LNG Terminal Use Agreement

6/2/2016
LNGTerminalUseAgreement
EX10.12dex101.htmLNGTERMINALUSEAGREEMENT
Exhibit10.1
***indicatesmaterialhasbeenomittedpursuanttoaConfidentialTreatmentRequestfiledwiththeSecuritiesandExchange
Commission.AcompletecopyofthisagreementhasbeenfiledseparatelywiththeSecuritiesandExchangeCommission.
LNGTERMINALUSEAGREEMENT
between
THEDOWCHEMICALCOMPANY
and
FREEPORTLNGDEVELOPMENT,L.P.
datedMarch1,2004
http://www.sec.gov/Archives/edgar/data/3570/000119312504087470/dex101.htm
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TABLEOFCONTENTS
Page
ARTICLE1DEFINITIONS
ARTICLE2SERVICESANDSCOPE
10
2.1
2.2
2.3
10
10
10
ARTICLE3SALEANDPURCHASEOFSERVICES
11
3.1
3.2
3.3
3.4
3.5
11
12
12
14
14
ARTICLE4COMPENSATIONFORSERVICES
15
4.1
4.2
4.3
4.4
4.5
4.6
4.7
15
16
16
17
18
19
19
ARTICLE5SCHEDULING
20
5.1
5.2
5.3
5.4
5.5
20
23
25
26
26
ARTICLE6RELEASEOFSERVICES
26
6.1
6.2
26
26
ARTICLE7TERM
29
7.1
7.2
7.3
7.4
29
29
31
31
ARTICLE8FREEPORTFACILITY
31
8.1
8.2
8.3
8.4
31
33
34
34
ServicestobeProvidedbyFLNG
AdditionalServices
ActivitiesOutsideScopeofthisAgreement
ServicesQuantity
CustomersUseofServicesQuantity
GasRedelivery
FailuretoTakeDeliveryofGasatDeliveryPoint
FreeportServicesManual
Fee
Retainage
ServicesUnavailability
ConstructionCostDeviationAmountandAdditionalCapitalCosts
NewTaxes
ServicesProvidedtoOtherCustomers
CertainAdjustmentstoReservationFee
CustomerLNGReceiptSchedule
GasDeliveryProcedure
Standard
SchedulingRepresentative
SchedulingCoordinationAmongCustomerandOtherCustomers
General
TemporaryRelease
Term
CommencementofDeliveries
DelayCausedbyForceMajeure
ConstructionProgressReports
FreeportFacility
ModificationstoFreeportFacility
CustomerInspectionRights
ResponsiblePractices
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ARTICLE9TRANSPORTATIONANDUNLOADING
36
9.1
9.2
9.3
9.4
9.5
9.6
9.7
9.8
9.9
36
39
40
40
42
43
44
45
45
ARTICLE10RECEIPTOFLNG
47
10.1
10.2
10.3
10.4
10.5
10.6
10.7
47
47
48
48
49
50
50
ARTICLE11REDELIVERYOFGAS
51
11.1
11.2
11.3
11.4
51
51
52
53
ARTICLE12PAYMENT
53
12.1
12.2
12.3
12.4
12.5
12.6
12.7
12.8
53
54
54
54
55
55
56
56
ARTICLE13SECUREDFINANCING
56
13.1
13.2
56
56
ARTICLE14DUTIES,TAXESANDOTHERGOVERNMENTALCHARGES
57
ARTICLE15INSURANCE
57
15.1
15.2
15.3
57
58
59
ARTICLE16LIABILITIES
59
16.1
16.2
59
59
LNGVessels
FreeportFacilityMarineOperationsManual
LNGVesselInspectionsRighttoRejectLNGVessel
AdvanceNoticesRegardingLNGVesselandCargoes
NoticeofReadiness
BerthingAssignment
UnloadingTime
UnloadingattheFreeportFacility
LNGVesselNotReadyforUnloadingExcessBerthTime
Title,CustodyandRiskofLoss
NoEncumbrance
ReceiptofLNG
QualityandMeasurementofCustomersLNG
OffSpecificationLNG
CustomersResponsibilityandReimbursement
SubsequentDeliveries
General
CustomersResponsibility
SpecificationsandMeasurementofGasattheDeliveryPoint
NonconformingGas
MonthlyStatements
OtherStatements
Adjustments
PaymentDueDates
Payment
Nonpayment
DisputedStatements
FinalSettlement
UCC1
SecuredFinancing
FLNGsInsurance
CustomersInsurance
PortLiabilityAgreement
LimitationofLiability
LimitationonDamages
ii
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ARTICLE17FORCEMAJEURE
60
17.1
17.2
17.3
17.4
17.5
17.6
17.7
60
60
60
61
61
61
61
ARTICLE18CURTAILMENTOFSERVICESORTEMPORARYDISCONTINUATIONOFSERVICES
62
18.1
18.2
62
62
ARTICLE19ASSIGNMENT
63
19.1
19.2
19.3
63
63
64
ARTICLE20CONDITIONSPRECEDENT
65
20.1
20.2
65
65
ARTICLE21TERMINATION
65
21.1
21.2
21.3
21.4
65
66
66
66
ARTICLE22APPLICABLELAW
66
ARTICLE23DISPUTERESOLUTION
66
23.1
23.2
66
67
ARTICLE24CONFIDENTIALITY
68
24.1
24.2
68
69
ARTICLE25REPRESENTATIONSANDWARRANTIES
70
25.1
25.2
70
71
ARTICLE26NOTICES
71
ARTICLE27MISCELLANEOUS
72
27.1
27.2
27.3
27.4
27.5
27.6
72
72
72
72
72
73
EventsofForceMajeure
LimitationonScopeofForceMajeureProtection
Notice
Measures
NoExtensionofTerm
SettlementofIndustrialDisturbances
AllocationofServices
ScheduledCurtailmentorTemporaryDiscontinuationofServices
UnscheduledCurtailmentorTemporaryDiscontinuationofServices
RestrictionsonAssignment
PermittedAssignments
AssignmentasNovation
ConditionsPrecedent
SatisfactionofConditionsPrecedent
EarlyTerminationEvents
ExerciseofRightofTermination
OtherTerminationProvisions
ConsequencesofTermination
DisputeResolution
ExpertDetermination
ConfidentialityObligation
PublicAnnouncements
RepresentationsandWarrantiesofCustomer
RepresentationsandWarrantiesofFLNG
Amendments
Approvals
SuccessorsandAssigns
Waiver
NoThirdPartyBeneficiaries
SupplementalTerms
iii
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27.7
27.8
27.9
27.10
27.11
27.12
27.13
27.14
27.15
27.16
27.17
AnnexI
AnnexII
RulesofConstruction
SurvivalofRights
RightsandRemedies
Interpretation
DisclaimerofAgency
SeveranceofInvalidProvisions
CompliancewithLaws
ConflictsofInterest
Expenses
Scope
CounterpartExecution
ExhibitA
ExhibitB
ExhibitC
ExhibitD
73
73
73
74
74
74
75
75
76
76
76
MeasurementsandTestsofLNGatReceiptPoint
MeasurementsandTestsforGasatDeliveryPoint
TermsofFreeportFacilityLease
SupplementalTerms
iv
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LNGTERMINALUSEAGREEMENT
ThisLNGTERMINALUSEAGREEMENT(theAgreement),datedasofthis1stdayofMarch2004(theEffective
Date),ismadebyandbetweenTHEDOWCHEMICALCOMPANY,aDelawarecorporationwithitsprincipalofficeat
2030DowCenter,Midland,Michigan,U.S.A.48674(Customer)andFREEPORTLNGDEVELOPMENT,L.P.,a
Delawarelimitedpartnershipwithaplaceofbusinessat1200SmithStreet,Suite600,Houston,Texas,U.S.A.77002
(FLNG).
RECITALS
WHEREAS,FLNGintendstoconstruct,ownandoperateanLNGterminalfacilitynearFreeport,Texascapableof
performingcertainLNGterminallingservices,including:theberthingofLNGvesselstheunloading,receivingandstoring
ofLNGtheregasificationofLNGthestorageofnaturalgasandthetransportationanddeliveryofnaturalgastoapipeline
interconnectionpointatStrattonRidge,Texas
WHEREAS,CustomerwillpurchaseLNGforimportationintotheUnitedStatesanddesirestopurchasesuchLNG
terminallingservicesfromFLNGand
WHEREAS,FLNGdesirestomakesuchLNGterminallingservicesavailabletoCustomerandtoOtherCustomersin
accordancewiththetermshereof.
NOW,THEREFORE,forgoodandvaluableconsideration,thereceiptandsufficiencyofwhichareherebyacknowledged
bythePartiesheretoandforthemutualcovenantscontainedherein,FLNGandCustomerherebyagreeasfollows:
ARTICLE1
DEFINITIONS
InadditiontoanytermsorexpressionsdefinedelsewhereinthisAgreement,thetermsorexpressionssetforthbelowshall
havethefollowingmeaningsinthisAgreement:
AdverseWeatherConditionsmeansweatherandseaconditionsactuallyexperiencedatorneartheFreeport
Facilitythataresufficientlysevereeither:(a)topreventanLNGvesselfromproceedingtoberth,orunloadingor
departingfromberth,inaccordancewithoneormoreofthefollowing:(i)regulationspublishedbyaGovernmental
Authority,(ii)anApproval,or(iii)anorderofaPilotor(b)tocauseanactualdeterminationbytheMasterofanLNG
Vesselthatitisunsafeforsuchvesseltoberth,unloadordepartfromberth.
1.2
AffiliatemeansaPerson(otherthanaParty)thatdirectlyorindirectlycontrols,iscontrolledby,orisunder
commoncontrolwith,aPartytothisAgreement,andforsuchpurposesthetermscontrol,controlledbyandother
derivativesshallmeanthedirectorindirectownershipofmorethanfiftypercent(50%)ofthevotingrightsina
Person.
AggregateContractedCapacityshallhavethemeaningsetforthinSection4.7(a)(i).
1.1
1.3
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1.4
Agreementmeansthisagreement,togetherwiththeAnnexesandExhibitsattachedhereto,whicharehereby
incorporatedintoandmadeaparthereof,asthesamemaybehereafteramended.
1.5
Alternate***shallhavethemeaningsetforthinSection3.3(c)(ii).
Approvalsmeansallconsents,authorizations,licenses,waivers,permits,approvalsandothersimilardocuments
fromorbyaGovernmentalAuthority.
1.7
ArrivalDateshallhavethemeaningsetforthinSection5.1(b)(i).
ArrivalLocationshallhavethemeaningsetforthinSection9.5(a).
1.9
BaseRatemeans:(a)theinterestrateperannumequalto(i)theprimerate(sometimesreferredtoasthebaserate)
forcorporateloansaspublishedbyTheWallStreetJournalinthemoneyratessectionontheapplicabledate,or(ii)in
theeventTheWallStreetJournalceasesorfailstopublishsucharate,theprimerate(oranequivalentthereof)inthe
UnitedStatesforcorporateloansdeterminedastheaverageoftheratesreferredtoasprimerate,baserateorthe
equivalentthereof,quotedbyChaseManhattanBank,CitibankandBankofNewYork,oranysuccessorthereof,for
shorttermcorporateloansinNewYorkontheapplicabledateplus(b)***percent(***%).TheBaseRateshall
changeasandwhentheunderlyingcomponentsthereofchange,withoutnoticetoanyPerson.
1.10
BritishThermalUnitorBTUmeanstheamountofheatrequiredtoraisethetemperatureofone(1)avoirdupois
poundofpurewaterfrom59.0degreesFahrenheitto60.0degreesFahrenheitatanabsolutepressureof14.696pounds
persquareinch.
1.11
BusinessDaymeansanydayotherthanaweekenddayorU.S.FederalbankingholidayinHouston,Texas.
1.12
CargomeansaquantityofLNGexpressedinMMBTUcarriedbyanLNGVesselinrelationtowhichFLNGwill
renderServiceshereunder.
1.13
CentralTimemeansCentralTimeZone,asadjustedforDaylightSavingTimeandStandardTime.
1.14
ClaimsshallhavethemeaningsetforthinSection10.2ofthisAgreement.
1.15
CommercialStartDateshallhavethemeaningsetforthinSection7.2.
1.16
ConditionsPrecedentshallhavethemeaningsetforthinSection20.1.
ContractYearmeanseachannualperiodstartingonOctober1andendingonSeptember30duringtheTermofthis
Agreementprovided,however,that(a)thefirstContractYearshallcommenceontheCommercialStartDateandend
onthefollowingSeptember30,and(b)thelastContractYearshallcommenceonOctober1immediatelypreceding
thelastdayoftheTermandendonthelastdayoftheTermassetforthinSection7.1.
1.6
1.8
1.17
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1.18
CubicMetermeansavolumeequaltothevolumeofacubeeachedgeofwhichisone(1)meter.
1.19
CustomermeansTheDowChemicalCompany,subjecttoArticle19.
CustomerLNGReceiptScheduleshallhavethemeaningsetforthinSection5.1(f).
1.21
CustomersLNGmeans,forthepurposesofServices,LNGreceivedattheReceiptPointforCustomersaccount.
1.22
CustomersInventorymeans,atanygiventime,thequantityinMMBTUsthatrepresentsLNGandGas(whetheror
notsuchGasisRegasifiedLNGorGasderivedorproducedfromsourcesotherthanRegasifiedLNG)heldfor
Customersaccount.Fortheavoidanceofdoubt,CustomersInventoryshall(i)bedeterminedafterdeductionof
RetainageinaccordancewithSections3.1(b)(ii)and4.2,and(ii)includeTemporaryReleaseInventory.
1.23
DeliveryPointmeansthepointofinterconnectbetweentheFreeportFacilityPipelineandaDownstreamPipeline
atStrattonRidge,Texas.
Disputemeansanydispute,controversyorclaim(ofanyandeverykindortype,whetherbasedoncontract,tort,
statute,regulation,orotherwise)arisingoutof,relatingto,orconnectedwiththisAgreement,includinganydisputeas
totheconstruction,validity,interpretation,termination,enforceabilityorbreachofthisAgreement,aswellasany
disputeoverjurisdiction.
1.25
DownstreamPipelinemeansallGaspipelinesdownstreamoftheDeliveryPointwhichtransportGasfromthe
FreeportFacility.
1.26
EffectiveDatemeansthedatesetforthinthepreambleofthisAgreement.
1.27
ExcessReceptionFeeshallhavethemeaningsetforthinSection4.1(c).
ExpectedReceiptQuantitymeans,withrespecttoagivenCargo,Customersreasonableestimateofthequantityof
LNG(inMMBTUs)thatsuchCargoisexpectedtounloadattheFreeportFacility,takingintoconsideration(a)the
expectedcompositionoftheCargoanticipatedtobeloadedattheLoadingPort,(b)theexpectedloadedvolumeof
suchCargo,(c)thenaturalboiloff,andfuelgasusedbythevesselinexcessofnaturalboiloff,expectedduring
shipmentoftheCargo,(d)theanticipatedtimerequiredfromthecommencementofloadingofsuchCargotothe
completionofunloadingofsuchCargo,and(e)theanticipatedquantityofheeltoberetainedbysuchCargo.For
purposesofthisAgreement,thetermExpectedReceiptQuantityshallbetheestimatesetforthinthenotice
deliveredpursuanttoSection5.1(b)(ii),asmaybesubsequentlyamendedpursuanttoSection9.4(a).
1.20
1.24
1.28
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1.29
ExtensionTermshallhavethemeaningsetforthinSection7.1(c).
1.30
FeeshallhavethemeaningsetforthinSection4.1.
1.31
FERCmeanstheFederalEnergyRegulatoryCommissionorasuccessorregulatoryagency.
FixedFeeComponentshallhavethemeaningsetforthinSection4.1(a)(i).
1.33
FLNGmeansFreeportLNGDevelopment,L.P.,subjecttoArticle19.
ForceMajeureshallhavethemeaningsetforthinSection17.1.
1.35
forCustomer,forCustomersaccount,onbehalfofCustomerorotherphrasescontainingsimilarwording
shallincludeLNGdeliveredtotheFreeportFacilityatCustomersdirectionorLNGdeliveredtotheFreeportFacility
byaTemporaryCustomer,asthecontextmayrequire,andshallincludebothCustomersInventoryandany
TemporaryReleaseInventory.
FreeportFacilitymeansthefollowingFLNGfacilitiesinBrazoria,CountynearFreeport,Texasusedtoprovide
Serviceshereunder,assuchfacilitieswillbeconstructedandmodifiedfromtimetotimeinaccordancewiththis
Agreement:(a)theLNGreceivingterminalfacilityasfurtherdescribedinSection8.1(b)(includingtheport,berthing
andunloadingfacilities,LNGstoragefacilities,andregasificationfacilities,togetherwithequipmentandfacilities
relatedthereto)and(b)theFreeportFacilityPipeline.
1.37
FreeportFacilityLeasemeansthatcertainGroundLeaseandDevelopmentAgreementbetweenBrazosRiver
HarborNavigationDistrictofBrazoriaCounty,TexasandFLNGdatedasofDecember12,2002.
1.38
FreeportFacilityMarineOperationsManualshallhavethemeaningsetforthinSection9.2.
1.39
FreeportFacilityPipelinemeansthepipelineapproximatelynine(9)milesinlengthandatleastthirtysix(36)
inchesindiameter,withamaximumallowableoperatingpressureofnolessthan1440psig,whichpipelineis
constructedandoperatedasapartoftheFreeportFacilityto(a)interconnectwithoneormoreDownstreamPipelines
atStrattonRidge,Texasand(b)transporttotheDeliveryPointeitherRegasifiedLNGand/orGasstoredinoneor
moreGasStorageFacilities.
1.40
FreeportServicesManualshallhavethemeaningsetforthinSection3.5.
***meanstheinternetbasedcomputersystemusedbyFLNGtocommunicatewithCustomerandOtherCustomers
regardingtheschedulingofLNGterminallingservicesattheFreeportFacility.
1.32
1.34
1.36
1.41
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Gasmeansanyhydrocarbonormixtureofhydrocarbonsconsistingpredominantlyofmethanewhichisina
gaseousstate.
GasStorageFacilitymeansanundergroundGasstoragefacilitynearStrattonRidge,Texasowned,operated,
contractedorotherwisemadeavailabletoFLNGforthepurposesofstoringGassolelyfortheaccountofCustomer
andOtherCustomers.
1.44
GovernmentalAuthoritymeans,inrespectofanycountry,anynational,regional,state,orlocalgovernment,any
subdivision,agency,commissionorauthoritythereof(includinganymaritimeauthorities,portauthorityoranyquasi
governmentalagency)havingjurisdictionoveraParty,theFreeportFacility,aGasStorageFacility,Customers
Inventory,anLNGVessel,aTransporter,oraDownstreamPipeline,asthecasemaybe,andactingwithinitslegal
authority.
1.45
GPAshallhavethemeaningsetforthinAnnexI.
1.46
GrossHeatingValuemeansthequantityofheatexpressedinBTUsproducedbythecompletecombustioninairof
one(1)cubicfootofanhydrousgas,atatemperatureof60.0degreesFahrenheitandatanabsolutepressureof14.696
poundspersquareinch,withtheairatthesametemperatureandpressureasthegas,aftercoolingtheproductsofthe
combustiontotheinitialtemperatureofthegasandair,andaftercondensationofthewaterformedbycombustion.
HenryHubPriceshallmean,withrespecttoanymonth,thefinalsettlementpriceindollarsperMMBTUforthe
NYMEXHenryHubNaturalGasfuturescontractforGastobedeliveredduringsuchmonth,suchfinalpricetobe
baseduponthelasttradingdayforthecontractforsuchmonthprovided,howeverthatiftheNYMEXHenryHub
NaturalGasfuturescontractsettlementpricesceasestobepublishedforanyreason,thePartiesshallselecta
comparableindextobeusedinitsplacethatmaintainstheintentandeconomiceffectoftheoriginalindex.
1.48
IncrementalCostsshallhavethemeaningsetforthinSection4.1(b).
1.49
InputAmeans***perMMBTUunlessotherwisemodifiedbySection4.4.
InternationalLNGTerminalStandardsmeans,totheextentnotinconsistentwiththeexpressrequirementsofthis
Agreement,theinternationalstandardsandpracticesapplicabletothedesign,equipment,operationormaintenanceof
LNGreceivingandregasificationterminals,establishedbythefollowing(suchstandardstoapplyinthefollowing
orderofpriority):(i)aGovernmentalAuthorityhavingjurisdictionoverFLNG(ii)theSocietyofInternationalGas
TankerandTerminalOperators(SIGTTO)and(iii)anyotherinternationallyrecognizednongovernmentalagency
ororganizationwithwhosestandardsandpracticesitiscustomaryforReasonableandPrudentOperatorsofLNG
receivingandregasificationterminalstocomply.Intheeventofaconflictbetweenanyoftheprioritiesnotedabove,
theprioritywiththelowestromannumeralnotedaboveshallprevail.
1.42
1.43
1.47
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1.51
InternationalLNGVesselStandardsmeans,totheextentnotinconsistentwiththeexpressedrequirementsofthis
Agreement,theinternationalstandardsandpracticesapplicabletotheownership,design,equipment,operationor
maintenanceofLNGvesselsestablishedbythefollowing(suchstandardstoapplyinthefollowingorderofpriority):
(i)aGovernmentalAuthority(ii)theInternationalMaritimeOrganization(iii)SIGTTOand(iv)anyother
internationallyrecognizednongovernmentalagencyororganizationwithwhosestandardsandpracticesitis
customaryforReasonableandPrudentOperatorsofLNGvesselstocomply.Intheeventofaconflictbetweenanyof
theprioritiesnotedabove,theprioritywiththelowestromannumeralnotedaboveshallprevail.
1.52
Liabilitiesmeansallliabilities,costs,claims,disputes,demands,suits,legaloradministrativeproceedings,
judgments,damages,lossesandexpenses(includingreasonableattorneysfeesandotherreasonablecostsoflitigation
ordefense),andanyandallfines,penaltiesandassessmentsof,orresponsibilitiesto,GovernmentalAuthorities.
1.53
LiquidsmeansliquidhydrocarbonscapableofbeingextractedfromLNGattheFreeportFacility,consisting
predominatelyofethane,propane,butaneandlongerchainhydrocarbons.
LoadingPortmeanstheportatwhichaCargoisloadedonboardanLNGVessel.
1.55
LNGmeansGasinaliquidstate.
1.56
LNGSuppliersmeans,inrelationtoperformanceoftheobligationsofFLNGandCustomerunderthisAgreement,
thosePersonswhoagreeinwritingpursuanttoanagreementtosupplyorsellLNGtoCustomeroraTemporary
CustomerfordeliverytotheFreeportFacility.
1.57
LNGVesselmeansanoceangoingvesselsuitablefortransportingLNGthatCustomer,aTemporaryCustomer,or
anLNGSupplierusesfortransportationofLNGtotheFreeportFacility.
1.58
MajorCustomermeansCustomerandanyOtherCustomerwhoseterminaluseagreemententitlessuchOther
Customertoberth,unloadanddeliverattheFreeportFacilityquantitiesofLNGgreaterthan***MMBTUsper
ContractYearforacontractualtermofatleast***(***)years.
MajorCustomerAllocationPriorityshallhavethemeaningsetforthinSection17.7.
1.60
***shallhavethemeaningsetforthinSection3.3(b).
MaximumLNGReceptionQuantitymeans,exceptasotherwiseprovidedinSection3.1(c),195,275,000
MMBTUsofLNGperContractYearprovided,however,thatforpurposesofthefirstandlastContractYear,the
MaximumLNGReceptionQuantityshallbeproratedbasedupontheratiothatthenumberofdaysduringsuch
ContractYearbearstothreehundredsixtyfive(365).
1.54
1.59
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1.62
***shallhavethemeaningsetforthinSection3.3(c).
MMBTUmeans1,000,000BTUs.
MonthlyComponentmeanstwelve(12)provided,however,thatforthefirstandlastContractYear,Monthly
ComponentshallmeanthenumberofmonthsintherespectiveContractYearwiththefirstandlastmonthsinsuch
ContractYearbeingproratedbaseduponthenumberofdaysinsuchmonth.
1.65
NominationNoticeshallhavethemeaningsetforthinSection5.2(c).
1.66
NonMajorCustomermeansanyOtherCustomerotherthanaMajorCustomer.
1.67
NORWindowshallhavethemeaningsetforthinSection9.5(b)(ii).
1.68
NoticeofReadinessorNORshallhavethemeaningsetforthinSection9.5.
1.69
OtherCustomersmeans,fromtimetotime,Persons(otherthanCustomerandTemporaryCustomers)receiving
LNGterminallingservicesfromFLNGsimilartotheServices.
PartyandPartiesmeansFLNGandCustomer,andtheirrespectivesuccessorsandassigns.
1.71
PaymentPeriodshallhavethemeaningsetforthinSection4.1.
1.72
PeakingGasshallhavethemeaningsetforthinSection3.1(b)(iii).
Personmeansanyindividual,corporation,partnership,trust,unincorporatedorganizationorotherlegalentity,
includinganyGovernmentalAuthority.
PilotmeansanyPersonengagedbyTransportertocomeonboardanLNGVesseltoassisttheMasterinpilotage,
mooringandunmooringofsuchLNGVesselandtoassistincoordinatingtheunloadingofLNGattheFreeport
Facility.
1.75
PipelineStandardsmeans,totheextentnotinconsistentwiththeexpressrequirementsofthisAgreement,the
standardsandpracticesapplicabletothedesign,equipment,operationormaintenanceofGaspipelines,established
bythefollowing(suchstandardstoapplyinthefollowingorderofpriority):(i)aGovernmentalAuthorityhaving
jurisdictionoverFLNGand(ii)anynationallyrecognizednongovernmentalagencyororganizationwithwhose
standardsandpracticesitiscustomaryforReasonableandPrudentOperatorsofU.S.Gaspipelinestocomply.Inthe
eventofaconflictbetweenanyoftheprioritiesnotedabove,theprioritywiththelowestromannumeralnotedabove
shallprevail.
PortChargesmeansallthirdpartychargesofwhatsoevernature(includingrates,tolls,andduesofevery
description)inrespectofanLNGVesselenteringorleavingtheFreeportFacility,includingchargesimposedbyfire
boats,tugsandescortvessels,the
1.63
1.64
1.70
1.73
1.74
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U.S.CoastGuard,aPilot,andanyotherPersonassistinganLNGVesseltoenterorleavetheFreeportFacility.For
purposesofthisAgreement,thetermPortChargesshallinclude,totheextentapplicabletoLNGVessels,PortUse
Fees(excludingrent)andThruputFees(assuchtermsaredefinedundertheFreeportFacilityLeaseasreflectedon
ExhibitAattachedhereto)butshallexcludeallotherfeesundertheFreeportFacilityLease.
1.77
psigmeanspoundspersquareinchgauge.
1.78
ReasonableandPrudentOperatormeansaPersonseekingingoodfaithtoperformitscontractualobligations,
andinsodoing,andinthegeneralconductofitsundertaking,exercisingthatdegreeofskill,diligence,prudenceand
foresightwhichwouldreasonablyandordinarilybeexpectedfromaskilledandexperiencedoperatorengagedinthe
sametypeofundertakingunderthesameorsimilarcircumstancesandconditions.
ReceiptPointmeansthepointattheFreeportFacilityatwhichtheflangecouplingoftheFreeportFacilitys
receivinglinejoinstheflangecouplingoftheLNGunloadingmanifoldonboardanLNGVessel.
1.80
RegasifiedLNGmeansGasderivedfromtheconversionofLNG(receivedbyFLNGattheReceiptPoint)fromits
liquidstatetoagaseousstate.
1.81
ReleaseNoticeshallhavethemeaningsetforthinSection6.2(b)(i)c.
1.82
ReservationFeeshallhavethemeaningsetforthinSection4.1(a).
1.83
RetainageshallhavethemeaningsetforthinSection4.2.
ScheduledUnloadingWindowmeans,foranyapplicableContractYear,anUnloadingWindowallocatedeitherto
CustomeroranyOtherCustomerpursuanttoArticle5.
1.85
SchedulingPeriodmeansaContractYearplusthethree(3)monthperiodimmediatelyfollowingsuchContract
Year.
1.86
SchedulingRepresentativemeanstheindividualappointedbyCustomerinaccordancewithSection5.4.
1.87
ServicesshallhavethemeaningsetforthinSection2.1,asexpandedfromtimetotimeinaccordancewithSection
2.2.
1.88
ServicesQuantityshallhavethemeaningsetforthinSection3.1(b).
1.89
ServicesUnavailabilityshallhavethemeaningsetforthinSection4.3(a).
