three arbitrators and there are more than two parties to the Dispute, then within thirty (30) Days of the filing of the arbitration, all claimants shall jointly appoint one arbitrator and all respondents shall jointly appoint one arbitrator, and the two arbitrators so appointed shall select the presiding arbitrator within thirty (30) Days after the latter of the two arbitrators has been appointed by the parties to the Dispute. For the purposes of appointing arbitrators under this Section 20, (a) Buyer, any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder and all Persons whose interest in this Agreement derives from them shall be considered as one party; and (b) Seller and all Persons whose interest in this Agreement derives from Seller shall be considered as one party. If either all claimants or all respondents fail to make a joint appointment of an arbitrator, or if the party-
|
20.1.5
|
Consolidation. If multiple arbitration proceedings are initiated under this Agreement, any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder, one or more other LNG sale and purchase agreements entered into by Seller, one or more equity capital contribution agreements entered into by the Partnership, the Partnership Agreement, the General Partner LLC Agreement, any management and advisory services agreement entered into by the Partnership or the LNG Marketing Agreement, the subject matters of which are related by common questions of law or fact and which could result in conflicting awards or obligations, then any party to any such dispute may request prior to the appointment of the arbitrators for such multiple or subsequent disputes that all such proceedings be consolidated into a single arbitral proceeding. Such request shall be directed to the AAA, which shall consolidate appropriate proceedings into a single proceeding unless consolidation would result in undue delay for the arbitration of the disputes.
|
20.1.6
|
Place of Arbitration. Unless otherwise agreed by all parties to the Dispute, the place of arbitration shall be New York, New York.
|
20.1.7
|
Language. The arbitration proceedings shall be conducted in the English language, and the arbitrators shall be fluent in the English language.
|
20.1.8
|
Entry of Judgment. The award of the arbitral tribunal shall be final and binding. Judgment on the award of the arbitral tribunal may be entered and enforced by any court of competent jurisdiction. The Parties agree that service of process for any action to enforce an award may be accomplished according to the procedures of Section 24, as well as any other procedure authorized by law.
|
20.1.9
|
Notice. All notices required for any arbitration proceeding shall be deemed properly given if given in accordance with Section 24.
|
20.1.10
|
Qualifications and Conduct of the Arbitrators. All arbitrators shall be and remain at all times wholly impartial, and, once appointed, no arbitrator shall have any ex parte communications with any of the parties to the Dispute concerning the arbitration or the underlying Dispute other than communications directly concerning the selection of the presiding arbitrator, where applicable.
|
20.1.11
|
Interim Measures. Any party to the Dispute may apply to a court in New York, New York, for interim measures (a) prior to the constitution of the
|
20.1.12
|
Costs and Attorneys’ Fees. The arbitral tribunal is authorized to award costs of the arbitration in its award, including: (a) the fees and expenses of the arbitrators; (b) the costs of assistance required by the tribunal, including its experts; (c) the fees and expenses of the administrator; (d) the reasonable costs for legal representation of a successful party; and (e) any such costs incurred in connection with an application for interim or emergency relief and to allocate those costs between the parties to the Dispute. The costs of the arbitration proceedings, including attorneys’ fees, shall be borne in the manner determined by the arbitral tribunal.
|
20.1.13
|
Interest. The award shall include pre-award and post-award interest, as determined by the arbitral tribunal, from the date of any default or other breach of this Agreement until the arbitral award is paid in full. Interest shall accrue at a rate per annum equal to two percent (2%) above LIBOR (as in effect on the Day such award was issued) on and from the Day when such award was issued until the date of its repayment, provided that, without prejudice to the other terms of this Agreement, if such period lasts longer than ninety (90) Days, the applicable LIBOR rate for each successive term of ninety (90) Days during that period shall be that in effect on the first (1st) Day of that ninety (90) Day period. Interest shall accrue from Day to Day and be calculated on the basis of a three hundred sixty (360) Day year.
|
20.1.14
|
Currency of Award. The arbitral award shall be made and payable in USD, free of any Tax or other deduction.
|
20.1.15
|
Waiver of Challenge to Decision or Award. To the extent permitted by law, the Parties hereby waive any right to appeal from or challenge any arbitral decision or award, or to oppose enforcement of any such decision or award before a court or any Governmental Authority, except with respect to
|
20.1.16
|
Confidentiality. Any arbitration or Expert determination relating to a Dispute (including an arbitral award, a settlement resulting from an arbitral award, documents exchanged or produced during an arbitration or Expert proceeding, and memorials, briefs or other documents prepared for the arbitration or Expert proceeding) shall be Confidential Information subject to the confidentiality provisions of Section 18; provided, however, that breach of such confidentiality provisions shall not void any settlement, determination or award.
|
20.2
|
Expert Determination
|
20.2.1
|
General. In the event of any disagreement between the Parties regarding a measurement under Exhibit A hereto or any other Dispute which the Parties agree to submit to an Expert (in either case, a “Measurement Dispute”), the Parties hereby agree that such Measurement Dispute shall be resolved by an Expert selected as provided in this Section 20.2.1. The Expert is not an arbitrator of the Measurement Dispute and shall not be deemed to be acting in an arbitral capacity. The Party desiring an expert determination shall give the other Party notice of the request for such determination. If the Parties are unable to agree upon an Expert within ten (10) Days after receipt of the notice of request for an expert determination, then, upon the request of either of the Parties, the International Centre for Expertise of the International Chamber of Commerce (“ICC”) shall appoint such Expert and shall administer such expert determination through the ICC’s Rules for Expertise. The Expert shall be and remain at all times wholly impartial, and, once appointed, the Expert shall have no ex parte communications with either of the Parties concerning the expert determination or the underlying Measurement Dispute. The Parties shall cooperate fully in the expeditious conduct of such expert determination and provide the Expert with access to all facilities, books, records, documents, information and personnel necessary to make a fully informed decision in an expeditious manner. Before issuing a final decision, the Expert shall issue a draft report and allow the Parties to comment on it. The Expert shall endeavor to resolve the Measurement Dispute within thirty (30) Days (but no later than sixty (60) Days) after his appointment, taking into account the circumstances requiring an expeditious resolution of the matter in dispute.
|
20.2.2
|
Final and Binding. The Expert’s decision shall be final and binding on the Parties unless challenged in an arbitration pursuant to Section 20.1 within thirty (30) Days of the date the Expert’s decision. If challenged, (a) the decision shall remain binding and be implemented unless and until finally replaced by an award of the arbitrators; (b) the decision shall be entitled to
|
20.2.3
|
Arbitration of Expert Determination. In the event that a Party requests expert determination for a Measurement Dispute which raises issues that require determination of other matters in addition to correct measurement under Exhibit A hereto, then either Party may elect to refer the entire Measurement Dispute for arbitration under Section 20.1.1. In such case, the arbitrators shall be competent to make any measurement determination that is part of a Dispute. An expert determination not referred to arbitration shall proceed and shall not be stayed during the pendency of an arbitration.
|
20.3
|
Governing Law
|
20.4
|
Immunity
|
20.4.1
|
Each Party, to the maximum extent permitted by Applicable Law, as to itself and its assets, hereby irrevocably, unconditionally, knowingly and intentionally waives any and all rights of immunity (sovereign or otherwise) and agrees not to claim, or assert any immunity with respect to the matters covered by this Agreement in any arbitration, Expert proceeding, or other action with respect to this Agreement, whether arising by statute or otherwise, that it may have or may subsequently acquire, including rights under the doctrines of sovereign immunity and act of state, immunity from legal process (including service of process or notice, pre-judgment or pre-award attachment, attachment in aid of execution, or otherwise), immunity from jurisdiction or judgment of any court, arbitrator, Expert or tribunal (including any objection or claim on the basis of inconvenient forum), and immunity from enforcement or execution of any award or judgment or any other remedy.
|
20.4.2
|
Each Party hereby irrevocably, unconditionally, knowingly and intentionally:
|
(a)
|
agrees that the execution, delivery and performance by such Party of this Agreement constitute private and commercial acts rather than public or governmental acts; and
|
(b)
|
consents in respect of the enforcement of any judgment against such Party in any such proceedings in any jurisdiction and to the giving of any relief or the issue of any process in connection with such proceedings (including the making, enforcement or execution of any
|
21.
|
Successors; Assignments
|
21.1
|
Successors
|
21.2
|
Assignment by Buyer
|
21.2.1
|
Early Assignments. Buyer may not novate or assign this Agreement to any Person other than an Affiliate of Buyer prior to the time that the Date of Substantial Completion for each of the Phase 1 Plants has occurred.
|
21.2.2
|
Prior Written Consent. At any time after the Date of Substantial Completion for each of the Phase 1 Plants has occurred, Buyer may novate or assign this Agreement in its entirety to another Person, for the remainder of the Term, upon the prior written consent of Seller (which consent shall not be unreasonably withheld or delayed), provided that:
|
(a)
|
Lenders have provided prior written consent to such novation or assignment;
|
(b)
|
such assignee or novatee assumes all of the obligations of Buyer under this Agreement commencing as of the date of the novation or assignment by execution of a copy of this Agreement in its own name (countersigned by Seller) or by execution of a binding assignment and assumption agreement which is enforceable by Seller; and
|
(c)
|
if required by Lenders, such assignee or novatee has an Acceptable Credit Rating or a Guaranty is provided to Seller prior to such novation or assignment.
|
21.2.3
|
Without Prior Consent to Affiliates. At any time, so long as Buyer is Original Buyer or an Affiliate of Original Buyer, Buyer may novate or assign this Agreement in its entirety, for the remainder of the Term, without Seller’s prior consent, to an Affiliate of Buyer, provided that:
|
(a)
|
Lenders have provided prior written consent to such novation or assignment;
|
(b)
|
such Affiliate assignee or novatee assumes all of the obligations of Buyer under this Agreement commencing as of the date of the novation or assignment by execution of a copy of this Agreement in
|
(c)
|
performance of this Agreement by Seller with such Affiliate assignee or novatee would comply with Applicable Laws and all relevant Approvals.
|
21.2.4
|
Further Obligations. Upon a novation or assignment in whole by Buyer in accordance with this Section 21.2, the assignor or novator shall be released from all further obligations, duties and liabilities under this Agreement, other than any obligations, duties and liabilities arising prior to the date of effectiveness of such novation or assignment
|
21.3
|
Assignment by Seller
|
21.4
|
Seller Financing
|
21.4.1
|
Lender Financing. Seller and its Affiliates shall have the right to obtain financing (including non-recourse or limited recourse financing) from Lenders. In connection with any financing or refinancing obtained by Seller or its Affiliates, Buyer shall, if so requested by Seller, deliver to Seller’s or its Affiliate’s Lenders or the agent acting on behalf of any such Lenders (“Lenders’ Agent”) certified copies of its corporate charter and by-laws, resolutions, incumbency certificates, financial statements and other financial information, and such other items or information upon the reasonable request by Lenders or Lenders’ Agent. Buyer shall, at Seller’s cost, also provide to the Lenders and Lenders’ Agent legal opinions in form and substance and from counsel reasonably acceptable to the Lenders.
|
21.4.2
|
Assignment as Security. Buyer further acknowledges and agrees that Seller may collaterally assign, transfer, or otherwise encumber, all or any of its rights, benefits and obligations under this Agreement to such Lenders or Lenders’ Agent as security for Seller’s obligations or its Affiliate’s obligations to Lenders. Accordingly, upon Seller’s request pursuant to a notice hereunder and at Seller’s cost, Buyer shall enter into, and if Buyer is Assignee Buyer, then Assignee Buyer shall cause any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder to enter into, one or more direct agreements or consent agreements (each, a “Direct Agreement”) pursuant to which Buyer or such guarantor, as applicable:
|
(a)
|
consents to the collateral assignment of Seller’s or its Affiliate’s rights and obligations under this Agreement or the guaranty, as applicable,
|
(b)
|
provides representations and warranties that this Agreement or the guaranty, as applicable, is in full force and effect and has not been modified or amended and that there are no defaults existing under this Agreement or the guaranty, as applicable;
|
(c)
|
in the case of Buyer, provides representations and warranties regarding the corporate existence of Buyer, its authority to enter into and perform this Agreement and that this Agreement is the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, and in the case of guarantor, provides representations and warranties regarding the corporate existence of guarantor, its authority to enter into and perform the guaranty and that the guaranty is the legal, valid and binding obligation of guarantor, enforceable against guarantor in accordance with its terms;
|
(d)
|
agrees to make payments of amounts owed under this Agreement or the guaranty, as applicable, to one or more accounts as notified by Lenders’ Agent from time to time;
|
(e)
|
in the case of Buyer, agrees to give Lenders and Lenders’ Agent notice of and an opportunity to cure any default by Seller under this Agreement;
|
(f)
|
agrees to modify or clarify provisions of this Agreement or the guaranty, as applicable, as reasonably requested by the Lenders or the Lenders’ Agent; and
|
(g)
|
agrees to other undertakings that are normal and customary in financings or refinancings of the type entered into by Seller or its Affiliates and the Lenders.
|
21.4.3
|
Assignment or Novation to Lenders. Seller may novate or assign this Agreement in its entirety, for the remainder of the Term, without Buyer’s prior consent, to Seller’s Lenders or its Affiliate’s Lenders or the relevant Lenders’ Agent and to any other designee or nominee of such Lenders (including a purchaser at any foreclosure sale or any assignee or transferee under any instrument of assignment or transfer in lieu of foreclosure)
|
22.
|
Contract Language
|
23.
|
Miscellaneous
|
23.1
|
Disclaimer of Agency
|
23.2
|
Entire Agreement
|
23.3
|
Third Party Beneficiaries
|
23.4
|
Amendments and Waiver
|
23.5
|
Exclusion
|
23.6
|
Further Assurances
|
23.7
|
Severability
|
24.
|
Notices
|
24.1
|
Form of Notice
|
24.1.1
|
Except where otherwise specifically provided in this Agreement, all notices, requests, consents, proposals, approvals and statements shall be in writing and in English, and if properly addressed to the recipient in the manner required by Sections 24.1.2 and 24.2, shall be deemed to have been properly given or delivered: (i) on the date of actual delivery when personally delivered to the intended recipient or when delivered to the intended recipient by a reputable courier delivery service; or (ii) on the date specified in Section 24.2.2, if by Electronic Transmission, provided that if such Electronic Transmission is directed after 5:00 p.m. (local time of the recipient) or on a day that is not a Business Day, then on the next succeeding Business Day after the date specified in Section 24.2.2.
|
24.1.2
|
A non-electronic document is deemed to be properly addressed, in each case, if to Buyer or Seller, to the address of such Person as set forth in this Section 24.1.2, or, in each case, to such other address or addresses as the addressee may have specified by written notice given to the other Party in the manner contemplated by Section 24.1.1.
|
24.2
|
Electronic Transmission
|
24.2.1
|
Without limiting the manner by which notice otherwise may be given effectively to Parties pursuant to Section 24.1, any notice under any provision of this Agreement shall be effective if given by a form of Electronic Transmission.
|
24.2.2
|
Notice given pursuant to Section 24.2.1 will be deemed delivered on the date on which it is directed to the electronic mail address set forth in Section 24.1.2, or to such other electronic mail address as the addressee previously may have specified by written notice given to the other Party in the manner contemplated by Section 24.1.1.
|
24.2.3
|
Buyer and Seller hereby consent to receive notices by Electronic Transmission at the electronic mail address set forth in Section 24.1.2.
|
25.
|
Trade Law Compliance
|
25.1
|
Trade Law Compliance
|
25.1.1
|
Each Party agrees to comply with the Export Authorizations, including incorporating into any resale contract for LNG sold under this Agreement the necessary conditions to ensure compliance with the Export Authorizations. Buyer shall promptly provide to Seller all information in
|
25.1.2
|
Without limiting the foregoing, the following provisions are included in this Agreement in accordance with the requirements of the Export Authorizations, and Buyer shall include, and require any direct or indirect buyer of LNG sold hereunder for whom Seller acts as agent in connection with one or more Export Authorizations to include, the following provisions in any agreement or other contract for the sale or transfer of LNG exported pursuant to any Export Authorization:
|
(a)
|
Buyer acknowledges and agrees that it will resell or transfer LNG purchased hereunder for delivery only to countries identified in Ordering Paragraph B of DOE/FE Order No. 3968, issued February 28, 2017, in FE Docket No. 16-144-LNG, and/or to purchasers that have agreed in writing to limit their direct or indirect resale or transfer of such LNG to such countries. Buyer further commits to cause a report to be provided to Driftwood LNG LLC that identifies the country (or countries) into which the LNG or natural gas was actually delivered and/or received for end use, and to include in any resale
|
(b)
|
Buyer acknowledges and agrees that it will resell or transfer LNG, purchased hereunder for delivery only to countries identified in Ordering Paragraph F of DOE/FE Order No. 4373, issued May 2, 2019, in FE Docket No. 16-144-LNG, and/or to purchasers that have agreed in writing to limit their direct or indirect resale or transfer of such natural gas or LNG to such countries. Buyer further commits to cause a report to be provided to Driftwood LNG LLC that identifies the country (or countries) into which the LNG was actually delivered, and to include in any resale contract for such LNG the necessary conditions to ensure that Driftwood LNG LLC is made aware of all such actual destination countries.
|
25.2
|
Compliance with Law
|
25.3
|
Commercial Activities
|
25.4
|
Records
|
25.5
|
Representation and Warranty
|
25.5.1
|
in the performance of this Agreement and the activities contemplated herein, neither such Party, nor any of its officers, directors, employees, agents or other representatives have taken any action, or omitted to take any action, which would (i) violate any applicable Anti-Corruption Law, any applicable Export Control and Sanctions Laws or any other Applicable Law applicable to such Party, or (ii) cause the other Party to be in violation of any Anti-Corruption Law or Export Control and Sanctions Law applicable to the other Party; and
|
25.5.2
|
without limiting the foregoing, neither such Party nor any of its directors, managers, officers, employees, agents, contractors or Affiliates has paid any fees, commissions, or rebates to any employee, officer, or agent of the other Party or any of its Affiliates or has provided or caused to be provided to any of them any gifts or entertainment of significant cost or value in connection with this Agreement in order to influence or induce any actions or inactions in connection with the commercial activities of the other Party hereunder.
|
25.6
|
Buyer Indemnity
|
|
[Signature Page to LNG Sale and Purchase Agreement]
|
d
|
=
|
density of LNG loaded at the prevailing composition and temperature Tl in kg/m3, rounded to two (2) decimal places, calculated according to the method specified in Paragraph 12.1 of this Exhibit A.
|
|
|
|
Hi
|
=
|
gross heating value (mass based) of component “i” in MJ/kg, in accordance with Paragraph 12.6(a) of this Exhibit A.
|
|
|
|
Hm
|
=
|
gross heating value (mass based) of the LNG loaded in MJ/kg, calculated in accordance with the method specified in Paragraph 12.3 of this Exhibit A, rounded to four (4) decimal places.
|
|
|
|
Hv
|
=
|
gross heating value (volume based) of the LNG loaded in Btu/SCF, calculated in accordance with the method specified in Paragraph 12.5 of this Exhibit A.
|
|
|
|
K1
|
=
|
volume correction in m3/kmol, at temperature Tl, obtained by linear interpolation from Paragraph 12.6(c) of this Exhibit A, rounded to six (6) decimal places.
|
|
|
|
K2
|
=
|
volume correction in m3/kmol, at temperature Tl obtained by linear interpolation from Paragraph 12.6(d) of this Exhibit A, rounded to six (6) decimal places.
|
|
|
|
Mi
|
=
|
molecular mass of component “i” in kg/kmol, in accordance with Paragraph 12.6(a) of this Exhibit A.
|
|
|
|
P
|
=
|
average absolute pressure of vapor in an LNG Tanker immediately before loading, in millibars, rounded to a whole millibar.
|
|
|
|
Q
|
=
|
number of MMBtu contained in the LNG delivered, rounded to the nearest ten (10) MMBtu.
|
|
|
|
Tl
|
=
|
average temperature of the liquid cargo in the LNG Tanker immediately after loading, in degrees Celsius, rounded to one (1) decimal place.
|
|
|
|
Tv
|
=
|
average temperature of the vapor in an LNG Tanker immediately before loading, in degrees Celsius, rounded to one (1) decimal place.
|
|
|
|
V
|
=
|
the volume of the liquid cargo loaded, in cubic meters, rounded to three (3) decimal places.
|
|
|
|
Vh
|
=
|
the volume of the liquid cargo in an LNG Tanker immediately before loading, in cubic meters, rounded to three (3) decimal places.
|
|
|
|
Vb
|
=
|
the volume of the liquid cargo in an LNG Tanker immediately after loading, in cubic meters, rounded to three (3) decimal places.
|
|
|
|
Vi
|
=
|
molar volume of component “i” at temperature Tl, in m3/kmol, obtained by linear interpolation from Paragraph 12.6(b) of this Exhibit A, rounded to six (6) decimal places.
|
|
|
|
Xi
|
=
|
molar fraction of component “i” of the LNG samples taken from the loading line, rounded to four (4) decimal places, determined by gas chromatographic analysis.
|
|
|
|
Xm
|
=
|
the value of Xi for methane.
|
|
|
|
Xn
|
=
|
the value of Xi for nitrogen.
|
QBOG
|
=
|
the quantity of boil-off gas in MJ consumed by the LNG Tanker during loading, calculated as follows:
|
||
|
||||
|
QBOG
|
=
|
(V2 x 55.575)
|
|
|
||||
|
where:
|
|
|
|
|
||||
|
V2
|
=
|
the quantity of Gas consumed by the LNG Tanker during loading (as calculated pursuant to the below formula), stated in kg and rounded to the nearest kg; and
|
|
|
||||
|
55.575
|
=
|
the heating value of the vapor (assumed to be 100% of methane) stated in MJ/kg at standard reference conditions (15˚C, 1.01325 bar) for both combustion & metering references (tables below).
|
V2
|
=
|
Vf – Vi
|
|
|
|
where:
|
|
|
|
|
|
V2
|
=
|
the quantity of Gas consumed by the LNG Tanker during loading, stated in kg;
|
|
|
|
Vf
|
=
|
the reading of Natural Gas Consumption Meter on board the LNG Tanker after the completion of loading, stated in kg; and
|
|
|
|
Vi
|
=
|
the reading of Natural Gas Consumption Meter on board the LNG Tanker before the start of loading, stated in kg.
|
Temperature
|
-150°C
|
-154°C
|
-158°C
|
-160°C
|
-162°C
|
-166°C
|
-170°C
|
Methane
|
0.039579
|
0.038983
|
0.038419
|
0.038148
|
0.037884
|
0.037375
|
0.036890
|
Ethane
|
0.048805
|
0.048455
|
0.048111
|
0.047942
|
0.047774
|
0.047442
|
0.047116
|
Propane
|
0.063417
|
0.063045
|
0.062678
|
0.062497
|
0.062316
|
0.061957
|
0.061602
|
Iso-Butane
|
0.079374
|
0.078962
|
0.078554
|
0.078352
|
0.078151
|
0.077751
|
0.077356
|
N-Butane
|
0.077847
|
0.077456
|
0.077068
|
0.076876
|
0.076684
|
0.076303
|
0.075926
|
Iso-Pentane
|
0.092817
|
0.092377
|
0.091939
|
0.091721
|
0.091504
|
0.091071
|
0.090641
|
N-Pentane
|
0.092643
|
0.092217
|
0.091794
|
0.091583
|
0.091373
|
0.090953
|
0.090535
|
N-Hexane
|
0.106020
|
0.105570
|
0.105122
|
0.104899
|
0.104677
|
0.104236
|
0.103800
|
Nitrogen
|
0.055877
|
0.051921
|
0.048488
|
0.046995
|
0.045702
|
0.043543
|
0.041779
|
Carbon Dioxide
|
0.027950
|
0.027650
|
0.027300
|
0.027200
|
0.027000
|
0.026700
|
0.026400
|
Oxygen
|
0.03367
|
0.03275
|
0.03191
|
0.03151
|
0.03115
|
0.03045
|
0.02980
|
Date
|
Required Capital Contribution
|
First Funding Date
|
30% of Capital Commitment
|
10 months after Phase 1 Project FID Date
|
10% of Capital Commitment
|
17 months after Phase 1 Project FID Date
|
20% of Capital Commitment
|
27 months after Phase 1 Project FID Date
|
20% of Capital Commitment
|
42 months after Phase 1 Project FID Date
|
20% of Capital Commitment
|
1.
|
Definitions and Interpretation
|
1
|
|
|
|
1.1
|
Definitions
|
1
|
|
|
1.2
|
Interpretation
|
17
|
|
|
1.3
|
Replacement of Rates and Indices No Longer Available
|
17
|
|
|
|
|
|
|
2.
|
Approvals
|
19
|
|
|
|
2.1
|
Approvals
|
19
|
|
|
2.2
|
Change in Export Laws
|
19
|
|
|
2.3
|
Conditions Precedent
|
20
|
|
|
|
|
|
|
3.
|
Subject Matter
|
20
|
|
|
|
3.1
|
Sale and Purchase of LNG
|
20
|
|
|
|
|
|
|
4.
|
Term
|
|
21
|
|
|
4.1
|
Term
|
21
|
|
|
4.2
|
Date of Substantial Completion
|
22
|
|
|
4.3
|
Date of Full Operations
|
22
|
|
|
4.4
|
Contract Year
|
22
|
|
|
|
|
|
|
5.
|
Quantities
|
23
|
|
|
|
5.1
|
ACQ
|
23
|
|
|
5.2
|
Adjusted Annual Contract Quantity
|
24
|
|
|
5.3
|
Seasonal Deliveries
|
24
|
|
|
5.4
|
Round-Up/Round-Down Quantities
|
24
|
|
|
5.5
|
Major Scheduled Maintenance
|
25
|
|
|
5.6
|
Seller’s Delivery Obligation
|
26
|
|
|
5.7
|
Buyer’s Purchase Obligation
|
27
|
|
|
|
|
|
|
6.
|
Delivery Point, Title and Risk, Destination
|
29
|
|
|
|
6.1
|
Delivery Point
|
29
|
|
|
6.2
|
Title and Risk
|
29
|
|
|
6.3
|
Destination
|
29
|
|
|
|
|
|
|
7.