SoleOpinionmeansanopinion,judgmentordiscretionofaPartythatisnotintendedtobecapableofbeing
challengedinanylegalorarbitralproceedingwhatsoever.
1.79
1.84
1.90
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1.91
StandardCubicFootmeansthequantityofGas,freeofwatervapor,occupyingavolumeofone(1)ActualCubic
Footatatemperatureof60.0degreesFahrenheitandatanabsolutepressureof14.696poundspersquareinch.For
purposesofthisSection1.91,ActualCubicFootmeansavolumeequaltothevolumeofacubewhoseedgeisone
(1)foot.
1.92
StoragemeanstheretentionbyFLNGofCustomersInventoryforaperiodoftimeintanksorotherfacilitiesatthe
FreeportFacility(includingtheFreeportFacilityPipeline)orinaGasStorageFacility.
1.93
StorageStandardsmeans,totheextentnotinconsistentwiththeexpressrequirementsofthisAgreement,the
standardsandpracticesapplicabletothedesign,equipment,operationormaintenanceofGasstoragefacilities,
establishedbythefollowing(suchstandardstoapplyinthefollowingorderofpriority):(i)aGovernmentalAuthority
havingjurisdictionoverFLNGand(ii)anynationallyrecognizednongovernmentalagencyororganizationwith
whosestandardsandpracticesitiscustomaryforReasonableandPrudentOperatorsofGasstoragefacilitiesto
comply.Intheeventofaconflictbetweenanyoftheprioritiesnotedabove,theprioritywiththelowestroman
numeralnotedaboveshallprevail.
1.94
SubstantialCompletionmeanscompletionoftheFreeportFacilitysothatitisreadytobeusedforitsintended
purpose,with(a)thecontractorundertheengineering,constructionandprocurementcontractfortheFreeportFacility
havingachievedallminimumacceptancerequirementsforSubstantialCompletionundersuchcontract,(b)all
ApprovalsnecessarytocommenceoperationsoftheFreeportFacilityhavingbeenreceivedbyFLNG,and(c)the
FreeportFacilitybeingcapableofperformingtheServicesQuantity.
1.95
Taxesmeansallcustoms,taxes,royalties,excises,fees,duties,levies,salesandusetaxesandvalueaddedtaxes,
chargesandallotherassessments,whichmaynoworhereafterbeenacted,leviedorimposed,directlyorindirectly,by
aGovernmentalAuthority,exceptPortCharges.
1.96
TemporaryCustomershallhavethemeaningsetforthinSection6.2(a).
1.97
TemporaryReleaseshallhavethemeaningsetforthinSection6.2(a).
1.98
TemporaryReleaseInventorymeans,atanygiventime,thequantityinMMBTUsthatrepresents(a)theLNG
receivedattheReceiptPointforTemporaryCustomersaccountand(b)Gas,whetherornotsuchGasisRegasified
LNGorGasderivedorproducedfromsourcesotherthanRegasifiedLNG,heldforTemporaryCustomersaccount.
TermshallhavethemeaningsetforthinSection7.1.
1.99
1.100
TransportermeansanyPersonwhoownsoroperatesanLNGVessel.
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1.101 UnloadingWindowmeansafortyeight(48)hourwindowstartingat6:00a.m.,CentralTimeonaspecifiedday
andendingfortyeight(48)consecutivehoursthereafterduringwhichFLNGwouldmakeavailableberthingandLNG
unloadingservicesattheFreeportFacilitytoeitherCustomeroroneoftheOtherCustomers.
1.102 VariableFeeComponentshallhavethemeaningsetforthinSection4.1(a)(ii).
ARTICLE2
SERVICESANDSCOPE
2.1
ServicestobeProvidedbyFLNG
DuringtheTerm,FLNGshall,actingasaReasonableandPrudentOperator,makeavailablethefollowingservicesto
Customer(suchavailableservicesbeinghereinreferredtoastheServices)inthemannersetforthinArticle3:
(a)
theberthingofLNGVesselsattheFreeportFacility
(b)
theunloadingandreceiptofLNGfromLNGVesselsattheReceiptPoint
(c)
theregasifyingofLNGheldinStorage
(d)
StorageofCustomersInventory
(e)
thetransportationanddeliveryofGasintheFreeportFacilityPipelinetotheDeliveryPoint(itbeing
acknowledgedthatFLNGmay,atitsoption,causeGastoberedeliveredtoCustomerfromsourcesotherthan
RegasifiedLNG)and
(f)
otheractivitiesdirectlyrelatedtoperformancebyFLNGoftheforegoing.
2.2
2.3
AdditionalServices
FromtimetotimeduringtheTerm,therepresentativesofFLNGandCustomermaysupplementthisAgreementin
accordancewithSection27.1toprovidethatFLNGwillalsomakeavailableservicestoCustomerinadditiontothe
ServicessetforthinSection2.1.
ActivitiesOutsideScopeofthisAgreement
Forgreatercertainty,thePartiesconfirmthatthefollowingactivities,interalia,arenotServicesprovidedbyFLNGto
Customerand,therefore,suchactivitiesareoutsideofthescopeofthisAgreement:
(a)
harbor,mooringandescortservices,includingthoserelatingtotugs,serviceboats,fireboats,andotherescort
vessels
(b)
theconstruction,operation,ownership,maintenance,repairandremovaloffacilitiesdownstreamofthe
DeliveryPoint
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(c)
thetransportationofGasbeyondtheDeliveryPoint
(d)
themarketingofGasandallactivitiesrelatedthereto(exceptasexpresslyprovidedinSection3.4)and
(e)
theremoval,marketingandtransportationofLiquidsandallactivitiesrelatedthereto.Fortheavoidanceof
doubt,FLNGreservestherighttoseparateand/orextractLiquidsfromLNGupstreamoftheDeliveryPoint,
providedthatsuchseparationdoesnotresultinGasfailingtomeetthequalityspecificationsattheDelivery
PointrequiredunderSection11.3.
ARTICLE3
SALEANDPURCHASEOFSERVICES
3.1
ServicesQuantity
(a)
PurchaseandSaleofServices.DuringeachContractYear,FLNGshallmakeavailabletoCustomer,and
Customershallpurchaseandpayfor(inrespectofthePaymentPeriod)inanamountequaltotheFee,the
ServicesQuantity.
(b)
ServicesQuantity.ThequantityofServicesFLNGshallmakeavailabletoCustomer(theServices
Quantity)duringaContractYear,andforwhichCustomershallpurchaseandpayfor(inrespectofthe
PaymentPeriod)pursuanttoSection3.1(a),shallconsistofthefollowing:
(i)
UnloadingofLNG.FLNGshallmaketheFreeportFacilityavailableduringUnloadingWindowsto
allowberthing,unloadingandreceiptofCustomersLNGinaquantityuptotheMaximumLNG
ReceptionQuantity
(ii)
StorageofCustomersInventory.FLNGshallcauseCustomersInventory,netofRetainage,tobeheld
temporarilyinStorageuntilredeliveredinaccordancewithSection3.1(b)(iii)belowand
(iii)
RedeliveryofGasatDeliveryPoint.SubjecttotheprovisionsofthisAgreement,includingSections
3.3(a),3.3(b)and3.3(c),FLNGshall,onadailybasis,makeGasfromCustomersInventoryavailable
toCustomerattheDeliveryPointattheratenominatedbyCustomerpursuanttoSection5.2(c),
whichnominatedrateshallbenolessthanthe***andnomorethanthe***provided,however,that
FLNGshall,onadailybasis,makeGasinexcessofthe***(PeakingGas)availabletoCustomer
attheDeliveryPointinthequantitiesdeterminedpursuanttoSections5.2(a)and5.2(b)(iv),but
subjecttotheallocationunderSection3.3(d).
(c)
CustomerOptiontoReduceMaximumLNGReceptionQuantity.NolaterthanAugust31,2004,Customer
shall,byprovidingwrittennoticethereof(theReductionNotice)toFLNG,havetherighttoreducethe
MaximumLNGReceptionQuantityforeachContractYeartoanamountnolessthan97,637,501MMBTUs.
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(d)
ExpirationofServicesQuantity.SubjecttoSection10.7,ifCustomerdoesnotuseanyportionoftheServices
QuantitymadeavailabletoCustomerpursuanttothetermsofthisAgreement,includinganyportionofthe
ServicesQuantitynotusedinconnectionwithaTemporaryRelease,Customersrighttosuchunusedportion
oftheServicesQuantityshallexpire.
(e)
ExcessReception.NotwithstandingtheprovisionsofSection3.1(b)(i),inrelationtoanyContractYear,
FLNGmay,initsSoleOpinion,allowberthing,unloadingandreceiptofCustomersLNGinquantitiesin
excessoftheMaximumLNGReceptionQuantity.AnysuchreceptionbyFLNGofquantitiesinexcessofthe
MaximumLNGReceptionQuantityshallbesubjecttothePartiesprioragreementuponatemporary
increaseinthe***foraspecifiedperiodoftimeinordertoallowCustomertoreceiveredeliveryofsuch
excessquantitieswithinareasonabletime.Theberthing,unloadingandreceiptofsuchquantitiesinexcess
oftheMaximumLNGReceptionQuantityshallnotbeconstruedtoalterorreleasetheobligationsofthe
PartiesunderthisAgreement,exceptthatCustomershallpaytheExcessReceptionFeeforsuchexcess
quantitiesandexceptasotherwiseprovidedintheprecedingsentence.
3.2
3.3
CustomersUseofServicesQuantity
CustomershallbeentitledtousetheServicesQuantityinwholeorinpartbyitself,ormaycontractwithoneormore
thirdpartiesforaTemporaryReleaseofsuchServicesQuantitypursuanttothetermsandconditionsofSection6.2.
GasRedelivery
(a)
NoPreDeliveryRight.OnanygivendayduringaContractYear,Customershallnotbeentitledtoreceive
quantitiesofGasinexcessofCustomersInventory.
(b)
***.ForpurposesofthisAgreement,theterm***means(i)the***dividedby(ii)***.
(c)
***.ForpurposesofthisAgreement,theterm***means,foranydayinwhichCustomerisnominating
pursuanttoSection5.2(c)(aNominationDay),thelesserof:
(i)
(a)thesumof(x)***,and(y)***,dividedby(b)thelesserofthirty(30)orthenumberofdaysfrom
andincludingtheNominationDayuntilthelastdayofCustomersnextScheduledUnloading
Windowor
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(ii)
theAlternate***asnotifiedpursuanttoSection5.2(a),suchamountbeing:
a.
thesumof:(x)***and,(y)***and(z)theaggregateofthefollowing,calculatedforeach
CargoexpectedtoarriveinsuchmonthattheFreeportFacilityforCustomersaccountafter
thedayintherelevantmonththatprecedesthelastdayofsuchmonthby***:(A)the
quantityinMMBTUsof***,dividedby(B)***andmultipliedby(C)thenumberof***,
fromandincludingthelastdayoftheapplicableScheduledUnloadingWindowtoand
includingthe***dividedby
b.
***.
provided,however,iftheExpectedReceiptQuantityforaparticularCargoscheduledtobedeliveredtothe
FreeportFacilityinthefollowingmonthexceeds***MMBTUs,thenFLNGshallhavetheright,initsnotice
underSection5.2(a),torequire***toallowOtherCustomerstounloadattheFreeportFacilitytheir
respectivemaximumLNGreceptionquantityona***overtheContractYear(suchhigherminimumrate
beingtheLargeLNGVesselGasRedeliveryAdjustment),andfurtherprovidedthatiftheapplicationof
theLargeLNGVesselAdjustmentresultsinthe***exceedingthe***foraparticularday,the***shall
automaticallyincreasebytheamountofsuchexcess.
(d)
PeakingGas.FLNGshallgivedueconsiderationtothenoticesprovidedtoitbyCustomerandOther
CustomerselectingtonominatequantitiesofPeakingGas(theNominees)pursuanttoSections5.2(c)and
5.2(d)andshallallocatesuchPeakingGasamongtheNomineesasfollows:
(i)
First,toeachNomineeinanamountnottoexceedthelesserof(a)thequantityofPeakingGas
nominatedbysuchNominee,and(b)theproductof(x)thequantityof***,and(y)afraction,the
numeratorofwhichissuchNominees***,andthedenominatorofwhichistheaggregate***ofall
Nominees
(ii)
Second,ifanyexcessquantityofPeakingGasremainsavailable,thentoeachNomineewith
unfulfillednominationsforsuchPeakingGasinanamountnottoexceedthelesserof(a)thequantity
ofPeakingGasnominatedbysuchNomineeandnotreceivedunderthepriorallocation,and(b)the
productof(x)theexcessquantityof***,and(y)afraction,thenumeratorofwhichistheNominees
***,andthedenominatorofwhichistheaggregate***ofallNomineeswithunfulfillednominations
forsuch***and
(iii)
Third,ifanyexcessquantityofPeakingGasremainsavailable,thenbyrepeatingtheallocationin
Section3.3(d)(ii)untiltheentirequantityofPeakingGasmadeavailablebyFLNGhasbeenallocated
orallnominationsforsuchPeakingGashavebeenfilled.
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3.4
3.5
FailuretoTakeDeliveryofGasatDeliveryPoint
IfonanydayCustomerfailsmateriallytotakeredeliveryofanyGasattheDeliveryPointattheratenominatedby
CustomerpursuanttoArticle5andsuchfailureisforreasonsotherthanaForceMajeureorreasonsattributableto
FLNG,thenFLNGmay,atitsoption,taketitletosamefreeandclearofanyClaims,andsellorotherwisedisposeof
suchCustomersInventoryusinggoodfaitheffortstoobtainthebestavailablepricesandtominimizecosts.FLNG
shallcredittoCustomersaccountthenetproceedsfromthesaleorotherdispositionofCustomersInventoryto
whichittakestitlehereunder,minusactualandreasonabletransportationcosts,thirdpartycharges,andan
administrativefeeof$0.05perMMBTUprovided,however,thatiftheamountofthecreditexceedstheamountdue
toFLNGunderthenextmonthlystatement,thenFLNGagreestopayanysuchexcessamounttoCustomerwithinfive
(5)BusinessDaysafterdeliveryofsuchmonthlystatement.
ActingasaReasonableandPrudentOperator,FLNGshalldevelopandmaintainasingleservicesmanualapplicable
toCustomerandallOtherCustomerswhichcontainsdetailedimplementationproceduresnecessaryforperformance
ofthisAgreementandagreementswithOtherCustomerswithregardtothematterssetforthinExhibitBattached
hereto(butexcludingthemattersgovernedbytheFreeportFacilityMarineOperationsManual).Indevelopingsucha
manual,FLNGshallprovideCustomerwithapreliminarydraftofthesame(thePreliminaryServicesManual).If
CustomerdesirestoconsultwithFLNGregardingthecontentsofthePreliminaryServicesManual,Customershall,no
laterthanfifteen(15)daysfromdeliveryofsaidmanualbyFLNG,requesttomeetwithFLNGbyprovidingnotice
thereoftoFLNG,andFLNGshall,nolaterthanthirty(30)daysafterreceiptofsuchnotice,meetwithCustomerto
discusssaidmanual.If(a)CustomerdoesnotsubmittheforegoingnoticetoFLNGonatimelybasisor(b)Customer
andFLNGmeetpursuanttosuchanoticeandareableduringsuchmeetingtoagreeuponrevisionstothedraft,then
suchdraft,assorevised(andasamendedfromtimetotime),shallconstitutetheFreeportServicesManual.If
CustomerandFLNGmeetpursuanttotheforegoingnoticeandareunableduringsuchmeetingtoagreeupon
revisionstothePreliminaryServicesManual,thenFLNGshalldetermine,whileusingitsreasonableeffortsto
accommodateCustomersviews,theFreeportServicesManual.IntheeventFLNGintendstoamendtheFreeport
ServicesManual,thenFLNGshallfollowtheproceduresetforthaboveinrelationtothePreliminaryServices
Manual.FLNGshalldelivertoCustomerandallOtherCustomersacopyoftheFreeportServicesManualandany
amendmentstheretopromptlyaftertheyhavebeenfinalizedoramended,asthecasemaybe.ThePartiesshallcomply
withtheFreeportServicesManualinallmaterialrespects.FLNGwillundertaketodevelopaFreeportServices
ManualthatisconsistentwiththisAgreementhowever,intheeventofaconflictbetweenthetermsofthis
AgreementandtheFreeportServicesManual,thetermsofthisAgreementshallcontrol.
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ARTICLE4
COMPENSATIONFORSERVICES
4.1
Fee
SubjecttotheadjustmentsprovidedinSections4.3and4.7,Customershall,asfullcompensationfortheperformance
byFLNGofitsobligationsunderthisAgreement,beartheRetainageandpaytoFLNGthesumofthefollowing
components(suchsumcollectivelyreferredtoastheFee)inrespectoftheperiodfromthelateroftheCommercial
StartDateorSubstantialCompletionuntiltheendoftheTerm(thePaymentPeriod):
(a)
ReservationFee.Amonthlyreservationfee(theReservationFee)consistingofthefollowing:
(i)
afixedamount(theFixedFeeComponent)payableinarrearsandequaltotheMaximumLNG
ReceptionQuantitydividedbytheMonthlyComponent,multipliedbyInputAand
(ii)
avariableamount(theVariableFeeComponent)payableinarrearsandequalto***multiplied
bytheMaximumLNGReceptionQuantitydividedbytheMonthlyComponentprovidedthat:
a.
iftheHenryHubPriceisgreaterthan***butlessthanorequalto***,theVariableFee
Componentshallbetheproductof(x)***plus***oftheincrementalamountbywhichthe
HenryHubPriceisgreaterthan***and(y)theMaximumLNGReceptionQuantitydivided
bytheMonthlyComponentor
b.
iftheHenryHubPriceisgreaterthan***,theVariableFeeComponentshallbe***
multipliedbytheMaximumLNGReceptionQuantitydividedbytheMonthlyComponent
(b)
IncrementalCosts.Thefollowingincrementalcosts(theIncrementalCosts)payableinarrears:
(i)
theactualelectricpowercostassociatedwiththeServicesprovidedhereundertoCustomer,
calculatedasanamountequalto(x)allelectricpowercostsincurredattheFreeportFacilityandall
GasStorageFacilities,duringtheapplicableperiodmultipliedby(y)afraction,thenumeratorof
whichisCustomersLNGreceivedattheFreeportFacilityduringsuchperiodandthedenominatorof
whichisthequantityofLNGreceivedattheFreeportFacilityduringsuchperiodfortheaccountof
CustomerandallOtherCustomers(provided,however,thatFLNGshallusereasonableeffortsto(x)
minimizeallsuchelectricpowercosts,and(y)obtainthebestcommercialratesforelectricservices
availableatthelocationoftheFreeportFacilitygiventheintendeduseoftheFreeportFacilityandits
twentyfour(24)houroperation)provided,however,thattheamount
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payablebyCustomerforelectricpowercostassociatedwithGasStorageFacilitiesshallnot,inany
ContractYear,exceed***/MMBTUmultipliedbytheMaximumLNGReceptionQuantity
(ii)
theactualamountofallreasonableincrementaldirectcosts,ifany,incurredbyFLNGforberthingan
LNGVesselaftersunsetattheFreeportFacility
(iii)
theactualamountofallreasonableincrementaldirectcosts,ifany,incurredbyFLNGwhenanLNG
Vesselarrivesmorethanthree(3)hoursaftertheETAsetforthintheFinalNoticedeliveredpursuant
toSection9.4(c)(iv),providedthatifsuchadelayisdirectlycausedbyaGovernmentalAuthorityora
ForceMajeureorAdverseWeatherConditions,thenfiftypercent(50%)ofsuchreasonable
incrementaldirectcostsand
(iv)
excessberthfees,ifany,underSection9.9(b)(iii)and
(c)
4.2
4.3
Retainage
ForpurposesofthisAgreement,thetermRetainagemeanstheaggregateof***ofCustomersLNG,toberetained
byFLNGascompensationforfuelfortheFreeportFacility.
ServicesUnavailability
(a)
Meeting.IfsomeoralloftheServicesareunavailabletoCustomeronanyday(orportionofaday)during
theTerm(collectivelyreferredtoasServicesUnavailability)asaresultof(x)afailureofFLNG(including
anunexcusedfailureofFLNG),(y)ForceMajeureofFLNG,or(z)acurtailmentortemporarydiscontinuation
ofServicespursuanttoSection18.2butnotSection18.1,thenthePartiesagree***.
(b)
ExpertDetermination.If,within***followingsuchmeeting,thePartiesareunabletoagreeuponameansby
whichtorestoretheServiceslostduringsuchServicesUnavailabilityand/ortoreducetheFeeduringsuch
ServicesUnavailability,thePartiesshallimmediatelysubmittheirDisputetoanexpert
ExcessReceptionFee.Anexcessreceptionfee(theExcessReceptionFee)if,inanyContractYear,FLNG
receivesquantitiesofLNGforCustomersaccountinexcessoftheMaximumLNGReceptionQuantity,
payableinarrearsuponCustomerexceedingtheMaximumLNGReceptionQuantity.InanyContractYear
thatCustomerexceedstheMaximumLNGReceivedQuantity,thenCustomershallhavetheoptiontocarry
forwardintothenextContractYearonehalfofthelastCargowithoutincurringtheExcessReceptionFeefor
suchcarryforwardquantity.TheExcessReceptionFeeshallequal(i)theamountbywhich***forsuch
ContractYear(ii)multipliedbyafeeequaltothesumof***dividedby***forsuchContractYear.
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pursuanttotheprovisionsofSection23.2fordeterminationbysuchexpertofanamountbywhichtheFee
shallbereducedasaresultoftheServicesUnavailability,theintentbeingthatCustomerwillnotpayfor
Servicestotheextentnotrestored.
(c)
Litigation.Notwithstandinganyprovisionhereintothecontrary,includingSections4.3(b)and23.2,ifa
Partydoesnotagreewiththeexpertsfinaldecision,thensuchPartymayrefertheDisputetolitigation
pursuanttoArticle23***ofthedatetheexpertsfinaldecisionisreceivedbytheParties.Iftheexperts
determinationisnotchallengedinanysuchlitigationwithin***,thensuchdeterminationshallbecome
finalandbinding.Inanysuchlitigationtheexpertdeterminationonthespecificmattershallbeentitledtoa
rebuttablepresumptionofcorrectness.
(d)
OtherRemedies.Fortheavoidanceofdoubt,theprovisionsofthisSection4.3arewithoutprejudicetoany
otherrightsorremediesofCustomerarisinghereunderorbylaworotherwise,includingtherighttorecover
damagesorpursueotherremediesthatCustomermayhaveasaresultofsuchServicesUnavailability.
4.4
ConstructionCostDeviationAmountandAdditionalCapitalCosts
(a)
ConstructionCostDeviationAmount.TheFixedFeeComponentisbaseduponestimatedexpendituresof
***forFLNGsconstructionoftheFreeportFacilityassuchfacilityisapprovedbyFERCintheorder
grantingauthorizationfortheFreeportFacilityunderSection3(a)oftheNaturalGasAct.InputAshallbe
adjusted,upwardsordownwardsasthecasemaybe,by***/MMBTUforeach***(orfractionthereof)
deviationinFLNGsactualcostofconstructingtheFreeportFacility(pursuanttotheapplicationfiledby
FLNGwithFERConMarch28,2003)ascomparedtosuchestimatedexpendituresof***(suchadjustment
beingtheConstructionCostDeviationAmount)providedthat:
(i)
afterissuancebyFERCoftheordergrantingauthorizationfortheFreeportFacilityunderSection3(a)
oftheNaturalGasAct(pursuanttotheapplicationfiledbyFLNGwithFERConMarch28,2003),the
ConstructionCostDeviationAmountshallbebasedonthepositiveornegativedifferencebetween
***andthetotallumpsumturnkeypriceduetotheEPCcontractorfromFLNGunderthe
engineering,procurementandconstructioncontractfortheFreeportFacilityasofthedateof
executionofsuchcontract(includinganyamountsdueasaresultofanychangeordersthereunderto
theextentnecessarytocomplywithsuchFERCorderpursuanttotheapplicationfiledwithFERCon
March28,2003)
(ii)
InputAshallnotbeadjustedinrelationtoanycostsforanydredgingofthemainshipchannel
beyondthescopeofthatanticipatedintheapplicationfiledbyFLNGwithFERConMarch28,2003
and
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(iii)
AdditionalCapitalCosts.If(i)FLNGisrequiredtoincuranycapitalexpendituretocomplywithanylaw,
ruleorregulationimposedbyFERCoranyGovernmentalAuthoritysubsequentto(x)approvalbyFERCof
FLNGsapplicationforauthorizationfortheFreeportFacilityunderSection3(a)oftheNaturalGasActand
(y)executionbyFLNGoftheengineering,procurementandconstructioncontractfortheFreeportFacilityso
authorizedand(ii)suchexpenditureisbeyondthoseoriginallyforeseenasoftheEffectiveDate(Additional
CapitalCosts),then(a)theInputAshallbeincreasedbyanamountequalto***foreach***(orfraction
thereof)ofAdditionalCapitalCostsand(b)FLNGshallrequirecomparableincrementalpaymentsfromOther
Customers,ineachcaseuntilsuchtimeastheAdditionalCapitalCostsandfinancecostsassociated
therewithhavebeenfullyrecoupedbyFLNGthroughsuchincrementalpaymentsbyCustomerandby
comparableincrementalpaymentsfromOtherCustomers.Fortheavoidanceofanydoubt,anyitempayable
orexcludedunderSection4.4(a)shallbeoutsidethescopeofthisSection4.4(b).
(c)
Limitation.NotwithstandingSections4.4(a)and4.4(b)oranyotherprovisionofthisAgreement,neitherthe
applicationoftheConstructionCostDeviationAmountnortheapplicationofAdditionalCapitalCostsshall
increasetheReservationFeetotheextentthatsuchincreasewouldcausethequotientof
4.5
theConstructionCostDeviationAmountshallnotincreasetheInputAtoanamountabove
***/MMBTUordecreasetheInputAtoanamountbelow***/MMBTU.
(b)
(i)
theReservationFee(excludinganyadjustmentinSection4.7)and
(ii)
theMaximumLNGReceptionQuantitydividedbytheMonthlyComponent,
toexceed***perMMBTU.
NewTaxes
(a)
Allocation.If,subsequenttotheEffectiveDate,anyGovernmentalAuthorityenactsanynewTaxesonFLNG,
theServices,ortheFreeportFacility(NewTaxes),thenthePartiesshallmeetwithaviewtoagreeingon
amendmentstothisAgreementwithrespecttotheequitableallocationofsuchNewTaxesbyandamongthe
PartiesandOtherCustomers.ForpurposesofthisAgreement,NewTaxesshallbeconsideredtoexclude
Taxesonthecapital,revenue,orincomederivedbyFLNG,salesoruseTaxesonconstructionoftheFreeport
Facility,anincreaseinexistingTaxes,paymentsdueundertheFreeportFacilityLease,andanyTaxesonreal
orpersonalpropertyownedorleasedbyFLNG.IfthePartiesfailtoreachagreementwithinninety(90)days
ofthecommencementofsuchnegotiations,thePartiesshallwithinthirty(30)daysthereafterappointan
expertpursuanttoArticle23toallocatetheeffectofNewTaxesbetweenthePartiesand
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OtherCustomers.Theexpertshalldetermineamethodbywhichtheeffectsthereofmaybeequitably
allocatedamongthePartiesandtheOtherCustomers.Theexpertshallbeauthorizedtomodifythis
Agreementinaccordancewiththeexpertsresolutionofsuchallocation.Thetermsequitableallocationor
equitablyallocatedunderthisSection4.5shalltakeintoaccount:(a)thetimingofwhenFLNGincursNew
Taxes,(b)iftherehasbeenareductionofTaxesandaconcurrentenactmentofNewTaxes,whichParty
currentlybearstheriskofTaxesunderthisAgreement,(c)thatCustomerispaying,aspartoftheFee,***per
MMBTUinrelationtopropertytaxesontheFreeportFacility,(d)theportionsofLNGterminallingservices
contractedbyCustomerandbyOtherCustomerswithFLNG,and(e)theremainingdurationoftheTermand
ofthetermoftheterminaluseagreementwitheachOtherCustomer.Inguidancetotheamendmentofthe
Agreement,anyNewTaxesallocatedtoCustomerhereundershallbetreatedaspartoftheFeeforthe
purposesofSections4.3and4.7(b).
(b)
4.6
ServicesProvidedtoOtherCustomers
(a)
IdentityofOtherCustomers.FLNGshallfromtimetotimeinformCustomeroftheidentityofallOther
CustomerswhohavesignedwithFLNGterminaluseagreementshavingatermofatleast***(***)years.
(b)
TerminalUseAgreementswithOtherCustomers.InitsnegotiationofterminaluseagreementswithOther
Customers,FLNGshallusebesteffortstoincludeshipping,schedulingandoperationalprovisionsthatare
consistentinallmaterialrespectswiththeprovisionsinArticle5,Article8,Article9,Article10,Article11,
andArticle17herein.
4.7
TaxProceedings.IntheeventFLNGoranyofitsAffiliatesreceivesnoticeofanyexamination,claim,
assessment,adjustmentorotherproceedingrelatingtotheliabilityforNewTaxes,FLNGshallnotify
Customerinwritingwithintwenty(20)daysofreceivingnoticethereof.ThePartiesshallcooperatewitheach
otherandwiththeirrespectiveAffiliatesinthenegotiationsandsettlementofanysuchexamination,claim,
assessment,adjustmentorotherproceeding.
CertainAdjustmentstoReservationFee
(a)
ReservationFeeRebate.ForpurposesofSection4.1,FLNGshallcredittheCustomersstatementforwhich
paymentisdueon***withanamountdeterminedasfollows(suchamounttheReservationFeeRebate
Amount):
(i)
***
(ii)
***
(iii)
***
(iv)
***
(v)
***
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(b)
AdjustmentduringExtensionTerms.NotwithstandinganyprovisiontothecontraryinSection4.1andthis
Agreement,duringanyExtensionTerm,thePartiesshalladjustthe***suchthattheFeeequalsthethen
currentmarketratesforsimilarLNGtollingservicesintheUnitedStatesprovided,however,thatthe***for
theExtensionTerm,asadjusted,shallnotexceedthe***applicabletotheInitialTermandshallnotbeless
than***.IfthePartiesareunabletoagreeuponthethencurrentmarketratesintheUnitedStatesnolater
than***priortotheexpirationofthethencurrentTerm,thePartiesagreetosubmittheDisputetoanexpert
pursuanttoSection23.1.IfthePartiesareabletoagreetosuchadjustmentofthe***,thePartiesshall
executeasupplementtothisAgreementpursuanttoSection27.1.Notwithstandinganyprovisiontothe
contraryinSection***andthisAgreement,duringanyExtensionTerm,thePartiesshalladjustthe***set
forthinSection***suchthatthe***.
(c)
NoOtherChargesorFeeIncreases.ThereshallbenochargesduefromCustomertoFLNGnoranyincreases
intheFeeunlessspecificallyauthorizedbythisAgreement.
ARTICLE5
SCHEDULING
5.1
CustomerLNGReceiptSchedule
(a)
FLNGDeliverables.Notlaterthanonehundredtwenty(120)dayspriortothebeginningofeachScheduling
Period,FLNGshallprovidetotheSchedulingRepresentativeanonbindingwrittenassessmentofthedates
ofanyplannedmaintenancetoormodificationsoftheFreeportFacilityforsuchSchedulingPeriodandthe
expectedimpactofsuchactivitiesontheavailabilityofServices.FLNGshalllimitthenumberofdaysofany
plannedmaintenancetoormodificationsoftheFreeportFacilityandshallmeettherequirementsofArticle
18.
(b)
NoticefromSchedulingRepresentative.Notlaterthanonehundredfive(105)dayspriortothebeginningof
eachSchedulingPeriod,theSchedulingRepresentativeshallnotifyFLNGofthefollowing:
(i)
aprogrammingschedulefortheunloadingof(x)uptotheMaximumLNGReceptionQuantityover
thecourseofthenextContractYearaswellas(y)upto***percent(***%)oftheMaximumLNG
ReceptionQuantityforthenextsucceedingContractYear(suchpercentagetobeadjustedtoreflect
anypartialContractYear)overthecourseofthelastthreemonthsoftheSchedulingPeriod,which
scheduleshallspecify,foreachUnloadingWindow,theproposedarrivaldate(theArrivalDate)of
theapplicableLNGVesselandwhichArrivalDatemust(x)resultinadeliverypatternwhereby
deliveriesinanygivenmonthdonotmaterially
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exceed***,(y)resultindeliveriesinanygivenmonth***,and(z)takeintoconsiderationthe
plannedmaintenanceandmodificationdatesfurnishedtoCustomerbyFLNGassetforthinSection
5.1(a)and
(ii)
NoticesfromOtherCustomers.CustomeracknowledgesthatOtherCustomerswillsubmitsimilarnoticesto
FLNGregardingthemattersprovidedforinSection5.1(b).
(d)
PreliminaryReceiptSchedule.***shalltakeintoconsiderationthenoticesthatitreceivesfromthe
SchedulingRepresentativeandtheOtherCustomersand,notlaterthanninety(90)dayspriortothe
beginningofeachSchedulingPeriod,***shallissueto***viathe***(orviaanalternative***ifthe***
isunavailable)apreliminaryreceiptscheduleforsuchSchedulingPeriod(the***PreliminaryReceipt
Schedule).Inissuinga***PreliminaryReceiptScheduleforaparticularSchedulingPeriod,***shallnot
alter,absent***srequest,anyScheduledUnloadingWindowallocatedto***forthelast***monthsofthe
CustomerLNGReceiptScheduleforthepriorSchedulingPeriod.CustomermayproposetoFLNGtochange
anysuchScheduledUnloadingWindow,andFLNGagreestogivedueconsiderationto,andusereasonable
effortstoaccommodate,suchchange.The***PreliminaryReceiptScheduleshallsetforth(i)***and(ii)
***forpurposesofchangespursuanttoSection5.1(i).
(e)
Other***PreliminaryReceiptSchedulesandMutualCooperation.***acknowledgesthat***willissueto
***viathe***apreliminaryreceiptschedulesimilartothe***PreliminaryReceiptScheduledescribedin
Section5.1(d),butcustomizedforeachsuch***(***PreliminaryReceiptSchedules).***also
acknowledgesthatconflictswilloccurinthepreparationofthePreliminaryReceiptScheduleand***
PreliminaryReceiptSchedulesbecauseofthejointuseoftheFreeportFacilityamongCustomerandOther
Customers.Accordingly,thePartiesagreetocooperatewitheachothertoresolveanysuchconflict.
(f)
ConsultationCustomerLNGReceiptSchedule.IftheSchedulingRepresentativedesirestoconsultwith***
regardingthecontentsofthe***PreliminaryReceiptSchedule,theSchedulingRepresentativeshall,nolater
thanfifteen(15)daysfromtheissuanceofthe***PreliminaryReceiptSchedule,requesttomeetwith***by
providingnoticethereof(theConsultationNotice)to***,and***shall,nolaterthanfifteen(15)days
afterreceiptoftheConsultationNotice,meetwiththeSchedulingRepresentativetodiscussthe***
PreliminaryReceiptSchedule.If(i)theSchedulingRepresentativedoesnotsubmitaConsultation
foreachArrivalDateproposedpursuanttoSection5.1(b)(i),thenameoftheLNGVesselexpectedto
deliverLNGtotheFreeportFacility(iftheidentityoftheLNGVesselisknowntoCustomeratsuch
time),theExpectedReceiptQuantity,andtheanticipatedquality(expressedintermsofGross
HeatingValue)oftheLNGtobedeliveredattheReceiptPointduringtheSchedulingPeriod.
(c)
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Noticeto***onatimelybasisor(ii)theSchedulingRepresentativeand***meetpursuanttoa
ConsultationNoticeandareableduringsuchmeetingtoagreeuponrevisionstothe***Preliminary
ReceiptSchedule,thensuch***PreliminaryReceiptSchedule,assorevised(andasupdatedfromtimeto
timeforsuchSchedulingPeriodby***viathe***,suchupdatestobemadeinaccordancewiththis
AgreementandtheFreeportServicesManual)shallconstitutetheCustomerLNGReceiptSchedule.Ifthe
SchedulingRepresentativeand***meetpursuanttoaConsultationNoticeandareunableduringsuch
meetingtoagreeuponrevisionstothe***PreliminaryReceiptSchedule,then***shalldetermine,while
usingitsreasonableeffortstoaccommodateCustomersviews,theCustomerLNGReceiptSchedulewiththe
understandingthat,forpurposesofsuchdetermination,noMajorCustomershallbegivenanypreferencein
schedulingoveranyotherMajorCustomerbutMajorCustomersshallbegivenpreferentialconsiderationin
schedulingoverNonMajorCustomers.FLNGshallissueviathe***(orviaanalternative***ifthe***is
unavailable)theCustomerLNGReceiptSchedulenolaterthansixty(60)dayspriortothefirstdayofthe
SchedulingPeriod.TheCustomerLNGReceiptScheduleshallsetforth(i)***and(ii)***.
(g)
OtherCustomerLNGReceiptSchedules.CustomeracknowledgesthatFLNGshallissuetoeachOther
CustomerafinalreceiptschedulesimilartotheCustomerLNGReceiptScheduledescribedinSection5.1(f)
butcustomizedforeachsuchOtherCustomer(suchschedulesreferredtoasOtherCustomerLNGReceipt
Schedules).
(h)
AdjustmenttoSchedulingPeriods.UponwrittenrequestbytheCustomer,FLNGshallusereasonableefforts
tomodifythetimeperiodsexpresslysetforthinSections5.1(a),5.1(b),5.1(d),and5.1(f)toallowCustomerto
interfacetheseperiodswithcorrespondingtimeperiodsforschedulingagreeduponbyCustomeranditsLNG
Suppliers.ForpurposesofthisSection5.1(h),FLNGshallbedeemedtohaveusedreasonableeffortsifFLNG
rejectsCustomersrequestbecauseitdetermines,actingasaReasonableandPrudentOperator,thatanysuch
modificationwouldinfringeontherightsofOtherCustomers.
(i)
CustomerChangestoCustomerLNGReceiptSchedule.ThePartiesagreeasfollows:
(i)
SubjecttothetermsofthisSection5.1(i),atanytimefollowingtheissuanceoftheCustomerLNG
ReceiptSchedule,theSchedulingRepresentativemaysubmittoFLNGawrittenrequesttochangea
ScheduledUnloadingWindowtoanUnloadingWindowthatisnotpresentlyallocatedtoCustomer
orOtherCustomersandwhichFLNGismakingavailabletoCustomerandOtherCustomersunderthe
CustomerLNGReceiptSchedule(suchrequesttochange,aCustomerOpenWindowRequest).
Customerunderstandsthat(x)OtherCustomersshallalsohavetherighttosubmittoFLNGsimilar
schedulingrequests(eachanOtherCustomerOpenWindowRequest),(y)***,and
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(z)***assoonaspossiblebutnotlaterthan5:00p.m.,CentralTimeoftheBusinessDayfollowing
thedateofreceiptbyFLNGoftheapplicableOpenWindowRequest.UponacceptinganOpen
WindowRequest,FLNGshallnotifyCustomerandOtherCustomersthereofviathe***(orviaan
alternative***ifthe***isunavailable).Notwithstandinganythinghereintothecontrary,Customer
shalluseitsreasonableeffortstokeeptoaminimumthenumberofCustomerOpenWindowRequests
itsubmitstoFLNG.
(ii)
(j)
5.2
SubjecttothetermsofthisSection5.1(i),atanytimefollowingtheissuanceoftheCustomerLNG
ReceiptSchedule,theSchedulingRepresentativemaysubmittoFLNGawrittenrequesttochangea
ScheduledUnloadingWindowtoafortyeight(48)hourperiodthatisunavailabletoCustomerunder
theCustomerLNGReceiptSchedule(suchchange,aChangeRequest).Customeracknowledges
thatanyChangeRequestwill(x)***and(y)***.Accordingly,FLNGshall***anyChangeRequest
andshallnotifyCustomerthereofviathe***(orviaanalternative***ifthe***isunavailable)
withinthree(3)BusinessDaysofitsreceiptofaChangeRequest.Notwithstandinganythinghereinto
thecontrary,Customershalluse***tokeeptoaminimumthenumberofChangeRequestsitsubmits
toFLNG,andFLNGshalluseitsreasonableeffortstoaccommodateCustomersChangeRequests.
OtherModificationsDuetoServicesUnavailability.If,foranyScheduledUnloadingWindow,Customeris
unable,duetoaServicesUnavailability,toberthandunloadanLNGVessel,eachaffectedScheduled
UnloadingWindowallocatedtoCustomerduringsuchperiodshallbe***,totheextentaffected.Inthe
eventaScheduledUnloadingWindowissocancelled,suchcancellationshallbewithoutprejudiceto
Customersrightsandremedieshereunder.ExceptasotherwiseprovidedinSection5.1(i),theCustomerLNG
ReceiptScheduleshallbeconsideredfirmandshallnotbesubjecttochangebyFLNGprovided,however,
thatFLNG***,withpreferencetoMajorCustomers,ifsuchServicesUnavailabilitycausedthe***ofoneor
moreScheduledUnloadingWindowsallocatedtoCustomerand/orOtherCustomers,inordertomaximize
efficientusageoftheFreeportFacilitytoassistCustomerandOtherCustomerstounloadquantitiesofLNG
whichwouldotherwisehavebeenunloadedattheFreeportFacilityduringsuchcancelledScheduled
UnloadingWindows.Moreover,intheeventofaServicesUnavailability,FLNGshallmakereasonableefforts
to***ofredeliveryofGasforCustomerandOtherCustomerstomaximizeefficientusageoftheFreeport
FacilitytoassistCustomerandOtherCustomersto***whichwouldotherwisehavebeenreceivedatthe
DeliveryPointduringsuchServicesUnavailability.
GasDeliveryProcedure
(a)
PreliminaryNominationSchedule.Notlaterthanthefifteenth(15 th)dayofeachmonth,commencingthe
monthimmediatelypriortotheCommercialStartDate,
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FLNGshallprovidetotheSchedulingRepresentativeanominationschedule(thePreliminary
NominationSchedule)thatsetsforth,foreachdayoftheensuingmonth,thefollowing:
(i)
the***and
(ii)
all***which,atthetimeofnotificationofthePreliminaryNominationSchedule,FLNGactingasa
ReasonableandPrudentOperator***fromtheFreeportFacilityprovided,however,thatFLNGshall
notbeobligatedtoofferordeliver***toCustomerorOtherCustomersfromGasStorageFacilitiesor
totheextentthataReasonableandPrudentOperatorwouldnotobligateitselftodosoundersimilar
circumstancesandconditions.
Fortheavoidanceofdoubt,FLNGshallbeobligatedtomakeavailabletoCustomerthequantitiesof***
notifiedinthePreliminaryNominationSchedule,asallocatedpursuanttoSection***.
DailyRecords.CommencingontheCommercialStartDate,FLNGshall,oneachBusinessDaybythetime
specifiedintheFreeportServicesManual,postonthe***foraccessbyCustomercertaindailyrecords(the
DailyRecords),includingthefollowing:
(i)
CustomersInventoryheldasof11:59p.m.,CentralTimeonthedayprecedingthepostingofthe
DailyRecords
(ii)
theestimatedquantityofCustomersInventoryexpectedtobeheldinStorageasof11:59p.m.,
CentralTimeontheBusinessDayonwhichtheDailyRecordsareposted,takingintoaccount
expectedreceiptsanddeliveriesduringsuchBusinessDay
(iii)
ifapplicable,theestimatedquantityofCustomersInventoryexpectedtobeheldinStorageasof
11:59p.m.,CentralTimeoneachnonBusinessDayoccurringbetweentheBusinessDayonwhich
theDailyRecordsarepostedandthenextBusinessDay,takingintoaccountexpectedreceiptsand
deliveriesduringsuchBusinessDaysand
(iv)
either(x)thetotalquantityof***,ifany,whichFLNGactingasaReasonableandPrudentOperator
hasdeterminedonsuchBusinessDaywillbe***on(a)theBusinessDayor(b)theBusinessDay
followingthepostingoftheDailyRecordsor(y)ifsuchpostingfallsonaBusinessDaythatprecedes
anynonBusinessDay,thetotalquantityof***,ifany,whichFLNGactingasaReasonableand
PrudentOperatorhasdeterminedonsuchBusinessDay***provided,however,thatFLNGshallnot
beobligatedtoofferordeliver***toCustomerorOtherCustomersfromGasStorageFacilitiesorto
theextentthataReasonableandPrudentOperatorwouldnotobligateitselftodosoundersimilar
circumstancesandconditions,aslongasthetotalquantitypostedontheDailyRecordsisnotless
thanthoseprovidedpursuanttoSection5.2(a)(ii).
(b)
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(c)
GasNomination.CommencingontheCommercialStartDate,theSchedulingRepresentativeshall,oneach
BusinessDaybythetimespecifiedintheFreeportServicesManual,nominatethequantitiesofGas
(includingPeakingGas,ifavailable)thatCustomerdesirestobedeliveredtoitattheDeliveryPointonthe
nextBusinessDayandanyinterveningdaysthatarenotBusinessDays(suchnextday(s)hereinafterreferred
toasaDeliveryDate)byprovidingnoticethereof(theNominationNotice)toFLNG.SubjecttoSection
3.3(a),thequantitiesnominatedbytheSchedulingRepresentativeinaNominationNoticeshallinnoevent
belessthanthe***normorethanthe***,exceptinthecaseofnominationsof***wheretheScheduling
Representativemust,intheNominationNotice,requestthe***aswellasthequantitiesof***requestedby
Customerfordelivery.IntheeventFLNGdoesnotreceiveaNominationNoticeonatimelybasis,the
SchedulingRepresentativeshallbedeemedtohavenominatedthe***unlessCustomerhasnominatedin
writingformultipledaysahigheramountnottoexceedthe***.
(d)
VariationsinDailyRedeliveryRates.FLNGshallusereasonableeffortstodesignateintheFreeportServices
ManualcertainblocksoftimeduringadayonwhichCustomerandOtherCustomersmayelecttovarythe
ratesbywhichFLNGistoredeliverGasnominatedforagivendaywithoutexceedingthetotalquantityof
Gasnominated.IfFLNGchoosestodesignatesuchblocksoftimeandCustomerdesirestovaryitsrates,
Customershall,inaNominationNotice,setforththespecificquantitiesofGastoberedeliveredbyFLNG
duringsuchblocks.TheFreeportServicesManualshallincludeprovisionswhichensurethat,ifFLNG
choosestodesignatesuchblocksoftime,Customershallbeallocatedatleastitsproratashareofsuch
variableratesindailyGasredelivery.
(e)
OtherCustomerNominationNotices.CustomeracknowledgesthatOtherCustomersshallprovidetoFLNG
noticessimilartotheNominationNoticedescribedinSection5.2(c).
(f)
Allocationof***PeakingNotice.Customerunderstandsthatifquantitiesof***aremadeavailableto
CustomerandOtherCustomerspursuanttoSections5.2(a)and5.2(b)(iv),eachofCustomerandtheOther
Customersshallhavetheoptiontonominatealloranyportionofsuchquantitiesthroughthenotices
providedforinSections5.2(c)and5.2(d).FLNGshallallocatesuch***asprovidedinSection***and,for
anygivenday,shallnotifyCustomerofthequantitiesof***allocatedtoCustomerwithinthetimespecified
intheFreeportServicesManual.
5.3
Standard
FLNGshallactasaReasonableandPrudentOperatorinperformingtheschedulingactivitiesrequiredbythisArticle
5.
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5.4
5.5
SchedulingRepresentative
BynolaterthanonemonthpriortotheCommercialStartDate,Customershallappointanindividualtoactas
SchedulingRepresentativeforthepurposesofthisArticle5provided,however,thatCustomershallhavetherightto
changetheidentityoftheSchedulingRepresentativeatanytimebynoticetoFLNG.Unlessotherwisestatedherein,
CustomerherebyauthorizestheSchedulingRepresentativetodoandperformanyandallactsforandonbehalfof
CustomerwithregardtoschedulingmattersprovidedforinthisArticle5.
SchedulingCoordinationAmongCustomerandOtherCustomers
CustomershallhavetherighttorequestFLNGtoarrangeajointmeetingwithOtherCustomerswithrespecttoany
matterinrelationtotheperformanceofthisArticle5.FLNGshallusereasonableeffortstoorganizesuchameeting,
providedthatFLNGmayelecttoincludeadditionalOtherCustomersif***.IftheOtherCustomersinvitedbyFLNG
agreetoparticipateinsuchajointmeetingbetweenCustomer,OtherCustomersandFLNG,thejointmeetingshallbe
heldassoonaspossible.Unlessotherwiseagreed,anysuchjointmeetingshallbeheldinHouston,Texasorby
telephone,asappropriate.
ARTICLE6
RELEASEOFSERVICES
6.1
6.2
General
Customermayassign(a)allorapartoftheServicesQuantityasaTemporaryReleaseinaccordancewithSection6.2,
or(b)allorapartoftheServicesQuantityinaccordancewithArticle19.
TemporaryRelease
(a)
General.CustomermayfromtimetotimeassignpartoftheServicesQuantityinwritingtoathirdparty(a
TemporaryCustomer)onatemporarybasisfornotmorethantheremainderofthethenexisting
SchedulingPeriod(eachsuchpartialassignmentreferredtohereinasaTemporaryRelease).Customer
shallhavetherighttohaveoccurringatanygiventimeupto***(***)TemporaryReleaseforeach***
MMBTUsofMaximumLNGReceptionQuantity.
(b)
Conditions.ATemporaryReleaseshallbesubjecttothefollowingconditions:
(i)
NoticeandConsent.NoTemporaryReleaseshallbepermitted,orshallbecomeeffective,unlessand
until:
a.
TheproposedTemporaryReleaseisconsistentwiththetermsandconditionsofthis
Agreement
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b.
TheServicesQuantitythatCustomerseekstoassignbywayofaproposedTemporary
ReleaseincludesonlyScheduledUnloadingWindowsundertheCustomerLNGReceipt
Schedule
c.
Customerhas(x)deliveredtoFLNGawrittennoticeintheformsetforthintheFreeport
ServicesManual(aReleaseNotice)disclosinginsufficientdetailthetermsandconditions
oftheproposedTemporaryReleaserelevanttotheServicesQuantityforFLNGtobeableto
carryoutitsobligationsunderthisArticle6,includingtheproposedeffectivedateand
expirationdateoftheTemporaryReleasebutexcludinganysensitivepricinginformation
relatedthereto,and(y)furnishedtoFLNGallinformationreasonablyrequestedbyFLNG
withrespecttosuchTemporaryReleasetotheextentnecessaryforFLNGtocarryoutits
obligationsunderthisAgreementand
d.
Exceptasotherwiseprovidedbelow,FLNGhasconsentedtotheTemporaryReleaseby
executingtheReleaseNotice,suchconsentnottobewithheldprovidedCustomercomplies
inallrespectswiththeprovisionsofSections6.2(b)(i)athrough6.2(b)(i)c.
(ii)
TemporaryReleasesforSubsequentSchedulingPeriods.NotwithstandingtherequirementinSection
6.2(a)thataproposedTemporaryReleaserelatetothethenexistingSchedulingPeriod,inorderto
assistCustomerinitslongtermbusinessplanning,CustomershallbeentitledtosubmittoFLNG
fromtimetotimeTemporaryReleasesforsubsequentSchedulingPeriods.Subjecttothesame
consentrights(ifany)setforthinSection6.2(b)(i)d,FLNGshallexecuteaReleaseNoticeforsuch
TemporaryReleaseforasubsequentSchedulingPeriod.
(iii)
Authorization.FollowingtheexecutionbyFLNGoftheReleaseNotice,FLNGshallbeauthorizedto
performthespecifiedportionoftheServicesQuantityforTemporaryCustomer,subjecttothe
provisionsofthisAgreement.InrelationtoaTemporaryRelease,TemporaryCustomershallbefully
authorizedtoactonbehalfofCustomer,andFLNGshallbeentitledtorelyonthenominations,
noticesandothersubmissionscommunicatedtoFLNGbytheTemporaryCustomerinrelationtothe
TemporaryReleaseasifsuchnominations,noticesandothersubmissionshadbeenmadeby
Customeritself.Intheeventofaconflictbetweenthetermsofthenominations,noticesandother
submissionsissuedbytheTemporaryCustomerinrelationtotheTemporaryReleaseandthoseissued
byCustomer,thetermsissuedbyCustomershallcontrol.
(iv)
NoEffecton***.Fortheavoidanceofdoubt,aTemporaryReleaseshallinnoeventincreasethe***.
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(v)
Performance.CommencingontheReleaseDateandcontinuingthroughtheexpirationortermination
oftheTemporaryRelease,(i)FLNGshallperformtheServicesassignedtoTemporaryCustomerunder
theTemporaryRelease,and(ii)CustomershallcauseTemporaryCustomertoperform,forthebenefit
ofFLNG,allrequirementsandobligationsofCustomerunderthisAgreementinrelationtothe
TemporaryRelease.
(vi)
ExpirationofTemporaryRelease.Exceptasotherwiseprovidedherein,FLNGshallrenderServicesto
TemporaryCustomerfortheperiodsetforthintheTemporaryRelease(suchperiodhereinreferredto
astheTemporaryTerm).CustomersNominationNoticesshallensurethattheTemporaryRelease
Inventoryisreducedtozero(0)MMBTUsasofthelastdayoftheTemporaryTerm.Intheeventthat
theTemporaryReleaseInventoryisnotreducedtozero(0)MMBTUonlastdayoftheTemporary
Term,theTemporaryReleaseInventoryremainingthereaftershallbedeemedsolelyasCustomers
Inventory.
(vii)
RemedialActions.IntheeventTemporaryCustomersactionsaremateriallyinconsistentwiththe
requirementsofthisAgreement,FLNGshallprovidewrittennoticethereoftoCustomer.Customer
shall(x)informFLNGwithinfive(5)daysofitsreceiptofFLNGsnoticeoftheremedialactionsit
intendstotaketocauseTemporaryCustomersactionstobemateriallyconsistentwiththe
requirementsofthisAgreement,and(y)causeTemporaryCustomertobeincomplianceherewith
withinthirty(30)daysafterdeliveryofFLNGsnotice.IntheeventCustomerisunabletocause
TemporaryCustomertobeincomplianceherewith,FLNGmayterminatetheTemporaryReleaseby
writtennoticetoCustomer.
(viii) Responsibility.CustomershallensurethateachTemporaryReleaseisperformedinamanner
consistentwiththeReleaseNoticeandthetermsandprovisionsofthisAgreement.Notwithstanding
anythinginthisArticle6tothecontrary,FLNGshallinvoiceCustomerinaccordancewiththe
provisionsofSection12.1fortheFeeattributabletoaTemporaryRelease,andCustomershallpay,or
causetobepaid,theFeeattributabletoaTemporaryRelease.NoTemporaryReleaseoranythingin
thisSection6.2shallrelieveCustomerorFLNGofanyresponsibilityorliabilityunderthis
Agreement.CustomershallremainliabletoFLNGforallobligationsofCustomerandTemporary
CustomerinconnectionwithanyTemporaryRelease.FLNGshallremainliabletoCustomerforall
obligationsofFLNGinconnectionwithanyTemporaryRelease.
(ix)
NoThirdPartyBeneficiary.ATemporaryCustomerisnotintendedtobe,andshallnotbeconstrued
tobe,athirdpartybeneficiaryofthisAgreement,norshallaTemporaryRelease,oranything
containedinthisAgreement,createanycontractualorquasicontractualrelationshiporobligation
betweenanyTemporaryCustomerandFLNG.
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ARTICLE7
TERM
7.1
Term
(a)
General.SubjecttotheprovisionsofthisAgreement,includingArticle20,thetermofthisAgreement(the
Term)shallconsistoftheInitialTermand,ifapplicable,anyExtensionTerm.
(b)
InitialTerm.TheinitialtermofthisAgreement(theInitialTerm)shallcommenceontheCommercialStart
Date,andshallcontinuethereafteruntilthedayimmediatelyprecedingthetwentieth(20 th)anniversary
thereof.
(c)
ExtensionTerm.Exceptasotherwiseprovidedherein,attheexpirationoftheInitialTerm,Customershall
havetherighttoelecttoextendthetermofthisAgreementasfollows(eachanExtensionTerm):
(i)
anextensiontermwhichshallcommenceonthedayimmediatelyfollowingtheexpirationofthe
InitialTermandcontinuethereafteruntilFebruary28,2033(thedayonwhichtheinitialtermofthe
FreeportFacilityLeaseexpires)and
(ii)
inadditiontotheextensionrightunder(i)above,uptotwoadditionalten(10)yearextensionterms
fromFebruary28,2033,thefirstofwhichshallcommenceonMarch1,2033andcontinueuntil
February28,2043,andthesecondofwhichshallcommenceonMarch1,2043andcontinueuntil
February28,2053.