|
Transportation and Loading
|
29
|
|
|
|
7.1
|
Transportation by Buyer
|
29
|
|
|
7.2
|
Driftwood LNG Terminal
|
29
|
|
|
7.3
|
Compatibility of the Driftwood LNG Terminal with LNG Tankers
|
31
|
|
|
7.4
|
Buyer Inspection Rights in Respect of the Driftwood LNG Terminal
|
32
|
|
|
7.5
|
LNG Tankers
|
33
|
|
|
7.6
|
LNG Tanker Inspections; LNG Tanker Vetting Procedures; Right to Reject LNG Tanker
|
36
|
|
|
7.7
|
Port Liability Agreement
|
37
|
|
|
7.8
|
Driftwood Marine Operations Manual
|
39
|
|
|
7.9
|
Loading of LNG Tankers
|
39
|
|
|
7.10
|
Notice of Readiness
|
41
|
|
|
7.11
|
Berthing Assignment
|
42
|
|
|
7.12
|
Berth Laytime
|
43
|
|
|
7.13
|
LNG Tanker Not Ready for LNG Loading; Excess Laytime
|
45
|
|
|
7.14
|
LNG Loadings at the Driftwood LNG Terminal
|
47
|
|
|
7.15
|
Cooperation
|
48
|
|
|
7.16
|
Cool-Down of LNG Tankers
|
48
|
|
|
7.17
|
Gas-Up of LNG Tankers
|
49
|
|
|
|
|
|
|
8.
|
Annual Delivery Program
|
51
|
|
|
|
8.1
|
Programming Information
|
51
|
|
|
8.2
|
Determination of Annual Delivery Program
|
52
|
|
|
8.3
|
Changes to Annual Delivery Program
|
54
|
|
|
8.4
|
Ninety Day Schedule
|
55
|
|
|
|
|
|
|
9.
|
Contract Sales Price
|
55
|
|
|
|
9.1
|
Contract Sales Price
|
55
|
|
|
|
|
|
|
10.
|
Invoicing and Payment
|
56
|
|
|
|
10.1
|
Invoices
|
56
|
|
|
10.2
|
Payment
|
58
|
|
|
10.3
|
Disputed Invoice
|
59
|
|
|
10.4
|
Delay in Payment
|
59
|
|
|
10.5
|
Audit Rights
|
60
|
|
|
|
|
|
|
11.
|
Taxes
|
60
|
|
|
|
11.1
|
Responsibility
|
60
|
|
|
11.2
|
Seller Taxes
|
60
|
|
|
11.3
|
Buyer Taxes
|
61
|
|
|
11.4
|
Withholding Taxes
|
61
|
|
|
11.5
|
Transfer Taxes
|
62
|
|
|
11.6
|
Mitigation and Cooperation
|
62
|
|
|
11.7
|
Refunds
|
62
|
|
|
|
|
|
|
12.
|
Quality
|
63
|
|
|
|
12.1
|
Specification
|
63
|
|
|
12.2
|
Determining LNG Specifications
|
63
|
|
|
12.3
|
Off-Specification LNG
|
63
|
|
|
|
|
|
|
13.
|
Measurements and Tests
|
66
|
|
|
|
13.1
|
LNG Measurement and Tests
|
66
|
|
|
13.2
|
Parties to Supply Devices
|
66
|
|
|
13.3
|
Selection of Devices
|
66
|
|
|
13.4
|
Tank Gauge Tables of LNG Tanker
|
66
|
|
|
13.5
|
Gauging and Measuring LNG Volumes Loaded
|
66
|
|
|
13.6
|
Samples for Quality Analysis
|
67
|
|
|
13.7
|
Quality Analysis
|
67
|
|
|
13.8
|
Operating Procedures
|
67
|
|
|
13.9
|
MMBtu Quantity Delivered
|
67
|
|
|
13.10
|
Verification of Accuracy and Correction for Error
|
67
|
|
|
13.11
|
Costs and Expenses
|
68
|
|
|
|
|
|
|
14.
|
Force Majeure
|
68
|
|
|
|
14.1
|
Force Majeure
|
68
|
|
|
14.2
|
Limitations on Force Majeure
|
69
|
|
|
14.3
|
Notification
|
71
|
|
|
14.4
|
Measures
|
72
|
|
|
14.5
|
No Extension of Term
|
72
|
|
|
14.6
|
Settlement of Industrial Disturbances
|
72
|
|
|
|
|
|
|
15.
|
Liabilities and Indemnification
|
72
|
|
|
|
15.1
|
General
|
72
|
|
|
15.2
|
Limitations on Liability
|
72
|
|
|
15.3
|
Buyer’s Credit; Credit Support
|
74
|
|
|
15.4
|
Third Party Liability
|
75
|
|
|
15.5
|
Seller’s Insurance
|
77
|
|
|
15.6
|
Buyer’s Insurance
|
77
|
|
|
|
|
|
|
16.
|
Safety
|
77
|
|
|
|
16.1
|
General
|
77
|
|
|
16.2
|
Third Parties
|
78
|
|
|
|
|
|
|
17.
|
Exchange of Information
|
78
|
|
|
|
|
|
|
|
18.
|
Confidentiality
|
78
|
|
|
|
18.1
|
Duty of Confidentiality
|
78
|
|
|
18.2
|
Permitted Disclosures
|
79
|
|
|
18.3
|
Confidential Information Remedy
|
80
|
|
|
18.4
|
Duration of Confidentiality
|
80
|
|
|
|
|
|
|
19.
|
Default and Termination
|
81
|
|
|
|
19.1
|
Seller’s Right to Suspend Performance
|
81
|
|
|
19.2
|
Termination Events
|
81
|
|
|
19.3
|
Termination
|
82
|
|
|
19.4
|
Rights Accrued Prior to Termination
|
83
|
|
|
19.5
|
Final Reconciliation
|
83
|
|
|
19.6
|
Survival
|
83
|
|
|
|
|
|
|
20.
|
Dispute Resolution and Governing Law
|
84
|
|
|
|
20.1
|
Dispute Resolution
|
84
|
|
|
20.2
|
Expert Determination
|
87
|
|
|
20.3
|
Governing Law
|
88
|
|
|
20.4
|
Immunity
|
88
|
|
|
|
|
|
|
21.
|
Successors; Assignments
|
88
|
|
|
|
21.1
|
Successors
|
88
|
|
|
21.2
|
Assignment by Buyer
|
88
|
|
|
21.3
|
Assignment by Seller
|
89
|
|
|
21.4
|
Seller, Driftwood and Affiliate Financing
|
89
|
|
|
|
|
|
|
22.
|
Contract Language
|
91
|
|
|
|
|
|
|
|
23.
|
Miscellaneous
|
91
|
|
|
|
23.1
|
Disclaimer of Agency
|
91
|
|
|
23.2
|
Entire Agreement
|
91
|
|
|
23.3
|
Third Party Beneficiaries
|
91
|
|
|
23.4
|
Amendments and Waiver
|
91
|
|
|
23.5
|
Exclusion
|
91
|
|
|
23.6
|
Further Assurances
|
91
|
|
|
23.7
|
Severability
|
91
|
|
|
23.8
|
Representations and Warranties of Buyer
|
91
|
|
|
23.9
|
Representations and Warranties of Seller
|
91
|
|
|
|
|
|
|
24.
|
Notices
|
92
|
|
|
|
24.1
|
Form of Notice
|
92
|
|
|
24.2
|
Electronic Transmission
|
93
|
|
|
|
|
|
|
25
|
Trade Law Compliance and Business Practices
|
93
|
|
|
|
25.1
|
Trade Law Compliance
|
93
|
|
|
25.2
|
Prohibited Practices
|
95
|
|
|
25.3
|
Records; Audit
|
95
|
|
|
25.4
|
Representations and Warranties
|
95
|
|
|
25.5
|
Indemnity
|
96
|
|
(1)
|
Driftwood LNG LLC (“Driftwood”) is developing a liquefied natural gas (“LNG”) liquefaction terminal on the Calcasieu River, south of Lake Charles, Louisiana;
|
(2)
|
Seller has obtained or will obtain rights to LNG supply from Driftwood;
|
(3)
|
Buyer desires to be engaged in the purchase of LNG at Driftwood’s liquefaction terminal and transportation of such LNG to one or more Discharge Terminals; and
|
(4)
|
Seller and Buyer desire to execute this definitive agreement setting out the Parties’ respective rights and obligations in relation to the sale and purchase of LNG.
|
1.
|
Definitions and Interpretation
|
1.1
|
Definitions
|
AAA:
|
as defined in Section 20.1.2;
|
Acceptable Credit Rating:
|
two (2) Credit Ratings that are each equal to or better than the following: (i) Baa3 by Moody’s Investors Service, Inc., (ii) BBB- by Standard & Poor’s Rating Services, a division of McGraw-Hill Companies, (iii) BBB- by Fitch Ratings, Inc., or (iv) any comparable Credit Ratings by any other nationally recognized statistical rating organizations registered with the U.S. Securities and Exchange Commission, including any successors to Moody’s Investors Service, Inc., Standard & Poor’s Rating Services, or Fitch Ratings, Inc.;
|
Acceptable Guarantor:
|
an Affiliate of Assignee Buyer that has an Acceptable Credit Rating;
|
ACQ:
|
as defined in Section 5.1.1;
|
Actual Laytime:
|
as defined in Section 7.12.2;
|
Quantity or AACQ:
|
as defined in Section 5.2;
|
Adverse Weather Conditions:
|
weather or sea conditions actually experienced or reasonably forecasted at or near the Driftwood LNG Terminal that are sufficiently severe: (i) to prevent an LNG Tanker from proceeding to berth, or loading or departing from berth, in accordance with one or more of the following: (a) regulations published by a Governmental Authority; (b) an Approval; or (c) an order of a Pilot; (ii) to cause an actual determination by the master of an LNG Tanker that it is unsafe for such LNG Tanker to berth, load, or depart from berth; or (iii) to prevent or severely limit the production of LNG at the Driftwood LNG Terminal;
|
Affiliate:
|
with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with such Person; for purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) means the direct or indirect ownership of fifty percent (50%) or more of the voting rights in a Person or the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise;
|
Agreement:
|
this agreement, including the Exhibits hereto, as the same may be amended, modified or replaced from time to time;
|
Allotted Laytime:
|
as defined in Section 7.12.1;
|
Allowed Laytime:
|
as defined in Section 7.13.2(a);
|
Annual Delivery Program or ADP:
|
as defined in Section 8.2.3;
|
Anti-Corruption Law:
|
any of the U.S. Foreign Corrupt Practices Act, the OECD convention on anti-bribery, the U.K. Bribery Act of 2010, E.U. and E.U. member country anti-bribery and corruption laws, and any other corruption or similar statute, regulation, order or convention binding on the applicable Person, as each may be amended from time to time, and including any implementing regulations promulgated pursuant thereto;
|
Applicable Laws:
|
in relation to matters covered by this Agreement, all applicable laws, statutes, rules, regulations, ordinances, codes, standards and rules of common law, and judgments, decisions, interpretations, orders, directives, injunctions, writs, decrees, stipulations, or awards of any applicable Governmental Authority or duly authorized official, court or arbitrator thereof, in each case, now existing or which may be enacted or issued after the Effective Date;
|
Approvals:
|
any and all permits (including work permits), franchises, authorizations, approvals, grants, licenses, visas, waivers, exemptions, consents, permissions, registrations, decrees, privileges, variances, validations, confirmations or orders granted by or filed with any Governmental Authority, including the Export Authorizations;
|
Assessment Period:
|
as defined in Section 9.1.1;
|
Assignee Buyer:
|
as defined in Section 15.3.2;
|
Bankruptcy Event:
|
with respect to any Person: (i) such Person’s suspension of payment of, or request to any court for a moratorium on payment of, all or a substantial part of such Person’s debts, (ii) such Person’s making of a general assignment, compromise or any composition with or for the benefit of its creditors except to the extent otherwise permitted by Section 21, (iii) any petition or filing under the bankruptcy or other insolvency laws of any jurisdiction, or consent by answer by such Person to the filing against it, seeking relief or reorganization or arrangement (by way of voluntary arrangement, scheme of arrangement or otherwise) or any other similar petition or filing in bankruptcy, for liquidation
|
Btu:
|
the amount of heat equal to one thousand fifty-five decimal zero five six (1,055.056) Joules;
|
Business Day:
|
any Day (other than Saturdays, Sundays and public holidays in England) on which commercial banks are normally open to conduct business in London, England;
|
Buyer:
|
as defined in the Preamble;
|
Buyer Taxes:
|
as defined in Section 11.3;
|
Cargo DoP Payment:
|
as defined in Section 5.6.2;
|
Cargo DoP Quantity:
|
as defined in Section 5.6.2;
|
Cargo Shortfall Payment:
|
as defined in Section 5.7.3;
|
Cargo Shortfall Quantity:
|
as defined in Section 5.7.2;
|
Claim:
|
all claims, demands, legal proceedings, or actions that may exist, arise, or be threatened currently or in the future at any time following the Effective Date, whether or not of a type contemplated by any Party, and whether based on federal, state, local, statutory or common law or any other Applicable Law;
|
Conditions Precedent:
|
as defined in Section 2.3.1;
|
Confidential Information:
|
as defined in Section 18.1;
|
Connecting Pipeline:
|
HGAP, the Driftwood Pipeline and any pipeline as may be directly interconnected to the Driftwood LNG Terminal;
|
Contract Year:
|
as defined in Section 4.4;
|
Credit Rating:
|
a credit rating in respect of the senior, unsecured, long-term debt (not supported by third-party credit enhancement) of a Person;
|
CP Fulfillment Date:
|
as defined in Section 2.3.2;
|
CSP:
|
as defined in Section 9.1.1;
|
Date of Full Operations:
|
as defined in Section 4.3.1;
|
Date of Substantial Completion:
|
as defined in Section 4.2.1;
|
Day:
|
a period of twenty-four (24) consecutive hours starting at 00:00 hours local time in Calcasieu Parish, Louisiana;
|
Delivery Point:
|
as defined in Section 6.1;
|
Delivery Window:
|
a twenty-four (24) hour period starting at 6:00 a.m. Central Time on a specified Day and ending twenty-four (24) consecutive hours thereafter that is allocated to Buyer under the ADP or Ninety Day Schedule, as applicable;
|
Demurrage Event:
|
as defined in Section 7.12.3;
|
Demurrage Rate:
|
as defined in Section 7.12.3;
|
Direct Agreement:
|
as defined in Section 21.4.2;
|
Discharge Terminal:
|
with respect to each cargo of LNG taken or scheduled to be taken by Buyer pursuant to this Agreement, the facilities intended by Buyer to be utilized for the unloading, reception, discharge, storage, treatment (if necessary), and regasification of the LNG and the processing and send-out of Gas or regasified LNG, and other relevant infrastructure, including marine
|
Dispute:
|
any dispute or difference of whatsoever nature arising under, out of, in connection with or in relation (in any manner whatsoever) to this Agreement or the subject matter of this Agreement, including (a) any dispute or difference concerning the initial or continuing existence of this Agreement or any provision of it, or as to whether this Agreement or any provision of it is invalid, illegal or unenforceable (whether initially or otherwise); or (b) any dispute or claim which is ancillary or connected, in each case in any manner whatsoever, to the foregoing;
|
Driftwood LNG Terminal:
|
the facilities that Driftwood intends to construct, own and operate (or have operated on its behalf) in Calcasieu Parish, Louisiana, on the Calcasieu River, including the Gas pretreatment and processing facilities, liquefaction facility, storage tanks, utilities, terminal facilities, and associated port and marine facilities, and all other related facilities both inside and outside the LNG plant, inclusive of all Plants that Driftwood elects to construct;
|
Driftwood Marine Operations Manual:
|
as defined in Section 7.8;
|
Driftwood Pipeline:
|
that certain Gas pipeline that Driftwood LNG Pipeline LLC intends to construct, own and operate (or have operated on its behalf), and which will interconnect the Driftwood LNG Terminal with other Gas pipelines in Louisiana;
|
Driftwood SPA:
|
as defined in Section 19.2.11;
|
Effective Date:
|
as defined in the Preamble;
|
Electronic Transmission:
|
any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process;
|
EPC Contract:
|
each of the Phase 1 EPC Contract, Phase 2 EPC Contract, Phase 3 EPC Contract and Phase 4 EPC Contract;
|
ETA:
|
with respect to an LNG Tanker, the estimated time of arrival of such LNG Tanker at the PBS;
|
Excess Boil-Off Event:
|
as defined in Section 7.12.4;
|
Expert:
|
a Person agreed upon or appointed in accordance with Section 20.2.1;
|
Export Authorizations:
|
as defined in Section 2.1;
|
Export Control and Sanctions Laws:
|
export control and sanctions laws and regulations of the United States of America, including the Export Administration Regulations, 15 C.F.R. Parts 730 et seq., and economic sanctions administered by the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC), 31 C.F.R. Part 500 et seq.;
|
FID Condition Precedent:
|
as defined in Section 2.3.1(a);
|
Final Contract Year:
|
as defined in Section 4.4(b);
|
First Contract Year:
|
as defined in Section 4.4(a);
|
Force Majeure:
|
as defined in Section 14.1;
|
FTA Export Authorization:
|
an order from the Office of Fossil Energy of the U.S. Department of Energy granting to Seller, its direct or indirect LNG supplier or any other Person acting as agent on behalf of Seller or such LNG supplier the authorization to export LNG delivered pursuant to this Agreement (or pursuant to an LNG supply or tolling agreement with such LNG supplier) by vessel from the Driftwood LNG Terminal to countries that have entered into a free trade agreement with the United States of America requiring the national treatment for trade in natural gas for a specific term, as the same may be supplemented, amended, modified, changed, superseded or replaced from time to time;
|
Full Operations:
|
as defined in Section 4.3.2;
|
Gas:
|
any hydrocarbon or mixture of hydrocarbons consisting predominantly of methane that is in a gaseous state;
|
Governmental Authority:
|
any national, regional, state, or local government, or any subdivision, agency, commission or authority thereof (including any maritime authorities, port authority or any quasi-governmental agency), having jurisdiction over a Party (or any Affiliate or direct or indirect owner thereof), a Connecting Pipeline, Gas in a Connecting Pipeline or the Driftwood LNG Terminal, the Driftwood LNG Terminal, LNG in the Driftwood LNG Terminal, an LNG Tanker, LNG or Gas in an LNG Tanker, a Transporter, the last disembarkation port of an LNG Tanker, a Discharge Terminal, or any Gas pipeline which interconnects with a Connecting Pipeline and which transports Gas to or from a Connecting Pipeline, as the case may be, and acting within its legal authority;
|
Gross Heating Value:
|
the quantity of heat expressed in Btu produced by the complete combustion in air of one (1) cubic foot of anhydrous gas, at a temperature of sixty (60) degrees Fahrenheit and at an absolute pressure of fourteen decimal six nine six (14.696) pounds per square inch, with the air at the same temperature and pressure as the gas, after cooling the products of the combustion to the initial temperature of the gas and air, and after condensation of the water formed by combustion;
|
Guarantor:
|
any Acceptable Guarantor executing a Guaranty for delivery to Seller hereunder to the extent required hereunder;
|
Guaranty:
|
an irrevocable payment guaranty, in a form reasonably acceptable to Seller, which is executed by a Guarantor in favor of Seller;
|
HGAP:
|
that certain Gas pipeline that Haynesville Global Access Pipeline LLC intends to construct, own and operate (or have operated on its behalf);
|
ICC:
|
as defined in Section 20.2.1;
|
Indemnified Party:
|
as defined in Section 15.4(a);
|
Indemnifying Party:
|
as defined in Section 15.4(a);
|
International LNG Terminal Standards:
|
to the extent not inconsistent with the express requirements of this Agreement, the international standards and practices applicable to the design, construction, equipment, operation or maintenance of LNG liquefaction terminals, established by the following (such standards to apply in the following order of priority): (i) a Governmental Authority having jurisdiction over the Driftwood LNG Terminal, Driftwood, the operator of the Driftwood LNG Terminal or Seller; (ii) the Society of International Gas Tanker and Terminal Operators (to the extent applicable); (iii) the Oil Companies International Marine Forum (OCIMF) (to the extent applicable) and (iv) any other internationally recognized non-governmental agency or organization with whose standards and practices it is customary for Reasonable and Prudent Operators of LNG liquefaction terminals, to comply, provided, however, that in the event of a conflict between any of the priorities noted above, the priority with the lowest roman numeral noted above shall prevail;
|
International LNG Vessel Standards:
|
the standards and practices from time to time in force applicable to the ownership, design, equipment, operation or maintenance of LNG vessels established by: (i) a Governmental Authority having jurisdiction over the LNG vessel in the Loading Port; (ii) the International Maritime Organization (IMO); (iii) the classification society of the LNG vessel, provided such classification society is a member of the International Association of Classification Societies Ltd. (IACS); (iv) the Oil Companies International Marine Forum (OCIMF); (v) the Society of International Gas Tanker and Terminal Operators (SIGTTO); and (vi) any other internationally recognized agency or non-governmental organization with whose standards and practices it is customary for Reasonable and Prudent Operators of LNG vessels similar to those applicable to this Agreement, to comply, provided, however, that in the event of a conflict between any of the priorities noted above, the priority with the lowest roman numeral noted above shall prevail;
|
International Standards:
|
(i) with respect to Buyer, the International LNG Vessel Standards; (ii) with respect to Seller, the International LNG Terminal Standards;
|
In-Transit Final Notice:
|
as defined in Section 7.9.3(d);
|
In-Transit First Notice:
|
as defined in Section 7.9.2;
|
In-Transit Fourth Notice:
|
as defined in Section 7.9.3(c);
|
In-Transit Second Notice:
|
as defined in Section 7.9.3(a);
|
In-Transit Third Notice:
|
as defined in Section 7.9.3(b);
|
JKM:
|
as defined in Section 9.1.1;
|
Lender:
|
any Person, other than a shareholder of either Party, duly authorized in its principal place of business to lend monies, to finance or to provide financial support in any form in respect of the Driftwood LNG Terminal or any other facilities under development by Seller, Driftwood or their respective Affiliates, including any commercial bank, export credit agency, funding agency, bondholder, institutional investor, insurance company, underwriter, or similar institution in relation to the provision of finance or financial support;
|
Lenders’ Agent:
|
as defined in Section 21.4.1;
|
LIBOR:
|
the rate per annum equal to the London Interbank Offer Rate as administered by ICE Benchmark Administration Limited (or any Person which takes over the administration of that rate) for three (3) month deposits in USD as published at or about 11:00 a.m. London time on any Business Day;
|
LNG:
|
Gas in a liquid state at or below its point of boiling and at or near atmospheric pressure;
|
LNG Tanker(s):
|
an ocean-going vessel suitable for transporting LNG which complies with the requirements of this Agreement and which Buyer uses or causes to be used, or intends to use or to be used, in connection with this Agreement;
|
Loading Port:
|
the port where the Driftwood LNG Terminal is located, or the port at an alternate supply source pursuant to Section 3.1.2;
|
Loss:
|
any and all losses, liabilities, damages, costs, judgments, settlements and expenses (whether or not resulting from Claims by Third Parties), including interest and penalties with respect thereto and reasonable attorneys’ and accountants’ fees and expenses;
|
M:
|
as defined in Section 9.1.1;
|
Major Scheduled Maintenance Quantity:
|
as defined in Section 5.5;
|
Measurement Dispute:
|
as defined in Section 20.2.1;
|
Mitigation Sale:
|
as defined in Section 5.7.5;
|
Mitigation Sale Payment:
|
as defined in Section 5.7.6;
|
MMBtu:
|
one million (1,000,000) Btus;
|
Month:
|
each period of time which starts at 00:00 local time in Lake Charles, Louisiana, on the first Day of each calendar month and ends at 24:00 local time in Lake Charles, Louisiana, on the last Day of the same calendar month;
|
Ninety Day Schedule:
|
as defined in Section 8.4;
|
Non-FTA Export Authorization:
|
an order from the Office of Fossil Energy of the U.S. Department of Energy granting to Seller, its direct or indirect LNG supplier or any other Person acting as agent on behalf of Seller or such LNG supplier the authorization to export LNG delivered pursuant to this Agreement (or pursuant to an LNG supply or tolling agreement with such LNG supplier) by vessel from the Driftwood LNG Terminal to countries that have not entered into a free trade agreement with the United States of America requiring the national treatment for trade in natural gas, which currently has or in the future develops the capacity to import LNG, and with which trade is not prohibited by United States of America law or policy, for a specific term, as the same may be
|
Notice of Readiness or NOR:
|
the notice of readiness issued by the master of an LNG Tanker or its agent in accordance with Section 7.10.1;
|
Off-Spec LNG:
|
as defined in Section 12.3.1;
|
Operational Tolerance:
|
as defined in Section 5.6.3;
|
Original Buyer:
|
Total Gas & Power North America, Inc., and not any successor or assign thereof;
|
P&I Club:
|
a Protection and Indemnity Club that is a member of the International Group of P&I Clubs;
|
P&I Insurance:
|
as defined in Section 15.6(b);
|
Party:
|
Buyer or Seller, and Parties means both Buyer and Seller;
|
Payment Business Day:
|
each Day that is a Business Day on which commercial banks are normally open to conduct business in the United States of America;
|
Payor:
|
as defined in Section 11.4;
|
PBS:
|
the customary Pilot boarding station at the Loading Port where the Pilot boards the LNG Tanker, as determined by the applicable Governmental Authority or other entity with authority to regulate transit and berthing of vessels at the Loading Port;
|
Person:
|
any individual, corporation, partnership, limited liability company, trust, unincorporated organization or other legal entity, including any Governmental Authority;
|
Phase 1 EPC Contract:
|
that certain Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Driftwood LNG Phase 1 Liquefaction Facility, between Driftwood LNG LLC and Bechtel Oil, Gas and Chemicals, Inc., dated November 10, 2017;
|
Phase 1 Plants:
|
each of Plant 1, Plant 2 and Plant 3;
|
Phase 1 Project:
|
collectively, the Phase 1 Plants, associated facilities, and associated Pipelines and Production Facilities, which shall include (a) the Phase 1 Plants and the related infrastructure for production of sixteen decimal five six (16.56) million tonnes per annum of LNG, (b) the Driftwood Pipeline and related infrastructure, and (c) the Permian Global Access Pipeline and related infrastructure – PGAP (approx. two (2) billion cubic feet per day capacity) or for the latter, any other equivalent asset allowing Driftwood Holdings LP and its wholly-owned Affiliates to access competitive gas prices in the Permian Basin;
|
Phase 2 EPC Contract:
|
that certain Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Driftwood LNG Phase 2 Liquefaction Facility, between Driftwood LNG LLC and Bechtel Oil, Gas and Chemicals, Inc., dated November 10, 2017;
|
Phase 3 EPC Contract:
|
that certain Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Driftwood LNG Phase 3 Liquefaction Facility, between Driftwood LNG LLC and Bechtel Oil, Gas and Chemicals, Inc., dated November 10, 2017;
|
Phase 4 EPC Contract:
|
that certain Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Driftwood LNG Phase 4 Liquefaction Facility, between Driftwood LNG LLC and Bechtel Oil, Gas and Chemicals, Inc., dated November 10, 2017;
|
Pilot:
|
any Person engaged by Transporter to come on board the LNG Tanker to assist the master in pilotage, maneuvering, berthing and unberthing of such LNG Tanker;
|
Pipelines:
|
as defined in the Total ECCA;
|
Plant:
|
each of Plant 1, Plant 2, Plant 3, Plant 4 and Plant 5;
|
Plant 1:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 1 EPC Contract that is described thereunder as “LNG Plant 1”;
|
Plant 2:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 1 EPC Contract that is described thereunder as “LNG Plant 2”;
|
Plant 3:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 2 EPC Contract;
|
Plant 4:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 3 EPC Contract;
|
Plant 5:
|
the LNG production plant to be constructed at the Driftwood LNG Terminal pursuant to the Phase 4 EPC Contract;
|
Platts Business Day:
|
as defined in Section 9.1.1;
|
Port Charges:
|
all charges of whatsoever nature (including rates, tolls, dues, fees, and imposts of every description) in respect of an LNG Tanker entering or leaving the Loading Port or loading LNG, including wharfage fees, in-and-out fees, franchise fees, line handling charges, and charges imposed by tugs, the U.S. Coast Guard, a port authority, a harbor master, a Pilot, and any other authorized Person assisting an LNG Tanker to enter or leave the Loading Port, and further including port use fees, throughput fees and similar fees payable by users of the Loading Port (or by Driftwood or the operator of the Driftwood LNG Terminal on behalf of such users);
|
Port Liability Agreement:
|
an agreement for use of the port and marine facilities located at the Loading Port, to be entered into as described in Section 7.7.1;
|
Preliminary AACQ:
|
as defined in Section 5.4.1;
|
Production Facilities:
|
as defined in the Total ECCA;
|
Provisional Invoice:
|
as defined in Section 10.1.7(a);
|
Reasonable and Prudent Operator:
|
a Person seeking in good faith to perform its contractual obligations, and in so doing, and in the general conduct of its undertaking, exercising that
|
Required Modification:
|
as defined in Section 7.3.2;
|
Round-Down Quantity:
|
as defined in Section 5.4.3;
|
Round-Up Quantity:
|
as defined in Section 5.4.2;
|
SCF:
|
for Gas, the quantity of anhydrous Gas that occupies one (1) cubic foot of space at a temperature of sixty (60) degrees Fahrenheit and a pressure of fourteen decimal six nine six (14.696) pounds per square inch absolute;
|
Scheduled Cargo Quantity:
|
the quantity of LNG (in MMBtus) identified in the ADP or Ninety Day Schedule to be loaded onto an LNG Tanker in a Delivery Window in accordance with Section 8;
|
Seller:
|
as defined in the Preamble;
|
Seller Aggregate Liability:
|
as defined in Section 15.2.6(b);
|
Seller Liability Cap:
|
as defined in Section 15.2.6(c);
|
Seller Taxes:
|
as defined in Section 11.2;
|
SI:
|
the International System of Units;
|
SIRE:
|
Ship Inspection Report Exchange;
|
SIRE Accredited Inspector:
|
an inspector qualified by the OCIMF to inspect an LNG Tanker for the purpose of generating an inspection report for inclusion in OCIMF’s Ship Inspection Report Program;
|
Specifications:
|
as defined in Section 12.1;
|
Stub Quantity:
|
as defined in Section 5.4.1;
|
Substantial Completion:
|
as defined in Section 4.2.2;
|
Taxes:
|
all taxes, levies, duties, charges, withholdings and all other assessments (but excluding Port Charges), which may now or hereafter be enacted, levied or imposed, directly or indirectly, by a Governmental Authority, including income, value added, goods and services, sales and use, gross receipts, license, payroll, environmental, profits, severance, premium, franchise, property, ad valorem, excise, capital stock, import, stamp, transfer, withholding, employment, occupation, generation, privilege, utility, regulatory, energy, consumption, lease, filing, recording and activity taxes, levies, duties, fees, charges, and imposts and any sum charged by reference to energy value and/or carbon content (regardless of whether the quantum of the charge is calculated by reference to energy value and/or carbon content or by reference to sums payable under this Agreement or otherwise), together with any and all penalties, interest and additions thereto;
|
Term:
|
as defined in Section 4.1;
|
Terminating Party:
|
as defined in Section 19.3.1;
|
Termination Event:
|
as defined in Section 19.2;
|
Third Party:
|
a Person other than a Party;
|
Third Party Claim:
|
as defined in Section 15.4(a);
|
Total ECCA:
|
as defined in Section 2.3.1(b);
|
Total ECCA Conditions Precedent:
|
as defined in Section 2.3.1(b);
|
Tranche:
|
as defined in Section 5.3;
|
Transfer Taxes:
|
as defined in Section 11.5;
|
Transporter:
|
any Person who contracts with Buyer (or any Person taking delivery, at the Driftwood LNG Terminal, of LNG sold to Buyer hereunder), for purposes of providing or operating any of the LNG Tankers; and
|
USD or US$:
|
the lawful currency from time to time of the United States of America.
|
1.2
|
Interpretation
|
1.2.1
|
The titles, headings, and numbering in this Agreement are included for convenience only and will have no effect on the construction or interpretation of this Agreement.
|
1.2.2
|
References in this Agreement to Sections and Exhibits are to those of this Agreement unless otherwise indicated. References to this Agreement and to agreements and contractual instruments will be deemed to include all exhibits, schedules, appendices, annexes, and other attachments thereto and all subsequent amendments and other modifications to such instruments, to the extent such amendments and other modifications are not prohibited by the terms of this Agreement.
|
1.2.3
|
The word “include” or “including” will be deemed to be followed by “without limitation.” The term “will” has the same meaning as “shall,” and thus imposes an obligation.
|
1.2.4
|
Whenever the context so requires, the singular includes the plural and the plural includes the singular, and the gender of any pronoun includes the other gender.
|
1.2.5
|
Unless otherwise indicated, references to any statute, regulation or other law will be deemed to refer to such statute, regulation or other law as amended or any successor law.
|
1.2.6
|
Unless otherwise indicated, references to a Person shall include such Person’s successors and permitted assigns.
|
1.2.7
|
Unless otherwise indicated, any reference to a time of Day shall be to Central Time in the United States of America.
|
1.2.8
|
Approximate conversions of any unit of measurement contained in parenthesis following the primary unit of measurement included in Sections 1 through 25 of this Agreement are inserted as a matter of operational convenience only to show the approximate equivalent in such different measurement. The obligations of the Parties under Sections 1 through 25 of this Agreement will be undertaken in respect of the primary unit of measurement and not in respect of any such approximate conversion.
|
1.3
|
Replacement of Rates and Indices No Longer Available
|
1.3.1
|
Subject to Section 1.3.6, if (a) a publication that contains a rate or index used in this Agreement ceases to be published for any reason or (b) such a rate or index ceases to exist, is materially modified, or no longer is used as a liquid
|
1.3.2
|
If the Parties fail to agree on a replacement rate or index pursuant to Section 1.3.1 within thirty (30) Days, the Parties may submit such issue to an Expert pursuant to Section 20.2, as amended by the provisions of this Section 1.3.2. Any Expert selected shall be instructed to select the published rate or index, or a combination of published rates or indices, with adjustments as necessary or appropriate, that most nearly preserves the intent and economic result of the original rates or indices. If the Parties are not able to agree upon an Expert within ten (10) Days after the receipt of the notice of request for expert determination, either Party may elect to refer the determination of the replacement rate or index for arbitration in accordance with Section 20.1.
|
1.3.3
|
If any rate used in this Agreement is not published for a particular date, but the publication containing such rate continues to be published and the rate itself continues to exist, the Parties shall use the published rate in effect for the date such rate was most recently published prior to the particular date, unless otherwise provided in this Agreement.
|
1.3.4
|
If any index used in this Agreement is not published for a particular date, but the publication containing such index continues to be published and the index itself continues to exist, the Parties shall use the published rate in effect for the date such rate was most recently published prior to the particular date, unless otherwise provided in this Agreement. If the index is subsequently published for the particular date, such published index will be substituted for the previously-used index and any calculations involving such index will be recalculated and the Parties will take any necessary actions based upon these revised calculations, including adjustments of amounts previously invoiced or paid.
|
1.3.5
|
If an incorrect value is published for any rate or index used in this Agreement and such error is corrected and published within ninety (90) Days of the date of the publication of such incorrect rate or index, such corrected rate or index will be substituted for the incorrect rate or index and any calculations involving such rate or index will be recalculated and the Parties will take any necessary actions based upon these revised calculations, including adjustments of amounts previously invoiced or paid.
|
1.3.6
|
Either Party may provide to the other Party notice at any time if such notifying Party reasonably believes that JKM has, when compared with JKM as at the Effective Date, ceased to be representative of the value of LNG delivered on a spot basis in China, Korea, Taiwan and Japan, due to a material decrease
|
2.
|
Approvals
|
2.1
|
Approvals
|
2.2
|
Change in Export Laws
|
2.3
|
Conditions Precedent
|
2.3.1
|
The Parties recognize and agree that this Agreement (other than the provisions of this Section 2.3 and Sections 1, 2.1, 2.2, 4.1 and 14 to 25, which shall all be in full force and effect as of the Effective Date) shall not become effective unless and until:
|
(a)
|
Driftwood has notified Seller that a positive final investment decision has been made by or on behalf of Driftwood in respect of the Phase 1 Project (such requirement, the “FID Condition Precedent”); and
|
(b)
|
the conditions set out in Section 4.1 of the Equity Capital Contribution Agreement between Driftwood Holdings LP and Total Delaware Inc. (the “Total ECCA”) have been satisfied or waived in accordance with the terms of the Total ECCA (such requirement, the “Total ECCA Conditions Precedent” and together with the FID Condition Precedent, the “Conditions Precedent”).
|
2.3.2
|
Promptly upon satisfaction of the Conditions Precedent, Seller shall notify Buyer of such satisfaction. Satisfaction of the FID Condition Precedent can be waived only by Seller upon notice to Buyer. Satisfaction of the Total ECCA Conditions Precedent can be waived only by mutual written agreement between the Parties. The date that the Conditions Precedent are satisfied or waived shall be the “CP Fulfillment Date.”
|
2.3.3
|
If the Total ECCA is terminated by either party thereto pursuant to Section 2.1(c) of the Total ECCA, then upon such termination of the Total ECCA, this Agreement shall automatically terminate without further action by either Party, and without any liability to either Party as a result of such termination.
|
3.
|
Subject Matter
|
3.1
|
Sale and Purchase of LNG
|
3.1.1
|
Seller shall sell and make available for delivery, or compensate Buyer if not made available for delivery, LNG in cargoes at the Delivery Point, and Buyer shall take and pay for, or compensate Seller if not taken, such LNG, in the quantities and at the prices set forth in and otherwise in accordance with and subject to the provisions of this Agreement.
|
3.1.2
|
Seller intends to load cargoes from the Driftwood LNG Terminal, but, upon not less than sixty (60) Days’ prior written notice and subject to the prior written consent of Buyer (such consent not to be unreasonably withheld or delayed), Seller may deliver cargoes to Buyer from any alternate source; provided, that:
|
(a)
|
LNG from such alternate source shall, when made available by Seller to Buyer, comply with the Specifications;
|
(b)
|
LNG from such alternate source shall comply with the specifications in Buyer’s relevant LNG sales contractual obligation(s) in the reasonable determination of Buyer;
|
(c)
|
Seller has agreed to reimburse Buyer an amount equal to Buyer’s reasonable estimate of the increased costs that would be incurred as a result of the delivery of LNG at such alternate source;
|
(d)
|
the delivery of LNG at an alternate source is necessitated by operational conditions affecting the Driftwood LNG Terminal that have reduced the capability of the Driftwood LNG Terminal to produce or load LNG;
|
(e)
|
the receipt of LNG at an alternate source will not affect the ability of LNG Tankers to perform such cargo receipts and deliveries and other cargo receipts and deliveries in a timely fashion and in accordance with Buyer’s contractual obligations, in the reasonable determination of Buyer;
|
(f)
|
the facilities at the alternate source are compatible with LNG Tankers and acceptable in the reasonable determination of Buyer;
|
(g)
|
any other condition reasonably imposed by Buyer has been satisfied by Seller to Buyer’s reasonable satisfaction; and
|
(h)
|
the alternate source and the voyage thereto do not present added risks or dangers to any LNG Tanker or personnel of Buyer or any Affiliate of Buyer in the reasonable determination of Buyer.
|
4.
|
Term
|
4.1
|
Term
|
4.2
|
Date of Substantial Completion
|
4.2.1
|
The Day Buyer is notified by Seller as the day on which a Plant achieves Substantial Completion shall be the “Date of Substantial Completion” for such Plant.
|
4.2.2
|
For all purposes of this Agreement, “Substantial Completion” of a Plant shall mean “Substantial Completion” of the “Project” that includes such Plant, in accordance with the EPC Contract pursuant to which such Plant is to be constructed (where “Project” and “Substantial Completion” are defined according to such EPC Contract). Seller shall provide prompt written notice to Buyer in the event that the terms of any EPC Contract are amended in a manner that alters the manner in which the Date of Substantial Completion of Plant 1, Plant 2 or Plant 3 is determined under such EPC Contract.
|
4.3
|
Date of Full Operations
|
4.3.1
|
The Day occurring three hundred and sixty-five (365) Days after the Date of Substantial Completion of a Plant, or any earlier date during such three hundred sixty-five (365)-Day period as elected by Seller and notified by Seller with not less than one hundred eighty (180) Days’ prior notice, shall be the “Date of Full Operations” for such Plant.
|
4.3.2
|
For all purposes of this Agreement, a Plant shall be considered to have achieved “Full Operations” as of the Date of Full Operations of such Plant.
|
4.3.3
|
If Seller elects an early Date of Full Operations of a Plant pursuant to Section 4.3.1, then:
|
(a)
|
the ACQ shall be adjusted according to Section 5.1.3; and
|
(b)
|
if applicable, Seller shall issue an ADP, or, as applicable, a revised ADP, that includes any additional cargo loadings required as a result thereof, with Seller using reasonable efforts to accommodate Buyer’s requests in respect thereof and making any changes in full-cargo lots (with any quantity that cannot be scheduled due to the full-cargo lot requirement being deemed a Round-Down Quantity or Round-Up Quantity, as applicable, carried forward to the next Contract Year).
|
4.4
|
Contract Year
|
(a)
|
the first Contract Year is the period of time beginning on the Date of Full Operations of the first Phase 1 Plant to achieve Full Operations
|
(b)
|
the final Contract Year is the period of time beginning on the January 1st immediately preceding the final Day of the Term and ending on the final Day of the Term (the “Final Contract Year”).
|
5.
|
Quantities
|
5.1
|
ACQ
|
5.1.1
|
ACQ. Subject to Sections 5.1.2 and 5.1.3, Buyer’s annual contract quantity of LNG under this Agreement (“ACQ”) for any given Contract Year shall be seventy-eight million two hundred fifty-five thousand (78,255,000) MMBtu; provided, however, that if prior to the Date of Full Operations of Plant 4, Seller is notified by Driftwood during the establishment of the ADP that the total LNG to be produced by Plant 1, Plant 2 and Plant 3 is anticipated by Driftwood, acting as a reasonable and prudent operator to be less than seven hundred eighty-two million, five hundred fifty thousand (782,550,000) MMBtu for the applicable Contract Year, as notified by Seller, then Seller, in its sole discretion, may elect to reduce the ACQ for such Contract Year by such difference, but not below sixty-five million two hundred twelve thousand five hundred (65,212,500) MMBtu.
|
5.1.2
|
First and Final Contract Years. The ACQ for the First Contract Year and Final Contract Year shall be pro-rated based on the number of days in each such Contract Year.
|
5.1.3
|
Start-Up.
|
(a)
|
The ACQ during the period of time from the Date of Full Operations of the first Phase 1 Plant to achieve Full Operations until the Date of Full Operations of the second Phase 1 Plant to achieve Full Operations shall be twenty-six million eighty-five thousand (26,085,000) MMBtu, pro-rated for the number of days in such period.
|
(b)
|
The ACQ during the period of time from the Date of Full Operations of the second Phase 1 Plant to achieve Full Operations until the Date of Full Operations of the third Phase 1 Plant to achieve Full Operations shall be fifty-two million one hundred seventy thousand (52,170,000) MMBtu, pro-rated for the number of days in such period.
|
5.1.4
|
Measurement Units. The ACQ shall be expressed in MMBtus. All references in this Agreement to cargoes or other units are solely for operational convenience.
|
5.2
|
Adjusted Annual Contract Quantity
|
5.2.1
|
any Round-Up Quantity for such Contract Year, determined in accordance with Section 5.4.2; and
|
5.2.2
|
any Round-Down Quantity for the previous Contract Year, determined in accordance with Section 5.4.3, and carried forward to the current Contract Year;
|
5.2.3
|
any Major Scheduled Maintenance Quantities for such Contract Year, if any, determined in accordance with Section 5.5;
|
5.2.4
|
any Round-Up Quantity taken in the previous Contract Year, determined in accordance with Section 5.4.2, and carried forward as a deduction to the current Contract Year; and
|
5.2.5
|
any Round-Down Quantity for the current Contract Year, determined in accordance with Section 5.4.3.
|
5.3
|
Seasonal Deliveries
|
5.3.1
|
the first (1st) Tranche shall be scheduled for delivery on a reasonably ratable basis throughout the months of January, February, March, October, November and December of the relevant Contract Year, taking into consideration planned maintenance at the Driftwood LNG Terminal; and
|
5.3.2
|
the second (2nd) Tranche shall be scheduled for delivery on a reasonably ratable basis throughout the months of April, May, June, July, August and September of the relevant Contract Year, taking into consideration planned maintenance at the Driftwood LNG Terminal.
|
5.4
|
Round-Up/Round-Down Quantities
|
5.4.1
|
If, during the development of the Annual Delivery Program for a Contract Year, it appears that the delivery during such Contract Year of the AACQ
|
5.4.2
|
If the other Party, through the use of reasonable efforts, is able to schedule the delivery or receipt, as applicable, of the additional LNG, then the difference between the AACQ and the Preliminary AACQ shall be the “Round-Up Quantity” for such Contract Year; provided, however, that the Round-Up Quantity shall be less than a full cargo lot.
|
5.4.3
|
If the other Party, despite its exercise of reasonable efforts, is not able to schedule the delivery or receipt, as applicable, of the additional LNG, or if neither Party requests a Round-Up Quantity pursuant to Section 8.1.3(b) or 8.2.1, as applicable, then the Stub Quantity shall be the “Round-Down Quantity” for such Contract Year; provided, however, that the Round-Down Quantity shall be less than a full cargo lot.
|
5.5
|
Major Scheduled Maintenance
|
5.5.1
|
Seller may only exercise its right to such reduction in a Contract Year to the extent Driftwood determines, as a Reasonable and Prudent Operator, that major scheduled maintenance is required for operational reasons;
|
5.5.2
|
Seller shall notify Buyer of its exercise of, and the amount of, Major Scheduled Maintenance Quantity pursuant to Section 8.1.1(b);
|
5.5.3
|
the Major Scheduled Maintenance Quantity reduction elected by Seller during any Contract Year may not exceed seven decimal five percent (7.5%) of the ACQ for such Contract Year; and
|
5.5.4
|
the cumulative amount of all Major Scheduled Maintenance Quantity reductions elected by Seller pursuant to this Section 5.5 shall not exceed twenty-five percent (25%) of the ACQ during any six (6) consecutive Contract Years.
|
5.6
|
Seller’s Delivery Obligation
|
5.6.1
|
During any Contract Year, Seller shall make available to Buyer the Scheduled Cargo Quantity with respect to each cargo scheduled in the ADP for such Contract Year, less;
|
(a)
|
any quantities of LNG not taken by Buyer for any reasons attributable to Buyer (other than quantities for which Buyer is excused pursuant to this Agreement from taking due to Seller’s breach of this Agreement), including quantities not taken by Buyer due to Force Majeure affecting Buyer;
|
(b)
|
any quantities of LNG not made available by Seller due to Force Majeure affecting Seller; and
|
(c)
|
any cargo suspended pursuant to Section 19.1.
|
5.6.2
|
Except as otherwise excused in accordance with the provisions of this Agreement, if, during any Contract Year, for any reason other than those specified in Section 5.6.1, Seller does not make available the Scheduled Cargo Quantity with respect to any cargo identified in Section 5.6.1 then the amount by which the Scheduled Cargo Quantity for such cargo exceeds the quantity of LNG made available by Seller in relation to such cargo shall be the “Cargo DoP Quantity”. Seller shall make a payment to Buyer for the Cargo DoP Quantity in an amount equal to:
|
(a)
|
in respect of any Cargo DoP Quantity or portion thereof for which a replacement quantity can be purchased:
|
(i)
|
an amount equal to the actual, documented amount paid by Buyer for the purchase of a replacement quantity of LNG or Gas (not to exceed the MMBtu equivalent of the Cargo DoP Quantity); less
|
(ii)
|
an amount equal to the CSP, multiplied by the Cargo DoP Quantity; plus
|
(iii)
|
any actual, reasonable and verifiable incremental costs incurred by Buyer as a result of such failure; less
|
(iv)
|
any actual, reasonable and verifiable savings obtained by Buyer as a result of such failure; plus
|
(b)
|
in respect of any Cargo DoP Quantity or portion thereof for which a replacement quantity cannot be purchased, any actual, reasonable and verifiable costs incurred by Buyer by adjusting, reducing, or
|
5.6.3
|
Notwithstanding the foregoing, if the Cargo DoP Quantity is within the operational tolerance of three percent (3%) of the Scheduled Cargo Quantity (“Operational Tolerance”) (such Operational Tolerance to be exercised by Seller only with respect to operational matters regarding the Driftwood LNG Terminal, and without regard commercial considerations), the Cargo DoP Payment shall be zero.
|
5.6.4
|
Buyer shall use reasonable efforts to mitigate Seller’s losses in accordance with this Section 5.6.
|
5.6.5
|
Notwithstanding the provisions of Section 15, nothing in this Section 5.6 shall limit Buyer’s right to:
|
(a)
|
recover demurrage pursuant to Section 7.12.3 and amounts in respect of boil-off pursuant to Section 7.12.4;
|
(b)
|
recover damages specified in Section 12.3 for delivery of Off-Spec LNG; or
|
(c)
|
terminate this Agreement in accordance with Section 19.
|
5.7
|
Buyer’s Purchase Obligation
|
5.7.1
|
During any Contract Year, Buyer shall take and pay for the Scheduled Cargo Quantity with respect to each cargo scheduled in the ADP for such Contract Year, less:
|
(a)
|
any quantities of LNG not made available by Seller for any reasons attributable to Seller (other than quantities for which Seller is excused pursuant to this Agreement from making available due to Buyer’s breach of this Agreement), including quantities not made available by Seller due to Force Majeure affecting Seller;
|
(b)
|
any quantities of LNG not taken by Buyer due to Force Majeure affecting Buyer;
|
(c)
|
any quantities of LNG that the relevant LNG Tanker is not capable of loading due to Seller’s delivery of LNG that has a Gross Heating
|
(d)
|
any quantities of Off-Spec LNG that Buyer is relieved from taking pursuant to Section 12.3.
|
5.7.2
|
If, with respect to any cargo identified in Section 5.7.1, Buyer does not take all or part of the Scheduled Cargo Quantity of such cargo, and such failure to take is not otherwise excused pursuant to Section 5.7.1, then the amount by which the Scheduled Cargo Quantity for such cargo exceeds the quantity of LNG taken by Buyer in relation to such cargo shall be the “Cargo Shortfall Quantity”.
|
5.7.3
|
Buyer shall pay Seller an amount equal to the Cargo Shortfall Quantity, multiplied by the CSP (the “Cargo Shortfall Payment”). For purposes of calculating the Cargo Shortfall Payment, the CSP shall be determined as of the Month in which the applicable Delivery Window begins.
|
5.7.4
|
Notwithstanding the foregoing, if the Cargo Shortfall Quantity is within the Operational Tolerance (such Operational Tolerance to be exercised by Buyer only with respect to operational matters regarding the LNG Tanker, and without regard to commercial considerations), the Cargo Shortfall Payment shall be zero.
|
5.7.5
|
Seller shall use reasonable efforts to sell or cause to be sold the Cargo Shortfall Quantity (whether as LNG or Gas) to a Third Party or multiple Third Parties through one or more sales (each such sale, a “Mitigation Sale”) generating a Mitigation Sale Payment. Seller shall not be obliged to effect or cause to be effected any Mitigation Sale under its third-party sales obligations if such sales obligations were effective at the time of the earlier to occur of (i) Buyer’s failure to take such LNG; or (ii) Buyer’s notice to Seller that it will not take such LNG.
|
5.7.6
|
If Seller sells or causes to be sold the Cargo Shortfall Quantity or any portion thereof in a Mitigation Sale, Seller shall, within ten (10) Days of Seller’s receipt of the final payment from a Mitigation Sale, refund to Buyer an amount (the “Mitigation Sale Payment”) equal to the lesser of (x) the Cargo Shortfall Payment in respect of the Cargo Shortfall Quantity (less any Mitigation Sale Payments already received pursuant to other Mitigation Sales in respect of the same Cargo Shortfall Quantity) and (y) an amount calculated as follows:
|
(a)
|
the proceeds of the Mitigation Sale; plus
|
(b)
|
any actual, reasonable and verifiable savings obtained by Seller as a result of the Mitigation Sale as opposed to the sale of LNG to Buyer,
|
(c)
|
any actual, reasonable and verifiable incremental costs incurred by Seller as a result of the Mitigation Sale.