7.2
IfCustomerdesirestoextendthisAgreementbyanExtensionTerm,Customermust(i)notifyFLNGofitsgoodfaith
desiretoelecttheapplicableExtensionTermatleastonethousandeighthundredtwentyfive(1,825)dayspriorto
theexpirationofthethencurrentTerm,and(ii)nolaterthanonethousandfourhundredsixty(1,460)dayspriortothe
expirationofthethencurrentTermsendFLNGabindingconfirmation(BindingConfirmation)thatthetermis
extendedbyanExtensionTerm.UponCustomersdeliveryofaBindingConfirmationtoFLNG,thisAgreementwill
thenbeautomaticallyextendedfortheapplicableExtensionTerm.
CommencementofDeliveries
InaccordancewiththeproceduresetforthinthisSection7.2,FLNGshallnotifyCustomerofthedateonwhich
ServicesforCustomerwillcommenceattheFreeportFacility(thefinaldatesonotifiedbeingtheCommercialStart
Date).TheCommercialStartDateshallbeadatewithintheperiodfromApril1,2007toMarch31,2008(such
periodbeingtheFirstWindowPeriod).TheFirstWindowPeriodshallbenarrowedpursuanttothefollowing
provisions:
(a)
NolaterthanDecember1,2006,FLNGshallnotifyCustomerofatwohundredseventy(270)daywindow
(SecondWindowPeriod)fallingwithintheFirstWindowPeriodfortheCommercialStartDateprovided
thatifFLNGfailstogivetimelynoticeofsame,theSecondWindowPeriodshallbethelatestpossibletwo
hundredseventieth(270 th)daywindowperiodwithintheFirstWindowPeriod
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(b)
Nolaterthanninety(90)daysinadvanceofthefirstdayoftheSecondWindowPeriod,FLNGshallnotify
Customerofaonehundredeighty(180)daywindow(ThirdWindowPeriod)fallingwithintheSecond
WindowPeriodfortheCommercialStartDateprovidedthatifFLNGfailstogivetimelynoticeofsame,the
ThirdWindowPeriodshallbethelatestpossibleonehundredeighty(180)daywindowperiodwithinthe
SecondWindowPeriod
(c)
Nolaterthansixty(60)daysinadvanceofthefirstdayoftheThirdWindowPeriod,FLNGshallnotify
Customerofaninety(90)daywindow(FourthWindowPeriod)fallingwithintheThirdWindowPeriod
fortheCommercialStartDateprovidedthatifFLNGfailstogivetimelynoticeofsame,theFourthWindow
Periodshallbethelatestpossibleninety(90)daywindowperiodwithintheThirdWindowPeriod
(d)
Nolaterthanthirty(30)daysinadvanceofthefirstdayoftheFourthWindowPeriod,FLNGshallnotify
Customerofasixty(60)daywindow(FifthWindowPeriod)fallingwithintheFourthWindowPeriodfor
theCommercialStartDateprovidedthatifFLNGfailstogivetimelynoticeofsame,theFifthWindow
Periodshallbethelatestpossiblesixty(60)dayperiodwithintheFourthWindowPeriod
(e)
Nolaterthanfifteen(15)daysinadvanceofthefirstdayoftheFifthWindowPeriod,FLNGshallnotify
Customerofathirty(30)daywindow(SixthWindowPeriod)fallingwithintheFifthWindowPeriodfor
theCommercialStartDateprovidedthatifFLNGfailstogivetimelynoticeofsame,theSixthWindow
Periodshallbethelatestpossiblethirty(30)dayperiodwithintheFifthWindowPeriod
(f)
Nolaterthanseven(7)daysinadvanceofthefirstdayoftheSixthWindowPeriod,FLNGshallnotify
Customerofafifteen(15)daywindow(FinalWindowPeriod)fallingwithintheSixthWindowPeriodfor
theCommercialStartDateprovidedthatifFLNGfailstogivetimelynoticeofsame,theFinalWindow
Periodshallbethelatestpossiblefifteen(15)dayperiodwithintheSixthWindowPeriodand
(g)
Nolaterthanthree(3)daysinadvanceofthefirstdayoftheFinalWindowPeriod,FLNGshallnotify
CustomeroftheCommercialStartDatefallingwithintheFinalWindowPeriodprovidedthatifFLNGfails
togivetimelynoticeofsame,theCommercialStartDateshallbethelatestpossibledayintheFinalWindow
Period.
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TheCommercialStartDateshallbethedatesonotified,regardlessofwhetheranyunloadingofCustomersLNGat
theFreeportFacilityactuallyoccursonsuchdate.
7.3
7.4
DelayCausedbyForceMajeure
ShouldaneventofForceMajeureoccurthathastheeffectofdelayingtheCommercialStartDate,thenthe
CommercialStartDateshallbepostponedordelayedtofullyaddresstheeffectsofsuchevent.
ConstructionProgressReports
BeginningonApril1,2004andeveryquarterthereafteruntiltheCommercialStartDate,FLNGshallfurnishto
Customeraninterimprogressreport(collectivelytheProgressReports)specifyingtheprogresssincethelast
reportandtheexpectedprogresstowardscompletingtheconstruction,testingandoperationalstartupoftheFreeport
Facility.EachProgressReportshallincludethestatusandprogressofallconstruction,anupdateoftheconstruction
schedule,andanyotherinformationwhichCustomerhasreasonablyrequestedinwritinginadvancetoenable
Customertoevaluatethestatusandprogressofconstruction,testingandoperationalstartupoftheFreeportFacility.
ARTICLE8
FREEPORTFACILITY
8.1
FreeportFacility
(a)
StandardofOperation.
(i)
BytheCommercialStartDate,FLNGshallcausetheFreeportFacilitytobeengineered,constructed
andcommissionedinagoodandworkmanlikemanner,inconformancewiththisAgreementandin
materialcompliancewithallApprovalsnecessarytocommenceoperationsoftheFreeportFacility.
(ii)
OnandaftertheCommercialStartDate,FLNGshallatalltimesengineer,construct,modify,maintain
andoperate(orcausetobeengineered,constructed,modified,maintainedandoperated):
a.
theFreeportFacilityinaccordancewiththefollowing:(x)InternationalLNGTerminal
Standards,includingthosedealingwiththeenvironment,healthandsafetyand(y)tothe
extentnotinconsistentwithInternationalLNGTerminalStandards,suchgoodandprudent
practicesasaregenerallyfollowedintheLNGindustrybyReasonableandPrudentOperators
ofLNGreceivingandregasificationterminals
b.
theFreeportFacilityPipelineinaccordancewith(x)PipelineStandards,includingthose
dealingwiththeenvironment,healthandsafetyand(y)totheextentnotinconsistentwith
PipelineStandards,suchgoodandprudentpracticesasaregenerallyfollowedbyReasonable
andPrudentOperatorsofU.S.Gaspipelinesand
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c.
(b)
(i)
appropriatesystemsforcommunicationswithLNGVessels
(ii)
berthingfacilitiesatQuintanaIsland,TexascapableofreceivinganLNGVesselhavinga
displacementofnomorethan150,000tonnes,anoveralllengthofnomorethan1,050feet,abeamof
nomorethan165feet,andadraftofnomorethan42feet,whichLNGVesselscansafelyreach,fully
laden,andsafelydepart,andatwhichLNGVesselscanliesafelyberthedandunloadsafelyafloat
(iii)
lightingsufficienttopermitunloadingoperations(otherthanberthingordepartingberth)bydayor
bynight,totheextentpermittedbyGovernmentalAuthorities(itbeingacknowledged,however,that
FLNGshallinnoeventbeobligatedtoallownighttimeberthingoperationsattheFreeportFacilityif
FLNGdetermines,actingasaReasonableandPrudentOperator,thatsuchoperationsduring
nighttimehourscouldposesafetyoroperationalriskstotheFreeportFacility,anLNGVessel,ora
thirdparty)
(iv)
unloadingfacilitiescapableofreceivingLNGatarateofnolessthan10,000CubicMetersperhour
whenthepressureattheReceiptPointisatleast5.6bars(gauge),withthree(3)unloadingarmseach
havingareasonableoperatingenvelopetoallowforshipmovementandmanifoldstrainersofsixty
(60)mesh
(v)
avaporreturnlinesystemofsufficientcapacitytotransfertoanLNGVesselquantitiesofGas
necessaryforthesafeunloadingofLNGatrequiredrates,pressuresandtemperatures
(vi)
facilitiesallowingingressandegressbetweentheFreeportFacilityandtheLNGVesselby(x)
representativesofGovernmentalAuthoritiesforpurposesofunloadingoperationsand(y)
representativesofCustomerand/oranindependentsurveyorforpurposesofconductingtestsand
measurementsofLNGonboardtheLNGVesselinaccordancewithAnnexI
eachGasStorageFacilityinaccordancewith(x)StorageStandards,includingthosedealing
withtheenvironment,healthandsafetyand(y)totheextentnotinconsistentwithStorage
Standards,suchgoodandprudentpracticesasaregenerallyfollowedbyReasonableand
PrudentOperatorsofGasstoragefacilities.
FacilitiestobeProvided.TheFreeportFacilityshallatalltimesaftertheCommercialStartDateincludeat
leastthefollowing:
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(vii)
(viii) LNGregasificationfacilitieswithatotaldailycapacityofatleast1,605,000MMBTUsand
(ix)
(c)
8.2
theFreeportFacilityPipelinewithatotaldailycapacityattheDeliveryPointofatleast2,140,000
MMBTUs,withsuitableinterconnectionswithDownstreamPipelinescapableofacceptingsuch
volumes.
IfFLNGelects,initsSoleOpinion,toalsoprovideGasStorageFacilities,suchfacilitiesshallbemade
availableinthequantitiesdeterminedbyFLNGfromtimetotime.
LNGstoragefacilitieswithatotalgrosscapacityofatleastthreehundredtwentythousand(320,000)
CubicMetersofLNG
FacilitiesNotProvided.Fortheavoidanceofdoubt,servicesandfacilitiesnotprovidedattheFreeport
Facilityincludethefollowing:(i)facilitiesandloadinglinesforliquidorgaseousnitrogentoserviceanLNG
Vessel(ii)facilitiesforprovidingbunkersand(iii)facilitiesforthehandlinganddeliverytotheLNGVessel
ofshipsstores,provisionsandspareparts.
ModificationstoFreeportFacility
(a)
FreeportFacility.CustomeracknowledgesthatitisfamiliarwiththegeneralspecificationsfortheLNG
berthingandunloadingfacilitiesoftheFreeportFacilityasofthedatehereof.FLNGacknowledgesthatsuch
specificationshavetakenintoconsiderationthenecessaryshipshorecompatibilityinrelationtotypical
LNGtankersexistingasoftheEffectiveDate.Afterthedatehereof,Customershallensure,atnocostto
FLNGexceptassetforthinSection8.2(b),thateachoftheLNGVesselsisfullycompatiblewiththeFreeport
Facility.ShouldanLNGVesselfailmateriallyeithertobecompatiblewiththeFreeportFacility,ortobein
compliancewiththeprovisionsofArticle9,CustomershallnotemploysuchLNGVesseluntilithasbeen
modifiedtobesocompatibleortosocomply.
(b)
Modifications.FLNGshallhavetheright,butnottheobligation,tofromtimetotimemodifytheFreeport
Facility(includingviaconstructionoracquisitionofotherfacilities)inordertoperformtheServicesorany
othermodeofLNG,Gas,orenergyrelatedservices,subjectto(x)suchmodificationsnotrenderingthe
FreeportFacilityincompatiblewithanLNGVessel,(y)suchmodificationsnotreducingtheServices
QuantityexceptasallowedinSection18.1and(z)suchmodificationsnototherwiseconflictingwitheach
PartysrightsandobligationsunderthisAgreement,includingtherequirementsofSections5.1(a),8.1(b)and
18.1.Notwithstanding(x)butsubjectto(y)and(z)intheforegoingsentence,FLNGmaymakesuch
modificationsinamannerthatwouldrenderitincompatiblewithanLNGVesselprovidedthat:
(i)
suchmodificationismadepursuanttoachangeinInternationalLNGTerminalStandardsor
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(ii)
8.3
8.4
theLNGVesseliscapableofbeingmodifiedtomaintaincompatibilitywithboththeFreeportFacility
andotherterminalsinitsnormal/intendedtradeand,inconnectionwithamodification(otherthan
pursuanttoparagraph(i)above),FLNGreimbursesCustomerforthereasonableactualcostsincurred
byCustomerincausingTransportertomodifytheLNGVesseltomaintaincompatibilitywiththe
FreeportFacilityassomodifiedprovided,further,thatCustomershalluseitsreasonableeffortsto
minimizecoststobebornebyFLNGhereunder,shallnotifyFLNGreasonablyinadvanceofthe
natureandexpectedcostofallsuchLNGVesselmodificationsbyTransporter,andshallcertifyto
FLNGtheactualamountanddetailofallcostsincurredforwhichsuchreimbursementfromFLNGis
requested.
CustomerInspectionRights
OnandaftertheCommercialStartDateanduponobtainingFLNGspriorwrittenconsent,whichconsentshallnotbe
unreasonablywithheldordelayed,areasonablenumberofCustomersdesignatedrepresentatives(includingLNG
SuppliersandTemporaryCustomers)mayfromtimetotimeinspecttheoperationoftheFreeportFacilitysolongas
suchinspectionoccursfrom8:00a.m.to5:00p.m.onaBusinessDay.AnysuchinspectionshallbeatCustomers
soleriskandexpense.Customer(anditsdesignees)shallcarryoutanysuchinspectionwithoutanyinterferencewith
orhindrancetothesafeandefficientoperationoftheFreeportFacility.Customersrighttoinspectandexaminethe
FreeportFacilityshallbelimitedtoverifyingFLNGscompliancewithFLNGsobligationsunderthisAgreementand
shallnotentitleCustomertomakedirectrequeststoFLNGregardinganyaspectoftheFreeportFacility.No
inspection(orlackthereof)oftheFreeportFacilitybyCustomerhereunder,oranyrequestsorobservationsmadeto
FLNGoritsrepresentativesbyoronbehalfofCustomerinconnectionwithanysuchinspection,shall(a)modifyor
amendFLNGsobligations,representations,warrantiesandcovenantsunderthisAgreementorunderanyagreement
orinstrumentcontemplatedbythisAgreementor(b)constituteanacceptanceorwaiverbyCustomerofFLNGs
obligationsunderthisAgreement.
ResponsiblePractices
(a)
Wastes.FLNGwarrantsthatitshallperformallactivitieshereunder(includinganyconstruction,maintenance
andoperationsactivities),Servicesandactivitiesrelatedtheretosafelyandinmaterialconformancewithall
applicablelaws,regulationsandordinancesdealingwithhazardouswastes.FLNGshallbedeemedthe
generatorandownerofanyWastes(whichterm,asusedinthisAgreement,includeshazardous
substancesand/orhazardousmaterialswhicharedisposedorreleasedasprovidedintheFederal
ComprehensiveEnvironmentalResponse,CompensationandLiabilityAct(CERCLA),42U.S.C.A.9601
etseq.,wasteasprovidedintheFederalResourceConservationandRecoveryAct(RCRA),42U.S.C.A.
6901etseq.andincludeswasteofanykindincludingroutineprocesswasteandbyproductswhichare
disposed)generatedinconnectionwithFLNGsperformanceunderthisAgreement.As
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such,FLNGshallbesolelyandindependentlyresponsibleforanyandallLiabilitiesrelatedtosuchWastes
andshallsafelyandinmaterialcompliancewithallapplicablelaws,regulationsandordinancesdisposeofor
arrangeforthedisposalofthesame.
(b)
Safety,SecurityandHygiene.FLNGshallbecomefamiliarwithallmaterials,chemicals,LNG,Gasand
Wastes,used,producedorgenerated,respectively,whileperformingunderthisAgreement.FLNGshall
materiallycomplywiththeFederalOSHAHazardCommunicationStandard,codifiedas29C.F.R.
1910.1200,etseq.,andanysimilarstaterighttoknowlawswhicharecurrentlyinforceormaybeenacted
inthefuture.FLNGissolelyresponsibleforinformingitsemployeesandcontractorsofthehazards
associatedwithanymaterials,chemicals,LNG,GasandWasteshandledpursuanttothisAgreementandis
alsoresponsiblefortrainingitsemployeesandcontractorsinthepropermethodsofhandlingthesame.
(c)
Personnel.AllFLNGpersonnel(otherthanthoseperformingroutinemaintenanceorcleaningfunctions)shall
befluentinwrittenandoralEnglish.
(d)
Indemnification.FLNGshallindemnify,defendandholdCustomer(includingCustomersAffiliates,
TemporaryCustomersandtheirrespectiveofficers,directors,employees,servants,agents,successors,and
assigns)harmlessfromandagainstanyandallLiabilitiesarisingoutofanyandallofthefollowing:
(i)
thefailureofFLNGorthoseactingunderorforFLNGtocomplywithallfederal,stateandlocallaws,
regulationsandordinances(includingthoserelatedtotheenvironment,healthandsafety)in
connectionwithFLNGsperformanceofitsobligationsunderthisSection8.4
(ii)
anycontaminationoftheenvironmentordamagetonaturalresources,includingdamagetoany
environmentalmedium(air,water,groundwaterorsoil),arisingoutoftheactivitiesofFLNGata
facilityownedoroperatedbyFLNGorafacility/locationchosenbyFLNGforitsdisposalofWastes
oranyotherfacilityatwhichFLNGsWastesmaybereleasedorthreatenedtobereleased,including
anyliabilityimposedbyfederal,stateandlocallaws,regulationsandordinances,including
CERCLA,RCRA,orcomparableandapplicablestateandlocallegalrequirementsor
(iii)
anydamagetoanypropertyordeathorinjuryofpersons(includingFLNGsemployees)arisingout
ofFLNGsperformanceornonperformanceofitsobligationsunderthisSection8.4oroutofFLNGs
operationoftheFreeportFacility.
TheobligationsinthisSection8.4(d)shallapplyregardlessofthetypeofassertionbeingmadeincluding
anylegal,equitable,oradmiraltycausesofactionorrights(includingnegligence,strictliabilityintort,other
tort,expressorimplied
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warranty,indemnity,contract,contributionorsubrogation),whethertheassertionismadebyaPartyorany
thirdparty,regardlessofwhentheeventsunderlyingsuchassertionoccurredandshallapplytoalltypesof
damagesallowedunderthisAgreement.
ARTICLE9
TRANSPORTATIONANDUNLOADING
9.1
LNGVessels
(a)
CustomertoCauseLNGVesselstoComply.AsbetweenCustomerandFLNG,Customershallberesponsible
forthetransportationofLNGfromtheLoadingPorttotheFreeportFacility.Inthisregard,Customershall
causeeachLNGVesseltocomplywiththerequirementsofthisArticle9inallrespects.
(b)
ApprovalsandDocumentation.EachLNGVesselshallcomplywiththeregulationsof,andobtainall
Approvalsrequiredby,GovernmentalAuthoritiestoenablesuchLNGVesseltoenter,leaveandcarryoutall
requiredoperationsattheFreeportFacility.EachLNGVesselshallatalltimeshaveonboardvalid
documentationsatisfactorytoFLNGevidencingallsuchApprovals.EachLNGVesselshallcomplyfully
withtheInternationalSafetyManagementCodefortheSafeOperationofShipsandPollutionPrevention
effectiveJuly1,1998,andatalltimesbeinpossessionofavalidsafetymanagementcertificate.
(c)
Fireboats,EscortVesselsandPortCharges.Customershallarrangefor,orcausetheappropriatePersonto
arrangefor,suchnumberandtypesoffireboatsandescortvesselsasarerequiredbyGovernmental
AuthoritiestoattendtheLNGVesselsoastopermitsafeandefficientmovementoftheLNGVesselwithinthe
maritimesafetyareaslocatedintheapproachestoandfromtheFreeportFacility.Customershallpay,orcause
tobepaid,allPortChargesdirectlytotheappropriatePersonprovided,however,thatFLNGshallbesolely
responsibleforpaymentofallchargesundertheFreeportFacilityLeaseotherthanthePortUseFees
(excludingrent)andThruPutFees.ShouldFLNGamendtheFreeportFacilityLease,suchamendmentshall
notoperatetoincreasethePortCharges.
(d)
Requirements.EachLNGVesselmustsatisfythefollowingrequirements:
(i)
Specifications.ExceptasotherwisemutuallyagreedinwritingbytheParties,eachLNGVesselshall
becompatiblewiththespecificationsoftheFreeportFacilityidentifiedinSection8.1(b).
Notwithstandingtheforegoing,intheeventanLNGVesseliscompatiblewiththespecificationsset
forthinSection8.1(b)orotherwiseacceptabletoFLNG,butaGovernmentalAuthorityorPilot
prohibitsorotherwisehinderstheutilizationofsuchLNGVessel,Customersobligationsunderthis
AgreementshallnotbeexcusedorsuspendedbyreasonofCustomersinability(pursuanttothe
foregoing)tousesuchavesselasanLNGVessel.FLNGwillprovidereasonableassistanceto
CustomerinCustomersattempttoremoveanysuchprohibitionorhindrance.
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(ii)
LNGVesselCapacity.ExceptasotherwiseagreedinwritingbyFLNG,eachLNGVesselshallhavean
LNGcargocontainmentcapacityofnolessthanonehundredtwentythousand(120,000)Cubic
Meters,determinedatthetimeofloadingofLNG.
(iii)
ConditionoftheLNGVessel.EachLNGVesselshallbeincompliancewithInternationalLNGVessel
Standards.Thelocationoftheunloadingmanifoldshallallowasafemarginformovementofthearms
withintheoperatingenvelope.
(iv)
ClassificationSociety.EachLNGVesselshallatalltimesbemaintainedinclasswithanyofthe
AmericanBureauofShipping,LloydsRegisterofShippingorDetNorskeVeritasoranyother
classificationsocietythatismutuallyagreeabletotheParties.
(v)
Construction.EachLNGVesselshallhavebeenconstructedtoallapplicableInternationalLNG
VesselStandards(includingtheInternationalCodeFortheConstructionandEquipmentofShips
CarryingLiquefiedGasesinBulk).
(vi)
OperationandMaintenance.EachLNGVesselshallcomplywith,andshallbefullyequipped,
suppliedandmaintainedtocomplywith,allapplicableInternationalLNGVesselStandards.Unless
approvedbyFLNGinwriting,whichapprovalshallnotbeunreasonablywithheldordelayed,an
LNGVesselshallbeprohibitedfromengaginginanymaintenance,repairorinwatersurveyswhile
berthedattheFreeportFacility.EachLNGVesselshallcomplyfullywiththeguidelinesofany
GovernmentalAuthorityoftheUnitedStates,includingtheNationalOceanographicand
AtmosphericAdministration(NOAA),inrelationtoactionstoavoidstrikesinU.S.waterswith
protectedseaturtlesandcetaceans(e.g.,whalesandothermarinemammals)andwithregardtothe
reportingofanystrikebytheLNGVesselwhichcausesinjurytosuchprotectedspecies.
(vii)
Crew.TheofficersandcrewofeachLNGVesselshallhavetheability,experience,licensesand
trainingcommensuratewiththeperformanceoftheirdutiesinaccordancewith,internationally
acceptedstandardsasadoptedonfirstclassLNGcarryingvesselsandasrequiredbyGovernmental
AuthoritiesandanylabororganizationhavingjurisdictionovertheLNGVesselorhercrew.Without
inanywaylimitingtheforegoing:
a.
allshipboardpersonnelshallholdvalidcertificatesofcompetenceinaccordancewiththe
requirementsofthelawoftheflagstateoftheLNGVesselandanyapplicablerequirements
ofthelawsoftheUnitedStatesofAmerica
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b.
theMaster,chiefengineer,chiefmateandcargoengineer(andsuchotherofficersoftheLNG
VesselhavingresponsibilitiesassociatedwiththepreparationoftheLNGVesselfor
unloading)shallbetrainedandcertifiedtoastandardcustomaryforanoperatorofafirst
classLNGvesselofthetypeandtonnageoftheLNGVesselandincompliancewiththe
InternationalConventiononStandardsofTraining,CertificationandWatchkeepingfor
Seafarers,1978
c.
theMaster,chiefengineer,allcargoengineers,andalldeckofficersshallbefluentinwritten
andoralEnglishandshallmaintainallrecordsandprovideallreportswithrespecttothe
LNGVesselinEnglish,andthereshallotherwisebeonboardsufficientpersonnelwitha
goodworkingknowledgeoftheEnglishlanguagetoenablecargohandlingandunloading
tobecarriedoutefficientlyandsafelyandtoenablecommunicationsbetweentheLNG
VesselandthoseunloadingtheLNGVesseltobecarriedoutquicklyandefficientlyand
d.
noneoftheLNGVesselsMaster,officersorcrewshall,whileservingontheLNGVessel,
abusetheuseofdrugsoralcohol,andTransportershallmaintainawrittenpolicytosuch
effect,suchpolicytomeetorexceedthestandardsoftheOilCompaniesInternational
MarineForumsGuidelinesfortheControlofDrugsandAlcoholAboardShip,1995,as
amendedfromtimetotime.IfanyMaster,officerorcrewmemberabusestheuseofdrugsor
alcohol,suchindividualshallbedismissedfromserviceontheLNGVessel.
(viii) Communications.EachLNGVesselshallhavecommunicationequipmentcomplyingwithapplicable
regulationsofGovernmentalAuthoritiesandpermittingsuchLNGVesseltobeinconstant
communicationwiththeFreeportFacilityandwithothervesselsinthearea(includingfireboats,
escortvesselsandothervesselsemployedinportoperations).
(ix)
PumpingTime.ProvidedthattheFreeportFacilitysuppliesasuitablevaporreturnlinemeetingthe
requirementsofSection8.1(b)(v),then:
a.
anLNGVesselwithanLNGcargocontainmentcapacitylessthanorequaltoonehundred
fortythousand(140,000)CubicMetersshallbecapableofunloadingLNGinamaximumof
fifteen(15)hoursand
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b.
anLNGVesselwithanLNGcargocontainmentcapacitygreaterthanonehundredforty
thousand(140,000)CubicMetersshallbecapableofunloadingLNGinthenumberofhours
derivedafterapplyingthefollowingformula:
15+x=maximumLNGunloadingtime(inhours)
where:
y=
theLNGcargocontainmentcapacityoftheLNGVesselinexcessof140,000
CubicMetersand
x=
y/10,000CubicMeters
9.2
Timeforconnecting,cooling,strippinganddisconnecting,andcoolingofliquidarmsshallnotbeincluded
inthecomputationofpumpingtime.
FreeportFacilityMarineOperationsManual
ActingasaReasonableandPrudentOperator,FLNGshalldevelopandmaintainasinglemarineoperationsmanual
thatgovernsactivitiesattheFreeportFacility,appliestoallLNGVesselsandvesselsusedbyOtherCustomers,andis
consistentwithInternationalLNGVesselStandards(butexcludingthemattersgovernedbytheFreeportServices
Manual).Indevelopingsuchamanual,FLNGshallprovideCustomerwithapreliminarydraftofthesame(the
PreliminaryMarineOperationsManual).IfCustomerdesirestoconsultwithFLNGregardingthecontentsofthe
PreliminaryMarineOperationManual,Customershall,nolaterthanfifteen(15)daysfromdeliveryofsaidmanualby
FLNG,requesttomeetwithFLNGbyprovidingnoticethereoftoFLNG,andFLNGshall,nolaterthanthirty(30)
daysafterreceiptofsuchnotice,meetwithCustomertodiscusssaidmanual.If(a)Customerdoesnotsubmitthe
foregoingnoticetoFLNGonatimelybasisor(b)CustomerandFLNGmeetpursuanttosuchanoticeandareable
duringsuchmeetingtoagreeuponrevisionstothedraft,thensuchdraft,assorevised(andasamendedfromtimeto
time)shallconstitutetheFreeportFacilityMarineOperationsManual.IfCustomerandFLNGmeetpursuantto
theforegoingnoticeandareunableduringsuchmeetingtoagreeuponrevisionstothePreliminaryMarine
OperationsManual,thenFLNGshalldetermine,whileusingitsreasonableeffortstoaccommodateCustomersviews,
theFreeportFacilityMarineOperationsManual.IntheeventFLNGintendstoamendtheFreeportFacilityMarine
OperationsManual,thenFLNGshallfollowtheproceduresetforthaboveinrelationtothePreliminaryMarine
OperationsManual.FLNGshalldelivertoCustomerandallOtherCustomersacopyoftheFreeportFacilityMarine
OperationsManualandanyamendmentstheretopromptlyaftertheyhavebeenfinalizedoramended,asthecasemay
be.ThePartiesshallcomplywiththeFreeportFacilityMarineOperationsManualinallmaterialrespects.FLNGwill
undertaketodevelopaFreeportFacilityMarineOperationsManualthatisconsistentwiththisAgreementhowever,
intheeventofaconflictbetweenthetermsofthisAgreementandtheFreeportFacilityMarineOperationsManual,
thetermsofthisAgreementshallcontrol.