|
5.7.7
|
Seller shall use reasonable efforts to mitigate Buyer’s losses in accordance with this Section 5.7.
|
6.
|
Delivery Point, Title and Risk, Destination
|
6.1
|
Delivery Point
|
6.2
|
Title and Risk
|
6.3
|
Destination
|
7.
|
Transportation and Loading
|
7.1
|
Transportation by Buyer
|
7.2
|
Driftwood LNG Terminal
|
7.2.1
|
During the period from the CP Fulfillment Date and continuing through the Date of Full Operations of each Phase 1 Plant, Seller shall proceed diligently to construct, test, commission, maintain and operate the applicable Plant in
|
7.2.2
|
During the period from the Date of Full Operations of a Phase 1 Plant and continuing throughout the Term, Seller shall have access to and use of and cause to be maintained and operated the Driftwood LNG Terminal in accordance with the following: (a) the terms and conditions set forth in this Agreement; (b) Applicable Laws; (c) International Standards; and (d) to the extent not inconsistent with International Standards, such good and prudent practices as are generally followed in the LNG industry by Reasonable and Prudent Operators of similar LNG liquefaction terminals.
|
7.2.3
|
The Driftwood LNG Terminal shall include the following:
|
(a)
|
systems for communications with LNG Tankers;
|
(b)
|
at least one berth, capable of berthing and mooring an LNG Tanker having a displacement of no more than one hundred forty-nine thousand (149,000) tons, an overall length of no more than one thousand thirty-four (1,034) feet (approximately three hundred fifteen (315) meters), a beam of no more than one hundred sixty-four (164) feet (approximately fifty (50) meters), and a draft of no more than forty (40) feet (approximately twelve (12) meters), which LNG Tankers can safely reach, and safely depart, fully laden, and at which LNG Tankers can lie safely berthed and load at all states of the tide safely afloat;
|
(c)
|
lighting sufficient to permit loading operations by day or by night, to the extent permitted by Governmental Authorities (it being acknowledged, however, that Seller shall in no event be obligated to allow nighttime berthing operations at the Driftwood LNG Terminal if Seller determines that such operations during nighttime hours could pose safety or operational risks to the Driftwood LNG Terminal, an LNG Tanker, or a Third Party);
|
(d)
|
facilities capable of loading LNG at an approximate rate of up to twelve thousand (12,000) cubic meters per hour at the Delivery Point, with three (3) LNG loading arms each having a reasonable operating envelope to allow for ship movement in accordance with International Standards;
|
(e)
|
a vapor return line system of sufficient capacity to allow for transfer of Gas necessary for safe LNG loading operations to take place at the allocated rates described in Section 7.2.3(d);
|
(f)
|
a suitable gangway allowing access to each LNG Tanker from the Driftwood LNG Terminal;
|
(g)
|
emergency shut down system capable of interconnecting with an LNG Tanker at berth;
|
(h)
|
LNG storage facilities;
|
(i)
|
LNG liquefaction facilities;
|
(j)
|
qualified and competent personnel, fluent in English to coordinate with the LNG Tanker during loading operations; and
|
(k)
|
facilities for the sampling and analysis of LNG.
|
7.2.4
|
Services and facilities not provided by Seller include the following: (a) facilities and loading lines for liquid or gaseous nitrogen to service an LNG Tanker; (b) facilities for providing bunkers; (c) facilities for the handling and delivery to the LNG Tanker of ship’s stores, provisions and spare parts; and (d) nitrogen rejection. Buyer shall be required to obtain towing, escort, line handling, and pilot services as described in Section 7.5.3.
|
7.3
|
Compatibility of the Driftwood LNG Terminal with LNG Tankers
|
7.3.1
|
Buyer shall ensure, at no cost to Seller, that each of the LNG Tankers is fully compatible with the general specifications set forth in Section 7.2.3 and any modifications made to the Driftwood LNG Terminal that are Required Modifications. Should an LNG Tanker fail materially either to be compatible with the Driftwood LNG Terminal, or to be in compliance with the provisions of Sections 7.5 and 7.6, Buyer shall not employ such LNG Tanker until it has been modified to be so compatible or to so comply.
|
7.3.2
|
During the period from the Date of Full Operations of a Phase 1 Plant and continuing throughout the Term, Seller shall be entitled to modify the Driftwood LNG Terminal in any manner whatsoever, provided that: (w) such modifications do not render the Driftwood LNG Terminal noncompliant with International Standards; (x) such modifications do not render the Driftwood LNG Terminal incompatible with an LNG Tanker that is compatible with the general specifications set forth in Section 7.2.3; (y) such modifications, once finalized, do not reduce the ability of Seller to make available LNG in accordance with the terms of this Agreement; and (z) such modifications do not otherwise conflict with Seller’s obligations hereunder. Notwithstanding the foregoing, Seller may modify the Driftwood LNG Terminal in a manner that would render it incompatible with an LNG Tanker if such modification is required by and is made pursuant to a change in Applicable Laws, a change
|
7.3.3
|
In the event the LNG Tanker fails to be compatible with the Driftwood LNG Terminal due to a modification to the Driftwood LNG Terminal that is not a Required Modification, the actual and documented costs and expenses incurred by Buyer solely as a result of such modification, including as a result of delays in the berthing of the LNG Tanker at the Driftwood LNG Terminal, repositioning of the LNG Tanker, and of the modifications of the LNG Tanker directly caused by such modification shall be reimbursed by Seller to Buyer.
|
7.4
|
Buyer Inspection Rights in Respect of the Driftwood LNG Terminal
|
7.4.1
|
Upon giving reasonable advance notice and obtaining Seller’s prior written consent, which consent shall not be unreasonably withheld or delayed, a reasonable number of Buyer’s designated representatives may from time to time (including during the period of construction of the Driftwood LNG Terminal), (x) not more often than once every calendar quarter or (y) following a material change to the Driftwood LNG Terminal (excluding during the period of construction of the Driftwood LNG Terminal), inspect the operation of the Driftwood LNG Terminal, and not more often than once every five (5) years, audit the health and safety policies, procedures and records of the Driftwood LNG Terminal, of Seller and of operator of the Driftwood LNG Terminal. Such inspection or audit shall occur between 8:00 a.m. Central Time and 5:00 p.m. Central Time on a Business Day scheduled by Seller. Seller shall use commercially reasonable efforts to schedule the inspection or audit on the date requested by Buyer. Any such inspection or audit shall be at Buyer’s sole risk and expense. In conjunction with any such inspection or audit, Seller shall provide, and shall procure that its Affiliates provide, Buyer reasonable access at reasonable times and places (taking into consideration schedule impact) to (a) relevant personnel in order to discuss the progress of the construction of the Driftwood LNG Terminal and the operation and maintenance of the Driftwood LNG Terminal (as applicable) and (b) relevant documentation, if any, available to Seller in support of such discussions. Buyer (and its designees) shall carry out any such inspection or audit without any interference with or hindrance to the safe and efficient operation of the Driftwood LNG Terminal. Buyer’s right to inspect and audit the Driftwood LNG Terminal shall be limited to verifying Seller’s compliance with Seller’s obligations under this Agreement. No inspection or audit (or lack thereof) of the Driftwood LNG Terminal by Buyer hereunder, or any requests or observations made to Seller or its representatives by or on behalf of Buyer in connection with any such inspection or audit, shall (i) modify or amend Seller’s obligations, representations, warranties and covenants hereunder; or (ii) constitute an acceptance or waiver by Buyer of Seller’s obligations hereunder.
|
7.4.2
|
Buyer shall indemnify and hold Seller and its Affiliates harmless from any Claims and Losses resulting from Buyer’s inspection or audit of the Driftwood LNG Terminal pursuant to Section 7.4.1.
|
7.4.3
|
Buyer shall have the right to reject the Driftwood LNG Terminal if it does not comply materially with the provisions of Section 7, provided that:
|
(a)
|
neither the exercise nor the non-exercise of such right shall reduce the responsibility of Seller to Buyer in respect of the Driftwood LNG Terminal and its operation, nor increase Buyer’s responsibilities to Buyer or Third Parties for the same; and
|
(b)
|
without prejudice to Section 14, Seller’s obligations under this Agreement shall not be excused or suspended by reason of the Driftwood LNG Terminal failing to comply materially with the provisions of this Agreement.
|
7.5
|
LNG Tankers
|
7.5.1
|
Buyer shall cause each LNG Tanker to comply with the requirements of this Section 7.5 and the requirements of Section 7.6 in all respects.
|
7.5.2
|
Each LNG Tanker shall comply with all Applicable Laws and International LNG Vessel Standards, including those that relate to seaworthiness, design, safety, environmental protection and navigation, and shall obtain all Approvals required by Governmental Authorities, in each case to enable such LNG Tanker to enter, leave and carry out all required operations at the Driftwood LNG Terminal. Each LNG Tanker shall at all times have on board valid documentation evidencing all such Approvals. Each LNG Tanker shall at all times be in possession of valid documents of compliance and safety management certificates, and shall have an effective management system in operation and an emergency response plan that addresses all identified risks and provides proper controls for dealing with these risks.
|
7.5.3
|
Buyer shall be required to obtain towing, escort, line handling, and pilot services, in accordance with this Section 7.5.3. Seller shall cause an Affiliate of Driftwood to procure tug services at the Driftwood LNG Terminal from a competent and experienced tug services provider. As soon as reasonably practicable after the Affiliate has so contracted for tug services, Seller shall notify Buyer thereof. Prior to the arrival of any LNG Tanker at the Loading Port, Buyer shall cause Transporter or the master of each LNG Tanker (acting on behalf of the ship-owner and charterer) making use of the port or marine facilities at the Loading Port on behalf of Buyer, to enter into a tug services agreement with the designated Affiliate of Driftwood for Buyer’s procurement, at its sole risk and expense, of tug services at the Driftwood LNG Terminal, which tug services shall include towing and escort services.
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7.5.4
|
Buyer shall pay or cause to be paid: (a) all Port Charges directly to the appropriate Person (including reimbursing Seller for any documented Port Charges paid by Seller, Driftwood or the operator of the Driftwood LNG Terminal on Buyer’s behalf); and (b) all documented charges payable by reason of any LNG Tanker having to shift from berth at the Driftwood LNG Terminal as a result of the action or inaction of Buyer.
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7.5.5
|
Each LNG Tanker must satisfy the following requirements:
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(a)
|
Except as otherwise mutually agreed in writing by the Parties, each LNG Tanker shall be compatible with the specifications of the Driftwood LNG Terminal identified in Section 7.2.3 and any modifications to the Driftwood LNG Terminal pursuant to Section 7.3.2, and shall be of a sufficient size to load the applicable Scheduled Cargo Quantity. If Buyer’s LNG Tanker is not capable of loading the applicable Scheduled Cargo Quantity, Buyer shall be deemed to have failed to take the shortfall quantity and the provisions of Sections 5.7.2 to 5.7.7 shall apply, except that Buyer shall not be deemed to have failed to take a shortfall quantity and the provisions of Sections 5.7.2 to 5.7.7 shall not apply if the volume equivalent of the Scheduled Cargo Quantity at the nominated Gross Heating Value has been loaded.
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(b)
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Except as otherwise agreed in writing by Seller, which agreement shall not be unreasonably withheld or delayed, each LNG Tanker shall have a gross volumetric capacity between one hundred twenty-
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(c)
|
Each LNG Tanker shall be, in accordance with International Standards, (i) fit in every way for the safe loading, handling and carrying of LNG in bulk at atmospheric pressure; (ii) tight, staunch, strong and otherwise seaworthy; and (iii) equipped with facilities for mooring and unmooring and with cargo handling and storage systems (including instrumentation) necessary for the safe loading, handling, carrying and measuring of LNG, in each case in good order and condition.
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(d)
|
Each LNG Tanker shall at all times be maintained in class with any classification society that is a member of International Association of Classification Societies Ltd. (IACS) and that has experience in the classification of LNG vessels.
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(e)
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Each LNG Tanker shall have been constructed to all applicable International Standards (including the International Code for the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk).
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(f)
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Each LNG Tanker shall comply with, and shall be fully equipped, supplied, operated, and maintained to comply with, all applicable International Standards and Applicable Laws, including those that relate to seaworthiness, design, safety, environmental protection, navigation, and other operational matters, and all procedures, permits, and approvals of Governmental Authorities for LNG vessels that are required for the transportation and loading of LNG at the Loading Port. Unless approved by Seller in writing, which approval shall not be unreasonably withheld or delayed, an LNG Tanker shall be prohibited from engaging in any maintenance, repair or in-water surveys while berthed at the Driftwood LNG Terminal. Each LNG Tanker shall comply fully with the guidelines of any Governmental Authority of the United States of America.
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(g)
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The officers and crew of each LNG Tanker shall have the ability, experience, licenses and training commensurate with the performance of their duties in accordance with internationally accepted standards with which it is customary for Reasonable and Prudent Operators of LNG vessels to comply and as required by Governmental Authorities and any labor organization having jurisdiction over the LNG Tanker or her crew. Without in any way limiting the foregoing, the master, chief engineer, all cargo engineers and all deck officers shall be fluent in written and oral English and
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(h)
|
Each LNG Tanker shall have communication equipment complying with applicable regulations of Governmental Authorities and permitting such LNG Tanker to be in constant communication with the Driftwood LNG Terminal, the Vessel Traffic Information System (VTIS) and other vessels in the area.
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(i)
|
Provided that the Driftwood LNG Terminal supplies a vapor return line meeting the requirements of Section 7.2.3(e), each LNG Tanker shall be capable of loading a full cargo of LNG in a maximum of nineteen (19) hours, in addition to any time for the connecting, cooling, draining, purging and disconnecting of liquid arms.
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(j)
|
Each LNG Tanker shall procure and maintain Hull and Machinery Insurance and P&I Insurance in accordance with Section 15.6.
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7.6
|
LNG Tanker Inspections; LNG Tanker Vetting Procedures; Right to Reject LNG Tanker
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7.6.1
|
During the Term, on prior reasonable notice to Buyer, Seller may, at its sole risk, send its qualified representatives to inspect during normal working hours any LNG Tanker as Seller may consider necessary to ascertain whether the LNG Tanker complies with this Agreement. Seller shall bear all the costs and expenses in connection with any inspection conducted hereunder. Any such inspection may include, as far as is practicable having regard to the LNG Tanker’s operational schedule, examination of the records related to the LNG Tanker’s hull, cargo and ballast tanks, machinery, boilers, auxiliaries and equipment; examination of the LNG Tanker’s deck, engine and official log books; review of records of surveys by the LNG Tanker’s classification society and relevant Governmental Authorities; and review of the LNG Tanker’s operating procedures and performance of surveys, both in port and at sea. Additionally, each LNG Tanker shall have been inspected and reported upon by a SIRE Accredited Inspector within six (6) Months of the time of its initial use at the Driftwood LNG Terminal, and each LNG Tanker shall be reported upon by a SIRE Accredited Inspector once every twelve (12) Months for the first ten (10) years of such LNG Tanker’s useful life and once every six (6) Months thereafter, and each inspection report of such SIRE Accredited Inspector shall show, to the reasonable satisfaction of Seller, no material deficiencies in the safety or operability of such LNG Tanker. Any inspection carried out pursuant to this Section 7.6.1: (a) shall not interfere with, or hinder, any LNG Tanker’s safe and efficient construction or operation; and (b) shall not entitle Seller or any of its representatives to make any request or recommendation directly to Transporter except through Buyer. No inspection (or lack thereof) of an LNG Tanker hereunder shall: (i) modify
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7.6.2
|
Seller shall indemnify and hold Buyer and its Affiliates harmless from any Claims and Losses resulting from Seller’s inspection of any LNG Tanker pursuant to Section 7.6.1.
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7.6.3
|
Buyer shall comply with all LNG Tanker vetting procedures, as set forth in the Driftwood Marine Operations Manual.
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7.6.4
|
Seller shall have the right to reject any LNG vessel that Buyer intends to use to take delivery of LNG hereunder at the Driftwood LNG Terminal if such LNG vessel does not comply materially with the provisions of Section 7, provided that:
|
(a)
|
neither the exercise nor the non-exercise of such right shall reduce the responsibility of Buyer to Seller in respect of such LNG vessel and her operation, nor increase Seller’s responsibilities to Buyer or Third Parties for the same; and
|
(b)
|
Buyer’s obligations under this Agreement shall not be excused or suspended by reason of Buyer’s inability (pursuant to the foregoing) to use a vessel as an LNG Tanker.
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7.7
|
Port Liability Agreement
|
7.7.1
|
Buyer shall cause Transporter or the master of each LNG Tanker (acting on behalf of the ship-owner and charterer) making use of the port or marine facilities at the Loading Port on behalf of Buyer, to execute a Port Liability Agreement prior to such LNG Tanker’s arrival at the Loading Port. Seller shall engage in good faith consultation with Buyer in the development of the form of the Port Liability Agreement and shall act as a Reasonable and Prudent Operator in developing the form of the Port Liability Agreement. The Port Liability Agreement shall treat Transporter in a non-discriminatory manner in comparison to all other owners and charterers of LNG vessels that use or transit the Loading Port. In the event the master of an LNG Tanker fails to execute the Port Liability Agreement, Buyer shall indemnify and hold Seller and each owner and operator of the Driftwood LNG Terminal or portion thereof harmless from any Claims brought against, or Losses incurred by Seller or any owner and operator of Driftwood LNG Terminal or any portion thereof, arising from such failure. If, as a result of Transporter executing the Port Liability Agreement, Transporter is liable to the LNG Tanker’s P&I Club for an additional premium for the LNG Tanker’s P&I indemnity coverage, and if Buyer is liable to Transporter for such additional premium, then Seller
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7.7.2
|
Subject to Section 7.7.1 and without prejudice to the terms of the Port Liability Agreement, Seller releases Buyer, its Affiliates and their respective shareholders and members, officers, directors, employees, designees, representatives, and agents from liability to Seller incident to all Claims and Losses that may exist, arise or be threatened currently or in the future at any time following the Effective Date and whether or not of a type contemplated by either Party at any time, brought by any Person for injury to, illness or death of any employee of Seller, or for damage to or loss of the Driftwood LNG Terminal, which injury, illness, death, damage or loss arises out of, is incident to, or results from the performance or failure to perform this Agreement by Buyer, or any of its Affiliates, shareholders and members, officers, directors, employees, designees, representatives and agents.
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7.7.3
|
Subject to Section 7.7.1 and without prejudice to the terms of Section 12 or the Port Liability Agreement, Buyer releases Seller and its Affiliates, Driftwood and its Affiliates, and their respective shareholders, officers, members, directors, employees, designees, representatives, and agents from liability to Buyer incident to all Claims and Losses that may exist, arise or be threatened currently or in the future at any time following the Effective Date and whether or not of a type contemplated by either Party at any time, brought by any Person for injury to, illness or death of any employee of Buyer or its Affiliates, or for damage to or loss of any LNG Tanker, which injury, illness, death, damage or loss arises out of, is incident to, or results from the performance or failure to perform this Agreement by Seller or its Affiliates, Driftwood or its Affiliates, or their respective shareholders officers, members, directors, employees, designees, representatives and agents.
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7.7.4
|
The initial form of Port Liability Agreement developed in accordance with Section 7.7.1 may be amended from time to time without consent of Buyer only if after any such amendment the revised terms of such Port Liability Agreement: (a) do not negatively impact Buyer’s ability to perform its obligations or exercise its rights under this Agreement, (b) treat Transporter in a non-discriminatory manner in comparison to all other owners and charterers of LNG vessels that use or transit the Loading Port, and (c) do not prevent any Transporter from obtaining full P&I indemnity coverage from a P&I Club, and such P&I indemnity will cover all Claims and Losses pursuant to such Port Liability Agreement in relation to use of the Loading Port by an LNG Tanker. Seller shall promptly notify, or cause to be notified, Buyer upon any amendment to the Port Liability Agreement and shall provide a copy of the amended Port Liability Agreement to Buyer.
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7.8
|
Driftwood Marine Operations Manual
|
7.9
|
Loading of LNG Tankers
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7.9.1
|
Except as otherwise specifically provided, the terms of this Section 7.9 shall apply to all LNG Tankers calling at the Driftwood LNG Terminal.
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7.9.2
|
Not later than twenty (20) Days prior to the ETA, Buyer shall notify, or cause the master of the LNG Tanker to notify, Driftwood of the information specified below (“In-Transit First Notice”):
|
(a)
|
name of the LNG Tanker, the volume of LNG onboard at the time the relevant notice is issued and the operator and owner of such LNG Tanker;
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(b)
|
any operational deficiencies in the LNG Tanker that may affect either its performance at the Driftwood LNG Terminal or its approach to or departure from the Driftwood LNG Terminal;
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(c)
|
whether the LNG Tanker will require cool-down service upon arrival at the Driftwood LNG Terminal, and, if so, the quantity of LNG (in cubic meters) estimated to be required for such cool-down service;
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(d)
|
whether the LNG Tanker will require gas-up service upon arrival at the Driftwood LNG Terminal; and
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(e)
|
the ETA.
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7.9.3
|
With respect to each LNG Tanker scheduled to call at the Driftwood LNG Terminal, Buyer shall give, or cause the master of the LNG Tanker to give, to Driftwood the following notices. Each such notice shall include details of any significant change in the information provided pursuant to Section 7.9.2 (as updated pursuant to subsequent notices) since the immediately preceding notice was given (including, subject to Sections 7.6 and 8.3, any change to the LNG Tanker):
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(a)
|
A second notice (“In-Transit Second Notice”), which shall be sent ninety-six (96) hours prior to the ETA set forth in the In-Transit First Notice or as soon as practicable prior to such ETA if the sea time between the point of departure of the LNG Tanker and the Loading Port is less than ninety-six (96) hours, stating the LNG Tanker’s then ETA. If, thereafter, such ETA changes by more than six (6) hours, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Driftwood notice of the corrected ETA;
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(b)
|
A third notice (“In-Transit Third Notice”), which shall be sent forty-eight (48) hours prior to the ETA set forth in the In-Transit Second Notice (as corrected), confirming or amending such ETA. If, thereafter, such ETA changes by more than six (6) hours, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Driftwood notice of the corrected ETA;
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(c)
|
A fourth notice (“In-Transit Fourth Notice”), which shall be sent twenty-four (24) hours prior to the ETA set forth in the In-Transit Third Notice (as corrected), confirming or amending such ETA. If, thereafter, such ETA changes by more than three (3) hours, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Driftwood notice of the corrected ETA;
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(d)
|
A fifth notice (“In-Transit Final Notice”), which shall be sent twelve (12) hours prior to the ETA set forth in the In-Transit Fourth Notice (as corrected), confirming or amending such ETA. If, thereafter, such ETA changes by more than one (1) hour, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Driftwood notice of the corrected ETA; and
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(e)
|
An NOR, which shall be given at the time prescribed in Section 7.10.
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7.9.4
|
Except where prohibited by any applicable Governmental Authority or International Standards, Buyer shall have the right to cause an LNG Tanker to burn Gas as fuel during operations at the Driftwood LNG Terminal (including while conducting cargo loading operations). Any quantity of Gas
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7.9.5
|
Seller shall have a right to use or dispose of, or cause to be used or disposed of, all Gas returned to the Driftwood LNG Terminal during cool-down or gas-up operations without compensation to Buyer. Seller shall have a right to use or dispose of, or cause to be used or disposed of, all Gas returned to the Driftwood LNG Terminal during loading operations, provided that Gas returned to the Driftwood LNG Terminal during loading shall be deducted for determining the quantity loaded for Buyer’s account in accordance with Paragraph 11(c)(ii) of Exhibit A and the formula set out in Paragraph 12.4 of Exhibit A.
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7.10
|
Notice of Readiness
|
7.10.1
|
The master of an LNG Tanker or such master’s agent shall tender the NOR to Driftwood upon arrival at the PBS or any customary anchorage location for LNG vessels seeking to transit the Calcasieu ship channel, provided that such LNG Tanker has received all required Approvals from the relevant Governmental Authorities (including security clearance from the US Coast Guard) that are required to transit to a berth of the Driftwood LNG Terminal, and is ready, willing, and able, to proceed to berth and load LNG or to commence cool-down or gas-up operations (as applicable).
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7.10.2
|
A valid NOR given under Section 7.10.1 shall become effective as follows:
|
(a)
|
For an LNG Tanker that tenders its NOR according to Section 7.10.1 at any time prior to or during the Delivery Window allocated to such LNG Tanker, an NOR shall become effective when the LNG Tanker is all fast at a berth of the Driftwood LNG Terminal and has received all required Approvals from the relevant Governmental Authorities (including security clearance from the US Coast Guard); and
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(b)
|
For an LNG Tanker that tenders its NOR according to Section 7.10.1 at any time after the expiration of the Delivery Window, an NOR shall become effective when, after Seller or Driftwood has notified the LNG Tanker that Driftwood is ready to receive the LNG Tanker, the LNG Tanker is all fast at a berth of the Driftwood LNG Terminal and has received all required Approvals from the relevant Governmental Authorities (including security clearance from the US Coast Guard).
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7.11
|
Berthing Assignment
|
7.11.1
|
Seller shall berth or caused to be berthed an LNG Tanker which has tendered NOR before or during its Delivery Window promptly after Seller determines such LNG Tanker will not interfere with berthing and loading of any other scheduled LNG vessel with a higher berthing priority but in no event later than the end of the Delivery Window allocated to such LNG Tanker; provided, however, that if Seller does not berth or cause to be berthed such LNG Tanker by the end of the Delivery Window, (a) Seller shall use reasonable efforts to berth or cause to be berthed such LNG Tanker within forty-eight (48) hours after the end of its Delivery Window, (b) Buyer shall use reasonable efforts to cause the LNG Tanker to remain at the PBS or applicable anchorage location for the Driftwood LNG Terminal, and (c) Buyer’s sole recourse and remedy during such period of time for Seller’s failure to berth or cause to be berthed the LNG Tanker by the end of the Delivery Window shall be demurrage pursuant to Section 7.12.3, payment for excess boil-off pursuant to Section 7.12.4 and provision by Seller of a cool-down pursuant to Section 7.16.1(b). If (i) at any time during such forty-eight (48) hour period, Buyer is no longer able, having used reasonable efforts, to cause the LNG Tanker to remain at the PBS or applicable anchorage location, or (ii) the forty-eight (48) hour period expires, and in either case Seller has not berthed or caused to be berthed the LNG Tanker, and such delay is not attributable to a reason that would result in an extension of Allotted Laytime under Section 7.12.1, then Seller shall be deemed to have failed to make the Scheduled Cargo Quantity of the relevant cargo available for delivery and the provisions of Sections 5.6.2 to 5.6.4 shall apply. Notwithstanding the foregoing, if, as a result of the Driftwood LNG Terminal not being ready to berth for reasons attributable to Buyer or Buyer’s Affiliates, Seller fails to make available a cargo, Buyer shall be deemed to have failed to take such cargo and the provisions of Sections 5.7.2 to 5.7.7 shall apply.
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7.11.2
|
For each delivery window period, Seller shall determine or cause to be determined the berthing priority among LNG vessels which have tendered NOR before or during their scheduled delivery window as follows:
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(a)
|
The first berthing priority for a delivery window period shall be for an LNG vessel scheduled for such delivery window period. Priority within this group shall be given to the LNG vessel which has first tendered to Driftwood its NOR. Once an LNG vessel achieves a first berthing priority pursuant to this Section 7.11.2(a) or 7.11.2(c), such LNG vessel shall maintain such priority until such LNG vessel is berthed, so long as its tendered NOR does not become invalid pursuant to Section 7.13.1;
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(b)
|
The second berthing priority for a delivery window period shall be for an LNG vessel scheduled for arrival before such delivery window period, which tendered to Driftwood its NOR prior to or during its scheduled delivery window but which was unable to proceed to berth for reasons not attributable to Buyer, the Transporter, the LNG Tanker or its master, crew, owner or operator. Priority within this group shall be given to the LNG vessel which has first tendered to Driftwood its NOR; and
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(c)
|
The third berthing priority for a delivery window period shall be for an LNG vessel scheduled for arrival after such delivery window period. Priority within this group shall be given to the LNG vessel which has first tendered to Driftwood its NOR. An LNG vessel with third berthing priority pursuant to this Section 7.11.2(c) will achieve a first berthing priority on its scheduled delivery window pursuant to Section 7.11.2(a) if such LNG vessel has not been berthed prior to such date, so long as its tendered NOR does not become invalid pursuant to Section 7.13.1.
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7.11.3
|
If an LNG Tanker tenders NOR after the end of its Delivery Window, Seller shall use reasonable efforts to berth or cause to be berthed such LNG Tanker as soon as reasonably practical; provided, however, that, unless otherwise agreed with Buyer, Seller shall have no obligation to use such efforts to berth or cause to be berthed an LNG Tanker that tenders NOR more than forty-eight (48) hours after the end of its Delivery Window. If, as of the forty-eighth (48th) hour after the end of the Delivery Window, the LNG Tanker has not tendered NOR, and such delay is not attributable to a reason that would result in an extension of Allowed Laytime under Sections 7.13.2(a)(i)-(viii), Buyer shall be deemed to have failed to take delivery of the Scheduled Cargo Quantity of the relevant cargo and the provisions of Sections 5.7.2 to 5.7.7 shall apply.
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7.12
|
Berth Laytime
|
7.12.1
|
The allotted laytime for each LNG Tanker (“Allotted Laytime”) shall be thirty (30) hours, as extended by any period of delay that is caused by:
|
(a)
|
reasons attributable to a Governmental Authority, Buyer, the Transporter, the LNG Tanker or its master, crew, owner or operator or any Third Party outside of the reasonable control of Seller, Driftwood or the operator of the Driftwood LNG Terminal, including security clearance review by the US Coast Guard;
|
(b)
|
Force Majeure or Adverse Weather Conditions;
|
(c)
|
unscheduled curtailment or temporary discontinuation of operations at the Driftwood LNG Terminal necessary for reasons of safety, except to the extent such unscheduled curtailment or temporary discontinuation of operations is due to Driftwood’s failure to operate and maintain its facilities as a Reasonable and Prudent Operator;
|
(d)
|
time at berth during any cool-down pursuant to Sections 7.16.1(a) and (c);
|
(e)
|
time at berth during any gas-up pursuant to Section 7.17;
|
(f)
|
nighttime transit restrictions, if applicable;
|
(g)
|
time to transit from the PBS or anchorage location, as applicable, to a berth of the Driftwood LNG Terminal, in the event Actual Laytime commences pursuant to Section 7.12.2(a)(1); and
|
(h)
|
any other interruption impacting the Loading Port, including the unavailability or delay of Pilot services, tugs, and other similar interruptions, to the extent such interruptions are not caused by reasons attributable to Seller, Driftwood or the operator of the Driftwood LNG Terminal.
|
7.12.2
|
The actual laytime for each LNG Tanker (“Actual Laytime”) shall commence (a) if a valid NOR was given pursuant to Section 7.10.1 prior to or during the Delivery Window for such LNG Tanker, the earlier of (1) twelve (12) hours after the later of the start of the Delivery Window and the time that such valid NOR was given pursuant to Section 7.10.1, and (2) when the NOR is effective, or (b) in all other cases, when the NOR is effective, and shall end when (i) the last loading arm of the Driftwood LNG Terminal has been disconnected from the LNG Tanker, (ii) the cargo documents are on board of the LNG Tanker and (iii) Seller, Driftwood or the operator of the Driftwood LNG Terminal has cleared the LNG Tanker for departure.
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7.12.3
|
In the event Actual Laytime exceeds Allotted Laytime (as extended pursuant to Section 7.12.1) (“Demurrage Event”), Seller shall pay to Buyer as liquidated damages demurrage in USD (which shall be prorated for a portion of a Day) at a rate equal to the Demurrage Rate. The “Demurrage Rate” initially shall be USD eighty thousand (US$80,000) per Day and shall be revised by Seller each Contract Year ending in five (5) or zero (0) (e.g., 2025 and 2030) to reflect the average of three quotes, each received from a different ship broker, for then-current long-term LNG vessel charter rates. Seller shall determine such revised Demurrage Rate and notify Buyer of such revised Demurrage Rate at least thirty (30) days prior to the start of such Contract Year ending in five (5) or zero (0), as applicable, and such revised Demurrage Rate shall be effective starting on the first day of such Contract Year ending
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7.12.4
|
In the event (a) an LNG Tanker is delayed in berthing at the Driftwood LNG Terminal or commencement of LNG loading due to an event occurring at or near the Driftwood LNG Terminal (including at the berth) and for a reason that would not result in an extension of Allotted Laytime under Section 7.12.1, and (b) as a result thereof, the commencement of LNG loading is delayed beyond twenty-four (24) hours after the LNG Tanker (i) has either tendered a valid NOR or berthed and (ii) is cleared by the Governmental Authorities to commence loading (“Excess Boil-Off Event”), Seller shall pay Buyer as liquidated damages an amount, on account of excess boil-off. The amount payable shall equal (x) the total number of full hours by which commencement of LNG loading is delayed beyond the aforementioned twenty-four (24) hour period, multiplied by (y) the CSP, multiplied by (z) a quantity in MMBtu equal to (A) the guaranteed daily ballast rate of boil-off of such LNG Tanker pursuant to Form B of the relevant charterparty or similar description provided by the LNG Tanker’s owner in the relevant charterparty, divided by (B) twenty-four (24) hours per Day, multiplied by (C) the cargo containment capacity of such LNG Tanker (in MMBtu), provided that in no event shall such quantity of MMBtu exceed the quantity of LNG onboard the LNG Tanker at the time it issued its valid NOR. For purposes of the foregoing, the CSP shall be determined as of the Month in which the applicable Delivery Window begins. Buyer shall invoice Seller for such excess boil-off within ninety (90) Days after the applicable event, pursuant to Section 10.1.4.
|
7.13
|
LNG Tanker Not Ready for LNG Loading; Excess Laytime
|
7.13.1
|
Except in the event Seller provides a cool-down service under Section 7.16.1(b), if any LNG Tanker previously believed to be ready for LNG loading is determined to be not ready after being berthed for reasons not attributable to Seller, Driftwood or the operator of the Driftwood LNG Terminal, the NOR shall be invalid, and Driftwood may direct (or cause Seller to direct) the LNG Tanker’s master to vacate the berth and proceed to anchorage, whether or not other LNG vessels are awaiting the berth, unless it appears reasonably certain to Driftwood that such LNG Tanker can be made ready without disrupting the overall berthing schedule of the Driftwood LNG Terminal or operations of the Driftwood LNG Terminal. When an unready LNG Tanker at anchorage becomes ready for LNG loading, its master shall notify Seller and Driftwood. If, as a result of such LNG Tanker not being ready to berth for reasons not attributable to Seller, Driftwood or the operator of the Driftwood LNG Terminal, Buyer fails to take a cargo, the provisions
|
7.13.2
|
The following shall apply with respect to berthing:
|
(a)
|
An LNG Tanker shall complete LNG loading and vacate the berth as soon as possible but not later than thirty (30) hours from the time the LNG Tanker is all fast at the berth and has received all required Approvals from the relevant Governmental Authorities (including security clearance from the US Coast Guard). Such thirty (30) hour-period (“Allowed Laytime”) shall be extended by any period of delay that is caused by:
|
(i)
|
reasons attributable to a Governmental Authority, Seller, Driftwood, the operator of the Driftwood LNG Terminal or any Third Party outside the reasonable control of Buyer, the Transporter, the LNG Tanker or its master, crew, owner or operator;
|
(ii)
|
Force Majeure or Adverse Weather Conditions;
|
(iii)
|
unscheduled curtailment or temporary discontinuation of operations at the Driftwood LNG Terminal necessary for reasons of safety, except to the extent such unscheduled curtailment or temporary discontinuation of operations is attributable to Buyer, the Transporter, the LNG Tanker or its master, crew, owner or operator;
|
(iv)
|
time at berth during any cool-down pursuant to Sections 7.16.1(a)-(c);
|
(v)
|
time at berth during any gas-up pursuant to Section 7.17;
|
(vi)
|
nighttime transit restrictions, if applicable;
|
(vii)
|
tidal restrictions; and
|
(viii)
|
any other interruption impacting the Loading Port, including the unavailability or delay of Pilot services, tugs, and other similar interruptions, to the extent such interruptions are not caused by reasons attributable to Buyer, the Transporter, the LNG Tanker or its master, crew, owner or operator.
|
(b)
|
If an LNG Tanker fails to depart at the end of its Allowed Laytime (as extended pursuant to Sections 7.13.2(a)(i)-(viii)), another LNG
|
(c)
|
If an LNG Tanker fails to depart the berth at the end of its Allowed Laytime (as extended pursuant to Sections 7.13.2(a)(i)-(viii)) and as a result the subsequent LNG vessel is prevented from or delayed in loading, Buyer shall reimburse Seller for any and all actual documented demurrage or excess boil-off that Seller becomes contractually obligated to pay to any Third Party with respect to such subsequent LNG vessel, as a result of the LNG Tanker not completing LNG loading and vacating the berth as required by this Section 7.13.2; provided that Buyer shall not be required to reimburse Seller for any amounts based on a demurrage rate or excess boil-off rate in excess of those specified in Section 7.12.3 and Section 7.12.4, as applicable. Seller shall invoice Buyer for any amounts due under this Section 7.13.2(c) pursuant to Section 10.1.4 within ninety (90) Days after the relevant Delivery Window.
|
(d)
|
In the event an LNG Tanker fails to vacate the berth pursuant to this Section 7.13 and Buyer is not taking actions to cause it to vacate the berth, Seller or Driftwood may effect such removal at the expense of Buyer.
|
7.14
|
LNG Loadings at the Driftwood LNG Terminal
|
7.14.1
|
Seller shall cooperate with Transporters (or their agents) and with the master of each LNG Tanker to facilitate the continuous and efficient loading of LNG hereunder.
|
7.14.2
|
During LNG loading, Seller shall take receipt of, through the Driftwood LNG Terminal vapor return line, Gas in such quantities as are necessary for the safe loading of LNG at such rates, pressures and temperatures as may be required by the design of the LNG Tanker or any standard operating practices of such LNG Tanker, provided such practices conform to International LNG Vessel Standards.
|
7.14.3
|
Promptly after completion of loading of each cargo, Seller shall send or cause to be sent to Buyer a certificate of origin, certificate of quantity, certificate of quality, cargo manifest and bill of lading, together with such other documents concerning the cargo as may reasonably be requested by Buyer.
|
7.14.4
|
Buyer, in cooperation with Seller, shall cause the LNG Tanker to depart safely and expeditiously from the berth upon completion of LNG loading.
|
7.15
|
Cooperation
|
7.16
|
Cool-Down of LNG Tankers
|
7.16.1
|
Buyer shall be solely responsible for ensuring that each LNG Tanker elected by Buyer for taking a cargo arrives at the Driftwood LNG Terminal cold and in a state of readiness. Notwithstanding the foregoing and subject to Section 7.16.2, Seller shall provide cool-down service to LNG Tankers at Buyer’s request as follows:
|
(a)
|
Seller shall use reasonable efforts (taking into account availability of sufficient berth time) to accept Buyer’s request to provide cool-down service for any LNG Tanker, subject to Buyer requesting such cool-down service by notice to Seller as far in advance of the relevant cargo’s Delivery Window as is reasonably practicable but in no case less than thirty (30) Days before the relevant cargo’s Delivery Window, provided that Seller shall accept Buyer’s request to provide a cool-down service if Buyer makes such request by notice at the time Buyer proposes its schedule of receipt of cargoes pursuant to Section 8.1.2 for the relevant Contract Year. Seller shall have no obligation pursuant to this Section 7.16.1(a) to provide cool-down services for more than one (1) LNG Tanker during any two (2) consecutive Contract Years (provided that any cool-down services which may be agreed to be provided as a result of mitigation of a Force Majeure event shall not be counted towards such limitation). Buyer shall pay Seller for all LNG provided by Seller for cooling such LNG Tankers in an amount equal to the quantity of LNG provided, multiplied by the CSP.
|
(b)
|
Seller shall provide cool-down service without payment to any LNG Tankers requiring cool-down solely as a result of a delay caused by Seller or Driftwood, but only if such LNG Tanker made no other call between the original Delivery Window and the requested cool-down time.
|
(c)
|
Seller shall use reasonable efforts, contingent on the availability of sufficient berth time and facilities status, to provide cool-down
|
7.16.2
|
The following shall apply to any cool-down service provided by Seller pursuant to Section 7.16.1:
|
(a)
|
the MMBtu content of the total liquid quantities delivered for cooling, measured before evaporation, shall be determined by reference to the relevant LNG Tanker’s cool-down tables;
|
(b)
|
the Parties will determine by mutual agreement the rates and pressures for delivery of LNG for cool-down, but always in full accordance with safe operating parameters and procedures established by Seller or Driftwood;
|
(c)
|
LNG provided during cool down by Seller pursuant to Section 7.16.1 shall not be applied against the Scheduled Cargo Quantity for the relevant cargo; and
|
(d)
|
unless cool-down services are agreed to be provided in the mitigation of Force Majeure, cool-down service shall not be provided during January, February, March, October, November or December of any Contract Year, provided that if Buyer requests cool-down service during such period, then Seller shall use commercially reasonable efforts to provide cool-down service during such period.
|
7.17
|
Gas-Up of LNG Tankers
|
7.17.1
|
Seller shall use reasonable efforts to obtain or cause to be obtained all relevant Approvals needed to allow Driftwood to offer gas-up service to LNG Tankers at the Driftwood LNG Terminal.
|
7.17.2
|
Notwithstanding the first sentence of Section 7.16.1 and subject to Section 7.17.3, to the extent Driftwood has all relevant Approvals needed to offer gas-up service to LNG Tankers at the Driftwood LNG Terminal and such services is otherwise permitted under Applicable Law, Seller shall provide gas-up service to LNG Tankers at Buyer’s request as follows:
|
(a)
|
Buyer’s request for gas-up service in respect of an LNG Tanker shall be provided at the same time that Buyer requests cool-down service in respect of such LNG Tanker pursuant to Section 7.16.
|
(b)
|
Seller shall use reasonable efforts (taking into account availability of sufficient berth time) to accept Buyer’s request to provide gas-up service for any LNG Tanker, subject to Buyer requesting such gas-up service by notice to Seller as far in advance of the relevant cargo’s Delivery Window as is reasonably practicable but in no case less than thirty (30) Days before the relevant cargo’s Delivery Window, provided that Seller shall accept Buyer’s request to provide a gas-up service if Buyer makes such request by notice at the time Buyer proposes its schedule of receipt of cargoes pursuant to Section 8.1.2 for the relevant Contract Year.
|
(c)
|
Seller shall use reasonable efforts, contingent on the availability of sufficient berth time and facilities status, to provide gas-up service at any time other than as described in Section 7.17.2(b) upon request by Buyer, provided that Seller shall have no obligation to provide such gas-up service if doing so would interfere with a scheduled Delivery Window of Buyer or a scheduled delivery window of any other Person, would adversely affect the ability of Seller to perform its other obligations under this Agreement and other LNG sale and purchase agreements or would adversely affect the ability of Driftwood to operate the Driftwood LNG Terminal in accordance with all Approvals and Applicable Law.
|
7.17.3
|
The following shall apply to any gas-up service provided by Seller pursuant to Section 7.17.2:
|
(a)
|
the Parties will determine by mutual agreement the rates and pressures for delivery of Gas for gas-up service, but always in full accordance with safe operating parameters and procedures established by Seller or Driftwood;
|
(b)
|
gas-up service shall only be provided to an LNG Tanker that is also entitled to receive, and is receiving, immediately after such gas-up service, cool-down service pursuant to Section 7.16;
|
(c)
|
without prejudice to any amounts owed by Buyer for cool-down service provided pursuant to Section 7.16 to an LNG Tanker that also receives gas-up service pursuant to this Section 7.17, Buyer shall not be obligated to make a payment to Seller for gas-up service; provided that Buyer shall pay Seller for all LNG provided by Seller for all gas-up services provided after the first gas-up in each Contract Year, in
|
(d)
|
gas-up service shall not be provided during January, February, March, October, November or December of any Contract Year, provided that if Buyer requests gas-up service during such period, then Seller shall use commercially reasonable efforts to provide gas-up service during such period; and
|
(e)
|
gas-up service shall only be available for LNG Tankers under nitrogen purge, provided that the Parties, acting reasonably, will discuss the acceptance of LNG Tankers under inert gas, if Buyer can demonstrate unavailability of nitrogen and if Seller is able to accommodate, including taking into consideration operational and regulatory requirements (in the case of regulatory requirements, as reasonably provided by Seller).
|
8.
|
Annual Delivery Program
|
8.1
|
Programming Information
|
8.1.1
|
No later than one hundred eight-eight (188) Days before the start of each Contract Year, Seller shall provide Buyer with:
|
(a)
|
Seller’s good faith estimate of the Gross Heating Value of LNG to be delivered during such Contract Year; and
|
(b)
|
the Major Scheduled Maintenance Quantity for such Contract Year, if any.
|
8.1.2
|
No later than one hundred thirty-two (132) Days before the start of each Contract Year, Buyer shall notify Seller of Buyer’s proposed schedule of receipt of cargoes for each Month of such Contract Year. Such schedule shall identify sufficient proposed cargoes in order to schedule the full AACQ, and such AACQ shall be distributed across the Contract Year in accordance with Section 5.3. Buyer’s notice shall include the following information:
|
(a)
|
the LNG Tanker (if known) for each proposed cargo;
|
(b)
|
the Scheduled Cargo Quantity for each proposed cargo;
|
(c)
|
the proposed Delivery Window for each cargo;
|
(d)
|
Buyer’s request (if any) for a Round-Up Quantity for such Contract Year; and
|
(e)
|
any other information that may affect annual scheduling.
|
8.1.3
|
Seller will then notify Buyer no less than eighty-six (86) Days before the start of such Contract Year of Seller’s proposed schedule of cargoes to be made available in each Month of such Contract Year, exercising reasonable efforts to adopt Buyer’s proposed schedule of receipts requested in accordance with Section 8.1.2; provided that (x) if Buyer fails to deliver the notice according to Section 8.1.2, Seller may nevertheless propose a schedule according to the terms of this Section 8.1.3, and (y) Seller shall have the right to modify Buyer’s proposed schedule to the extent required to ensure that the entire AACQ is scheduled and to comply with the other requirements of this Agreement, including the terms of Section 5.3. Such notice shall include the following information:
|
(a)
|
the proposed AACQ for the Contract Year;
|
(b)
|
the proposed Round-Up Quantity (if any) or Round-Down Quantity (if any) for the Contract Year;
|
(c)
|
any Round-Down Quantity not taken in the previous Contract Year and carried forward to the current Contract Year;
|
(d)
|
any Round-Up Quantity taken in the previous Contract Year and carried forward as a deduction in the current Contract Year;
|
(e)
|
the Major Scheduled Maintenance Quantity (if any) for the Contract Year identified by Seller pursuant to Section 8.1.1(b);
|
(f)
|
for each cargo:
|
(i)
|
the loading terminal if changed from Driftwood LNG Terminal pursuant to Section 3.1.2;
|
(ii)
|
the LNG Tanker (if specified by Buyer);
|
(iii)
|
the Scheduled Cargo Quantity, if any, specified in the notice sent by Buyer pursuant to Section 8.1.2; and
|
(iv)
|
the proposed Delivery Window; and
|
(g)
|
any other information that may affect annual scheduling.
|
8.2
|
Determination of Annual Delivery Program
|
8.2.1
|
No later than ten (10) Days after receipt of Seller’s proposed schedule provided under Section 8.1.3, Buyer shall notify Seller if Buyer desires to
|
8.2.2
|
If, prior to the date that is sixty-one (61) Days before the start of a Contract Year, the Parties have agreed on a schedule of deliveries for such Contract Year, then Seller shall issue the delivery schedule agreed by the Parties. If the Parties are unable to agree on a schedule of deliveries for such Contract Year, then no later than sixty-one (61) Days before the start of such Contract Year, Seller shall issue the delivery schedule for such Contract Year containing the information set forth in Section 8.1.3, modified to reflect any changes agreed by the Parties pursuant to Section 8.2.1 and to reflect any changes required by Section 5.4 to Seller’s proposal pursuant to Section 8.1.3(b) for a Round-Up Quantity or Round-Down Quantity. The schedule promulgated by Seller shall reflect the exercise of reasonable efforts by Seller to (i) assign to Buyer Delivery Windows that are as close as reasonably practicable to the Delivery Windows proposed by Buyer pursuant to Section 8.1.2, and (ii) specify the Scheduled Cargo Quantity with respect to each LNG Tanker as notified by Buyer pursuant to Section 8.1.2; provided, that Seller shall have the right to issue a schedule with different terms to the extent required to ensure that the entire AACQ is scheduled and to comply with the other requirements of this Agreement, including the terms of Section 5.3. Seller shall provide for delivery of the AACQ in accordance with Section 5.3.
|
8.2.3
|
The schedule for deliveries of LNG during the Contract Year established pursuant to this Section 8.2, as amended from time to time in accordance with Section 8.3, is the “Annual Delivery Program” or “ADP”. If Seller fails to issue the schedule provided for in Sections 8.1.3 or 8.2.2, if applicable, then the schedule proposed by Buyer under Section 8.1.2 shall be the ADP for the relevant Contract Year.
|
8.2.4
|
All references in Section 8.1 and this Section 8.2 to a specific number of Days prior to the start of a Contract Year shall be construed to mean, for purposes of the First Contract Year, as such number of Days prior to the anticipated Date of Full Operations for Plant 1 as revised by any acceleration thereof by Seller pursuant to Section 4.3.1. In the event of such acceleration, Seller shall be deemed to be in compliance with Section 8.1.1 for purposes of the First Contract Year so long as Seller provides the notice required by Section 8.1.1 at the same time Seller provides notice of such acceleration.
|
8.3
|
Changes to Annual Delivery Program
|
8.3.1
|
Subject to the remainder of this Section 8.3, either Party may request by notice a change in the ADP or Ninety Day Schedule for a Contract Year for any reason.
|
8.3.2
|
As soon as possible after notice has been received pursuant to this Section 8.3, the Parties shall consult with one another in order to examine whether such ADP or Ninety Day Schedule can be revised to accommodate such proposed change(s). Neither Party shall unreasonably withhold or delay its consent to revise the ADP or Ninety Day Schedule in accordance with changes proposed by the other Party; provided that neither Party shall be under any obligation to consent thereto if:
|
(a)
|
in the case of Seller, (i) Seller is unable to agree after the exercise of reasonable efforts to any necessary changes in its arrangements with its LNG supplier(s), LNG producer(s), transporters or other buyers of LNG, (ii) the requested change would impose additional costs (unless Buyer agrees to reimburse such costs) or risks upon Seller, or (iii) the requested change would increase the total quantities scheduled hereunder or decrease the total quantities scheduled hereunder; or
|
(b)
|
in the case of Buyer, (i) Buyer is unable to agree after the exercise of reasonable efforts to any necessary changes in its arrangements with Transporter or Buyer’s customers, (ii) the requested change would impose additional costs (unless Seller agrees to reimburse such costs) or risks upon Buyer, or (iii) the requested change would increase the total quantities scheduled hereunder or decrease the total quantities scheduled hereunder.
|
8.3.3
|
A Party shall not withhold or delay its consent to revise the ADP or Ninety Day Schedule if the proposed change: (a) complies with the terms of this Agreement and Applicable Laws; (b) by the exercise of reasonable efforts on the part of such Party, does not create a material adverse impact on health, safety, environment or the operations of such Party; (c) does not result in unreimbursed increased costs or decreased revenues to such Party; and (d) results in no change to the total quantities scheduled hereunder.