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9.3
LNGVesselInspectionsRighttoRejectLNGVessel
(a)
Inspections.DuringtheTerm,onpriorreasonablenoticetoCustomer,FLNGmay,atitssolerisk,sendits
representatives(includinganindependentinternationallyrecognizedmaritimeconsultant)toinspectduring
normalworkinghoursanyLNGVesselasFLNGmayconsidernecessarytoascertainwhethertheLNGVessel
complieswiththeprovisionsofthisAgreement.FLNGshallbearthecostsandexpensesinconnectionwith
anyinspectionconductedhereunder.Anysuchinspectionmayinclude,asfarasispracticablehavingregard
totheLNGVesselsoperationalschedule,examinationoftheLNGVesselshull,cargoandballasttanks,
machinery,boilers,auxiliariesandequipmentexaminationoftheLNGVesselsdeckandenginescrap/rough
andfaircopy/officiallogbooksreviewofrecordsofsurveysbytheLNGVesselsclassificationsocietyand
relevantGovernmentalAuthoritiesandreviewoftheLNGVesselsoperatingproceduresandperformanceof
surveys,bothinportandatsea.AnyinspectioncarriedoutpursuanttothisSection9.3(a):(i)shallnot
interferewith,orhinder,anyLNGVesselssafeandefficientconstructionoroperationand(ii)shallnot
entitleFLNGoranyofitsrepresentativestomakeanyrequestorrecommendationdirectlytoTransporter
exceptthroughCustomer.Noinspection(orlackthereof)ofanLNGVesselhereundershall(i)modifyor
amendCustomersobligations,representations,warrantiesandcovenantsunderthisAgreementorunderany
agreementorinstrumentcontemplatedbythisAgreementor(ii)constituteanacceptanceorwaiverbyFLNG
ofCustomersobligationsunderthisAgreement.
(b)
RighttoRejectLNGVessel.Withoutprejudicetoanyotherrightsandremediesarisinghereunderorbylaw
orotherwise,FLNGshallhavetherighttorejectanyLNGVesselthatCustomerintendstousetodeliverLNG
totheFreeportFacilityifsuchLNGVesseldoesnotcomplymateriallywiththeprovisionsofthisAgreement,
providedthat:
(i)
neithertheexercisenorthenonexerciseofsuchrightshallreducetheresponsibilityofCustomerto
FLNGinrespectofsuchvesselandheroperation,norincreaseFLNGsresponsibilitiestoCustomeror
thirdpartiesforthesameand
(ii)
CustomersobligationsunderthisAgreementshallnotbeexcusedorsuspendedbyreasonof
Customersinability(pursuanttotheforegoing)touseavesselasanLNGVessel.
9.4
AdvanceNoticesRegardingLNGVesselandCargoes
(a)
ChangesinExpectedReceiptQuantity.If,subsequenttoissuingthenoticerequiredunderSection5.1(b)(ii)
herein,CustomerhasreasontoforeseeachangeintheExpectedReceiptQuantityforaparticularArrival
Date,CustomershallpromptlyprovidenoticethereoftoFLNGandincludeinsuchnoticeCustomersnew
estimateoftheExpectedReceiptQuantity.TotheextentsuchnewestimateincreasestheExpectedReceipt
Quantitycontainedinanypriornoticeforthat
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ScheduledUnloadingWindow,FLNGshallusereasonableendeavorstoacceptsuchlargerquantitybutshall
atalltimesretaintherightnottoacceptsuchincreaseif,initsSoleOpinion,suchnewestimatewillresultin
excessinventoryattheFreeportFacility.
(b)
LNGVesselNomination.Assoonaspossiblebutnolaterthanfive(5)dayspriortothescheduledloading
dateforaCargo,CustomershallnotifyFLNGoftheinformationspecifiedbelow:
(i)
nameofLNGVesseland,inreasonabledetail,theage,dimensions,specifications,operator,safety
record,andconditionofsuchLNGVessel
(ii)
nameofLoadingPort
(iii)
expecteddeparturedateofLNGVesselfromLoadingPort
(iv)
estimatedarrivaldateattheFreeportFacilityand
(v)
anychangesintheExpectedReceiptQuantitysinceCustomerspriornotice.
IntheeventCustomerhasareasontoforeseeachangeintheinformationspecifiedabove,Customershall
promptlyprovidenoticethereoftoFLNG.Moreover,ifthevesselthatCustomerproposestouseasanLNG
Vesselhasnot,withintheimmediatelyprecedingContractYear,deliveredLNGtotheFreeportFacility,
CustomershallendeavortonotifyFLNGthereofassoonaspossiblebutinnoeventlaterthantwenty(20)
dayspriortothefirstdayoftheapplicableScheduledUnloadingWindow.
(c)
LNGVesselMovements.WithrespecttoeachCargoofLNGtobedeliveredhereunder,Customershallgive,
orcausetheMasteroftheLNGVesseltogive,toFLNGthefollowingnotices:
(i)
Afirstnotice(FirstNotice),whichshallbesentuponthedepartureoftheLNGVesselfromthe
LoadingPortandwhichshallsetforththetimeanddatethatloadingwascompleted,thevolume
(expressedinCubicMeters)ofLNGloadedonboardtheLNGVessel,theestimatedtimeofarrivalof
theLNGVesselattheArrivalLocation(ETA),andanyoperationaldeficienciesintheLNGVessel
thatmayaffectitsperformanceattheFreeportFacilityorberth
(ii)
Asecondnotice(SecondNotice),whichshallbesentninetysix(96)hourspriortotheETAset
forthintheFirstNotice,statingtheLNGVesselsthenETA.If,thereafter,suchETAchangesbymore
thansix(6)hours,Customershallgivepromptly,orcausetheMasteroftheLNGVesseltogive
promptly,toFLNGnoticeofthecorrectedETA
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(iii)
Athirdnotice(ThirdNotice),whichshallbesenttwentyfour(24)hourspriortotheETAsetforth
intheSecondNotice(ascorrected),confirmingoramendingsuchETA.If,thereafter,suchETA
changesbymorethanthree(3)hours,Customershallgivepromptly,orcausetheMasteroftheLNG
Vesseltogivepromptly,toFLNGnoticeofthecorrectedETA
(iv)
Afourthnotice(FinalNotice),whichshallbesenttwelve(12)hourspriortotheETAsetforthin
theThirdNotice(ascorrected),confirmingoramendingsuchETA.If,thereafter,suchETAchangesby
morethanone(1)hour,Customershallgivepromptly,orcausetheMasteroftheLNGVesseltogive
promptly,toFLNGnoticeofthecorrectedETAand
(v)
AnNOR,whichshallbegivenatthetimeprescribedinSection9.5below.
(d)
(e)
9.5
CharacteristicsofCargoes.WiththeFirstNotice,CustomershallnotifyFLNG,orcauseFLNGtobenotified,
forFLNGsinformationonly,ofthefollowingcharacteristicsoftheLNGcomprisingitsCargoasdetermined
atthetimeofloading:
(i)
GrossHeatingValueperunit
(ii)
molecularpercentageofhydrocarboncomponentsandnitrogen
(iii)
averagetemperatureand
(iv)
densityatloading.
RighttoRejectCertainQuantities.Withoutprejudicetoanyotherrightsandremediesarisinghereunderor
bylaworotherwise,FLNGshallforanyreason(includinglimitationsinLNGStorage)havetherighttoreject
unloadingofthatquantityofLNGonboardanLNGVesselthatexceedsbymorethanfivepercent(5%)the
ExpectedReceiptQuantityforsuchCargoasspecifiedin,whicheverapplicable,(i)thenoticedelivered
pursuanttoSection5.1(b)(ii)andutilizedbyFLNGforthepurposesofdeterminingtheCustomerLNG
ReceiptScheduleor(ii)anysubsequentnoticedeliveredpursuanttoSection9.4(a)andacceptedbyFLNG.
NoticeofReadiness
(a)
Issuance.Subjecttoanyapplicablerestrictions,includinganynighttimetransitrestrictionsimposedby
GovernmentalAuthoritiesorPilotsoranyotherreasonabletimingrestrictionsimposedbyFLNG,theMaster
ofanLNGVesseloritsagentshallgivetoFLNGitsNORtounload(berthornoberth)uponarrivalofsuch
LNGVesselatthespecificlocationofftheFreeportFacilitydesignatedforsuchpurposesintheFreeport
FacilityMarineOperationsManual(suchlocationreferredtoastheArrivalLocation).
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(b)
Effectiveness.AnNORgivenunderSection9.5(a)shallbecomeeffectiveasfollows:
(i)
ForanLNGVesselarrivingattheArrivalLocationatanytimebefore6:00a.m.,CentralTimeonthe
firstdayoftheScheduledUnloadingWindowallocatedtosuchLNGVessel,anNORshallbedeemed
effectiveattheearlierof(x)6:00a.m.,CentralTimeonthefirstdayofsuchScheduledUnloading
Windowor(y)thetimeunloadingcommences
(ii)
ForanLNGVesselarrivingattheArrivalLocationatanytimebetweentheperiodof6:00a.m.,
CentralTimeonthefirstdayoftheScheduledUnloadingWindowallocatedtosuchLNGVesseland
two(2)hoursbeforesunset,CentralTimeontheseconddayofsuchScheduledUnloadingWindow
(suchperiodreferredtoastheNORWindow),anNORshallbecomeeffectiveatthetimeofits
issuanceor
(iii)
ForanLNGVesselarrivingattheArrivalLocationatanytimeaftertheexpirationoftheNOR
Window,anNORshallbecomeeffectiveuponFLNGsnoticetotheLNGVesselthatitisreadyto
receivetheLNGVesselatberth.
9.6
BerthingAssignment
(a)
GeneralRule.FLNGshalldeterminetheberthingsequenceofallLNGVesselsandothervesselsatthe
FreeportFacilityinordertoensurecompliancewiththeCustomerLNGReceiptScheduleandtheOther
CustomerLNGReceiptSchedules.IfanLNGVesselarrivesnotreadytounloadforanyreason,FLNGmay
refusetoallowittoberth.
(b)
TimelyArrival.FLNGshallberthanLNGVesselarrivingbeforeorduringitsNORWindowatthefirst
opportunitythatFLNGdeterminessuchLNGVesselwillnotinterferewithunloadingbyanyotherscheduled
vessel.SubjecttoSection9.6(c),FLNGshallnotbeobligatedtoberthanLNGVesselarrivinglaterthantwo
(2)hourspriortosunsetattheFreeportFacilityontheseconddayoftheScheduledUnloadingWindow
allocatedtosuchLNGVessel(hereinafterreferredtoastheBerthingDeadline).Fortheavoidanceof
doubt,ifFLNGdoesnotberthsuchLNGVesselbytheBerthingDeadline,Customerssolerecourseand
remedyforFLNGsbreachthereofisdemurragepursuanttoSection9.7(c)andexcessboiloffpursuantto
Section9.7(d).IfberthingServicesareunavailabletoCustomerandallOtherCustomers,thensuch
unavailabilityshallbeaServicesUnavailabilityunderSection4.3asopposedtoafailuretomeetthe
BerthingDeadlineunderthisSection9.6(b).
(c)
LateArrival.FLNGshallberthanLNGVesselarrivingafteritsNORWindowatthefirstopportunitythat
FLNGreasonablydeterminessuchLNGVesselwillnotinterferewithunloadingbyanyscheduledvessel.
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9.7
UnloadingTime
(a)
AllottedUnloadingTime.TheallottedunloadingtimeforeachLNGVessel(AllottedUnloadingTime)
shallbethirtysix(36)hours,subjecttoextensionsfor:
(i)
reasonsattributabletoCustomer,aPilot,aGovernmentalAuthority,theLNGVesseloritsMaster,
crew,owneroroperator
(ii)
AdverseWeatherConditions
(iii)
ForceMajeure
(iv)
unscheduledcurtailmentortemporarydiscontinuationofoperationsattheFreeportFacilityin
accordancewithSection18.2
(v)
occupancyoftheberthbyanLNGvesselthatarrivedatberthattheFreeportFacilitynolaterthan
two(2)hourspriortosunsetontheseconddayoftheScheduledUnloadingWindowallocatedto
suchvessel,whichshallresultinanextensionofnomorethannine(9)hours
(vi)
failuretosendtheFinalNoticeand
(vii)
nighttimetransitrestrictions.
(b)
ActualUnloadingTime.TheactualunloadingtimeforeachLNGVessel(ActualUnloadingTime)shall
commencewhentheNORiseffectiveunderSection9.5(a)andshallendwhentheunloadingandreturnlines
oftheLNGVesselaredisconnectedfromtheFreeportFacilitysunloadingandreturnlines.
(c)
DemurrageattheFreeportFacility.
(i)
IntheeventActualUnloadingTimeexceedsAllottedUnloadingTime(includinganyextensionin
accordancewithSection9.7(a))(DemurrageEvent),FLNGshallpaytoCustomerasliquidated
damagesdemurrageinUnitedStatesdollars(whichshallbeproratedforaportionofaday)
determinedinaccordancewiththeratesetoutinthefollowingtable:
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DemurrageRate
in$/day
LNGVesselCargoCapacity
Lessthan120,000CubicMeters
(ii)
(d)
9.8
9.9
120,000CubicMetersorgreaterup
to,butnotincluding,160,000
Cubic
Meters
***
160,000CubicMetersorgreaterup
to,butnotincluding,200,000
Cubic
Meters
***
200,000CubicMetersorgreater
***
IfaDemurrageEventoccurs,CustomershallinvoiceFLNGforsuchdemurragepursuanttoSection
12.2.
ExcessBoilOff.IfanLNGVesselisdelayedincommencementofunloadingduetoaneventoccurringatthe
FreeportFacilityandforareasonthatwouldnotresultinanextensionofAllottedUnloadingTimeunder
Section9.7(a),andif,asaresultthereof,thecommencementofunloadingisdelayedbeyond***afterthe
NoticeofReadinessiseffective,then,foreachfullhourbywhichcommencementofunloadingisdelayed
beyondsuch***period,FLNGshallpayCustomerasliquidateddamagesanamount,onaccountofexcess
boiloff,equaltotheHenryHubPricemultipliedbythequantityinMMBTUsequalto***oftheCargoper
day.CustomershallinvoiceFLNGforsuchexcessboiloffpursuanttoSection12.2.
UnloadingattheFreeportFacility
(a)
Efficiency.FLNGshallcooperatewithTransporters(ortheiragents)andwiththeMasterofeachLNGVessel
tofacilitatethecontinuousandefficientdeliveryofLNGhereunder.
(b)
VaporReturnLine.DuringunloadingofeachCargoofLNG,FLNGshallreturntotheLNGVesselGasinsuch
quantitiesasarenecessaryforthesafeunloadingoftheLNGatsuchrates,pressuresandtemperaturesasmay
berequiredbythedesignoftheLNGVessel,andsuchreturnedGasshallnotbedeemedtobevolume
unloadedforCustomersaccount.
Ratetobeestablishedby
agreementoftheParties
LNGVesselNotReadyforUnloadingExcessBerthTime
(a)
VesselNotReadyforUnloading.IfanyLNGVessel,previouslybelievedtobereadyforunloading,is
determinedtobenotreadyafterbeingberthed,FLNGmaydirecttheLNGVesselsMastertovacatetheberth
andproceedtoanchorage,whetherornototherLNGvesselsareawaitingtheberth,unlessitappears
reasonablycertaintoFLNGthatsuchLNGVesselcanbemadereadywithout
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disruptingtheoverallunloadingscheduleoftheFreeportFacilityoroperationsoftheFreeportFacility.
WhenanunreadyLNGVesselatanchoragebecomesreadyforunloading,itsMastershallnotifyFLNG.Upon
thereberthingofanyLNGVesselvacatedpursuanttothisSection9.9(a),Customershallberesponsiblefor
anyactualcostsincurredbyFLNGactingasaReasonableandPrudentOperatorasaresultofsuchLNG
Vesselnotbeingreadyforunloading,withFLNGusingreasonableeffortstominimizesuchcosts.
(b)
BerthLimitations.
(i)
AnLNGVesselshallcompleteunloadingandvacatetheberthassoonaspossiblebutnotlaterthan
thefollowingallowedberthtime:
a.
twentyfour(24)hours,inthecaseofanLNGVesselwithanLNGcargocontainment
capacitylessthanorequaltoonehundredfortythousand(140,000)CubicMetersor
b.
inaccordancewiththefollowingformula,inthecaseofanLNGVesselwithanLNGcargo
containmentcapacitygreaterthanonehundredfortythousand(140,000)CubicMeters:
24
+x=allowedberthtime(inhours)
y=
theLNGcargocontainmentcapacityoftheLNGVesselinexcessof140,000
CubicMetersand
x=
y/10,000CubicMeters.
where:
Notwithstandingtheforegoing,theaforementionedtimerestrictionsshallbeextendedfor:(a)reasons
attributabletoFLNG(b)reasonsattributabletoaPilotortoaGovernmentalAuthority(c)Adverse
WeatherConditions(d)ForceMajeureand(e)nighttimetransitrestrictions.
(ii)
IfanLNGVesselfailstodepartattheendofitsallowedberthtime,FLNGmaydirecttheLNGVessel
tovacatetheberthandproceedtoseaatutmostdispatch.
(iii)
IfanLNGVesselfailstovacatetheberthafterexpirationofitsallowedberthtimeafterreceiptof
FLNGsnoticetodosounderthisSection9.9,CustomershallreimburseFLNGforanyandall
reasonableandactualdamagesitsincursasaresultthereof,includingamountsFLNGbecomes
contractuallyobligatedtopayasdemurragetoanyoftheOtherCustomersortopayanyOther
Customerforexcessboiloff.
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(iv)
SubjecttothisSection9.9,intheeventanLNGVesselfailstovacatetheberthandCustomerisnot
takingactionstocauseittovacatetheberth,FLNGmayeffectsuchremovalattheexpenseofthe
Customer.
ARTICLE10
RECEIPTOFLNG
10.1
Title,CustodyandRiskofLoss
(a)
TitletoCustomersInventory.SubjecttoSection3.4,titlewithrespecttoCustomersInventoryshallremain
withCustomerevenduringperiodswhenitisinthepossessionandcontrolofFLNG(includingwhileheldat
aGasStorageFacilityandasprovidedinSection10.5).Fortheavoidanceofdoubt,titleandriskoflosswith
respecttoRetainageshallpasstoFLNGattheReceiptPoint.
(b)
Possession,RiskofLossandControl.Possession,riskoflossandcontrolofCustomersLNGshallpassfrom
CustomertoFLNGupondeliveryofsameattheReceiptPoint.Possession,riskoflossandcontrolof
CustomersInventoryshallpassfromFLNGtoCustomerupondeliveryofsameattheDeliveryPoint.
10.2
NoEncumbrance
(a)
CustomersCovenants.CustomerwarrantstoFLNGthat(i)CustomerhastitletoallofCustomersInventory,
otherthantotheTemporaryReleaseInventoryand(i)therelevantTemporaryCustomerhastitletoallofthe
TemporaryReleaseInventory.CustomercovenantsthatCustomersInventoryshallremainfreeofall
encumbrancesandLiabilitiestherefor,andthatnocircumstanceswillexistwhichcouldgiverisetoany
Liabilitiesorencumbrancesrelatingthereto(collectively,Claims)otherthanthosethatmaybecausedby
actsoromissionsofFLNGorOtherCustomers.Customeragreestofullydefend,indemnifyandholdFLNG
anditsAffiliatesharmlessagainstallClaimsregardingCustomersInventory,includingClaimsbroughtby
OtherCustomers,otherthananyClaimscausedbyactsoromissionsofFLNGorOtherCustomers.For
purposesofSection10.2,thetermencumbranceshallincludeanymortgage,pledge,lien,charge,adverse
claim,proprietaryright,assignmentbywayofsecurity,securityinterest,titleretention,preferentialrightor
trustarrangementoranyothersecurityagreementorarrangementhavingtheeffectofsecurity.
(b)
FLNGsCovenants.FLNGcovenantsthatithastherighttodelivertoCustomerattheDeliveryPointallGas
heldforCustomersaccountfreefromallClaimsrelatingthereto.FLNGcovenantsthatCustomersInventory,
whileinFLNGspossessionorcontrol,shallremainfreeofallClaims,otherthanthosethatmaybecausedby
Customersactsoromissions.FLNGalsocovenantsthatthenetproceedsresultingfromanysaleof
CustomersInventoryunderSection3.4shallremainfreeofallClaims,otherthanthosethatmaybecaused
byCustomersactsoromissions.FLNGagreestofullydefend,indemnifyandholdCustomerandits
AffiliatesharmlessfromandagainstallClaimsregardingCustomersInventoryorsuchnetproceeds,other
thanClaimscausedbytheactsoromissionsofCustomer.
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10.3
10.4
ReceiptofLNG
ThereceiptofLNGfromanLNGVesselattheReceiptPointshallbecarriedoutbyuseofpumpsandotherequipment
ontheLNGVesselundersuchreasonableandcustomaryconditionsspecifiedintheFreeportFacilityMarine
OperationsManualprovidedthatsuchreasonableandcustomaryconditionsforthereceiptofLNGspecifiedinthe
FreeportFacilityMarineOperationsManualshallnot(a)exceedthespecificationsoftheLNGVessel,providedthat
suchspecificationsmeettherequirementsofthisAgreementor(b)violatetherequirementsofaGovernmental
AuthorityhavingjurisdictionovertheLNGVessel.
QualityandMeasurementofCustomersLNG
CustomersLNGshallbemeasuredandtestedinaccordancewithAnnexI.CustomershallensurethatallLNG
deliveredattheReceiptPointforCustomersaccountshallconformtothefollowingspecifications:
(a)
GrossHeatingValue.
(i)
LNGwhendeliveredbyCustomertoFLNGshallhave,inagaseousstate,aGrossHeatingValueof
notlessthan950BTUperStandardCubicFootandnotmorethan***BTUperStandardCubicFoot.
(ii)
IftheGrossHeatingValueofLNGtobedeliveredhereunderishigherthanthelimitssetforthin
Section10.4(a)(i)byreasonofboiloffoccurringduringadelay(otherthanadelaywhichextends
AllottedUnloadingTimeunderSection9.7(a))causedbyFLNGinunloadinganLNGVesselofmore
thanthirty(30)hoursafterNORbecomeseffective,suchLNGshallbedeemedtohavemetthequality
specificationsofthisAgreementregardingGrossHeatingValue.
(b)
Components.
(i)
AttheReceiptPoint,theLNGdeliveredbyCustomertoFLNGshall,wheninagaseousstate,contain
notlessthaneightysix(86)molecularpercentage(86MOL%)ofmethane(C1)and,forthe
componentsandsubstanceslistedbelow,suchLNGshallnotcontainmorethanthefollowing:
a.
Nitrogen(N2),0.5MOL%
b.
Ethane(C2),11MOL%
c.
Propane(C3),3.5MOL%
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(ii)
10.5
Butanes(C4)andheavier,2MOL%
e.
Pentanes(C5)andheavier,.09MOL%
f.
Hydrogensulfide(H2S),.25grainsper100StandardCubicFeet(.25grains/100SCF)and
g.
Totalsulfurcontent,5grainsper100StandardCubicFeet(5grains/100SCF).
TheLNGwhendeliveredbyCustomertoFLNGshallcontainnowater,mercury,activebacteriaor
bacterialagents(includingsulfatereducingbacteriaoracidproducingbacteria)andother
contaminantsorextraneousmaterial.
(a)
RefusalofOffSpecLNG.WithoutprejudicetoanyotherrightsandremediesofFLNGhereunder,subjectto
Section10.5(b),FLNGmayrefusetotakedeliveryofallorpartofanyLNGnotconformingtothequality
specificationssetforthinSection10.4(OffSpecLNG).However,ifFLNGrefusestotakedeliveryofLNG
andsuchLNGissubsequentlydeterminednottohavebeenOffSpecLNG,thenFLNGshallpayall
LiabilitiesincurredbyCustomerasaresultofFLNGsrefusal,withCustomerusingreasonableeffortsto
minimizesuchLiabilities.
(b)
Notice.CustomershallprovidenoticetoFLNGassoonasreasonablypracticableofanyexistingor
anticipatedfailureoftheLNGavailablefordeliverytoFLNGhereundertoconformtothequality
specificationssetforthinSection10.4,givingdetailsofthenatureandexpectedmagnitudeofthevariance,
thecauseofthenoncomplianceandtheprobabledurationthereof,includingtheCargoesandScheduled
UnloadingWindowstobeaffectedthereby.Ifsonotified,FLNGshallassoonaspossibleinformCustomer
whetheritintendstorejectanyofsuchOffSpecLNG.IfFLNGisnotifiedbyCustomerpriortothe
commencementofunloadingofaCargoattheFreeportFacilitythattheLNGisOffSpecLNGandthe
quantityisdeliveredtotheFreeportFacility,FLNGshallusereasonableendeavorstotakedeliveryofany
Cargoeswhichitwouldotherwisebeentitledtorejectprovided,howeverthatFLNGshallbeentitledto
delayunloadingofOffSpecLNGfortheperiodoftimereasonablyrequiredforFLNGtodeterminewhetherit
cantakedeliveryofsuchOffSpecLNGpursuanttothisSection10.5(b).SubjecttoFLNGfirstusingits
reasonableendeavorstotakedeliveryofanyCargoescontainingOffSpecLNG,FLNGshall:
(i)
notifyCustomerthatFLNGwilltakedeliveryofsomeoralloftheaffectedCargoes,without
prejudicetoFLNGsrightsandremedieswithrespecttosuchOffSpecLNGotherthanFLNGsright
torejectsaidCargoor
(ii)
rejectalloranyoftheaffectedCargoes.
OffSpecificationLNG
d.
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UnlessFLNGwasnotifiedbyCustomerofOffSpecLNG,FLNGshallprovidenoticetoCustomerassoonas
reasonablypracticableofanyOffSpecLNG,givingdetailsofthenatureandexpectedmagnitudeofthe
varianceandtheaffectedCargo.
10.6
CustomersResponsibilityandReimbursement
(a)
NoContinuingWaiver.AcceptanceofOffSpecLNGshallnotpreventFLNGfromrefusingfuturedeliveries
ofOffSpecLNG.NowaiverbyFLNGofanydefaultbyCustomerofanyofthespecificationssetforthinthis
Article10shalleveroperateasacontinuingwaiverofsuchspecificationorasawaiverofanysubsequent
default,whetherofalikeordifferentcharacter.
(b)
DeliveryofaCargoofOffSpecLNG.IfFLNGacceptsdeliveryofaCargoofOffSpecLNGwhichitwould
otherwisebeentitledtoreject,Customershall:
(i)
bearthefinancialresponsibilityforallreasonableandactualincrementalcosts(otherthancapital
costs)andLiabilitiesincurredbyFLNGoranyofFLNGsAffiliates,ineachcaseactingasa
ReasonableandPrudentOperator,inconnectionwithreceivingandtreatingOffSpecLNGbysuch
meansasareappropriate,includingmixingsuchOffSpecLNGwithlowercalorificvalueGasor
injectingnitrogen,withFLNGusingreasonableeffortstominimizesuchcostsand
(ii)
indemnifyandholdharmlessFLNG,itsAffiliatesandtheirrespectivedirectors,officersand
employeesfromanyandallLiabilities,includinganyofsameattributabletoclaimsofanyPerson
(includingTemporaryCustomers)andanyOtherCustomers,whichariseoutof,areincidenttoor
resultfromtheacceptance,handling,disposaloruseofOffSpecLNG.
(c)
10.7
ExtendedDeliveryofOffSpecLNG.If(i)CustomernotifiesFLNGpursuanttoSection10.5(b)ofan
anticipateddeliveryoftwo(2)ormoreCargoesofOffSpecLNGand(ii)thePartiesagreeforFLNGtoincur
incrementalcapitalcostsinordertoacceptdeliveryofsuchCargoes,thenCustomershall,inadditiontoits
paymentandindemnificationobligationsunderSection10.6(b),bearthefinancialresponsibilityforand
directlyfund,atFLNGselection,allsuchincrementalcapitalcosts.