|
8.3.4
|
Upon a scheduling change pursuant to this Section 8.3, the ADP and, if applicable, the Ninety Day Schedule shall be amended accordingly and an updated ADP and, if applicable, an updated Ninety Day Schedule shall promptly be provided in writing by Seller to Buyer.
|
8.4
|
Ninety Day Schedule
|
9.
|
Contract Sales Price
|
9.1
|
Contract Sales Price
|
9.1.1
|
Subject to Section 9.1.2, the contract sales price (“CSP”) (expressed in USD per MMBtu rounded to two decimal places, and not less than zero) for all LNG made available by Seller to Buyer under this Agreement shall be as follows:
|
9.1.2
|
CSP shall be adjusted as follows, to the extent applicable:
|
(a)
|
if at any time the US Department of Labor Bureau of Labor Statistics CPI (All Urban Consumers, U.S., All Items, 1982 – 1984, Not Seasonally Adjusted, Series I.D. CUUR0000SA0) statistics are adjusted for a relevant period following the calculation of CSP in respect of any LNG delivered hereunder, then (i) such CSP shall be recalculated pursuant to this Section 9.1, (ii) all invoices previously issued by Seller during such period shall be treated as Provisional Invoices, and (iii) Seller shall issue a revised invoice reflecting any aggregate credit for Buyer, or debit owed by Buyer, as applicable, in respect of all such Provisional Invoices, as soon as reasonably practicable thereafter;
|
(b)
|
if at any time prior to the end of the Term, any index is discontinued or otherwise no longer published, a comparable index will be substituted pursuant to Section 1.3; and
|
(c)
|
if at any time prior to the end of the Term, any index is rebased, the formula in Section 9.1.1 shall be adjusted accordingly to properly reflect the rebasing.
|
10.
|
Invoicing and Payment
|
10.1
|
Invoices
|
10.1.1
|
Invoices for Cargoes. Invoices for each cargo made available by Seller and taken by Buyer, together with relevant supporting documents including a certificate of quantity loaded, shall be prepared and delivered by Seller to Buyer promptly following each Delivery Window and receipt of the final
|
10.1.2
|
Invoices for Cargo DoP Payments. Invoices for Cargo DoP Payments owed to Buyer by Seller shall be prepared by Buyer and delivered to Seller promptly following the Delivery Window of each affected cargo.
|
10.1.3
|
Invoices for Cargo Shortfall Payments. Invoices for Cargo Shortfall Payments owed to Seller by Buyer shall be prepared by Seller and delivered to Buyer promptly following the Delivery Window for each affected cargo. Invoices for any amounts owed to Buyer by Seller pursuant to Section 5.7.6 shall be prepared by Seller and delivered to Buyer as soon as reasonably practicable.
|
10.1.4
|
Invoices for Various Sums Due. In the event that any sums are due from one Party to the other Party under Section 7.5.4(b), 7.12.3, 7.12.4, 7.13.2(c), 7.16.1, 10.3.3, 10.4.1, 11.5, 12.3.1, or 12.3.2 of this Agreement, the Party to whom such sums are owed shall furnish an invoice therefor, describing in reasonable detail the basis for such invoice and providing relevant documents supporting the calculation thereof.
|
10.1.5
|
Invoices for Other Sums Due. In the event that any sums are due from one Party to the other Party under this Agreement, other than for a reason addressed in Section 10.1.1 through 10.1.4, the Party to whom such sums are owed shall furnish an invoice therefor, describing in reasonable detail the basis for such invoice and providing relevant documents supporting the calculation thereof.
|
10.1.6
|
Notice. Invoices shall be sent in accordance with Section 24.
|
10.1.7
|
Provisional Invoices.
|
(a)
|
In the event (i) a rate or index used in the calculation of an amount is not available on a temporary or permanent basis; or (ii) any other relevant information necessary to compute an invoice is not available, the invoicing Party may issue a provisional invoice (“Provisional Invoice”) in an amount calculated, in the case of subsection (i) of this Section 10.1.7(a), in accordance with Section 1.3, and, in the case of subsection (ii) of this Section 10.1.7(a), based on the best estimate of the unavailable information by the Party issuing the Provisional Invoice. A Provisional Invoice shall be deemed to be an invoice issued pursuant to Section 10.1.1 through 10.1.3, as applicable, for the purposes of the payment obligations of Seller or Buyer, as applicable, and shall be subject to subsequent adjustment in accordance with Section 10.1.7(b).
|
(b)
|
If a Provisional Invoice has been issued, the invoicing Party shall issue a final invoice reflecting any credit or debit, as applicable, to the Provisional Invoice as soon as reasonably practicable after the information necessary to compute the payment has been obtained by such Party. Seller and Buyer shall settle such debit or credit amount, as the case may be, when payment of the next invoice is due pursuant to Section 10.2 or, if earlier, upon the termination of this Agreement.
|
10.2
|
Payment
|
10.2.1
|
Payments for Cargoes. Invoices issued in accordance with Section 10.1.1 for cargoes made available and taken shall become due and payable by Buyer on the tenth (10th) Day after the date on which Buyer received such invoice.
|
10.2.2
|
Cargo DoP Payments. Invoices issued in accordance with Section 10.1.2 shall become due and payable on the tenth (10th) Day following receipt by Seller.
|
10.2.3
|
Cargo Shortfall Payments. Invoices issued in accordance with Section 10.1.3 shall become due and payable on the tenth (10th) Day following receipt by Buyer. Amounts owed by Seller in accordance with Section 10.1.3 shall become due and payable on the tenth (10th) Day following Seller receiving the applicable corresponding payment pursuant to a Mitigation Sale.
|
10.2.4
|
Payments for Other Sums Due. An invoice issued pursuant to Section 10.1.4 or 10.1.5 shall be paid by the paying Party thereunder not later than twenty (20) Days after receipt of such invoice.
|
10.2.5
|
Payment Method. All invoices shall be settled by payment in USD of the sum due by wire transfer of immediately available funds to an account with the bank designated by the other Party in accordance with Section 10.2.6.
|
10.2.6
|
Designated Bank. Each Party shall designate a bank in a location reasonably acceptable to the other Party for payments under this Agreement. Initially a Party shall designate its bank by notice to the other Party prior to the later of (a) the date thirty (30) Days after the Effective Date and (b) the Date of Substantial Completion of Plant 1, and thereafter not less than thirty (30) Days before any redesignation is to be effective.
|
10.2.7
|
Payment Date. If any invoice issued pursuant to Section 10.1 would result in a Party being required to make a payment on a Day that is not a Payment Business Day, then the due date for such invoice shall be the immediately succeeding Payment Business Day.
|
10.3
|
Disputed Invoice
|
10.3.1
|
Payment Pending Dispute. Absent manifest error, each Party invoiced pursuant to Section 10.1.1, 10.1.2, 10.1.3, or 10.1.4 shall pay all disputed and undisputed amounts due under such invoice without netting or offsetting, and the Party disputing any amounts due under any such invoice shall as soon as reasonably practicable notify the other Party of the reasons for such disagreement. In the case of manifest error, the correct amount shall be paid disregarding such error, and necessary correction and consequent adjustment shall be made within five (5) Business Days after agreement or determination of the correct amount.
|
10.3.2
|
Timing. Except with respect to Sections 1.3, 10.3.4, and 14, any invoice may be contested by the receiving Party only pursuant to Section 10.5 or if, within a period of thirteen (13) Months after its receipt thereof, that Party serves notice to the other Party questioning the correctness of such invoice. Subject to Section 10.5, if no such notice is served, the invoice shall be deemed correct and accepted by both Parties.
|
10.3.3
|
Interest. The Party who invoiced and received payment of a sum, subsequently determined not to have been payable under this Agreement to such Party, shall pay interest to the other Party on such amount, at a rate per annum equal to two percent (2%) above LIBOR (as in effect on the Day when such sum was originally paid) on and from the Day when such sum was originally paid until the date of its repayment, provided that, without prejudice to the other terms of this Agreement, if such period lasts longer than ninety (90) Days, the applicable LIBOR rate for each successive term of ninety (90) Days during that period shall be that in effect on the first (1st) Day of that ninety (90) Day period. Interest shall accrue from Day to Day and be calculated on the basis of a three hundred sixty (360) Day year.
|
10.3.4
|
Measurement or Analyzing Errors. Any errors found in an invoice or credit note which are caused by the inaccuracy of any measuring or analyzing equipment or device shall be corrected in accordance with Exhibit A hereto, as applicable, and shall be settled in the same manner as is set out above in this Section 10.3.
|
10.4
|
Delay in Payment
|
10.4.1
|
Interest. If either Party fails to make payment of any sum as and when due under this Agreement, it shall pay interest thereon to the other Party at a rate per annum equal to two percent (2%) above LIBOR (as in effect on the Day when such sum was originally due) on and from the Day when payment was due until the date of payment, provided that, without prejudice to the other terms of this Agreement, if such period lasts longer than ninety (90) Days, the applicable LIBOR rate for each successive term of ninety (90) Days
|
10.4.2
|
Costs and Expenses. Subject to Section 20.1.12, each Party shall bear its own costs (including attorneys’ or experts’ fees or costs) in respect of enforcement of such Party’s rights in any Dispute proceeding as a result of the other Party failing to perform or failing timely to perform its obligations under this Agreement including failing timely to make any payment in accordance with this Agreement.
|
10.5
|
Audit Rights
|
11.
|
Taxes
|
11.1
|
Responsibility
|
11.2
|
Seller Taxes
|
(a)
|
solely on account of the corporate existence of Seller or its Affiliates;
|
(b)
|
in respect of the property, revenue, income, or profits of Seller or its Affiliates (other than Taxes required to be deducted or withheld by Buyer from or in respect of any payments (whether in cash or in kind) under this Agreement);
|
(c)
|
subject to Section 11.5, in the United States of America or any political subdivision thereof, that may be levied or assessed upon the export, loading, storage, processing, transfer, transport, ownership of title, or delivery of LNG, up to and at the Delivery Point and prior to the transfer of title to such LNG to Buyer pursuant to Section 6.2; and
|
(d)
|
payable by Buyer by reason of a failure by Seller to properly deduct, withhold or pay any Taxes described in Section 11.4.
|
11.3
|
Buyer Taxes
|
(a)
|
solely on account of the corporate existence of Buyer or its Affiliates;
|
(b)
|
in respect of the property, revenue, income, or profits of Buyer or its Affiliates (other than Taxes required to be deducted or withheld by Seller from or in respect of payments (whether in cash or in kind) under this Agreement);
|
(c)
|
in the United States of America (or any political subdivision thereof) or in any jurisdiction in which any of Buyer’s Discharge Terminals are located (or any political subdivision thereof), or any jurisdiction through which any LNG Tanker transits or on which any LNG Tanker calls (or any political subdivision thereof), in each case that may be levied or assessed upon the sale, use, purchase, import, unloading, export, loading, storage, processing, transfer, transport, ownership of title, receipt or delivery of LNG after the transfer of title to such LNG to Buyer pursuant to Section 6.2 at the Delivery Point; and
|
(d)
|
payable by Seller by reason of a failure by Buyer to properly deduct, withhold or pay any Taxes described in Section 11.4.
|
11.4
|
Withholding Taxes
|
11.5
|
Transfer Taxes
|
11.6
|
Mitigation and Cooperation
|
11.7
|
Refunds
|
12.
|
Quality
|
12.1
|
Specification
|
Minimum Gross Heating Value
|
1000 Btu/SCF
|
Maximum Gross Heating Value
|
1150 Btu/SCF
|
Minimum methane (C1)
|
84.0 MOL%
|
Maximum H2S
|
0.25 grains per 100 SCF
|
Maximum Sulfur
|
1.35 grains per 100 SCF
|
Maximum N2
|
1.5 MOL%
|
Maximum Ethane (C2)
|
11 MOL%
|
Maximum Propane (C3)
|
3.5 MOL%
|
Maximum Butane (C4) and heavier
|
2 MOL%
|
12.2
|
Determining LNG Specifications
|
12.3
|
Off-Specification LNG
|
12.3.1
|
If Seller, acting as a Reasonable and Prudent Operator, determines prior to loading of a cargo that the LNG is expected not to comply with the Specifications (“Off-Spec LNG”) upon loading, Seller shall, as soon as reasonably practicable, suspend loading and shall give notice to Buyer of the extent of the expected variance as soon as practicable (but in no case later than the commencement of loading of the cargo), and:
|
(a)
|
Buyer shall use reasonable efforts, including coordinating with the Transporter and the operator of the Discharge Terminal, to accept
|
(b)
|
if Buyer can accept delivery of such cargo, then Buyer shall take delivery of such cargo, and Seller shall reimburse Buyer for all reasonable documented direct costs incurred by Buyer (including direct costs owed to any Affiliate of Buyer, Transporter, and the operator of the Discharge Terminal) in transporting and treating such Off-Spec LNG to meet the Specifications (or to otherwise make such LNG marketable); provided, however, the Seller’s liability shall not exceed twenty percent (20%) of the CSP for such cargo, multiplied by the quantity (in MMBtu) of the Off-Spec LNG; and
|
(c)
|
if Buyer determines in good faith that it cannot, using reasonable efforts, receive such cargo, or that Buyer anticipates that it might be liable for costs that would not otherwise be reimbursed pursuant to Section 12.3.1(b), then Buyer shall be entitled to reject such cargo by giving Seller notice of rejection within forty-eight (48) hours of the Buyer’s receipt of Seller’s notice, and Buyer shall be relieved of its obligation to load such cargo, Seller shall be deemed to have failed to make available such cargo and Section 5.6.2 shall apply in respect of such cargo.
|
12.3.2
|
If Off-Spec LNG is delivered to Buyer without Buyer being made aware of the fact that such Off-Spec LNG does not comply with the Specifications, or without Buyer being made aware of the actual extent to which such Off-Spec LNG does not comply with the Specifications, then upon Buyer or Seller becoming aware that the LNG is Off-Spec LNG and following prompt notice thereof to the other Party, Seller shall immediately suspend loading operations (if applicable) pending a determination by Buyer and:
|
(a)
|
if Buyer is able, using reasonable efforts, to transport and treat the Off-Spec LNG to meet the Specifications (or to otherwise make such LNG marketable) within the cost limitations set forth in this Section 12.3.2(a), then Buyer shall notify Seller as soon as practicable to resume loading (if applicable) and Seller shall reimburse Buyer for all reasonable documented direct costs and expenses incurred by Buyer (including direct costs owed to any Affiliate of Buyer, Transporter, and the operator of the Discharge Terminal) in
|
(b)
|
if Buyer determines in good faith that it cannot, using reasonable efforts, transport and treat such Off-Spec LNG to meet the Specifications (or to make such LNG marketable) within the cost limitations set forth in Section 12.3.2(a), then: (i) Buyer shall be entitled to reject such Off-Spec LNG by giving Seller notice of such rejection as soon as practicable, and in any case within ninety-six (96) hours after (A) Seller notifies Buyer that such LNG is Off-Spec LNG and the actual extent to which such Off-Spec LNG does not comply with the Specifications or (B) Buyer becomes aware that such LNG is Off-Spec LNG, whichever occurs first; (ii) Buyer shall be entitled to dispose of the loaded portion of such Off-Spec LNG (or regasified LNG produced therefrom) in any manner that Buyer, acting in accordance with the standards of a Reasonable and Prudent Operator, deems appropriate; and (iii) Seller shall reimburse Buyer in respect of and indemnify and hold Buyer harmless from all direct loss, damages, costs and expenses incurred by Buyer, any Affiliate of Buyer, Transporter or the operator of the Discharge Terminal (if, and only to the extent that, Buyer is contractually liable to such operator) as a result of the delivery of such Off-Spec LNG, including in connection with the handling, treatment or safe disposal of such Off-Spec LNG or other LNG being held at the Discharge Terminal or being carried onboard the LNG Tanker which was contaminated by it, cleaning or clearing the LNG Tanker and Discharge Terminal, and damage caused to the LNG Tanker and Discharge Terminal.
|
12.3.3
|
If Buyer rejects a cargo in accordance with Section 12.3.1(c) or 12.3.2(b), Seller shall be deemed to have failed to make available such cargo, and the Scheduled Cargo Quantity for such cargo shall be treated as a Cargo DoP Quantity resulting in a Cargo DoP Payment under Section 5.6.2. If Buyer accepts a cargo of Off-Spec LNG in accordance with Section 12.3.1(b) or transports and treats a cargo of Off-Spec LNG in accordance with Section 12.3.2(a), Seller shall be deemed to have satisfied its obligation to make available such LNG to Buyer for purposes of Section 5.6.1. For purposes of calculations pursuant to this Section 12.3, the CSP shall be determined as of the Month in which the applicable Delivery Window begins.
|
13.
|
Measurements and Tests
|
13.1
|
LNG Measurement and Tests
|
13.2
|
Parties to Supply Devices
|
13.2.1
|
Buyer shall supply, operate and maintain, or cause to be supplied, operated and maintained, suitable gauging devices for the LNG tanks of the LNG Tanker, as well as pressure and temperature measuring devices, in accordance with Section 13.3 and Exhibit A, and any other measurement, gauging or testing devices which are incorporated in the structure of such LNG Tanker or customarily maintained on shipboard.
|
13.2.2
|
Seller shall supply, operate and maintain, or cause to be supplied, operated and maintained, devices required for collecting samples and for determining quality and composition of the delivered LNG, in accordance with Section 13.3 and Exhibit A, and any other measurement, gauging or testing devices which are necessary to perform the measurement and testing required hereunder at the Loading Port.
|
13.3
|
Selection of Devices
|
13.4
|
Tank Gauge Tables of LNG Tanker
|
13.5
|
Gauging and Measuring LNG Volumes Loaded
|
13.6
|
Samples for Quality Analysis
|
13.7
|
Quality Analysis
|
13.8
|
Operating Procedures
|
13.8.1
|
Prior to carrying out measurements, gauging and analyses hereunder, the Party responsible for such operations shall notify the designated representative(s) of the other Party, allowing such representative(s) a reasonable opportunity to be present for all operations and computations; provided, however, that the absence of such representative(s) after notification and reasonable opportunity to attend shall not affect the validity of any operation or computation thereupon performed.
|
13.8.2
|
At the request of either Party, any measurements, gauging and/or analyses provided for in Sections 13.5, 13.6, 13.7 and 13.10.1 shall be witnessed and verified by an independent surveyor agreed in writing by the Parties. The results of verifications and records of measurement shall be maintained in accordance with the terms of Exhibit A.
|
13.9
|
MMBtu Quantity Delivered
|
13.10
|
Verification of Accuracy and Correction for Error
|
13.10.1
|
Each Party shall test and verify the accuracy of its devices at intervals to be agreed between the Parties. In the case of gauging devices of the LNG Tanker, such tests and verifications shall take place during each scheduled dry-docking, provided that the interval between such dry dockings shall not exceed five (5) years. Indications from any redundant determining devices should be reported to the Parties for verification purposes. Each Party shall have the right to inspect and if a Party reasonably questions the accuracy of any device, to require the testing or verification of the accuracy of such device in accordance with the terms of Exhibit A.
|
13.10.2
|
Permissible tolerances of the measurement, gauging and testing devices shall be as described in Exhibit A.
|
13.11
|
Costs and Expenses
|
13.11.1
|
Except as provided in this Section 13.11, all costs and expenses for testing and verifying measurement, gauging or testing devices shall be borne by the Party whose devices are being tested and verified; provided, however, that representatives of the Parties attending such tests and verifications shall do so at the cost and risk of the Party they represent.
|
13.11.2
|
In the event that a Party inspects or requests the testing/verification of any of the other Party’s devices on an exceptional basis in each case as provided in Section 13.10.1, the Party requesting the testing/verification shall bear all costs thereof; provided, however, that in the event that such testing or verification discloses that the other Party’s devices fail to comply with the requirements of this Agreement, all costs and expenses for such testing and verification of the devices that failed to comply shall be borne by the Party whose devices were tested.
|
13.11.3
|
The costs of the independent surveyor:
|
(a)
|
requested by a Party in accordance with Section 13.8.2 or paragraph 3(a) of Exhibit A shall be borne by the requesting Party; and
|
(b)
|
referred to in Section 13.9 shall be borne equally by Buyer and Seller.
|
14.
|
Force Majeure
|
14.1
|
Force Majeure
|
14.1.1
|
Force Majeure may include circumstances of the following kind, provided that such circumstances satisfy the definition of Force Majeure set forth above:
|
(a)
|
acts of God, a Governmental Authority, or a public enemy;
|
(b)
|
subject to Section 14.6, strikes, lockout, or other industrial action;
|
(c)
|
wars, blockades or civil disturbances of any kind; epidemics, actual or reasonably forecasted adverse weather or sea conditions, fires, explosions, arrests and restraints of governments or people; acts of terrorism, acts of piracy and serious threat of piracy;
|
(d)
|
the breakdown or failure of, freezing of, breakage or accident to, or the necessity for making repairs or alterations to any facilities or equipment;
|
(e)
|
in respect of Seller: (i) loss of, accidental damage to, or inaccessibility to or inoperability of (x) the Driftwood LNG Terminal or any Connecting Pipeline or (y) the liquefaction and loading facilities at any alternate source pursuant to Section 3.1.2 and any Gas pipeline as may be directly interconnected thereto, and subject to Section 14.2.4; and (ii) any event that affects Driftwood (or one or more of its Gas suppliers or LNG producer that is necessary for Driftwood to carry out certain obligations hereunder) that itself would meet the definition of Force Majeure, in this Section 14.1;
|
(f)
|
in respect of Buyer, events affecting the ability of any LNG Tanker to receive and transport LNG including the unavailability of tug services, subject to Section 14.2.3; and
|
(g)
|
the withdrawal, denial, or expiration of, or failure to obtain, any Approval.
|
14.1.2
|
Nothing in this Section 14.1 shall be construed to require a Party to observe a higher standard of conduct than that required of a Reasonable and Prudent Operator as a condition to claiming the existence of Force Majeure.
|
14.2
|
Limitations on Force Majeure
|
14.2.1
|
Indemnity and Payment Obligations. Notwithstanding Section 14.1, no Force Majeure shall relieve, suspend, or otherwise excuse either Party from performing any obligation to indemnify, reimburse, hold harmless or otherwise pay the other Party under this Agreement.
|
14.2.2
|
Events Not Force Majeure. The following events shall not constitute Force Majeure:
|
(a)
|
a Party’s inability to finance its obligations under this Agreement or the unavailability of funds to pay amounts when due in the currency of payment;
|
(b)
|
the unavailability of, or any event affecting, any facilities at or associated with any loading port or unloading port (or downstream of an unloading port) other than the Driftwood LNG Terminal or any alternate source agreed by the Parties pursuant to Section 3.1.2;
|
(c)
|
the ability of Seller or Buyer to obtain better economic terms for LNG or Gas from an alternative supplier or buyer, as applicable;
|
(d)
|
changes in either Party’s market factors, default of payment obligations or other commercial, financial or economic conditions, including failure or loss of any of Buyer’s or Seller’s Gas, LNG or electric power markets;
|
(e)
|
breakdown or failure of plant or equipment caused by normal wear and tear or by a failure to properly maintain such plant or equipment;
|
(f)
|
the non-availability or lack of economically obtainable Gas reserves;
|
(g)
|
in the case of Seller, any event arising from an action or omission of (i) any Affiliate of Seller, (ii) the contractor or sub-contractor or agent of Seller or Affiliate of Seller, or (iii) the operator of the Driftwood LNG Terminal, in each case to the extent that, had Seller taken such action or experienced such event, such event would not constitute Force Majeure pursuant to the provisions of this Section 14;
|
(h)
|
in the case of Buyer, any event arising from an action or omission of (i) any Affiliate of Buyer, (ii) any customer of Buyer scheduled to take delivery of LNG from Buyer at the Driftwood LNG Terminal, (iii) the contractor or sub-contractor or agent of Buyer or Affiliate of Buyer, (iv) the operator of any part of any Discharge Terminal or (v) any Transporter, in each case to the extent that, had Buyer taken such action or experienced such event, such event would not constitute Force Majeure pursuant to the provisions of this Section 14; and
|
(i)
|
the loss of interruptible or secondary firm transportation service on a Connecting Pipeline or any pipeline upstream of a Connecting Pipeline unless the cause of such loss was an event that would satisfy the definition of Force Majeure hereunder and primary in-the-path transportation service on such pipeline was also interrupted as a result of such event.
|
14.2.3
|
LNG Tankers.
|
(a)
|
Force Majeure relief in respect of Buyer for an event described in Section 14.1.1(f) affecting a specific LNG Tanker shall only be available with respect to cargoes that are scheduled to be transported
|
(b)
|
With respect to any particular cargo, Buyer shall not be entitled to claim Force Majeure relief for an event affecting the LNG Tanker nominated for such cargo if such LNG Tanker was affected by, or should reasonably have been expected by Buyer or its customer utilizing such LNG Tanker (in each case acting as a Reasonable and Prudent Operator) to be affected by, such Force Majeure event at the time it was nominated by Buyer pursuant to Section 8.1.2 or Section 8.3, as applicable, for the relevant cargo.
|
14.2.4
|
Alternative Sources. Force Majeure relief in respect of Seller for an event described in Section 14.1.1(e) affecting an alternate LNG source or facility thereat agreed between the Parties pursuant to Section 3.1.2 shall (a) only be available with respect to the cargo that is scheduled to be loaded at the Loading Port of such facility in the ADP or applicable Ninety Day Schedule for such Contract Year or, to the extent that the ADP for the following Contract Year has been issued, in the ADP for such following Contract Year and (b) not be available for an event affecting such alternate LNG source or facility thereat if such alternate LNG source or facility thereat was affected by such Force Majeure at the time it was nominated by Seller pursuant to Section 3.1.2 for the applicable cargo.
|
14.3
|
Notification
|
14.3.1
|
the estimated period during which performance may be prevented, interfered with or delayed, including, to the extent known or ascertainable, the estimated extent of such reduction in performance;
|
14.3.2
|
the particulars of the program to be implemented to resume normal performance under this Agreement; and
|
14.3.3
|
the anticipated quantity of LNG scheduled in the ADP for a Contract Year that will not be made available or taken, as the case may be, by reason of Force Majeure.
|
14.4
|
Measures
|
14.5
|
No Extension of Term
|
14.6
|
Settlement of Industrial Disturbances
|
15.