SubsequentDeliveries
UnlessotherwiserequestedbyCustomer,anyquantitiesofLNGwhichwere,undertheCustomerLNGReceipt
Schedule,scheduledtobeunloadedduringtheContractYearbutwereactuallyunloadedattheFreeportFacility
withinthefirst***(***)daysinthefollowingContractYearshallbe,forthepurposesoftheMaximumLNG
ReceptionQuantity,deemedtohavebeenreceivedbyFLNGintheContractYearinwhichsuchquantitieswere
originallyscheduledtobeunloaded.
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ARTICLE11
REDELIVERYOFGAS
11.1
General
(a)
DeliveryPoint.SubjecttoSection3.3(a),thevolumeofGasnominatedbyCustomerforanydaypursuantto
Section5.2shallbedeliveredattheDeliveryPoint.
(b)
CommingledStream.CustomeracknowledgesandagreesthatCustomersInventoryshallbedeliveredby
FLNGinacommingledstream,includingthatcombinedwithLNGreceivedbyFLNGfromTemporary
CustomersandanyOtherCustomers.CustomerfurthersacknowledgesandagreesthatCustomershallhave
norighttoreceiveGasofthesamequalityasCustomersLNG,providedthatthespecificationsofthe
commingledGasstreamattheDeliveryPointsatisfytherequirementssetforthinSection11.3.
(c)
Odorization.FLNGwilldeliverCustomersInventoryattheDeliveryPointinitsnaturalstatewithoutthe
additionofanyodorizingagent,andFLNGshallnotbeobligatedtoaddodorizingagentstoanyGasunless
requiredtodosobyaGovernmentalAuthority.FLNGdoesnotassumeanyresponsibilityforLiabilitiesby
reasonofthefactthatithasnotodorizedCustomersInventorypriortoitsdeliverytoCustomer.
11.2
CustomersResponsibility
(a)
DownstreamArrangements.CustomershallarrangeforthepurchaseandtransportationofGasbyDownstream
PipelinesinordertomeetitsobligationstotakeredeliveryofGasinaccordancewiththeprovisionsof
Section3.4attheratesnominatedpursuanttoArticle5.Customershallbesolelyresponsibleformakingall
necessaryarrangementswiththirdpartiesatordownstreamoftheDeliveryPointtoenableFLNGtodeliver
GastoDownstreamPipelinesonatimelybasispursuanttothetermsandconditionsofthisAgreement.
Customershallalsobesolelyresponsibleforensuringthatallsucharrangementsareconsistentwiththeterms
andconditionsofthisAgreementandshallrequireallrelevantthirdpartiestoconfirmtoFLNGallof
CustomersnominationsandschedulingofdeliveriesofGas,suchconfirmationtobebytelephone,
electronictransmission,orothermeansacceptabletoFLNG.Suchthirdpartyarrangementsshallbetimely
communicatedto,andcoordinatedwith,FLNG,andFLNGshallhavenoliabilitywhatsoeverforanyfailure
ofanysuchthirdpartytoprovidedownstreamarrangements.ThemannerinwhichCustomersInventoryis
transportedfromorpurchasedattheDeliveryPointshallbesubjecttotherules,guidelines,andpoliciesof
theDownstreamPipelinetransportingorpurchasinganysuchGas(asmaybechangedfromtimetotimeby
theDownstreamPipeline).CustomerandFLNGrecognizethatthereceiptanddeliveryontheDownstream
PipelinesfacilitiesofGasshallbesubjecttotheoperationalproceduresofsuchDownstreamPipeline.
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(b)
ImbalanceCharges.IntheeventaDownstreamPipelineimposesschedulingfees,imbalancecharges,cashout
costsorsimilarcosts,feesordamagesforimbalancesassociatedwithCustomersGas(Imbalance
Charges),CustomershallbeobligatedtouseitsreasonableeffortstoavoidimpositionofsuchImbalance
Charges.CustomershallindemnifyandholdharmlessFLNG,itsAffiliatesandtheirrespectivedirectors,
officersandemployeesfromallLiabilitiesarisingoutof,incidenttoorresultingfromanyImbalanceCharge
directlyresultingfromCustomersactsoromissions.FLNGshallindemnifyandholdharmlessCustomer,its
Affiliatesandtheirrespectivedirectors,officersandemployeesfromallLiabilitiesarisingoutof,incidentto
orresultingfromanyImbalanceChargedirectlyresultingfromFLNGsactsoromissions.FLNGwilluse
reasonableeffortstominimizeanyImbalanceChargesandwillnotifyCustomerofanyImbalanceCharges
includedinorimposedbyanyoperationalbalancingagreement.
(c)
Limitation.CustomershallensurethatitsGastransportationandsalesarrangementsareincompliancewith
allapplicablelawsandregulations.Inthisregard,Customeragreesthatitshalltransport,orcausetobe
transported,CustomersInventoryonlyintointrastateGaspipelinesorstoragefacilitiesunlessotherwise
approvedbyGovernmentalAuthorities.
11.3
SpecificationsandMeasurementofGasattheDeliveryPoint
GasdeliveredtoCustomerattheDeliveryPointshallbemeasuredandtestedinaccordancewithAnnexII.FLNG
shallensurethatallGasdeliveredattheDeliveryPointforCustomersaccountshallconformtothefollowing
specifications:
(a)
GrossHeatingValue.GaswhendeliveredbyFLNGtoCustomershallhaveaGrossHeatingValueofnotless
than950BTUperStandardCubicFootandnotmorethan1150BTUperStandardCubicFoot.
(b)
Components.
(i)
AttheDeliveryPoint,GasdeliveredbyFLNGtoCustomershallcontainnotlessthaneightysix(86)
molecularpercentage(86MOL%)ofmethane(C1)and,forthecomponentsandsubstanceslisted
below,suchGasshallnotcontainmorethanthefollowing:
a.
Nitrogen(N2)three(3)MOL%
b.
Pentanes(C5)andheavier,0.1MOL%
c.
Hydrogensulfide(H2S),.25grainsper100StandardCubicFeet(.25grains/100SCF)
d.
Totalsulfurcontent,5grainsper100StandardCubicFeet(5grains/100SCF)
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(ii)
(c)
11.4
Oxygen(O2),ten(10)partspermillion
f.
Carbondioxide(CO2),two(2)MOL%and
g.
Water(H2O),seven(7)poundsperonemillion(1,000,000)cubicfeet.
GaswhendeliveredbyFLNGtoCustomershallcontainnomercury,activebacteriaorbacterial
agents(includingsulfatereducingbacteriaoracidproducingbacteria)andothercontaminantsor
extraneousmaterial.
GasDeliveryPressure.CustomersInventoryshallbedeliveredattheDeliveryPointatanadequatepipeline
pressure.Inthisregard,FLNGshallprovideGasatanadequatepressure(nottoexceed1250psig)intothe
FreeportFacilityPipelineinordertodeliverGasattheDeliveryPoint.
NonconformingGas
(a)
RighttoReject.WithoutprejudicetoanyotherrightsandremediesofCustomerhereunder,Customershall
havetherighttorejectGasthatdoesnotconformtothespecificationssetforthinSection11.3
(NonconformingGas)providedthatCustomershallfirstusereasonableendeavorstotakedeliveryofany
NonconformingGaswhichitwouldotherwisebeentitledtoreject.
(b)
FLNGIndemnity.IfCustomeracceptsdeliveryofNonconformingGaswhichitwouldotherwisebeentitled
toreject,FLNGshallindemnifyandholdharmlessCustomer,itsAffiliatesandtheirrespectivedirectors,
officersandemployeesfromanyandallLiabilities,includinganyofsameattributabletoclaimsofany
Person(includingOtherCustomers,aDownstreamPipeline,aDownstreamPurchaserandTemporary
Customers),whichariseoutof,areincidenttoorresultfromtheacceptance,handling,disposaloruseof
NonconformingGas.IfCustomeracceptsdeliveryofNonconformingGaswhichitwouldotherwisebe
entitledtoreject,FLNGshallbearthefinancialresponsibilityforallreasonableandactualincrementalcosts
(otherthancapitalcosts)andLiabilitiesincurredbyCustomeroranyofCustomersAffiliates,ineachcase
actingasaReasonableandPrudentOperator,inconnectionwithacceptingdeliveryofNonconformingGas.
e.
ARTICLE12
PAYMENT
12.1
MonthlyStatements
Betweenthefirst(1 st)dayofeachmonthandthetenth(10th)dayofeachmonth,commencingwiththemonthafter
thebeginningofthePaymentPeriod,FLNGshalldelivertoCustomerastatementsettingforththefollowing:
(a)
theFixedFeeComponentoftheReservationFeeforthepriormonth
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12.2
12.3
12.4
theVariableFeeComponentoftheReservationFeeforthepriormonth
(c)
theIncrementalCosts,ifany,forthepriormonth
(d)
theExcessReceptionFee,ifany,forthepriormonth
(e)
anyadjustmentpursuanttoSection4.3and
(f)
anyadjustmentpursuanttoSection4.7(a),inOctoberofeachyear.
OtherStatements
IfanyotheramountisduefromonePartytotheotherhereunderandifprovisionfortheinvoicingofthatamountdue
isnotmadeelsewhereinthisArticle12,thenthePartytowhomsuchamountisdueshallfurnishastatementtherefor
totheotherParty,alongwithpertinentinformationshowingthebasisforthecalculationthereof.Uponrequest,the
PartywhoissuedastatementunderthisArticle12shallprovidereasonablesupportingdocumentationtosubstantiate
anyamountclaimedtobedue.
AllstatementsdeliveredbyFLNGtoCustomershallasmuchaspracticableaccountseparatelyfortheFeerelatedto
eachTemporaryReleasefromallotheramountsowedbyCustomer.FLNGshallreflecttheRetainagefortheprior
monthonanysuchstatement.
(b)
Adjustments
If,withintwo(2)yearsoftheissuanceofastatement,eitherPartyacquiresinformationindicatingthenecessityofan
adjustmenttosuchstatementrenderedhereunder,thenthePartyacquiringtheinformationshallpromptlyserveon
theotherPartyawrittennoticesettingforththatinformation.Unlessotherwiseprovidedherein,afterobtainingthat
information,thePartythatpreparedthepriorstatementwhichbyreasonofthatinformationmustbeadjusted,shall
promptlyprepareandserveontheotherPartyanadjustedstatement,showingthenecessarypayment,thecalculation
ofthepaymentamount,andthePartyfromwhomthepaymentisowing.
PaymentDueDates
(a)
DueDateforMonthlyStatement.EachmonthlystatementsubmittedpursuanttoSection12.1shallbecome
dueandpayableonthelaterof(i)ten(10)daysafterdeliverybyFLNGofsuchmonthlystatementor(ii)the
twentyfifth(25 th)dayofthemonthinwhichsuchmonthlystatementwasreceivedprovidedthatifsuchday
isnotaBusinessDay,itshallbecomedueandpayableonthenextBusinessDay.
(b)
DueDateforOtherStatements.EachstatementsubmittedpursuanttoSection12.2shallbecomedueand
payableonthethirtieth(30 th)dayafterthedateonwhichitisreceivedprovidedthatifsuchpaymentdue
dateisnotaBusinessDay,theduedateforsuchpaymentshallbeextendedtothenextBusinessDay.For
purposesofthisSection12.4(b),afacsimilecopyofaninvoiceshallbedeemedreceivedbyaPartyonthe
nextBusinessDayfollowingthedayonwhichitwassent.
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(c)
12.5
12.6
Interest.Ifthefullamountofanystatementisnotpaidwhendue,theunpaidamountthereofshallbear
interestattheBaseRate,compoundedannually,fromandincludingthedayfollowingtheduedateuptoand
includingthedatewhenpaymentismade.
Payment
EachPartyshallpay,orcausetobepaid,inUnitedStatesdollarsinimmediatelyavailablefunds,allamountsthat
becomedueandpayablebysuchPartypursuanttoanystatementissuedhereunder,toabankaccountoraccounts
designatedbyandinaccordancewithinstructionsissuedbytheotherPartyonthestatement.Eachpaymentofany
amountowingunderSection4.1(a)andeachpaymentofundisputedamounts(thedisputedportionofwhichis
addressedunderSection12.7)owingunderanyotherprovisionshereundershallbeinthefullamountduewithout
reductionoroffsetforanyreason(exceptasexpresslyallowedunderthisAgreement),includingTaxes,exchange
charges,orbanktransfercharges.Notwithstandingtheprecedingsentence,thepayingPartyshallnotberesponsible
foradesignatedbanksdisbursementofamountsremittedtosuchbank,andadepositinimmediatelyavailablefunds
ofthefullamountofeachstatementwithsuchbankshallconstitutefulldischargeandsatisfactionofthestatement.
Nonpayment
ThetermCumulativeDelinquencyAmountshallmean,withrespecttoaParty,thecumulativeamountowedthatis
notdisputedunderSection12.7,expressedinUnitedStatesdollars,thatisowedbythatPartytotheotherPartyunder
thisAgreementandispastdue.WithoutprejudicetoaPartysrightofoffset,ifaPartysfailuretopaywhenduean
amountowinghereundercausesitsCumulativeDelinquencyAmounttoexceed***,thenthePartytowhichsuch
amountisowedshallhavetheright,upongivingthirty(30)dayswrittennotice(suchnoticehereinafterreferredtoas
theDelinquencyNotice)totheowingParty,tosuspendperformanceofitsobligationsunderthisAgreementuntil
suchamount,withinterestinaccordancewithSection12.4(c),hasbeenpaidinfullprovided,however,that(a)no
suchsuspensionofaPartysobligationsunderthisSection12.6shallexcusetheowingPartyfromtheperformanceof
itsobligationshereunder,and(b)intheeventthatFLNGsuspendsperformanceunderthisSection12.6,Customer
shallcontinuetobeliablefortheFeepursuanttoArticle4.IfanysuchCumulativeDelinquencyAmounthasnot
beenpaidwithinsixty(60)daysaftertheissuanceoftheDelinquencyNotice,thenthePartytowhomsuchamountis
owedshallhavetheright,uponnotlessthanthirty(30)daysnoticetotheotherParty,toterminatethisAgreement
withoutthenecessityofanyfurtheraction,unlesswithinthatthirty(30)dayperiod,thePartytowhichsuchamount
isowedreceivespaymentsfromoronbehalfoftheowingPartyequaltotheCumulativeDelinquencyAmount.Any
suchterminationshallbewithoutprejudicetoanyotherrightsandremediesoftheterminatingPartyarising
hereunderorbylaworotherwise,includingtherightofsuchPartytoreceivepaymentinrespectofallobligations
andclaimsthataroseoraccruedpriortosuchterminationorbyreasonofsuchdefaultbytheowingParty.
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12.7
12.8
DisputedStatements
Intheeventofdisagreementconcerninganystatement,CustomerorFLNG(asthecasemaybe)shallmake
provisionalpaymentofthetotalamountowingunderSection4.1(a)andtheundisputedamountsundertheremaining
provisionshereofandshallimmediatelynotifytheotherPartyofthereasonsforsuchdisagreement.Statementsmay
becontestedbyCustomerorFLNG(asthecasemaybe)onlyif,withinaperiodoftwo(2)yearsafteraPartysreceipt
thereof,CustomerorFLNG(asthecasemaybe)servesontheotherPartynoticequestioningtheircorrectness.Ifno
suchnoticeisserved,statementsshallbedeemedcorrectandacceptedbybothParties.Promptlyafterresolutionof
anyDisputeastoastatement,theamountofanyoverpaymentorunderpayment(plusinterestasprovidedinSection
12.4(c))shallbepaidbyFLNGorCustomertotheother,asthecasemaybe.
FinalSettlement
Withinsixty(60)daysafterexpirationoftheTerm,FLNGandCustomershalldeterminetheamountofanyfinal
reconciliationpayment.Aftertheamountofthefinalsettlementhasbeendetermined,FLNGshallsendastatementto
Customer,orCustomershallsendastatementtoFLNG,asthecasemaybe,inUnitedStatesdollarsforamountsdue
underthisSection12.8,andFLNGorCustomer,asthecasemaybe,shallpaysuchfinalstatementnolaterthan
twenty(20)daysafterthedateofreceiptthereof.
ARTICLE13
SECUREDFINANCING
13.1
13.2
UCC1
FLNGshallexecuteandfile(andrefileuponexpiration),andgrantstoCustomertherighttoexecuteandfile(andre
fileuponexpiration)onFLNGsbehalf,intheproperofficeoftheproperjurisdictionaUCC1forthepurposeof
givingnoticetothecreditorsofFLNGthat(a)CustomersInventoryisownedbyCustomer,(b)forpurposesofthe
UniformCommercialCode,thenatureoftherelationshipbetweenCustomerandFLNGwithregardtosuchLNGand
Gasisthatofbailerandbailee(andiftheformoftheUCC1thenineffectcontainedabailmentboxtobechecked,
thebailmentrelationshipwouldbeindicated),and(c)neitherFLNGnoritscreditorsshallhaveanyownershipor
otherrightarisingfromsuchbailment.NothingcontainedinaUCC1shallactasanamendmenttothetermsofthis
Agreement.
SecuredFinancing
(a)
Acknowledgement.IntheeventFLNGobtainsanysecuredfinancing(exceptthoserisingoutofthe
operationoflawfortheprocurementorinstallationoffixturesandequipment),FLNGshallobtainfromthe
lenderprovidingsuchfinancinganacknowledgementthat(i)CustomersInventoryisownedby
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Customer,and(ii)neitherFLNGnorsuchlendershallhaveanyownershiporotherrightarisingfromthis
AgreementexceptasexpresslyprovidedinSections3.4and10.2(b).
(b)
NonDisturbance.IntheeventFLNGobtainsanysecuredfinancing(exceptthoserisingoutoftheoperation
oflawfortheprocurementorinstallationoffixturesandequipment),FLNGshallobtainfromthelender
providingsuchfinancinganondisturbanceagreementprotectingtherightsofCustomerunderthis
Agreementintheeventofaforeclosureorotherrealizationbysuchlenderonitscollateral.Customer
acknowledgesandagreesthatinordertoobtainsuchnondisturbanceagreement,Customermayberequired
toexecuteanddelivertosuchlenderanagreementtoattorntosuchlenderonthetermsofthisAgreementin
theeventofaforeclosureorotherrealizationbysuchlenderonitscollateral,andtheobligationofFLNGto
obtainanondisturbanceagreementshallbeconditionedonCustomerprovidingsuchagreementtoattorn.
ForpurposesofthisSection13.2(b),attornshallmeanthatCustomerwouldrecognizethelenderasthe
holderofFLNGsrightsandobligationsunderthisAgreement.
ARTICLE14
DUTIES,TAXESANDOTHERGOVERNMENTALCHARGES
AsbetweenFLNGandCustomer,Customershallberesponsibleforandpay,orcausetobepaid,allTaxesthatmaybe
imposedorleviedonCustomersInventoryandtheLNGVessels.CustomershallnotberesponsibletoreimburseFLNGfor
anyTaxesorNewTaxesotherthanthosethatmaybeallocatedtoCustomerunderSection4.5.
ARTICLE15
INSURANCE
15.1
FLNGsInsurance
FLNGshallberesponsibleforobtainingandmaintaining(a)insurancefortheFreeportFacilitytotheextentrequired
byapplicablelawand(b)additionalinsurance,asisreasonablynecessaryandavailableonreasonablecommercial
terms,againstsuchotherrisksandatsuchlevelsasaReasonableandPrudentOperatorofashareduseLNGreceiving
andregasificationterminalwouldobtain.FLNGshallobtainsuchinsurancefromareputableinsurer(orinsurers)
reasonablybelievedtohaveadequatefinancialreserves.AnyinsurancepolicyrequiredpursuanttothisSection15.1
shallcontainastandardwaiverofsubrogationendorsement.Suchinsurance(otherthanbusinessinterruption
insurance)shallbeprimarytoanyinsuranceheldbyCustomerandshallnameCustomer,includingitsAffiliatesand
theirdirectors,officers,agentsandemployees,asanadditionalinsured.FLNGshallbedeemedtohaveobtained
insuranceatalevelthataReasonableandPrudentOperatorwouldhaveobtainedintheeventFLNGobtainsthe
followingminimuminsurancecoverages:
(a)
CommercialGeneralLiabilityInsuranceandWharfOwnersLiabilityInsuranceinanamountof***,such
insurancetobeeitherobtainedindependently,oraspartofanumbrellapolicy
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15.2
(b)
StatutoryWorkersCompensationandEmployersLiabilityInsuranceinanamountof***
(c)
AllRiskPropertyInsuranceequaltoreplacementvalueormaximumforeseeablelossiflessthanreplacement
value(except,however,forfloodandearthquake,theminimumcoverageshallbe***)
(d)
BusinessInterruptionInsuranceequalto***,basedonafortyfive(45)daywaitingperiodand
(e)
PollutionInsuranceinanamountequalto***.
FLNGshallfurnishtoCustomerdetailedwritteninformationconcerningallinsurancepoliciesrequiredunderSection
15.1priortotheCommercialStartDateandthereafteratleastonceeachContractYear.Thereceiptofsuch
informationshallnotimposeanyobligationonCustomer.
CustomersInsurance
(a)
LNGVesselInsurance.CustomershallensurethatinsurancesareprocuredandmaintainedforeachLNG
Vesselinaccordancewiththefollowingprovisions.Inallcases,suchinsuranceshallestablishinsurance
coveragesconsistentwithinsurancestothestandardswhichashipowneroperatingreputableLNGvessels,as
aReasonableandPrudentOperator,shouldobserveininsuringLNGvesselsofsimilartype,size,ageand
tradeassuchLNGVessel.Inthisregard:
(i)
HullandMachineryInsuranceshallbeplacedandmaintainedwithreputablemarineunderwriters
and
(ii)
Protection&IndemnityInsurance(P&IInsurance)shallbeplacedandmaintainedasanunlimited
entry,ifsuchentryisavailable,withandsubjecttoandonthebasisoftherulesofanyofthe
reputableP&IinsuranceassociationsexperiencedinprovidingP&IInsuranceforLNGvessels
(ApprovedProvider).ThetermsoftheP&IInsuranceshallbethoseofthestandardrulesofthe
ApprovedProvider,providedthatspecialprovisionsresultingfromTransportersacceptance,ifit
doesso,ofthePortLiabilityAgreementpursuanttoSection15.3shallbeincorporatedintotheterms
ofTransportersP&IInsurance.
(b)
EvidenceofInsurance.PriortothecommencementofdeliveriestotheFreeportFacilityandthereafteratleast
onceeachContractYear,CustomershallfurnishthefollowingevidenceofinsurancetoFLNGinrelationto
eachLNGVessel:covernotes,certificatesofentry,thelatestrulesoftheparticularApprovedProvider,and
detailedwritteninformationconcerningallrequiredinsurancepolicies.
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15.3
NotwithstandinganyotherprovisionofthisAgreementandanyrightsthataTransportermayhaveunderapplicable
law,eachofFLNGandCustomeragreetothePortLiabilityAgreementsetforthonExhibitCinrelationtoLiabilities
forincidentscausedbyanLNGVesseloccurringattheFreeportFacility.CustomershallcauseTransportertoexecute
thePortLiabilityAgreementintheformsetforthonExhibitCpriortoTransportersLNGVesselsarrivalatthe
FreeportFacility.***
ARTICLE16
LIABILITIES
16.1
LimitationofLiability
(a)
LimitationofFLNG.InnocaseshalltheLiabilitiesofFLNGtoCustomerarisingoutof,relatingto,or
connectedwithanEventunderthisAgreementexceed***provided,however,thattheforegoinglimitation
shallnotapplyto(i)FLNGsobligationsunderSection8.4(excludingSection8.4(d)(iii))(ii)FLNGs
obligationsunderSection10.2(b)andArticle13(iii)FLNGsobligationtocreditthenetproceedsunder
Section3.4or(iv)LiabilitiescausedbytheGrossNegligence/WillfulMisconductofFLNG.
(b)
LimitationofCustomer.InnocaseshalltheLiabilitiesofCustomertoFLNGarisingoutof,relatingto,or
connectedwithanEventunderthisAgreementexceed***provided,however,thattheforegoinglimitation
shallnotapplyto(i)theFee(ii)theobligationofCustomertoindemnifyandholdFLNGharmlessunder
Section15.3or(iii)LiabilitiescausedbytheGrossNegligence/WillfulMisconductofCustomer.
(c)
Definitions.ForpurposesofthisSection16.1,anEventmeansanyoccurrenceorseriesofoccurrences
havingthesameorigin,andGrossNegligence/WillfulMisconductmeansanyactorfailuretoact(whether
sole,jointorconcurrent)byFLNGwhichwasintendedtocause,orwhichwasinrecklessdisregardofor
wantonindifferenceto,harmfulconsequencesFLNGknew,orshouldhaveknown,suchactorfailurewould
haveonthesafetyorpropertyofanotherPerson.
16.2
LimitationonDamages
NoPartyshallbeliabletotheotherPartyfororinrespectof:
(a)
lossofprofitsorbusinessinterruptionor
(b)
anyexemplaryorpunitivedamages,
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sufferedorincurredbytheotherPartyoranyPersonresultingfrombreachoforfailuretoperformthisAgreementor
thebreachofanyrepresentationorwarrantyhereunder,whetherexpressorimplied,andwhethersuchdamagesare
claimedunderbreachofwarranty,breachofcontract,tort,orothertheoryorcauseofactionatlaworinequity,except
totheextentsuchdamageshavebeenawardedtoathirdpartyandaresubjecttoallocationbetweenoramongthe
partiestotheDispute.
ARTICLE17
FORCEMAJEURE
17.1
17.2
NeitherPartyshallbeliabletotheotherforanydelayorfailureinperformancehereunderifandtotheextentsuch
delayorfailureisaresultofForceMajeure.SubjecttotheprovisionofthisArticle17,thetermForceMajeure
shallmeananyact,event,orcircumstancethatisnotreasonablywithinthecontrolofandthatpreventsordelaysa
performancebyaParty.NothinginthisArticle17shallbeconstruedtorequireaPartytoobserveahigherstandardof
conductthanthatrequiredofaReasonableandPrudentOperatorasaconditiontoclaimingtheexistenceofForce
Majeure.
17.3
EventsofForceMajeure
LimitationonScopeofForceMajeureProtection
***
Notice
AForceMajeureeventshalltakeeffectatthemomentsuchaneventorcircumstanceoccurs.Upontheoccurrenceofa
ForceMajeurethatprevents,interfereswithordelaystheperformancebyFLNGorCustomer,inwholeorinpart,of
anyofitsobligationshereunder,thePartyaffectedshallgivenoticethereoftotheotherPartydescribingsuchevent
andstatingtheobligationstheperformanceofwhichareaffected(eitherintheoriginalorinsupplementalnotices)
andstating,asapplicable:
(a)
theestimatedperiodduringwhichperformancemaybeprevented,interferedwithordelayed,including,to
theextentknownorascertainable,theestimatedextentofsuchreductioninperformance
(b)
theparticularsoftheprogramtobeimplementedtoresumenormalperformancehereunder
(c)
theanticipatedportionoftheServicesQuantityforaContractYearthatwillnotbemadeavailableor
received,asthecasemaybe,byreasonofForceMajeureand
(d)
whereSection17.7applies,thequantityofServicesthatFLNGreasonablyexpectstoallocatetoCustomer.
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SuchnoticesshallthereafterbeupdatedatleastmonthlyduringtheperiodofsuchclaimedForceMajeurespecifying
theactionsbeingtakentoremedythecircumstancescausingsuchForceMajeure.
17.4
17.5
InordertoresumenormalperformanceofthisAgreementwithintheshortesttimepracticable,thePartyaffectedby
theForceMajeureshalltakeallmeasurestothisendwhicharereasonableunderthecircumstances,takinginto
accounttheconsequencesresultingfromsucheventofForceMajeure.Priortoresumptionofnormalperformance,the
PartiesshallcontinuetoperformtheirrespectiveobligationsunderthisAgreementtotheextentnotexcusedasa
resultofsucheventofForceMajeure.
17.6
17.7
NoExtensionofTerm
TheTermshallnotbeextendedasaresultoforbythedurationofaneventofForceMajeure.
Measures
SettlementofIndustrialDisturbances
Settlementofstrikes,lockouts,orotherindustrialdisturbancesshallbeentirelywithinthediscretionoftheParty
experiencingsuchsituations,andnothinghereinshallrequiresuchPartytosettleindustrialdisputesbyyieldingto
demandsmadeonitwhenitconsiderssuchactioninadvisable.
AllocationofServices
If,asaresultofaneventofForceMajeure,FLNGisunabletomeetitscontractualobligationstoCustomerandany
OtherCustomersunderLNGterminaluseagreements,FLNGshallallocatetheavailablecapabilityoftheFreeport
FacilitytoperformactivitiessimilartotheServicesinthefollowingorderofpriority(suchallocationhereinreferred
toastheMajorCustomerAllocationPriority):
(a)
firstamongMajorCustomersonly,basedontheratiothattheMaximumLNGReceptionQuantitybearsto
theAggregateContractedCapacityfortheremainderofsuchContractYear(butincludingMajorCustomers
only)and
(b)
thentheremainingcapability,ifany,amongNonMajorCustomersbasedonthesameratio(butincluding
NonMajorCustomersonly).
DuringtheperiodofForceMajeure,FLNGshallnot(i)provideLNGterminallingservicestoanyOtherCustomerwho
isnotanOtherCustomeratthetimetheForceMajeurecommencedor(ii)otherwisetakeanyactionwhichwould
reducetheCustomersallocationunderSection17.7.
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ARTICLE18
CURTAILMENTOFSERVICESOR
TEMPORARYDISCONTINUATIONOFSERVICES
18.1
18.2
ScheduledCurtailmentorTemporaryDiscontinuationofServices
IfFLNGhasnotifiedCustomerinconnectionwiththepreparationoftheCustomerLNGReceiptScheduleinSection
5.1ofmaintenancetoormodificationoftheFreeportFacility,FLNGshallhavetherighttocurtailortemporarily
discontinuetheGasredeliveryportionoftheServicesduringtheallottedtimeperiodspecifiedinsuchschedule,but
onlytotheextentduetosuchmaintenanceormodification.Duringtheperiodofsuchcurtailmentortemporary
discontinuationofServices,FLNGshall,fromtimetotime,usereasonableendeavorstoupdateCustomeronthe
expectedprogresstowardscompletingthemaintenanceormodification,whicheverisapplicable.Forpurposesofthis
Section18.1,acurtailmentofortemporarydiscontinuationofServicesshalllastnomorethanthree(3)consecutive
days.Notwithstandingtheforegoing,FLNGagreesthat,forpurposesofthisSection18.1,neitheracurtailmentnora
temporarydiscontinuationofServicesshallreduceFLNGsobligationstoallowberthing,unloadingandreceiptof
CustomersLNGinaquantityuptotheMaximumLNGReceptionQuantity.
UnscheduledCurtailmentorTemporaryDiscontinuationofServices
InadditiontotherightssetforthinSection18.1,FLNGshallhavetherighttocurtailortemporarilydiscontinuethe
Services,inwholeorinpart,atanytimeinorderto(a)repairtheFreeportFacilityor(b)protectpersonsandproperty,
includingtheFreeportFacility,fromharmordamageduetooperationalorsafetyconditions.FLNGshalluse
reasonableendeavorstoprovideCustomeranoticeofcurtailmentortemporarydiscontinuationasisreasonable
underthecircumstances,andsuchnoticemaybeissuedforaspecificperiodoftimeoruntilfurthernoticeisgiven.
FLNGshallusereasonableendeavorstominimizeanycurtailmentordiscontinuationofServicestoCustomer.If,asa
resultofanyunscheduledcurtailmentortemporarydiscontinuationofServicespursuanttothisSection18.2,FLNGis
unabletomeetitscontractualobligationstoCustomerandanyOtherCustomersunderLNGterminaluseagreements,
FLNGshallallocatetheavailablecapabilityoftheFreeportFacilitytoperformactivitiessimilartotheServicesin
accordancewiththeMajorCustomerAllocationPriority.IfacurtailmentortemporarydiscontinuationofServices
occursunderthisSection18.2,FLNGmaydirectCustomertoadjustreceiptsofLNGanddeliveriesofCustomers
Inventory,asthecasemaybe,withpreferencegiventoMajorCustomers.Notwithstandingtheforegoing,FLNGshall
havenoresponsibilitytoinformTransporters,LNGVessels,DownstreamPipelines,LNGSuppliers,oranyother
PersonsinvolvedinthetransactionastosuchcurtailmentortemporarydiscontinuationofServices.
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ARTICLE19
ASSIGNMENT
19.1
RestrictionsonAssignment
(a)
ConsentofOtherPartyRequired.ExceptasotherwiseprovidedinthisArticle19,neitherthisAgreementnor
anyrightsorobligationshereundermaybeassignedbyanyPartywithoutthepriorwrittenconsentofthe
otherParty,whichconsentshallnotbeunreasonablywithheldordelayed.FLNGshallnotwithholdits
consentif(i)thecreditratingatthetimeoftheassignmentoftheproposedassigneeisequaltoorbetterthan
thelowerofthecreditratingofCustomeranda***ratingasperMoodys(orequivalentratingofanother
reputablecreditratingagency,includingS&P,or,intheeventS&PorMoodysceaseprovidingsuchratings,
byanyequivalentstatisticalratingorganizationrecognizedintheUnitedStates),and(ii)therequirementsof
Section19.1(b)aremet.Forgreatercertainty,aTemporaryReleaseunderSection6.2shallnotberegardedas
anassignmentunderthisArticle19.
(b)
ObligationofAssignee.IfconsentisgrantedpursuanttoSection19.1(a),theassigneetosuchassignment
must,asaconditiontosuchassignment,delivertothenonassigningPartyitswrittenundertakingtobe
boundbyandperformallobligationsoftheassignorunderthisAgreementfromandaftertheeffectivedateof
theassignment.
19.2
PermittedAssignments
(a)
Financing.
(i)
NotwithstandingtheprovisionsofSection19.1,FLNGshallbeentitledtoassign,mortgage,orpledge
alloranyofitsrights,interests,andbenefitshereundertoafinancialinstitutionthatprovideatleast
***millionoffinancing,tosecurepaymentofanyindebtednessorworkingcapitalincurredortobe
incurred,inconnectionwiththeconstructionandtermfinancingoftheFreeportFacility.Customer
shallprovidetothefinancialinstitutiontowhomsuchindebtednessorworkingcapitalisoweda
consenttoassignmentinformandsubstancecustomaryforsimilarfinancingtransactionsandagreed
bysuchfinancialinstitutionandCustomer.
(ii)
NotwithstandingtheprovisionsofSection19.1,Customershallbeentitledtoassign,mortgage,or
pledgealloranyofitsrights,interests,andbenefitshereundertoafinancialinstitutionthatprovide
atleast***millionoffinancing,tosecurepaymentofanyindebtednessincurredortobeincurred.
FLNGshallprovidetothefinancialinstitutiontowhomsuchindebtednessisowedaconsentto
assignmentinformandsubstancecustomaryforsimilarfinancingtransactionsandagreedbysuch
financialinstitutionandFLNG.
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(b)
PartialAssignmentsforPeriodsof***YearsorMore.NotwithstandingtheprovisionsofSection19.1and
subjecttotheprovisionsofthisSection19.2(b),CustomershallunderthisSection19.2(b)beentitledto
assignallorapartofitsrighttousetheServicesQuantityforaperiodthatisnolessthan***(***)years(a
PartialAssignment)ifsuchPartialAssignment(a)isforaquantityofnolessthan***MMBTUsper
ContractYearand(b)isto:
(i)
anAffiliateuponnoticeto,butwithoutrequiringtheconsentof,FLNGor
(ii)
anyotherPersonuponthewrittenconsentofFLNG,whichconsentshallnotbeunreasonably
withheldordelayedprovidedthat,FLNGshallnotwithholditsconsentif(i)thecreditratingatthe
timeoftheassignmentoftheproposedassigneeisequaltoorbetterthanthelowerofthecreditrating
ofCustomeranda***ratingasperMoodys(orequivalentratingofanotherreputablecreditrating
agency,includingS&P,or,intheeventS&PorMoodysceaseprovidingsuchratings,byany
equivalentstatisticalratingorganizationrecognizedintheUnitedStates),and(ii)therequirementsof
thisSection19.2(b)aremet.
19.3
AnyPartialAssignmentissubjectto(a)theassigneeexecutingaterminaluseagreementwithFLNG(a
ParallelTUA)and(b)CustomeragreeingtoappropriatemodificationstotheGasredeliveryprovisions
ofthisAgreement(toensurethatFLNGisatalltimescapableofperformingthisAgreementandtheParallel
TUA)andtothequantityprovisionstoreflectsuchassignment.ThetermsoftheParallelTUAshallbe
substantiallythesameasthetermsofthisAgreementexcepttotheextentnecessarytoreflectthedifferences
necessarytoimplementthePartialAssignment.Fortheavoidanceofdoubt,Customershallhaveno
obligationorliabilityundertheParallelTUAandtheassignorshallberelievedofallrightsandobligations
hereundertotheextentoftheassignmentfromandaftertheeffectivedateoftheassignment.
AssignmentasNovation
AnassignmentunderthisSection19.1shallnotserveasanovationofthisAgreementunlessanduntil,butshallserve
asanovationif,theassigneedeliverstothenonassigningPartyitswrittenundertakingtobeboundbyandperform
allobligationsoftheassignorunderthisAgreementfromandaftertheeffectivedateofthenovation,asifitwerethe
assignor.Intheeventofanovation,theassigneeshallbedeemedtobeaPartytothisAgreementforallpurposeswith
respecttorightsandobligationspertainingtooperationshereunderfromandaftertheeffectivedateofthe
assignment,andtheassignorshallberelievedofallrightsandobligationshereunderfromandaftertheeffectivedate
oftheassignment.AnyassignmentunderSections19.2(a)and(b)shallnotconstituteanovation.
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ARTICLE20
CONDITIONSPRECEDENT
20.1
ConditionsPrecedent
ThePartiesrecognizeandagreethatonlytheprovisionsofArticle1,Article19,Article22,Article23,Article24,
Article25,Article26,Article27andthisArticle20shallbecomeeffectiveandbindingasoftheEffectiveDate,and
thatallotherprovisionscontainedhereinshallnotbecomeeffectiveandbindingunlessanduntilbothofthe
followingconditions(ConditionsPrecedent)havebeensatisfiedorwaivedbyFLNG:
(a)
Approvals.BynolaterthanDecember31,2004,FLNGshallhaveobtainedallApprovalsthatarenecessary
forFLNGtoconstructandoperatetheFreeportFacilityand
(b)
FinancingofFreeportFacility.BynolaterthanJune30,2005,FLNGhasprovidedtoCustomerevidencethat
ithassuccessfullyarrangedandclosedonfinancingoftheFreeportFacility.
20.2
SatisfactionofConditionsPrecedent
(a)
General.FLNGshallendeavortoprocurethesatisfactionoftheConditionsPrecedentbytheapplicabledate
providedinSection20.1andshallkeepCustomerreasonablyinformedastotheprogressbeingmadetowards
satisfactionofeachoftheConditionsPrecedent.
(b)
Notification.FLNGshallnotifyCustomerofsuchsatisfactionpromptlyuponsatisfactionofanyCondition
Precedent.Moreover,FLNGshallnotifyCustomerpromptlyuponFLNGsdeterminationthataCondition
Precedentcannotbemet.
(c)
Waiver.SatisfactionofanyConditionPrecedentmaybewaivedonlybyFLNG.
(d)
Termination.IftheConditionPrecedentinquestionhasnotbeensatisfiedorwaivedbytheapplicable
deadlineinSection20.1,theneitherPartymaythereafterterminatethisAgreementwithimmediateeffectby
givingnoticeofsuchterminationtotheotherParty.UponterminationofthisAgreementunderthisSection
20.2(d),thePartiesshallbedischargedfromanyfurtherobligationsorLiabilitiesunderthisAgreement
withoutprejudicetoanyrights,obligationsorLiabilitieswhichmayhaveaccrueduptosuchdateof
termination.
ARTICLE21
TERMINATION
21.1
EarlyTerminationEvents
IfduringtheperiodofconstructionoftheFreeportFacility,CustomerreasonablydeterminesthatSubstantial
Completionwillnotoccurby***,thenCustomermayterminatethisAgreement(suchterminationreferredtoasan
EarlyTerminationEvent)pursuanttotheotherprovisionsofthisArticle21.
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21.2
ExerciseofRightofTermination
(a)
Notice.UpontheoccurrenceofanEarlyTerminationEvent,CustomershallgivenoticethereoftoFLNG.
(b)
Cure.Atanytimeaftertheexpirationofaperiodofthirty(30)daysafterCustomergivesnoticeofanEarly
TerminationEventpursuanttoSection21.2(a),CustomermayterminatethisAgreementwithimmediate
effectbygivingnoticeofsuchterminationtoFLNGprovided,however,thatCustomermaynotterminate
thisAgreementifthecircumstancesconstitutingtheEarlyTerminationEventhavebeenfullyremediedor
haveceasedtoapply.
21.3
21.4
OtherTerminationProvisions
ThisAgreementisalsosubjecttotheterminationprovisionsprovidedinSection12.6andSection20.2(d).
ConsequencesofTermination
TerminationofthisAgreementunderthisArticle21oranyotherprovisionofthisAgreementshallbewithout
prejudicetoanyotherrightsandremediesofeitherPartyarisinghereunderorbylaworotherwisewhicharoseor
accruedpriortoorasaresultofsuchterminationorbyreasonofdefaultofeitherParty.
ARTICLE22
APPLICABLELAW
ThesubstantivelawsoftheStateofNewYork,UnitedStatesofAmerica,exclusiveofanyconflictsoflawsprinciplesthat
couldrequiretheapplicationofanyotherlaw,shallgovernthisAgreementforallpurposes,includingtheresolutionofall
DisputesbetweentheParties.
ARTICLE23
DISPUTERESOLUTION
23.1
DisputeResolution
(a)
Notification.APartywhodesirestosubmitaDisputeforresolutionshallcommencetheresolutionprocessby
providingtheotherPartywrittennoticeoftheDispute(NoticeofDispute).TheNoticeofDisputeshall
containabriefstatementofthenatureoftheDisputeandthereliefrequested.ThesubmissionofaNoticeof
DisputeshalltollanyapplicablestatutesoflimitationrelatedtotheDispute,pendingtheconclusionor
abandonmentofresolutionproceedingsunderthisSection23.1.
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(b)
Negotiations.ThePartiesshallseektoresolveanyDisputebynegotiationbetweenSeniorExecutives.A
SeniorExecutivemeansanyindividualwhohasauthoritytonegotiatethesettlementoftheDisputefora
Party.Withinthirty(30)daysafterthedateofthereceiptbytheapplicablePartyoftheNoticeofDispute
(whichnoticeshallrequestnegotiationsamongSeniorExecutives),theSeniorExecutivesrepresentingthe
PartiestotheDisputeshallmeetatamutuallyacceptabletimeandplacetoexchangerelevantinformationin
anattempttoresolvetheDispute.IfaSeniorExecutiveintendstobeaccompaniedatthemeetingbyan
attorney,theotherPartysSeniorExecutiveshallbegivenwrittennoticeofsuchintentionatleastthree(3)
daysinadvanceandmayalsobeaccompaniedatthemeetingbyanattorney.Notwithstandingtheabove,
anyPartymayinitiatelitigationproceedingspursuanttoSection23.1(c)concerningsuchDisputewithin
sixty(60)DaysafterthedateofreceiptoftheNoticeofDispute.
(c)
Litigation.ThePartiesagreethatirreparabledamagewouldoccurintheeventthatanyoftheprovisionsof
thisAgreementwerenotperformedinaccordancewiththeirspecifictermsorwereotherwisebreached.Itis
accordinglyagreedthatthePartiesshallbeentitledtoaninjunctionorinjunctionstopreventbreachesofthis
AgreementandtoenforcespecificallythetermsandprovisionsofthisAgreementinanyFederalcourt
locatedintheStateofTexas,thisbeinginadditiontoanyotherremedytowhichtheyareentitledatlaworin
equity.Inaddition,eachofthePartiesheretoirrevocablyandunconditionally(a)consentstosubmititselfto
thepersonaljurisdictionofanyFederalcourtlocatedintheStateofTexasintheeventanyDisputearisesout
ofthisAgreement,(b)agreesthatitwillnotattempttodenyordefeatsuchpersonaljurisdictionbymotionor
otherrequestforleavefromanysuchcourt,(c)waives(andagreesnottopleadorclaim)anyobjectiontothe
layingofvenueofanyaction,suitorproceedingarisingoutofthisAgreement,(d)agreesthatitwillnot
bringanyactionrelatingtothisAgreement,inanycourtotherthananyFederalcourtsittingintheStateof
Texas,and(e)waivesanyrighttotrialbyjurywithrespecttoanyactionrelatedtoorarisingoutofthis
Agreement.
23.2
ExpertDetermination
ForanydecisionreferredtoanexpertbythePartiesunderthisAgreement(includingunderSections4.3,4.5,4.7,
AnnexIorAnnexII),thePartiesherebyagreethatsuchdecisionshallbeconductedexpeditiouslybyanexpert
selectedunanimouslybythePartiestotheDispute.Theexpertshallnotbedeemedtobeactinginanarbitral
capacity.ThePartydesiringanexpertdeterminationshallgivetheotherPartytotheDisputenoticeoftherequestfor
suchdetermination.IfthepartiestotheDisputeareunabletoagreeuponanexpertwithinten(10)daysafterreceipt
ofthenoticeofrequestforanexpertdetermination,then,upontherequestofanyofthepartiestotheDispute,the
InternationalCentreforExpertiseoftheInternationalChamberofCommerceshallappointsuchexpertandshall
administersuchexpertdeterminationthroughtheICCsRulesforExpertise.Theexpertshallbeandremainatall
timeswhollyimpartial,and,onceappointed,theexpertshallhavenoexpartecommunicationswithanyoftheParties
totheDisputeconcerningtheexpertdeterminationortheunderlyingDispute.Both
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Partiesagreetocooperatefullyintheexpeditiousconductofsuchexpertdeterminationandtoprovidetheexpert
withaccesstoallfacilities,books,records,documents,informationandpersonnelnecessarytomakeafullyinformed
decisioninanexpeditiousmanner.Beforeissuingafinaldecision,theexpertshallissueadraftreportandallowthe
partiestotheDisputetocommentonit.TheexpertshallendeavortoresolvetheDisputewithinthirty(30)days(but
nolaterthansixty(60)days)afterhisappointment,takingintoaccountthecircumstancesrequiringanexpeditious
resolutionofthematterindispute.ExceptasotherwiseprovidedinSection4.3(c),theexpertsdecisionshallbefinal
andbindingontheParties.
ARTICLE24
CONFIDENTIALITY
24.1
ConfidentialityObligation
ExceptasotherwiseexpresslyprovidedinSection4.6(a),aPartyshallnotcommunicatethisAgreementtothird
partieswithoutthewrittenconsentoftheotherParty.Furthermore,informationordocumentsthatcomeintothe
possessionofaParty(theRecipient)bymeansof,oronbehalfof,theotherParty(theDiscloser)inconnection
withthisAgreementmaynotbeusednorcommunicatedtoPersons(otherthantheParties)withoutthewritten
consentoftheDiscloser.Notwithstandingthepriortwosentences,eitherPartyshallhavetherighttodisclosethis
AgreementandsuchinformationordocumentswithoutobtainingtheotherPartyspriorconsentinanyofthe
situationsdescribedbelow:
(a)
accountants,otherprofessionalconsultantsorunderwriters,providedsuchdisclosureissolelytoassistthe
purposeforwhichtheaforesaidweresoengagedandfurtherprovidedthatsuchPersonsagreetoholdsuch
informationordocumentsundertermsofconfidentialityequivalenttothisSection24.1,andforthebenefit
oftheParties
(b)
bonafideprospectivepurchasersofallorapartofaPartysoritsAffiliatesbusiness,bonafideprospective
assigneesofallorpartofaPartysinterestinthisAgreement,orprovidersoffinancetoeitherPartyinrelation
tothisAgreementortheFreeportFacility,providedthatsuchPersonsagreetoholdsuchinformationor
documentsundertermsofconfidentialityequivalenttothisSection24.1,andforthebenefitoftheParties
(c)
tolegalcounsel,providedsuchdisclosureissolelytoassistthepurposeforwhichtheaforesaidwereso
engaged
(d)
ifrequiredbyanycourtoflaworanylaw,rule,orregulation,orifrequestedbyaGovernmentalAuthority
havingorassertingjurisdictionoveraPartyandhavingorassertingauthoritytorequiresuchdisclosurein
accordancewiththatauthority(includinginconnectionwiththeresolutionofaDisputeunderSection23.1),
orpursuanttotherulesofanyrecognizedstockexchangeoragencyestablishedinconnectiontherewith
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(e)
totheoperatorofaGasStorageFacility,toTemporaryCustomers,toprospectiveTemporaryCustomers,to
Transporters,toLNGSuppliersandtoanyofthepurchasersundertheCustomersGassalescontractsfrom
CustomersInventory,ineachcaseonlytotheextentrequiredfortheadministrationofsuchcontracts,and
providedthatsuchPersonsagreetoholdsuchinformationordocumentsundertermsofconfidentiality
equivalenttothisSection24.1,andforthebenefitoftheParties
(f)
toitsAffiliates,itsshareholders,partners,oritsshareholdersandpartnersAffiliates,providedthatsuch
recipiententityhasabonafidebusinessneedforsuchinformationandagreestoholdsuchinformationor
documentsundertermsofconfidentialityequivalenttothisSection24.1
(g)
toanyGovernmentAuthoritiestotheextentsuchdisclosureassistsFLNGandCustomerinobtaining
Approvals
(h)
toanExpertinconnectionwiththeresolutionofaDisputepursuanttoSection23.2
(i)
totheextentanysuchinformationordocumenthasenteredthepublicdomainotherthanthroughthefaultor
negligenceofthePartymakingthedisclosure
(j)
toOtherCustomersbyFLNGonlyinordertoallowFLNGtoperformitsobligationsunderSection4.6(b)
herein
(k)
RecipientalreadypossessedtheinformationordocumentpriortoreceiptfromDiscloser
(l)
Recipientacquiredtheinformationordocumentfromathirdpartywithoutanobligationofconfidenceand
(m)
theinformationordocumentwasindependentlydevelopedbyorforRecipient.
24.2
Notwithstandingtheforegoing,eachPartyacknowledgesandagreesthatcertainprovidersoffinancetoFLNGaswell
asFLNGsshareholdersandpartnersmaydisclosethisAgreementandinformationordocumentsdisclosedpursuant
tothisSection24.1ifrequiredbyanycourtoflaworanylaw,rule,orregulation,orifrequestedbyaGovernmental
AuthorityhavingorassertingjurisdictionoversuchPersonsandhavingorassertingauthoritytorequiresuch
disclosureinaccordancewiththatauthority,orpursuanttotherulesofanyrecognizedstockexchangeoragency
establishedinconnectiontherewith.TheobligationsofArticle24shallterminatetwo(2)yearsafterthetermination
ofthisAgreement.
PublicAnnouncements
(a)
General.NeitherPartymayissueormakeanypublicannouncement,pressreleaseorstatementregardingthis
Agreementunless,priortothereleaseofthepublicannouncement,pressreleaseorstatement,suchParty
furnishestheother
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Partywithacopyofsuchannouncement,pressreleaseorstatement,andobtainstheapprovaloftheother
Partyprovidedthat,notwithstandinganyfailuretoobtainsuchapproval,noPartyshallbeprohibitedfrom
issuingormakinganysuchpublicannouncement,pressreleaseorstatementifitisnecessarytodosoin
ordertocomplywiththeapplicablelaws,rulesorregulationsofanyGovernmentalAuthority,legal
proceedingsorstockexchangehavingjurisdictionoversuchParty.
(b)
PromotionalMaterials.NotwithstandinganyprovisioninthisSection24.2(a)tothecontrary,eitherParty
mayusethefollowinginexternalannouncementsandpublications:(i)informationconcerningthesigningof
thisAgreement(ii)thegeneralnatureoftheServicesand(iii)thegeneralnatureofCustomersinvolvement
intheFreeportFacilityprojectprovided,however,thatthePartymakingsuchexternalannouncementor
publicationshallnot,indoingso,usethetrademark,servicemarkandtradenameoftheotherPartywithout
suchotherPartyspriorwrittenconsent.
ARTICLE25
REPRESENTATIONSANDWARRANTIES
25.1
RepresentationsandWarrantiesofCustomer
AsofthedatehereofanduntiltheexpirationofthisAgreement,Customerrepresents,undertakesandwarrantsthat:
(a)
CustomerisandshallremaindulyorganizedandingoodstandingunderthelawsoftheStateofDelaware,
U.S.A.,dulyqualifiedtodobusinessinthosejurisdictionswherethenatureofitsactivitiesorproperty
requiressuchqualificationandtoperformitsobligationsunderthisAgreement
(b)
Customerhastakenallnecessaryactiontoauthorizetheexecution,deliveryandperformanceofits
obligationshereunder
(c)
Customerhasnotretained,employedorusedanybrokerorintermediaryinconnectionwiththenegotiation
ofthisAgreementandhasnoobligationtoanythirdpartybywayofcommissions,findersfeesorsimilar
feeswithrespecttotheexecutionofthisAgreementand
(d)
neithertheexecution,deliverynorperformanceofthisAgreement,northeconsummationofanyaction
contemplatedherein,conflictsorwillconflictwith,resultsorwillresultinabreachof,orconstitutesorwill
constituteadefaultunder,anyprovisionofCustomersconstitutiveinstrumentsoranylaw,judgment,order,
decree,ruleorregulationofanycourt,administrativeagencyorotherinstrumentalityofanyGovernmental
AuthorityorofanyotheragreementorinstrumenttowhichCustomerisaparty.
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25.2
RepresentationsandWarrantiesofFLNG
AsofthedatehereofanduntiltheexpirationofthisAgreement,FLNGrepresents,undertakesandwarrantsthat:
(a)
FLNGisandshallremaindulyorganizedandingoodstandingunderthelawsoftheStateofDelaware,
U.S.A.,dulyqualifiedtodobusinessinthosejurisdictionswherethenatureofitsactivitiesorproperty
requiressuchqualificationandtoperformitsobligationsunderthisAgreement
(b)
FLNGhastakenallnecessaryactiontoauthorizetheexecution,deliveryandperformanceofitsobligations
hereunder
(c)
FLNGhasnotretained,employedorusedanybrokerorintermediaryinconnectionwiththenegotiationof
thisAgreementandhasnoobligationtoanythirdpartybywayofcommissions,findersfeesorsimilarfees
withrespecttotheexecutionofthisAgreementand
(d)
neithertheexecution,deliverynorperformanceofthisAgreement,northeconsummationofanyaction
contemplatedherein,conflictsorwillconflictwith,resultsorwillresultinabreachof,orconstitutesorwill
constituteadefaultunder,anyprovisionofFLNGsconstitutiveinstrumentsoranylaw,judgment,order,
decree,ruleorregulationofanycourt,administrativeagencyorotherinstrumentalityofanyGovernmental
AuthorityorofanyotheragreementorinstrumenttowhichFLNGisaparty.
ARTICLE26
NOTICES
Exceptasotherwisespecificallyprovided,allnoticesauthorizedorrequiredbetweenthePartiesbyanyofthe
provisionsofthisAgreementshallbeinwriting(inEnglish)anddeliveredinpersonorbycourierserviceorbyany
electronicmeansoftransmittingwrittencommunicationswhichprovideswrittenconfirmationofcomplete
transmission,andaddressedtosuchParty.Oralcommunicationdoesnotconstitutenoticeforpurposesofthis
Agreement,andemailaddressesandtelephonenumbersforthePartiesarelistedbelowasamatterofconvenience
only.Theforegoingnotwithstanding,noticesgivenfromLNGVesselsatseamaybegivenbyradio,andnotices
requiredunderArticle5maybegivenbyemailorvia***.AnoticegivenunderanyprovisionofthisAgreement
shallbedeemeddeliveredonlywhenreceivedbythePartytowhomsuchnoticeisdirected,andthetimeforsuch
Partytodeliveranynoticeinresponsetosuchoriginatingnoticeshallrunfromthedatetheoriginatingnoticeis
received.ReceivedforpurposesofthisArticle26shallmeanactualdeliveryofthenoticetotheaddressofthe
Partyspecifiedhereunderor,intheeventnoticewasgivenbyradiofromanLNGVesselatsea,actualreceiptofthe
communicationbyradio,ortobethereafternotifiedinaccordancewiththisArticle26.EachPartyshallhavetheright
tochangeitsaddressatanytimeand/ordesignatethatcopiesofallsuchnoticesbedirectedtoanotherPersonat
anotheraddress,bygivingwrittennoticethereoftotheotherParty.
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FREEPORTLNGDEVELOPMENTL.P.
Attention:President
Attention:SeniorCommercialManager,LNG
1200SmithStreet,Suite600
400W.SamHoustonPkwy.S.