|
Liabilities and Indemnification
|
15.1
|
General
|
15.2
|
Limitations on Liability
|
15.2.1
|
Incidental and Consequential Losses. Neither Party shall be liable to the other Party hereunder as a result of any act or omission in the course of or in connection with the performance of this Agreement, for or in respect of:
|
(a)
|
any indirect, incidental, consequential or exemplary losses;
|
(b)
|
any loss of income or profits;
|
(c)
|
except as expressly provided in this Agreement, any failure of performance or delay in performance to the extent relieved by the application of Force Majeure in accordance with Section 14; or
|
(d)
|
except as expressly provided in this Agreement, any losses arising from any claim, demand or action made or brought against the other Party by a Third Party.
|
15.2.2
|
Exclusive Remedies. A Party’s sole liability, and the other Party’s exclusive remedy, arising under or in connection with Sections 5.6, 5.7, 7.12.3, 7.12.4, 7.13.2(c) and 12.3 and this Section 15 shall be as set forth in each such provision, respectively.
|
15.2.3
|
Liquidated Damages. The Parties agree that it would be impracticable to determine accurately the extent of the loss, damage and expenditure that either Party would have in the circumstances described in Sections 5.6, 5.7, 7.12.3 and 7.12.4. Accordingly, the Parties have estimated and agreed in advance that the sole liability, and exclusive remedy for such circumstances shall be as provided in those Sections, and neither Party shall have additional liability as a result of any such circumstances. Each amount described in or determined by the provisions of Sections 5.6, 5.7, 7.12.3 and 7.12.4 is intended to represent a genuine pre-estimate by the Parties as to the loss or damage likely to be suffered by the Party receiving the payment or benefit in each such circumstance. Each Party waives any right to claim or assert, in any arbitration or expert determination pursuant to Section 20 in any action with respect to this Agreement, that any of the exclusive remedies set forth in Sections 5.6, 5.7, 7.12.3 and 7.12.4 do not represent a genuine pre-estimate by the Parties as to the loss or damage likely to be suffered by the Party receiving the payment or benefit in each such circumstance or otherwise are not valid and enforceable damages.
|
15.2.4
|
Express Remedies. The Parties agree that Section 15.2.1 shall not impair a Party’s obligation to pay the amounts specified in, or the validity of or limitations imposed by, Sections 5.6, 5.7, 7.12.3, 7.12.4, 7.13.2(c) and 12.3. Neither Party shall have a right to make a claim for actual damages (whether direct or indirect) or other non-specified damages under any circumstances for which an express remedy or measure of damages is provided in this Agreement.
|
15.2.5
|
Remedies in Contract. Except with respect to claims for injunctive relief under Sections 18 and 20.1.11, a Party’s sole remedy against the other Party for nonperformance or breach of this Agreement or for any other claim of whatsoever nature arising out of or in relation to this Agreement shall be in contract and no Party shall be liable to another Party (or its Affiliates and contractors and their respective members, directors, officers, employees and agents) in respect of any damages or losses suffered or claims which arise out of, under or in any alleged breach of statutory duty or tortious act or omission or otherwise.
|
15.2.6
|
Seller Aggregate Liability for Certain Events.
|
(a)
|
Notwithstanding any provision herein to the contrary, the maximum Seller Aggregate Liability as of any given date in respect of any occurrence or series of occurrences shall not exceed the Seller Liability Cap.
|
(b)
|
“Seller Aggregate Liability” shall mean, as of any date of determination, any and all liability of Seller to Buyer under this Agreement, excluding (i) any Seller liabilities under this Agreement for which Seller has already made payment to Buyer as of such date and (ii) any liability caused by the gross negligence or willful misconduct of Seller or any Affiliate of Seller.
|
(c)
|
The “Seller Liability Cap”, as of any given time of determination, shall be an amount (in USD) equal to USD one hundred and fifty million (US$ 150,000,000).
|
15.2.7
|
EXCEPT FOR WARRANTIES OF (I) TITLE AND (II) NO LIENS OR ENCUMBRANCES, AND SUBJECT TO THE PROVISIONS OF THIS AGREEMENT CONCERNING THE QUALITY OF LNG TO BE DELIVERED UNDER THIS AGREEMENT, SELLER EXPRESSLY NEGATES ANY WARRANTY WITH RESPECT TO LNG DELIVERED UNDER THIS AGREEMENT, WRITTEN OR ORAL, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY WITH RESPECT TO CONFORMITY TO SAMPLES, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.
|
15.3
|
Buyer’s Credit; Credit Support
|
15.3.1
|
At all times prior to any assignment of this Agreement by Original Buyer, Original Buyer shall have no obligation to maintain any credit rating or provide any guaranty, letter of credit or other credit support in connection with this Agreement; provided that, if required for financing, Buyer shall use its commercial reasonable efforts to provide information or documents confirming its ability to perform its financial obligations under this Agreement.
|
15.3.2
|
If Buyer assigns or novates this Agreement to a Third Party who is not an Affiliate of Original Buyer (such Third Party, the “Assignee Buyer”) and if in connection with such assignment or novation Lenders require in accordance with Section 21.2.2(c) that Assignee Buyer have an Acceptable Credit Rating or a Guaranty be provided to Seller prior to such novation or assignment, then at all times following such assignment or novation
|
(a)
|
Assignee Buyer shall at all times on and after such assignment or novation maintain an Acceptable Credit Rating or provide or cause to be provided a Guaranty. In the event any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder no longer has an Acceptable Credit Rating or is otherwise no longer an Acceptable Guarantor, Assignee Buyer shall provide a replacement Guaranty or, if unable to comply with the requirements of a Guaranty because no Guarantor exists, an alternative credit support reasonably acceptable to Lenders at all times. Any Guaranty or alternative credit support required to be delivered to Seller pursuant to this Section 15.3.2(a) shall be delivered within thirty (30) Days of such requirement arising.
|
(b)
|
If Assignee Buyer, or Assignee Buyer’s Guarantor, merges or consolidates, sells all or substantially all of its assets, or novates or assigns this Agreement or the Guaranty, as applicable, then the surviving entity, asset purchaser or assignee, as the case may be, shall either have and maintain an Acceptable Credit Rating or assume in writing or by operation of law the obligations of Assignee Buyer or Assignee Buyer’s Guarantor, as applicable. In the event the foregoing conditions are not satisfied, Assignee Buyer shall provide a replacement Guaranty or, if unable to comply with the requirements of a Guaranty because no Guarantor exists, an alternative credit support reasonably acceptable to Lenders at all times. Any Guaranty or alternative credit support required to be delivered to Seller pursuant to this Section 15.3.2(b) shall be delivered within thirty (30) Days of such requirement arising.
|
15.4
|
Third Party Liability
|
(a)
|
If any Third Party shall notify either Party (the “Indemnified Party”) with respect to any matter (a “Third Party Claim”) that may give rise to a claim for indemnification against the other Party (the “Indemnifying Party”) under this Section 15 or elsewhere in this Agreement, then the Indemnified Party shall promptly notify the Indemnifying Party thereof in writing; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is materially prejudiced.
|
(b)
|
The Indemnifying Party will have the right to defend against the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying Party notifies the Indemnified Party in writing within fifteen (15) Days after the Indemnified Party has given notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against any damages the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim; (ii) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third Party Claim and fulfill its indemnification obligations hereunder; (iii) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief; (iv) settlement of, or an adverse judgment with respect to, the Third Party Claim is not in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice materially adverse to the continuing business interests of the Indemnified Party; and (v) the Indemnifying Party conducts the defense of the Third Party Claim actively and diligently.
|
(c)
|
So long as the Indemnifying Party is conducting the defense of the Third Party Claim in accordance with Section 15.4(b): (i) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim; (ii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed); and (iii) the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed).
|
(d)
|
In the event any of the conditions in Section 15.4(b) is or becomes unsatisfied, or a conflict arises, with regard to the Third Party Claim, between the Indemnified Party and the Indemnifying Party in respect of such Third Party Claim the Indemnified Party may defend against the Third Party Claim in any manner it reasonably may deem appropriate.
|
(e)
|
If either Party gives notice to the other Party of a Third Party Claim pursuant to the provisions of Section 15.4(a) and the notified Party does not give notice that it will indemnify the notifying Party in the manner set out in Section 15.4(b), the notifying Party shall
|
15.5
|
Seller’s Insurance
|
15.5.1
|
Seller shall obtain and maintain or cause to be obtained and maintained:
|
(a)
|
insurance for the Driftwood LNG Terminal to the extent required by Applicable Law, and
|
(b)
|
additional insurance, as is reasonably necessary, against such other risks and at such levels as a Reasonable and Prudent Operator of a liquefaction terminal would obtain.
|
15.5.2
|
Seller shall obtain or cause to be obtained the insurance required by Section 15.5.1 from a reputable insurer (or insurers) reasonably believed to have adequate financial reserves. Seller shall exercise its best efforts, or shall cause the applicable insured Person to use its best efforts, to collect any amount due under such insurance policies.
|
15.6
|
Buyer’s Insurance
|
(a)
|
Hull and Machinery Insurance shall be placed and maintained with reputable marine underwriters; and
|
(b)
|
Protection & Indemnity Insurance (“P&I Insurance”) shall be placed and maintained with full P&I indemnity cover in the ordinary course from a P&I Club, and such LNG Tanker shall be entered for insurance with a P&I Club, including pollution liability standard for LNG vessel and Certificate of Financial Responsibility.
|
16.
|
Safety
|
16.1
|
General
|
16.2
|
Third Parties
|
17.
|
Exchange of Information
|
18.
|
Confidentiality
|
18.1
|
Duty of Confidentiality
|
(a)
|
already known to the recipient from sources other than the other Party;
|
(b)
|
already in the public domain (other than as a result of a breach of the terms of this Section 18.1); or
|
(c)
|
independently developed by the recipient;
|
18.2
|
Permitted Disclosures
|
18.2.1
|
The Confidential Information, which either Party receives from the other, may be disclosed by such Party:
|
(a)
|
to any Person who is such Party’s legal counsel, other professional consultant or adviser, Transporter, insurer, accountant or construction contractor; provided that such disclosure is solely to assist the purpose for which such Person was so engaged;
|
(b)
|
if required and to the extent required by the rules of any recognized stock exchange or agency established in connection therewith upon which the securities of such Party or a company falling within Section 18.2.1(f) are quoted;
|
(c)
|
as may be required under federal or state securities or “Blue Sky” Applicable Laws;
|
(d)
|
if required and to the extent required by the U.S. Department of Energy;
|
(e)
|
without limiting Section 18.2.1(c) or (d), if required and to the extent required by any Applicable Laws, or such Party becomes legally required (by oral questions, interrogatories, request for information or documents, orders issued by any Governmental Authority or any other process) to disclose such information, or to the extent necessary to enforce Section 20.1 or 20.2 or any arbitration award or binding decision of an Expert (including by filing Confidential Information in proceedings before a court or other competent judicial authority) or to enforce other rights of a party to the Dispute; provided that such Party shall, to the extent practicable, give prior notice to the other Party of the requirement and the terms thereof and shall cooperate with the other Party to minimize the disclosure of the information, seek a protective order or other appropriate remedy, and if such protective order or other remedy is not obtained, then such Party will furnish only that portion of such information that it is legally required to furnish;
|
(f)
|
to any of its Affiliates or shareholders (or any company involved in the provision of advice to any such Affiliate or shareholder for the purposes of this Agreement) and any employee of that Party or of a company to which disclosure is permitted pursuant to this Section 18.2.1(f);
|
(g)
|
to any bona fide intended assignees of a Party’s interests under this Agreement;
|
(h)
|
to any Third Party as reasonably necessary for the performance of a Party’s obligations under this Agreement;
|
(i)
|
to any arbitrator appointed in accordance with Section 20.1.4, to any Expert appointed pursuant to Section 20.2.1, or to any other party to an arbitration or Expert proceeding arising under or in connection with this Agreement, or to any witnesses appearing in an arbitration under Section 20.1 or in an Expert proceeding under Section 20.2; or
|
(j)
|
to any Person reasonably required to see such Confidential Information, including the Lenders, in connection with any bona fide financing or offering or sale of securities by Seller, Driftwood, Buyer or any Affiliate or shareholder of any of the foregoing, to comply with the disclosure or other requirements of Applicable Law or of financial institutions or other participants (including rating agencies) in such financing, offering or sale.
|
18.2.2
|
The Party making the disclosure shall ensure that any Person listed in Section 18.2.1(a), (f), (g), (h), (i) or (j) to which it makes the disclosure (excluding any legal counsel, arbitrator or Expert already bound by confidentiality obligations) undertakes to hold such Confidential Information subject to confidentiality obligations equivalent to those set out in Section 18.1. In the case of a disclosure to an employee made in accordance with Section 18.2.1(f), the undertaking shall be given by the company on its own behalf and in respect of all its employees.
|
18.2.3
|
No press release concerning the execution of this Agreement or resolution of any Disputes shall be issued unless agreed by the Parties.
|
18.3
|
Confidential Information Remedy
|
18.4
|
Duration of Confidentiality
|
19.
|
Default and Termination
|
19.1
|
Seller’s Right to Suspend Performance
|
19.1.1
|
Seller Right to Suspend. If Seller has not received payment in respect of any amounts due under any invoice(s) under this Agreement totaling in excess of USD fifteen million (US$15,000,000) within five (5) Business Days after the due date thereof, then without prejudice to any other rights and remedies of Seller arising under this Agreement or by Applicable Laws or otherwise, upon giving five (5) Business Days’ notice to Buyer:
|
(a)
|
Seller may suspend delivery of any or all subsequent cargoes until the amounts outstanding under such invoice(s) and interest thereon have been paid in full.
|
(b)
|
In the event of such suspension, Buyer shall not be relieved of any of its obligations under this Agreement, and the provisions of Sections 5.7.2 to 5.7.7 shall apply with respect to each cargo scheduled in the Annual Delivery Program or Ninety Day Schedule which is not delivered during the suspension.
|
(c)
|
During the period that such suspension is effective, Seller shall have no obligation to make available LNG to Buyer.
|
19.1.2
|
Buyer Right to Suspend. Without prejudice to its rights under the Termination Event set out in Section 19.2.1, if a Bankruptcy Event has occurred with respect to Seller, Buyer shall be entitled to suspend by written notice to Seller the performance of its obligations under this Agreement to take and pay for LNG, until such Bankruptcy Event is no longer occurring with respect to Seller. Buyer’s right to suspend shall not excuse Buyer from paying for LNG taken prior to the suspension.
|
19.2
|
Termination Events
|
19.2.1
|
in respect of either Party, if a Bankruptcy Event has occurred with respect to the other Party or any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder;
|
19.2.2
|
in respect of either Party, if the other Party fails to pay or cause to be paid any amount or amounts in the aggregate due in connection with this Agreement that are in excess of USD fifty million (US$50,000,000), for a period of ten (10) Days or more following the due date of the relevant invoice;
|
19.2.3
|
in respect of either Party, violation of Section 25.2.1(b) or 25.4(b) by the other Party;
|
19.2.4
|
in respect of Seller, if Buyer fails to comply with Section 15.3 or 21;
|
19.2.5
|
by Seller, if (i) Buyer or any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder fails to execute any Direct Agreement with Seller’s or its Affiliate’s respective Lenders within sixty (60) Days after Seller’s request thereof, provided that such Direct Agreement complies with the requirements in Sections 21.4.2(a) to (g), or (ii) in connection with any financing, Buyer fails to provide to the Lenders and the Lenders’ Agent any legal opinion that complies with the requirements in Section 21.4.1 within sixty (60) Days after Seller’s request thereof;
|
19.2.6
|
in respect of Buyer, if (a) Seller has declared Force Majeure one or more times and the interruptions resulting from such Force Majeure total twenty-four (24) Months during any thirty-six (36) Month period, and (b) such Force Majeure has resulted in Seller being prevented from making available fifty percent (50%) or more of the annualized ACQ during such periods of Force Majeure;
|
19.2.7
|
in respect of Seller, if (a) Buyer has declared Force Majeure one or more times and the interruptions resulting from such Force Majeure total twenty-four (24) Months during any thirty-six (36) Month period, and (b) such Force Majeure has resulted in Buyer being prevented from taking fifty percent (50%) or more of the annualized ACQ during such periods of Force Majeure;
|
19.2.8
|
in respect of Seller, violation of Section 25.1 by Buyer;
|
19.2.9
|
in respect of Buyer, if Seller fails to make available (as such obligation for any cargo is set forth in Section 5.6.1) and is not deemed to make available fifty percent (50%) of the cargoes scheduled in any given twelve (12) Month period;
|
19.2.10
|
in respect of Seller, if Buyer fails to take (as such obligation for any cargo is set forth in Section 5.7.1) fifty percent (50%) of the cargoes scheduled in any given twelve (12) Month period; and
|
19.2.11
|
in respect of Seller, if the LNG sale and purchase agreement to be entered into after the Effective Date between Driftwood (as seller) and Buyer (as buyer) (“Driftwood SPA”) is terminated.
|
19.3
|
Termination
|
19.3.1
|
Notice of Termination. Upon the occurrence of any Termination Event, the Party which has the right under Section 19.2 to terminate this Agreement
|
19.3.2
|
Timing. Except with respect to the Termination Events described in Section 19.3.3, at any time after the expiry of a period of forty-five (45) Days after the Terminating Party gave notice of a Termination Event pursuant to Section 19.3.1, unless the circumstances constituting the Termination Event have been fully remedied or have ceased to apply, the Terminating Party may terminate this Agreement with immediate effect by giving notice of such termination to the other Party.
|
19.3.3
|
Certain Events. Upon the occurrence of a Termination Event described in Section 19.2.1, 19.2.3, 19.2.4, 19.2.5, 19.2.6, 19.2.7, 19.2.8, 19.2.9, 19.2.10 or 19.2.11, the Terminating Party’s notice pursuant to Section 19.3.1 shall terminate this Agreement immediately.
|
19.3.4
|
Automatic Termination. This Agreement shall automatically terminate without further action by either Party pursuant to the terms of Section 2.3.3, if applicable.
|
19.4
|
Rights Accrued Prior to Termination
|
(a)
|
the rights and liabilities of the Parties accrued prior to or as a result of such termination; and
|
(b)
|
claims for breaches of Section 18 that occur during the three (3) year period after termination of this Agreement.
|
19.5
|
Final Reconciliation
|
19.6
|
Survival
|
20.
|
Dispute Resolution and Governing Law
|
20.1
|
Dispute Resolution
|
20.1.1
|
Arbitration. Any Dispute (other than a Dispute submitted to an Expert under Section 20.2.1) shall be exclusively and definitively resolved through final and binding arbitration, it being the intention of the Parties that this is a broad form arbitration agreement designed to encompass all possible claims and disputes under this Agreement.
|
20.1.2
|
Rules. The arbitration shall be conducted in accordance with the International Arbitration Rules of the American Arbitration Association (“AAA”) (as then in effect).
|
20.1.3
|
Number of Arbitrators. The arbitral tribunal shall consist of three (3) arbitrators, who shall endeavor to complete the final hearing in the arbitration within six (6) Months after the appointment of the last arbitrator.
|
20.1.4
|
Method of Appointment of the Arbitrators. If there are only two (2) parties to the Dispute, then each party to the Dispute shall appoint one (1) arbitrator within thirty (30) Days of the filing of the arbitration, and the two arbitrators so appointed shall select the presiding arbitrator within thirty (30) Days after the latter of the two arbitrators has been appointed by the parties to the Dispute. If a party to the Dispute fails to appoint its party-appointed arbitrator or if the two party-appointed arbitrators cannot reach an agreement on the presiding arbitrator within the applicable time period, then the AAA shall serve as the appointing authority and shall appoint the remainder of the three arbitrators not yet appointed. If the arbitration is to be conducted by three arbitrators and there are more than two parties to the Dispute, then within thirty (30) Days of the filing of the arbitration, all claimants shall jointly appoint one arbitrator and all respondents shall jointly appoint one arbitrator, and the two arbitrators so appointed shall select the presiding arbitrator within thirty (30) Days after the latter of the two arbitrators has been appointed by the parties to the Dispute. For the purposes of appointing arbitrators under this Section 20, (a) Buyer, any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder and all Persons whose interest in this Agreement derives from them shall be considered as one party; and (b) Seller and all Persons whose interest in this Agreement derives from Seller shall be considered as one party. If either all claimants or all respondents fail to make a joint appointment of an arbitrator, or if the party-appointed arbitrators cannot reach an agreement on the presiding arbitrator within the applicable time period, then the AAA shall serve as the appointing authority and shall appoint the remainder of the three (3) arbitrators not yet appointed.
|
20.1.5
|
Consolidation. If multiple arbitration proceedings are initiated under this Agreement or any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder, the subject matters of which are related by common questions of law or fact and which could result in conflicting awards or obligations, then any party to any such dispute may request prior to the appointment of the arbitrators for such multiple or subsequent disputes that all such proceedings be consolidated into a single arbitral proceeding. Such request shall be directed to the AAA, which shall consolidate appropriate proceedings into a single proceeding unless consolidation would result in undue delay for the arbitration of the disputes.
|
20.1.6
|
Place of Arbitration. Unless otherwise agreed by all parties to the Dispute, the place of arbitration shall be New York, New York.
|
20.1.7
|
Language. The arbitration proceedings shall be conducted in the English language, and the arbitrators shall be fluent in the English language.
|
20.1.8
|
Entry of Judgment. The award of the arbitral tribunal shall be final and binding. Judgment on the award of the arbitral tribunal may be entered and enforced by any court of competent jurisdiction. The Parties agree that service of process for any action to enforce an award may be accomplished according to the procedures of Section 24, as well as any other procedure authorized by law.
|
20.1.9
|
Notice. All notices required for any arbitration proceeding shall be deemed properly given if given in accordance with Section 24.
|
20.1.10
|
Qualifications and Conduct of the Arbitrators. All arbitrators shall be and remain at all times wholly impartial, and, once appointed, no arbitrator shall have any ex parte communications with any of the parties to the Dispute concerning the arbitration or the underlying Dispute other than communications directly concerning the selection of the presiding arbitrator, where applicable.
|
20.1.11
|
Interim Measures. Any party to the Dispute may apply to a court in New York, New York, for interim measures (a) prior to the constitution of the arbitral tribunal (and thereafter as necessary to enforce the arbitral tribunal’s rulings); or (b) in the absence of the jurisdiction of the arbitral tribunal to rule on interim measures in a given jurisdiction. The Parties agree that seeking and obtaining such interim measures shall not waive the right to arbitration. The Parties unconditionally and irrevocably submit to jurisdiction in New York, New York, for the limited purposes of an application for interim measures under this Section 20.1.11. The arbitrators (or in an emergency the presiding arbitrator acting alone in the event one or more of the other arbitrators is unable to be involved in a timely fashion) may grant interim measures including injunctions, attachments and conservation orders
|
20.1.12
|
Costs and Attorneys’ Fees. The arbitral tribunal is authorized to award costs of the arbitration in its award, including: (a) the fees and expenses of the arbitrators; (b) the costs of assistance required by the tribunal, including its experts; (c) the fees and expenses of the administrator; (d) the reasonable costs for legal representation of a successful party; and (e) any such costs incurred in connection with an application for interim or emergency relief and to allocate those costs between the parties to the Dispute. The costs of the arbitration proceedings, including attorneys’ fees, shall be borne in the manner determined by the arbitral tribunal.
|
20.1.13
|
Interest. The award shall include pre-award and post-award interest, as determined by the arbitral tribunal, from the date of any default or other breach of this Agreement until the arbitral award is paid in full. Interest shall accrue at a rate per annum equal to two percent (2%) above LIBOR (as in effect on the Day such award was issued) on and from the Day when such award was issued until the date of its repayment, provided that, without prejudice to the other terms of this Agreement, if such period lasts longer than ninety (90) Days, the applicable LIBOR rate for each successive term of ninety (90) Days during that period shall be that in effect on the first (1st) Day of that ninety (90) Day period. Interest shall accrue from Day to Day and be calculated on the basis of a three hundred sixty (360) Day year.
|
20.1.14
|
Currency of Award. The arbitral award shall be made and payable in USD, free of any Tax or other deduction.
|
20.1.15
|
Waiver of Challenge to Decision or Award. To the extent permitted by law, the Parties hereby waive any right to appeal from or challenge any arbitral decision or award, or to oppose enforcement of any such decision or award before a court or any Governmental Authority, except with respect to the limited grounds for modification or non-enforcement provided by any applicable arbitration statute or treaty.
|
20.1.16
|
Confidentiality. Any arbitration or Expert determination relating to a Dispute (including an arbitral award, a settlement resulting from an arbitral award, documents exchanged or produced during an arbitration or Expert proceeding, and memorials, briefs or other documents prepared for the arbitration or Expert proceeding) shall be Confidential Information subject to the confidentiality provisions of Section 18; provided, however, that breach of such confidentiality provisions shall not void any settlement, determination or award.
|
20.2
|
Expert Determination
|
20.2.1
|
General. In the event of any disagreement between the Parties regarding a measurement under Exhibit A hereto or any other Dispute which the Parties agree to submit to an Expert (in either case, a “Measurement Dispute”), the Parties hereby agree that such Measurement Dispute shall be resolved by an Expert selected as provided in this Section 20.2.1. The Expert is not an arbitrator of the Measurement Dispute and shall not be deemed to be acting in an arbitral capacity. The Party desiring an expert determination shall give the other Party notice of the request for such determination. If the Parties are unable to agree upon an Expert within ten (10) Days after receipt of the notice of request for an expert determination, then, upon the request of either of the Parties, the International Centre for Expertise of the International Chamber of Commerce (“ICC”) shall appoint such Expert and shall administer such expert determination through the ICC’s Rules for Expertise. The Expert shall be and remain at all times wholly impartial, and, once appointed, the Expert shall have no ex parte communications with either of the Parties concerning the expert determination or the underlying Measurement Dispute. The Parties shall cooperate fully in the expeditious conduct of such expert determination and provide the Expert with access to all facilities, books, records, documents, information and personnel necessary to make a fully informed decision in an expeditious manner. Before issuing a final decision, the Expert shall issue a draft report and allow the Parties to comment on it. The Expert shall endeavor to resolve the Measurement Dispute within thirty (30) Days (but no later than sixty (60) Days) after his appointment, taking into account the circumstances requiring an expeditious resolution of the matter in dispute.
|
20.2.2
|
Final and Binding. The Expert’s decision shall be final and binding on the Parties unless challenged in an arbitration pursuant to Section 20.1 within thirty (30) Days of the date the Expert’s decision. If challenged, (a) the decision shall remain binding and be implemented unless and until finally replaced by an award of the arbitrators; (b) the decision shall be entitled to a rebuttable presumption of correctness; and (c) the Expert shall not be appointed in the arbitration as an arbitrator or as advisor to either Party without the written consent of both Parties.
|
20.2.3
|
Arbitration of Expert Determination. In the event that a Party requests expert determination for a Measurement Dispute which raises issues that require determination of other matters in addition to correct measurement under Exhibit A hereto, then either Party may elect to refer the entire Measurement Dispute for arbitration under Section 20.1.1. In such case, the arbitrators shall be competent to make any measurement determination that is part of a Dispute. An expert determination not referred to arbitration shall proceed and shall not be stayed during the pendency of an arbitration.
|
20.3
|
Governing Law
|
20.4
|
Immunity
|
20.4.1
|
Each Party, to the maximum extent permitted by Applicable Law, as to itself and its assets, hereby irrevocably, unconditionally, knowingly and intentionally waives any and all rights of immunity (sovereign or otherwise) and agrees not to claim, or assert any immunity with respect to the matters covered by this Agreement in any arbitration, Expert proceeding, or other action with respect to this Agreement, whether arising by statute or otherwise, that it may have or may subsequently acquire, including rights under the doctrines of sovereign immunity and act of state, immunity from legal process (including service of process or notice, pre-judgment or pre-award attachment, attachment in aid of execution, or otherwise), immunity from jurisdiction or judgment of any court, arbitrator, Expert or tribunal (including any objection or claim on the basis of inconvenient forum), and immunity from enforcement or execution of any award or judgment or any other remedy.
|
20.4.2
|
Each Party hereby irrevocably, unconditionally, knowingly and intentionally:
|
(a)
|
agrees that the execution, delivery and performance by such Party of this Agreement constitute private and commercial acts rather than public or governmental acts; and
|
(b)
|
consents in respect of the enforcement of any judgment against such Party in any such proceedings in any jurisdiction and to the giving of any relief or the issue of any process in connection with such proceedings (including the making, enforcement or execution of any such judgment or any order arising out of any such judgment against or in respect of any property whatsoever irrespective of its use or intended use).
|
21.
|
Successors; Assignments
|
21.1
|
Successors
|
21.2
|
Assignment by Buyer
|
21.2.1
|
Early Assignments. Buyer may not novate or assign this Agreement to any Person other than an Affiliate of Buyer prior to the time that the Date of Substantial Completion for each of the Phase 1 Plants has occurred.
|
21.2.2
|
Prior Written Consent. At any time after the Date of Substantial Completion for each of the Phase 1 Plants has occurred, Buyer may novate or assign this Agreement in its entirety to another Person, for the remainder of the Term, upon the prior written consent of Seller (which consent shall not be unreasonably withheld or delayed), provided that:
|
(a)
|
Lenders have provided prior written consent to such novation or assignment;
|
(b)
|
such assignee or novatee assumes all of the obligations of Buyer under this Agreement commencing as of the date of the novation or assignment by execution of a copy of this Agreement in its own name (countersigned by Seller) or by execution of a binding assignment and assumption agreement which is enforceable by Seller; and
|
(c)
|
if required by Lenders, such assignee or novatee has an Acceptable Credit Rating or a Guaranty is provided to Seller prior to such novation or assignment.
|
21.2.3
|
Without Prior Consent to Affiliates. At any time, so long as Buyer is Original Buyer or an Affiliate of Original Buyer, Buyer may novate or assign this
|
(a)
|
Lenders have provided prior written consent to such novation or assignment;
|
(b)
|
such Affiliate assignee or novatee assumes all of the obligations of Buyer under this Agreement commencing as of the date of the novation or assignment by execution of a copy of this Agreement in its own name (countersigned by Seller) or by execution of a binding assignment and assumption agreement which is reasonably acceptable in form and substance to, and enforceable by, Seller; and
|
(c)
|
performance of this Agreement by Seller with such Affiliate assignee or novatee would comply with Applicable Laws and all relevant Approvals.
|
21.2.4
|
Further Obligations. Upon a novation or assignment in whole by Buyer in accordance with this Section 21.2, the assignor or novator shall be released from all further obligations, duties and liabilities under this Agreement, other than any obligations, duties and liabilities arising prior to the date of effectiveness of such novation or assignment.
|
21.3
|
Assignment by Seller
|
21.3.1
|
Prior Written Consent. Seller may novate or assign this Agreement in its entirety to another Person, for the remainder of the Term, upon the prior written consent of Buyer (which consent shall not be unreasonably withheld or delayed), provided that such assignee or novatee assumes all of the obligations of Seller under this Agreement commencing as of the date of the novation or assignment by execution of a copy of this Agreement in its own name (countersigned by Buyer) or by execution of a binding assignment and assumption agreement which is enforceable by Buyer.
|
21.3.2
|
Without Prior Consent to Affiliates. Seller may novate or assign this Agreement in its entirety, for the remainder of the Term, without Buyer’s prior consent, to an Affiliate of Seller, provided that:
|
(a)
|
such Affiliate assignee or novatee assumes all of the obligations of Seller under this Agreement commencing as of the date of the novation or assignment by execution of a copy of this Agreement in its own name (countersigned by Buyer) or by execution of a binding assignment and assumption agreement which is reasonably acceptable in form and substance to, and enforceable by, Buyer; and
|
(b)
|
performance of this Agreement by Buyer with such Affiliate assignee or novatee would comply with Applicable Laws and all relevant Approvals.
|
21.3.3
|
Further Obligations. Upon a novation or assignment by Seller in accordance with this Section 21.3, the assignor or novator shall be released from all further obligations, duties and liabilities under this Agreement, other than any obligations, duties and liabilities arising prior to the date of effectiveness of such novation or assignment.
|
21.4
|
Seller, Driftwood and Affiliate Financing
|
21.4.1
|
Lender Financing. Seller, Driftwood and their respective Affiliates shall have the right to obtain financing (including non-recourse or limited recourse financing) from Lenders. In connection with any financing or refinancing obtained by Seller, Driftwood or their respective Affiliates, Buyer shall, if so requested by Seller, deliver to Seller’s, Driftwood’s or their respective Affiliate’s Lenders or the agent acting on behalf of any such Lenders (“Lenders’ Agent”) certified copies of its corporate charter and by-laws, resolutions, incumbency certificates, financial statements and other financial information, and such other items or information upon the reasonable request by Lenders or Lenders’ Agent. Buyer shall, at Seller’s cost, also provide to the Lenders and Lenders’ Agent legal opinions in form and substance and from counsel reasonably acceptable to the Lenders.
|
21.4.2
|
Assignment as Security. Buyer further acknowledges and agrees that Seller may collaterally assign, transfer, or otherwise encumber, all or any of its rights, benefits and obligations under this Agreement to such Lenders or Lenders’ Agent as security for Seller’s, Driftwood’s or their respective Affiliate’s obligations to Lenders. Accordingly, upon Seller’s request pursuant to a notice hereunder and at Seller’s cost, Buyer shall enter into, and if Buyer is Assignee Buyer, then Assignee Buyer shall cause any guarantor that has provided a guaranty in support of Assignee Buyer’s obligations hereunder to enter into, one or more direct agreements or consent agreements (each, a “Direct Agreement”) pursuant to which Buyer or such guarantor, as applicable:
|
(a)
|
consents to the collateral assignment of Seller’s, Driftwood’s or their respective Affiliate’s rights and obligations under this Agreement or the guaranty, as applicable, to the Lenders or the Lenders’ Agent and the subsequent assignment and transfer of this Agreement or the guaranty, as applicable, to the Lenders’ Agent or other designee or nominee of the Lenders (including a purchaser at any foreclosure sale or any assignee or transferee under any instrument of assignment or transfer in lieu of foreclosure) following an event of default by Seller, Driftwood or their respective Affiliate under the financing documents
|
(b)
|
provides representations and warranties that this Agreement or the guaranty, as applicable, is in full force and effect and has not been modified or amended and that there are no defaults existing under this Agreement or the guaranty, as applicable;
|
(c)
|
in the case of Buyer, provides representations and warranties regarding the corporate existence of Buyer, its authority to enter into and perform this Agreement and that this Agreement is the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, and in the case of guarantor, provides representations and warranties regarding the corporate existence of guarantor, its authority to enter into and perform the guaranty and that the guaranty is the legal, valid and binding obligation of guarantor, enforceable against guarantor in accordance with its terms;
|
(d)
|
agrees to make payments of amounts owed under this Agreement or the guaranty, as applicable, to one or more accounts as notified by Lenders’ Agent from time to time;
|
(e)
|
in the case of Buyer, agrees to give Lenders and Lenders’ Agent notice of and an opportunity to cure any default by Seller under this Agreement;
|
(f)
|
agrees to modify or clarify provisions of this Agreement or the guaranty, as applicable, as reasonably requested by the Lenders or the Lenders’ Agent; and
|
(g)
|
agrees to other undertakings that are normal and customary in financings or refinancings of the type entered into by Seller, Driftwood or their respective Affiliates and the Lenders.
|
21.4.3
|
Assignment or Novation to Lenders. Seller may novate or assign this Agreement in its entirety, for the remainder of the Term, without Buyer’s prior consent, to Seller’s Lenders, Driftwood’s Lenders or their respective Affiliate’s Lenders or the relevant Lenders’ Agent and to any other designee or nominee of such Lenders (including a purchaser at any foreclosure sale or any assignee or transferee under any instrument of assignment or transfer in lieu of foreclosure) following an event of default by Seller, Driftwood or their respective Affiliate under the financing documents entered into by Seller, Driftwood or their respective Affiliates with such Lenders, provided that each such transferee assumes all of the obligations of Seller under this Agreement commencing on the date of the assignment by execution of a copy of this Agreement in its own name (countersigned by Buyer) or by
|
22.
|
Contract Language
|
23.
|
Miscellaneous
|
23.1
|
Disclaimer of Agency
|
23.2
|
Entire Agreement
|
23.3
|
Third Party Beneficiaries
|
23.4
|
Amendments and Waiver
|
23.5
|
Exclusion
|
23.6
|
Further Assurances
|
23.7
|
Severability
|
23.8
|
Representations and Warranties of Buyer
|
23.8.1
|
Buyer is and shall remain duly formed and in good standing under the laws of the jurisdiction of its organization;
|
23.8.2
|
Buyer has the requisite power, authority and legal right to execute and deliver, and to perform its obligations under, this Agreement;
|
23.8.3
|
Buyer has not incurred any liability to any financial advisor, broker or finder for any financial advisory, brokerage, finder’s or similar fee or commission in connection with the transactions contemplated by this Agreement for which Seller or any of its Affiliates could be liable; and
|
23.8.4
|
neither the execution, delivery, nor performance of this Agreement violates or will violate, results or will result in a breach of or constitutes or will constitute a default under any provision of Buyer’s organizational documents, any law, judgment, order, decree, rule, or regulation of any court, administrative agency, or other instrumentality of any Governmental Authority or of any other material agreement or instrument to which Buyer is a party.
|
23.9
|
Representations and Warranties of Seller
|
23.9.1
|
Seller is and shall remain duly formed and in good standing under the laws of the jurisdiction of its organization;
|
23.9.2
|
Seller has the requisite power, authority and legal right to execute and deliver, and to perform its obligations under this Agreement;
|
23.9.3
|
Seller has not incurred any liability to any financial advisor, broker or finder for any financial advisory, brokerage, finder’s or similar fee or commission in connection with the transactions contemplated by this Agreement for which Buyer or any of its Affiliates could be liable; and
|
23.9.4
|
neither the execution, delivery, nor performance of this Agreement, violates or will violate, results or will result in a breach of, or constitutes or will constitute a default under, any provision of Seller’s organizational documents, any law, judgment, order, decree, rule, or regulation of any court, administrative agency, or other instrumentality of any Governmental Authority or of any other material agreement or instrument to which Seller is a party.
|
24.
|
Notices
|
24.1
|
Form of Notice
|
24.1.1
|
Except where otherwise specifically provided in this Agreement, all notices, requests, consents, proposals, approvals and statements shall be in writing and in English, and if properly addressed to the recipient in the manner required by Sections 24.1.2 and 24.2, shall be deemed to have been properly given or delivered: (i) on the date of actual delivery when personally delivered to the intended recipient or when delivered to the intended recipient by a reputable courier delivery service; or (ii) on the date specified in Section 24.2.2, if by Electronic Transmission, provided that if such Electronic Transmission is directed after 5:00 p.m. (local time of the recipient) or on a day that is not a Business Day, then on the next succeeding Business Day after the date specified in Section 24.2.2.
|
24.1.2
|
A non-electronic document is deemed to be properly addressed, in each case, if to Buyer or Seller, to the address of such Person as set forth in this Section 24.1.2, or, in each case, to such other address or addresses as the addressee may have specified by written notice given to the other Party in the manner contemplated by Section 24.1.1.
|
24.2
|
Electronic Transmission
|
24.2.1
|
Without limiting the manner by which notice otherwise may be given effectively to Parties pursuant to Section 24.1, any notice under any provision of this Agreement shall be effective if given by a form of Electronic Transmission.
|
24.2.2
|
Notice given pursuant to Section 24.2.1 will be deemed delivered on the date on which it is directed to the electronic mail address set forth in Section 24.1.2, or to such other electronic mail address as the addressee previously may have specified by written notice given to the other Party in the manner contemplated by Section 24.1.1.
|
24.2.3
|
Buyer and Seller hereby consent to receive notices by Electronic Transmission at the electronic mail address set forth in Section 24.1.2.
|
25.
|
Trade Law Compliance and Business Practices
|
25.1
|
Trade Law Compliance
|
25.1.1
|
Each Party agrees to comply with the Export Authorizations, including incorporating into any resale contract for LNG sold under this Agreement the necessary conditions to ensure compliance with the Export Authorizations. Buyer shall promptly provide to Seller all information in order for Seller, its direct or indirect LNG supplier or any other Person acting as agent on behalf of Seller or such LNG supplier under an Export Authorization, to comply with the Export Authorizations, including information that identifies for each LNG cargo delivered under this Agreement the country (or countries) into which the LNG or Gas was actually delivered (i.e., use in combustion or other chemical reaction conversion process). Buyer commits to include in any resale contract for LNG sold under this Agreement the necessary conditions to ensure Seller is made aware of all such countries into which the LNG or Gas was actually delivered. If any Export Authorization requires conditions to be included in this Agreement beyond those that are already included herein, then, within fifteen (15) days following the issuance of the Export Authorization imposing such condition, the Parties shall discuss the appropriate changes to be made to this Agreement to comply with such Export Authorization and shall amend this Agreement accordingly. Buyer acknowledges and agrees that it will resell
|
25.1.2
|
Without limiting the foregoing, the following provisions are included in this Agreement in accordance with the requirements of the Export Authorizations, and Buyer shall include, and require any direct or indirect buyer of LNG sold hereunder for whom Seller or Driftwood acts as agent in connection with one or more Export Authorizations to include, the following provisions in any agreement or other contract for the sale or transfer of LNG exported pursuant to any Export Authorization:
|
(a)
|
Buyer acknowledges and agrees that it will resell or transfer LNG purchased hereunder for delivery only to countries identified in Ordering Paragraph B of DOE/FE Order No. 3968, issued February 28, 2017, in FE Docket No. 16-144-LNG, and/or to purchasers that have agreed in writing to limit their direct or indirect resale or transfer of such LNG to such countries. Buyer further commits to cause a report to be provided to Driftwood LNG LLC that identifies the country (or countries) into which the LNG or natural gas was actually delivered and/or received for end use, and to include in any resale contract for such LNG the necessary conditions to ensure that Driftwood LNG LLC is made aware of all such countries.
|
(b)
|
Buyer acknowledges and agrees that it will resell or transfer LNG, purchased hereunder for delivery only to countries identified in Ordering Paragraph F of DOE/FE Order No. 4373, issued May 2, 2019, in FE Docket No. 16-144-LNG, and/or to purchasers that have agreed in writing to limit their direct or indirect resale or transfer of such natural gas or LNG to such countries. Buyer further commits to cause a report to be provided to Driftwood LNG LLC that identifies the country (or countries) into which the LNG was actually delivered, and to include in any resale contract for such LNG the necessary conditions to ensure that Driftwood LNG LLC is made aware of all such actual destination countries.
|
25.2
|
Prohibited Practices
|
25.2.1
|
Each Party agrees that, in the performance of this Agreement and the activities contemplated herein, neither such Party, nor any of its officers, directors, employees, agents or other representatives will take any action, or omit to take any action, which would (a) violate any applicable Anti-Corruption Law, any applicable Export Control and Sanctions Laws or any other Applicable Law applicable to such Party, or (b) cause the other Party to be in violation of any Anti-Corruption Law or Export Control and Sanctions Law applicable to such other Party.
|
25.2.2
|
Without limiting Section 25.2.1, each Party agrees on behalf of itself, its directors, managers, officers, employees, agents, contractors, and Affiliates, not to pay any fees, commissions or rebates to any employee, officer or agent of the other Party or any of its Affiliates nor provide or cause to be provided to any of them any gifts or entertainment of significant cost or value in connection with this Agreement in order to influence or induce any actions or inactions in connection with the commercial activities of the other Party hereunder.
|
25.3
|
Records; Audit
|
25.4
|
Representations and Warranties
|
25.5
|
Indemnity
|
SELLER:
|
|
|
BUYER:
|
|
TELLURIAN TRADING UK LTD.
|
|
TOTAL GAS & POWER NORTH AMERICA, INC.
|
||
/s/ Tarek Souki
|
|
/s/ Alexandre Paty
|
||
Name: Tarek Souki
|
|
Name: Alexandre Paty
|
||
Title: Director
|
|
Title: Vice President, Trading
|
d
|
=
|
Σ (Xi x Mi)
|
|||||||
Σ (Xi x Vi)
|
-
|
[
|
K1+
|
(K2-K1) x Xn
|
]
|
x
|
Xm
|
||
0.0425
|
V = Vb - Vh
|
||
Hm
|
=
|
Σ (Xi x Mi x Hi)
|
|
Σ (Xi x Mi)
|
|||
Q
|
=
|
1
|
x
|
{
|
(V x d x Hm)
|
-
|
(
|
V
|
x
|
288.15
|
x
|
P
|
)
|
x
|
37.7
|
+
|
QBOG
|
}
|
||
1055.12
|
273.15 + Tv
|
1013.25
|
||||||||||||||||||
QBOG
|
= the quantity of boil-off gas in MJ consumed by the LNG Tanker during loading, calculated as follows:
|
V2
|
= the quantity of Gas consumed by the LNG Tanker during loading (as calculated pursuant to the below formula), stated in kg and rounded to the nearest kg; and
|
55.575
|
= the heating value of the vapor (assumed to be 100% of methane) stated in MJ/kg at standard reference conditions (15˚C, 1.01325 bar) for both combustion & metering references (tables below).
|
V2
|
= the quantity of Gas consumed by the LNG Tanker during loading, stated in kg;
|
Vf
|
= the reading of Natural Gas Consumption Meter on board the LNG Tanker after the completion of loading, stated in kg; and
|
Vi
|
= the reading of Natural Gas Consumption Meter on board the LNG Tanker before the start of loading, stated in kg.
|
Hv = 1.13285 x Σ (Xi x Mi x Hi)
|
||
Molecular
Mass of
Mixture
|
-150°C
|
-154°C
|
-158°C
|
-160°C
|
-162°C
|
-166°C
|
-170°C
|
16.0
|
-0.000012
|
-0.000010
|
-0.000009
|
-0.000009
|
-0.000008
|
-0.000007
|
-0.000007
|
16.5
|
0.000135
|
0.000118
|
0.000106
|
0.000100
|
0.000094
|
0.000086
|
0.000078
|
17.0
|
0.000282
|
0.000245
|
0.000221
|
0.000209
|
0.000197
|
0.000179
|
0.000163
|
17.2
|
0.000337
|
0.000293
|
0.000261
|
0.000248
|
0.000235
|
0.000214
|
0.000195
|
17.4
|
0.000392
|
0.000342
|
0.000301
|
0.000287
|
0.000274
|
0.000250
|
0.000228
|
17.6
|
0.000447
|
0.000390
|
0.000342
|
0.000327
|
0.000312
|
0.000286
|
0.000260
|
17.8
|
0.000502
|
0.000438
|
0.000382
|
0.000366
|
0.000351
|
0.000321
|
0.000293
|
18.0
|
0.000557
|
0.000486
|
0.000422
|
0.000405
|
0.000389
|
0.000357
|
0.000325
|
18.2
|
0.000597
|
0.000526
|
0.000460
|
0.000441
|
0.000423
|
0.000385
|
0.000349
|
18.4
|
0.000637
|
0.000566
|
0.000499
|
0.000477
|
0.000456
|
0.000412
|
0.000373
|
18.6
|
0.000677
|
0.000605
|
0.000537
|
0.000513
|
0.000489
|
0.000440
|
0.000397
|
18.8
|
0.000717
|
0.000645
|
0.000575
|
0.000548
|
0.000523
|
0.000467
|
0.000421
|
19.0
|
0.000757
|
0.000685
|
0.000613
|
0.000584
|
0.000556
|
0.000494
|
0.000445
|
19.2
|
0.000800
|
0.000724
|
0.000649
|
0.000619
|
0.000589
|
0.000526
|
0.000474
|
19.4
|
0.000844
|
0.000763
|
0.000685
|
0.000653
|
0.000622
|
0.000558
|
0.000503
|
19.6
|
0.000888
|
0.000803
|
0.000721
|
0.000688
|
0.000655
|
0.000590
|
0.000532
|
19.8
|
0.000932
|
0.000842
|
0.000757
|
0.000722
|
0.000688
|
0.000622
|
0.000561
|
20.0
|
0.000976
|
0.000881
|
0.000793
|
0.000757
|
0.000721
|
0.000654
|
0.000590
|
25.0
|
0.001782
|
0.001619
|
0.001475
|
0.001407
|
0.001339
|
0.001220
|
0.001116
|
30.0
|
0.002238
|
0.002043
|
0.001867
|
0.001790
|
0.001714
|
0.001567
|
0.001435
|
Molecular
Mass of
Mixture
|
-150°C
|
-154°C
|
-158°C
|
-160°C
|
-162°C
|
-166°C
|
-170°C
|
16.0
|
-0.000039
|
-0.000031
|
-0.000024
|
-0.000021
|
-0.000017
|
-0.000012
|
-0.000009
|
16.5
|
0.000315
|
0.000269
|
0.000196
|
0.000178
|
0.000162
|
0.000131
|
0.000101
|
17.0
|
0.000669
|
0.000568
|
0.000416
|
0.000377
|
0.000341
|
0.000274
|
0.000210
|
17.2
|
0.000745
|
0.000630
|
0.000478
|
0.000436
|
0.000397
|
0.000318
|
0.000246
|
17.4
|
0.000821
|
0.000692
|
0.000540
|
0.000495
|
0.000452
|
0.000362
|
0.000282
|
17.6
|
0.000897
|
0.000754
|
0.000602
|
0.000554
|
0.000508
|
0.000406
|
0.000318
|
17.8
|
0.000973
|
0.000816
|
0.000664
|
0.000613
|
0.000564
|
0.000449
|
0.000354
|
18.0
|
0.001049
|
0.000878
|
0.000726
|
0.000672
|
0.000620
|
0.000493
|
0.000390
|
18.2
|
0.001116
|
0.000939
|
0.000772
|
0.000714
|
0.000658
|
0.000530
|
0.000425
|
18.4
|
0.001184
|
0.001000
|
0.000819
|
0.000756
|
0.000696
|
0.000567
|
0.000460
|
18.6
|
0.001252
|
0.001061
|
0.000865
|
0.000799
|
0.000735
|
0.000605
|
0.000496
|
18.8
|
0.001320
|
0.001121
|
0.000912
|
0.000841
|
0.000773
|
0.000642
|
0.000531
|
19.0
|
0.001388
|
0.001182
|
0.000958
|
0.000883
|
0.000811
|
0.000679
|
0.000566
|
19.2
|
0.001434
|
0.001222
|
0.000998
|
0.000920
|
0.000844
|
0.000708
|
0.000594
|
19.4
|
0.001480
|
0.001262
|
0.001038
|
0.000956
|
0.000876
|
0.000737
|
0.000623
|
19.6
|
0.001526
|
0.001302
|
0.001078
|
0.000992
|
0.000908
|
0.000765
|
0.000652
|
19.8
|
0.001573
|
0.001342
|
0.001118
|
0.001029
|
0.000941
|
0.000794
|
0.000681
|
20.0
|
0.001619
|
0.001382
|
0.001158
|
0.001065
|
0.000973
|
0.000823
|
0.000709
|
25.0
|
0.002734
|
0.002374
|
0.002014
|
0.001893
|
0.001777
|
0.001562
|
0.001383
|
30.0
|
0.003723
|
0.003230
|
0.002806
|
0.002631
|
0.002459
|
0.002172
|
0.001934
|
Vesting Date
|
Number of Shares
|
[ ]
|
_____________
|
[ ]
|
_____________
|
[ ]
|
_____________
|
[ ]
|
_____________
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Tellurian Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Meg A. Gentle
|
Meg A. Gentle
|
Chief Executive Officer
|
(as Principal Executive Officer)
|
Tellurian Inc.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Tellurian Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Antoine J. Lafargue
|
Antoine J. Lafargue
|
Senior Vice President and Chief Financial Officer
|
(as Principal Financial Officer)
|
Tellurian Inc.
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Meg A. Gentle
|
Meg A. Gentle
|
Chief Executive Officer
|
(as Principal Executive Officer)
|
Tellurian Inc.
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Antoine J. Lafargue
|
Antoine J. Lafargue
|
Senior Vice President and Chief Financial Officer
|
(as Principal Financial Officer)
|
Tellurian Inc.
|