Houston,Texas770024310
Houston,Texas770421299
Fax:(713)9802903
***
Email:president@freeportlng.com
***
Telephone:(713)9802888
***
ARTICLE27
MISCELLANEOUS
27.1
27.2
ThisAgreementmaynotbeamended,modified,variedorsupplementedexceptbyaninstrumentinwritingsignedby
FLNGandCustomer.
27.3
27.4
27.5
SuccessorsandAssigns
ThisAgreementshallinuretothebenefitofandbebindingupontherespectivesuccessorsandpermittedassignsof
theParties.
Approvals
AftersatisfactionoftheConditionsPrecedent,eachPartyshallusereasonableendeavorstomaintaininforceallofits
respectiveApprovalsnecessaryforitsperformanceunderthisAgreement.CustomerandFLNGshallcooperatewith
eachotherwherevernecessaryforthispurpose.
Amendments
Waiver
NofailuretoexerciseordelayinexercisinganyrightorremedyarisingfromthisAgreementshalloperateorbe
construedasawaiverofsuchrightorremedy.Performanceofanyconditionorobligationtobeperformedhereunder
shallnotbedeemedtohavebeenwaivedorpostponedexceptbyaninstrumentinwritingsignedbythePartywhois
claimedtohavegrantedsuchwaiverorpostponement.NowaiverbyeitherPartyshalloperateorbeconstruedasa
waiverinrespectofanyfailureordefaultnotexpresslyidentifiedbysuchwrittenwaiver,whetherofasimilaror
differentcharacter,andwhetheroccurringbeforeorafterthatwaiver.
NoThirdPartyBeneficiaries
TheinterpretationofthisAgreementshallexcludeanyrightsunderlegislativeprovisionsconferringrightsundera
contracttoPersonsnotapartytothatcontract.NothinginthisAgreementshallotherwisebeconstruedtocreateany
dutyto,orstandardofcarewithreferenceto,oranyliabilityto,anyPersonotherthanaParty.
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27.6
27.7
SupplementalTerms
ThePartiesagreethatthesupplementaltermssetforthinExhibitDareherebyincorporatedintoandmadeapart
hereof.
RulesofConstruction
(a)
Drafting.EachprovisionofthisAgreementshallbeconstruedasthoughallPartiesparticipatedequallyinthe
draftingofthesame.Consequently,thePartiesacknowledgeandagreethatanyruleofconstructionthata
documentistobeconstruedagainstthedraftingpartyshallnotbeapplicabletothisAgreement.
(b)
Priority.
(i)
IntheeventofaconflictbetweenthetermsofthisAgreementexcludingAnnexesIand11and
ExhibitsA,BandC(aftersuchexclusion,theBaseAgreement)andthetermsofAnnexesIandII
orExhibitsA,BandC,alltermsoftheBaseAgreementshalltakeprecedenceoverAnnexesIandII
andExhibitsA,BandC.
(ii)
IntheeventofaconflictbetweenthetermsofthisAgreementincludingAnnexesIandIIandExhibits
A,B,andCandthetermsofExhibitD,thetermsofExhibitDshallgovern.
(iii)
IntheeventthatanyconflictarisesbetweenthisAgreementandtheFreeportFacilityMarine
OperationsManual,thisAgreementshallprevail.Intheeventthatanyconflictarisesbetweenthis
AgreementandtheFreeportServicesManual,thisAgreementshallprevail.
27.8
27.9
SurvivalofRights
AnyterminationorexpirationofthisAgreementshallbewithoutprejudicetoanyrights,remedies,obligationsand
LiabilitieswhichmayhaveaccruedtoaPartypursuanttothisAgreementorotherwiseunderapplicablelaw.Allrights
orremedieswhichmayhaveaccruedtothebenefitofeitherParty(andanyofthisAgreementsprovisionsnecessary
fortheexerciseofsuchaccruedrightsorremedies)priortotheterminationorexpirationofthisAgreementshall
survivesuchterminationorexpiration.Furthermore,theprovisionsofSection8.4,Article12,Article14,Article16,
Article21,Article22,Article23,Article24,Article26,andArticle27shallsurvivetheterminationorexpirationof
thisAgreement.
RightsandRemedies
ExceptwherethisAgreementexpresslyprovidestothecontrary,therightsandremediescontainedinthisAgreement
arecumulativeandnotexclusiveofanyrightsandremediesprovidedbylaw.
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27.10 Interpretation
(a)
Headings.ThetopicalheadingsusedinthisAgreementareforconvenienceonlyandshallnotbeconstrued
ashavinganysubstantivesignificanceorasindicatingthatalloftheprovisionsofthisAgreementrelatingto
anytopicaretobefoundinanyparticularArticle.
(b)
SingularandPlural.Referencetothesingularincludesareferencetothepluralandviceversa.
(c)
Gender.Referencetoanygenderincludesareferencetoallothergenders.
(d)
Article.Unlessotherwiseprovided,referencetoanyArticle,Section,Schedule,AnnexorExhibitmeansan
Article,Section,Schedule,AnnexorExhibitofthisAgreement.Unlessotherwiseprovided,referencetoany
ClausemeansaClausetoExhibitDofthisAgreement.
(e)
Include.Thewordsincludeandincludingshallmeanincludeorincludingwithoutlimitingthe
generalityofthedescriptionprecedingsuchtermandareusedinanillustrativesenseandnotalimiting
sense.
(f)
TimePeriods.Referencestoday,month,quarterandyearshall,unlessotherwisestatedordefined,
meanaday,month,quarterandyearoftheGregoriancalendar,respectively.Fortheavoidanceofdoubt,a
dayshallcommenceat24:00midnight.
(g)
StatutoryReferences.Unlessthecontextotherwiserequires,anyreferencetoastatutoryprovisionisa
referencetosuchprovisionasamendedorreenactedorasmodifiedbyotherstatutoryprovisionsfromtime
totimeandincludessubsequentlegislationandregulationsmadeundertherelevantstatute.
(h)
Currency.Referencestoalldollarsinanyformshallbeareferencetothelawfulcurrencyfromtimetotimeof
theUnitedStatesofAmerica.
27.11 DisclaimerofAgency
Therights,duties,obligationsandLiabilitiesofthePartiesunderthisAgreementshallbeindividual,notjointor
collective.ItisnottheintentionofthePartiestocreate,norshallthisAgreementbedeemedorconstruedtocreate,a
partnership,jointventureorotherassociationoratrust.ThisAgreementshallnotbedeemedorconstruedto
authorizeanyPartytoactasanagent,servantoremployeefortheotherPartyforanypurposewhatsoeverexceptas
explicitlysetforthinthisAgreement.IntheirrelationswitheachotherunderthisAgreement,thePartiesshallnotbe
consideredfiduciaries.
27.12 SeveranceofInvalidProvisions
IfandforsolongasanyprovisionofthisAgreementshallbedeemedtobejudgedinvalidforanyreasonwhatsoever,
suchinvalidityshallnotaffectthevalidityor
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operationofanyotherprovisionofthisAgreementexceptonlysofarasshallbenecessarytogiveeffecttothe
constructionofsuchinvalidity,andanysuchinvalidprovisionshallbedeemedseveredfromthisAgreementwithout
affectingthevalidityofthebalanceofthisAgreement.
27.13 CompliancewithLaws
InperformanceoftheirrespectiveobligationsunderthisAgreement,eachPartyagreestocomplywithallapplicable
laws,statutes,rules,regulations,judgments,decrees,injunctions,writsandorders,andallinterpretationsthereof,of
allGovernmentalAuthoritieshavingjurisdictionoversuchParty.
27.14 ConflictsofInterest
(a)
RestrictiononFLNGasOtherCustomer.FLNGshallavoidanyconflictbetweenitsowninterestsandthe
interestsofCustomerinrelationtoobtainingLNGterminallingservicesfromtheFreeportFacility.Inthis
regard,FLNGshallnotbecomeoneoftheOtherCustomersduringtheTermhereofunlessCustomerhasfirst
consentedinwriting(suchconsentnottobeunreasonablywithheldordelayed)tosuchexpandedbusiness
rolebyFLNG.
(b)
AffiliatedCustomerLimitations.IfitisexpectedthatanyofFLNGsjointventurepartnersoraffiliated
entitiesoranypartner,shareholder,member,orotherdirectorindirectequityownerofFLNGoranAffiliate
thereof(eachanAffiliatedCustomer)willbecomeoneoftheOtherCustomersduringtheTermhereof,
FLNGshallprovideCustomersixty(60)dayspriornoticethereof.Thereafter,ifCustomerrequestssucha
meeting,thePartiesshallmeettodiscusstheAffiliatedCustomersarrangementswithFLNGregardingLNG
terminallingservices.IntheeventanAffiliatedCustomerbecomesanOtherCustomer,thefollowing
additionalrestrictionsshallapply:
(c)
(i)
NoAffiliatedCustomershallbeaMajorCustomer
(ii)
NoAffiliatedCustomershallbegivenanypreferenceinschedulingoverCustomerand
(iii)
InrelationtoanyrightshereunderwhicharebasedonFLNGsSoleOpinion(includingFLNGsright
underSection3.1toallowberthing,unloadingandreceiptofCustomersLNGinquantitiesinexcess
oftheMaximumLNGReceptionQuantity),FLNGshallnot,inexercisingsuchrights,giveany
preferencetoanAffiliatedCustomerwhichwouldadverselyaffectCustomersrightshereunder.
ConflictsGenerally.Exceptasprovidedabove,thePartiesandtheirAffiliatesarefreetoengageorinvest
(directlyorindirectly)inanunlimitednumberofactivitiesorbusinesses,anyoneormoreofwhichmaybe
relatedtoorincompetitionwiththebusinessactivitiescontemplatedunderthisAgreement,withouthaving
orincurringanyobligationtoofferanyinterestinsuchbusinessactivitiestotheotherParty.
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27.15 Expenses
EachPartyshallberesponsibleforandbearallofitsowncostsandexpensesincurredinconnectionwiththe
preparationandnegotiationofthisAgreement.
27.16 Scope
ThisAgreementconstitutestheentireagreementbetweenthePartiesrelatingtothesubjectmatterhereofand
supersedesandreplacesanyprovisionsonthesamesubjectcontainedinanyotheragreementbetweentheParties,
whetherwrittenororal,priortothedateoftheoriginalexecutionhereof.
27.17 CounterpartExecution
ThisAgreementmaybeexecutedinanynumberofcounterpartsandeachsuchcounterpartshallbedeemedan
originalAgreementforallpurposesprovidedthatnoPartyshallbeboundtothisAgreementunlessanduntilboth
Partieshaveexecutedacounterpart.
INWITNESSWHEREOF,eachofthePartieshascausedthisAgreementtobedulyexecutedandsignedbyitsduly
authorizedofficerasoftheEffectiveDate.
By: FreeportLNGGP,Inc.,itsGeneralPartner
By:
MichaelS.Smith
ChiefExecutiveOfficer
By:
B.J.Sumrall,Jr.
SeniorCommercialManager
76
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ANNEXI
MEASUREMENTSANDTESTSFORLNGATRECEIPTPOINT
ThePartiesshallagree,nolaterthan***,totheprovisionsofAnnexIintheeventthePartiesfailtosoagreebyDecember
31,2004,themattershallbereferredtoanexpertunderSection23.2.
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ANNEXII
MEASUREMENTSANDTESTSFORGASATDELIVERYPOINT
ThePartiesshallagree,nolaterthan***,totheprovisionsofAnnexIIintheeventthePartiesfailtosoagreebyDecember
31,2004,themattershallbereferredtoanexpertunderSection23.2.
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EXHIBITA
TERMSOFFREEPORTFACILITYLEASE
3.2
AdjustmentofBaseRentandOtherFees
(a)ConsumerPriceIndex.Asusedherein,thetermConsumerPriceIndexmeanstheConsumerPriceIndexforallurban
consumerspublishedbytheBureauofLaborStatistics,UnitedStatesDepartmentofLabor(19931995equals100)forthe
entireUnitedStates.IfthepublicationoftheConsumerPriceIndexisdiscontinuedpriortotheexpirationorterminationof
thisLease,orifthepresentmethodofascertainingtheindexfigureismateriallyorsubstantiallychanged,Landlordand
Tenantwillnegotiateingoodfaithtoarriveatasubstitutestandardwhichshouldproducesubstantiallythesameresultsas
theConsumerPriceIndexwasdesignedtogiveonthedateoftheexecutionofthisLease.Ifnecessary,thepartieswillsubmit
theissueonnonbindingmediationpriortoandasaconditionofinstitutinglitigationinaccordancewiththefollowing
provisions.If,followingsuchnonbindingmediation,thepartieshavenotagreedtoasubstitutestandard,thesubstitute
standardshallbedetermined,uponthewrittenapplicationofeitherpartyhereto,byajudgeofadistrictcourtofBrazoria
County,Texas.Ifsaidjudgewillnotmakesuchadetermination,asubstitutestandardwillbedeterminedbyarbitrationunder
theTexasGeneralArbitrationAct(oranysimilarTexasacttheninexistence).Eachpartyheretoshallappointanarbitrator
andthetwososelectedshallselectathird,oriftheyareunabletoagree,thethirdarbitratorshallbeappointedbythecourt
undertheTexasGeneralArbitrationAct.IntheeventanewbasefortheConsumerPriceIndexisestablished,andthereafter,
forthepurposesofmakingcomputationashereinprovided,thecontrollingindicesstipulatedinthisLeaseshallbeadjusted
toconformtothenewbasesothatthecalculationshereinprovidedshallhavethesameresultsasifmadeontheConsumer
PriceIndex19931995equals100.Atanytimewhenasubstitutestandardhasnotbeeneitheragreeduponordetermined
inaccordancewiththeprovisionshereof,TenantshallcontinuetopayLandlordthe...ThruputFees...thenineffect....
(c)AdjustmentofThruputFees.TheamountoftheThruputFeesshallbeadjustedasofthefirstdayofthefifth(5 th)Lease
YearfollowingtheGMStartDateandasofthefirstdayofeachfifth(5 th)LeaseYearthereaftertoanamountequaltothe
lesserof(i)theapplicableTariffRateforThruputFees,or(ii)anamountdeterminedbyincreasingtherateof$0.30pershort
ton(2000pounds)byafactorequaltothepercentageincreaseintheConsumerPriceIndexasdeterminedbythelatest
publishedfiguresnextprecedingthedateonwhichsuchadjustmentistobemadecomparedtotheConsumerPriceIndexlast
reportedpriortoMarch1,2005.
...
(f)NoReductions.NotwithstandinganyreductionsthatmayoccurintheConsumerPriceIndexatanytime,noadjustmentof
the...ThruputFees...willbemadeif,followingsuchadjustment,theamountoftheapplicablefee(s)wouldbelowerthan
theamountpaidorpayablebyTenantintheimmediatelyprecedingLeaseYear.
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3.3.
Dockage,WharfageandThruputFees
TenantunderstandsandagreesthatTenant(orcarriersshippingproductstoorreceivingproductsfromTenant,asthecase
maybe,intoandfromPortFreeport)willpaytoLandlordtherents,dockageandmooringfees,wharfagefees,thruput
chargesandothercharges(collectively,thePortUseFees)aspublishedinPortFreeport,PortTariffNo.5,orsubsequent
revisionsthereof(theTariffRate),forservicesprovidedbyLandlordtoTenantorsuchotherparties,inconnectionwith
suchpartysactualuseoftheDockFacilitiesandotherPortFacilitiesownedbyLandlord.Notwithstandinganythingtothe
contrarysetforthherein,thruputfeesforLNG(theThruputFees)duringtheInitialTermwillnotexceedthelesserof(a)
theapplicableTariffRate,or(b)thesumof$0.30pershortton(2000pounds),asadjustedfromtimetotimeasprovidedin
Section3.2hereof....
***
CapitalizedtermsusedinthisExhibitAaredefinedintheFreeportFacilityLeaseasfollows:
Dockmeansaslipandadockfortheberthingofships(LNGtankers)withintheQuintanaTerminalarea....
DockFacilitiesmeanstheDockandtheDockMachinery.
DockMachinerymeanssuchequipmentandmachineryontheDockasarereasonablyrequiredbyTenantfortheloading
andunloadingofLNGfromvessels.
EscalationDatemeanstheearliertooccurof(a)onehundredeighty(180)daysfollowingthedateofFERCApproval,(b)
thedateonwhichconstructionoftheLNGFacilitycommencesor(c)March1,2005.
GMStartDatemeansthedatethatistheearliertooccurof(a)fortytwo(42)monthsfollowingtheEscalationDate,
regardlessofwhethertheDockFacilitieshavebeencompletedbythattime,or(b)thedateofSubstantialCompletionofthe
LNGFacility.
InitialTermmeansaninitialtermofthirty(30)yearsbeginningonMarch1,2003,subjecttotheprovisionsoftheLease.
LandlordmeansBrazosRiverHarborNavigationDistrictofBrazoriaCounty,Texas.
LeasemeanstheGroundLeaseandDevelopmentAgreemententeredintoasofDecember12,2002byandbetween
LandlordandTenant.
LeaseYearmeansaperiodoftwelve(12)consecutivefullcalendarmonths.
PortFacilitiesmeanspropertyonoraboutthechannels,waterways,docks,slipsandotherfacilitiesandimprovements
owned,operatedorcontrolledbyLandlord.
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SubstantialCompletionmeansthedateonwhichacertificateofsubstantialcompletionormechanicalcompletionor
mechanicalcompletionisissuedbytheengineerinchargeofsupervisingconstruction(or,ifnone,thegeneralcontractorin
chargeofconstruction).
TenantmeansFreeportLNGDevelopment,L.P.,aDelawarelimitedpartnership,actingbyandthroughitssolegeneral
partner,FreeportLNGGP,Inc.,aDelawarecorporation.
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EXHIBITB
FREEPORTSERVICESMANUAL
TheFreeportServicesManualreferredtoinSection3.5shallbelimitedtothefollowingmattersandothermattersofasimilar
nature:
1.
DetailsassociatedwiththeimplementationofSection5.1amongFLNG,CustomerandOtherCustomers
2.
DetailsassociatedwiththeGasdeliveryproceduresinSection5.2amongFLNG,CustomerandOther
Customers
3.
Detailsassociatedwiththecontentandformatofthe***
4.
FormoftheReleaseNoticereferredtoinSection6.2(b)(i)c
5.
DetailsassociatedwiththeinvoicingprocessunderArticle12,including:
a.
Formatofinvoices(electronicandoriginal)
b.
Numberingsystems/codesforallinvoicerelateddocuments
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EXHIBITC
PORTLIABILITYAGREEMENTPORTOFFREEPORT,TEXAS
THISPORTLIABILITYAGREEMENT(thisAgreement)iseffectiveasof,20,andismadebyand
betweenFREEPORTLNGDEVELOPMENT,L.P.,aDelawarelimitedpartnership,representedhereinbyFreeportLNGGP,
Inc.,itsGeneralPartner(FLNG),and[INSERTNAME(S)OFVESSELOWNER(S),a[TYPEOFENTITYAND
JURISDICTIONOFORGANIZATION]([collectively]VesselOwner).
RECITALS
WHEREAS,VesselOwner,usingtheLNGvesselsetforthbelowunderitsnameandsignature(Vessel),proposestodeliver
certainquantitiesofliquefiednaturalgastoFLNGatitsmarineterminalandreceiving,storageandregasificationfacilities
locatedintheFreeport,Texasarea(asmorefullydefinedbelow,theMarineTerminal)and
WHEREAS,VesselOwnerandFLNG(collectively,thePartiesandindividuallyaParty)haveagreedtoallocatethe
riskofandresponsibilityforlossanddamageresultingfromanIncident(asdefinedbelow)attheMarineTerminalinthe
followingmanner
NOWTHEREFORE,forgoodandvaluableconsideration,thereceiptandsufficiencyofwhichisherebyacknowledged,the
Partiesagreeasfollows:
1.
Thefollowingtermsshallhavethefollowingmeaningswhenusedherein:
Affiliatemeans,withrespecttoanyPerson,anyotherPersonwhich,directlyorindirectly,controls,iscontrolledby,
orisundercommoncontrolwith,suchPerson.Forpurposesofthisdefinition,control(including,withcorrelative
meanings,thetermscontrolledbyandundercommoncontrolwith)meansthepossession,directlyor
indirectly,ofthepowertodirectorcausethedirectionofthemanagementandpoliciesofaPerson,whetherthrough
theownershipofvotingsecuritiesorotherwise.
IncidentmeansanyoccurrenceorseriesofoccurrenceshavingthesameorigininwhichtheVesselcauses(i)
damagetotheMarineTerminaland/or(ii)anobstructionordangeraffectingorinterferingwiththenormaloperation
oftheMarineTerminal.
TerminalInterestsmeans(i)FLNG,(ii)allAffiliatesofFLNG,(iii)allPersons(otherthantheVesselInterestsand
Personsprovidingfireboats,tugsandescortvesselstoVesselatthePort)employedorprovidingservicesatthe
MarineTerminalinconnectionwiththeunloading,storage,orregasificationofLNGattheMarineTerminal,and(iv)
theemployeesandagentsofallPersonsreferredtointhisparagraph.
MarineTerminalmeansFLNGsmarineterminalandLNGreceiving,storageandregasificationfacilitieslocated
atthePort,includingallberths,buoys,gear,craft,equipment,plant,facilitiesandpropertyofanykind(whether
afloatorashore)locatedthereatoradjacenttheretoandintheownership,possessionorcontroloftheTerminal
Interests.
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Personmeansanyindividual,firm,corporation,trust,partnership,association,jointventure(incorporatedor
unincorporated),orotherbusinessentity.
PortmeanstheportatornearFreeport,Texas,includingitsanchorage,turningbasinandapproachesintothe
MarineTerminalassociatedtherewith.
VesselInterestsmeans(i)VesselOwner,(ii)allAffiliatesofVesselOwner,(iii)allPersons(otherthantheTerminal
Interests)participating,employed,orprovidingservicesinconnectionwiththeownershiporoperation(includingall
operationsrelatedtonavigationandberthing/unberthing)oftheVessel,and(iv)theemployeesandagentsofall
Personsreferredtointhisparagraph.
2.
Inallcircumstances,theMasteroftheVesselshallremainsolelyresponsibleonbehalfoftheVesselInterestsforthe
propernavigationandsafetyoftheVesselandhercargo.
AnyliabilityfordamagetothePortortheMarineTerminalarisingfromanIncidentshall,asbetweentheVessel
InterestsandtheTerminalInterests,beborne(i)bytheVesselInterestsalone,iftheVesselInterestsarewhollyor
partiallyatfaultandtheTerminalInterestsarenotatfault,(ii)bytheTerminalInterestsalone,iftheTerminalInterests
arewhollyorpartiallyatfaultandtheVesselInterestsarenotatfault,(iii)bytheVesselInterestsandtheTerminal
Interests,inproportiontothedegreeoftheirrespectivefault,ifbothareatfaultandthedegreeofsuchfaultcanbe
established,or(iv)bytheVesselInterestsandtheTerminalInterestsequallyifneitherofthemappearstobeatfaultor
itisnotpossibletoestablishthedegreeoftheirrespectivefault.Inthisregard,anyactsoromissionsofPersons
providingfireboats,tugsandescortvesselstoVesselatthePortshallbedeemedtobetheresponsibilityoftheVessel
Interests.
3.
4.(i)
(ii)
SubjecttoSection4(ii)below,thetotalaggregateliabilityoftheVesselIntereststotheTerminalInterests,
howeverarising,inrespectofanyoneIncident,shallnotexceed***.Paymentofanaggregatesumof***to
anyoneormoreoftheTerminalInterestsinrespectofanyoneIncidentshallbeacompletedefensetoany
claim,suitordemandrelatingtosuchIncidentmadebytheTerminalInterestsagainsttheVesselInterests.
TheliabilityoftheVesselInterestshereundershallbejointandseveral.
VesselInterestsshallprovidetotheTerminalInterestsatalltimessufficientwrittenevidencethattheVessels
ProtectionandIndemnityAssociationhasagreedto(a)covertheVesselInterestsasamemberofthe
AssociationagainsttheliabilitiesandresponsibilitiesprovidedforinthisAgreementinaccordancewithits
Rules(b)givetheTerminalInterestspriornoticeofcancellationoftheVesselsentryinsuchProtectionand
IndemnityAssociationand(c)waiveinfavoroftheTerminalInterestsallrightsofsubrogationofclaimsby
theProtectionandIndemnityAssociationagainsttheTerminalIntereststotheextentsuchclaimshavebeen
waivedinthisAgreementbytheVesselInterests.
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5.
AstomatterssubjecttothisAgreementandregardlessoffaultornegligenceonthepartofanyParty,withrespectto
anIncident:
(i)
excepttotheextentexpresslypreservedinthisAgreement,TerminalInterestsherebyexpressly,voluntarily
andintentionallywaiveanyrightorclaimstheymightotherwisehaveagainsttheVesselInterestsunder
applicablelawsorunderanyportliabilityagreementorsimilarportconditionsofusepreviouslysignedby
theMasterforthePortand
(ii)
excepttotheextentexpresslypreservedinthisAgreement,VesselInterestsherebyexpressly,voluntarilyand
intentionally***.
TheforegoingwaiversshallapplytoallPersonsclaimingthroughtheTerminalInterestsorthroughtheVessel
Interests.
6.
ThesubstantivelawofNewYork,withoutregardtoanyconflictsoflawprinciplesthatcouldrequiretheapplication
ofanyotherlaw,shallgoverntheinterpretationofthisAgreementandanydispute,controversy,orclaimarisingout
of,relatingto,orinanywayconnectedwiththisAgreement,including,withoutlimitation,theexistence,validity,
performance,orbreachhereof.
INWITNESSWHEREOF,thePartieshavecausedthisAgreementtobeexecutedbytheirdulyauthorizedrepresentatives
effectiveasofthedatefirstsetforthabove.
By: FreeportLNGGP,asGeneralPartner
[INSERTSIGNATURESOFEACHOFVESSEL
INTERESTS]
By:
Title:
By:
Title:
Asownerofthe
NameofVessel
RegistrationNo.
StateofRegistry
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EXHIBITD
SUPPLEMENTALTERMS
InadditiontothetermsandconditionscontainedinthisAgreementincludingAnnexesIandIIandExhibitsA,B,andC
(hereinaftertheTerminalUseAgreement),thePartiesfurtheragreetothefollowing:
1.
Financing.
(a)
ThePartiesacknowledgeandagreethattheyexecutedacertainLoanAgreementonJune19,2003with
FreeportLNGInvestments,LLP(f/k/aFreeportLNGInvestments,LLC)(LoanAgreement).TheParties
agreethattheLoanAgreementshallcontinueinfullforceandeffectaccordingtoitsownterms.
(b)
IfFLNGdesirestoobtainequityfinancingfortheFreeportFacility,FLNGshall:
2.
(c)
discussthevariousoptionswithCustomerandthemeritsofCustomerbecominganequityownerin
theFreeportFacilityand
(ii)
allowCustomertocompetetobeoneoftheparticipantsprovidingsuchequityfinancing.
FLNGwilldiscusswithCustomerthevariousfinancingoptionsandgiveCustomertheopportunityto
providereasonableassistance,ifrequestedbyFLNG.
PotentialExtractionofLiquids.
(a)
ThePartiesacknowledgethatthefacilitiesrequiredunderanyLiquidsextractionproject(asdiscussedbelow)
havenotbeenincludedinFLNGsapplicationforauthorizationfortheFreeportFacilityunderSection3(a)
oftheNaturalGasActavailableat15U.S.C.717f(c)andarenotincludedincapitalexpendituresaddressed
inSection4.4oftheTerminalUseAgreement.
(b)
FLNGwillusereasonableeffortstonegotiateterminaluseagreementswithallOtherCustomersthatwill
provideFLNGtherighttoextracttheLiquidscontainedintheLNGdeliveredtotheFreeportFacility.Inthe
eventsuchaprojectisconstructed,thePartiesagreethatFLNGshallprovidetoCustomertherightsto
CustomersproportionateshareofLiquidscontainedinequivalentvolumesofGasdeliveredtotheFreeport
FacilityundertheTerminalUseAgreement.ThePartiesrecognizethatCustomersLNGwillbecommingled
withthatofOtherCustomersandasaresulttheshareofLiquidsavailabletoCustomerwillreflectthe
commingledcontent.
Moreover,iftheConditionPrecedentspecifiedinSection20.1(b)oftheAgreementhasnotbeensatisfiedor
waivedthereunder,thenpriortoterminatingtheTerminalUseAgreementpursuanttoSection20.2,FLNG
shallforaperiodnotexceedingthirty(30)daysnegotiateingoodfaithwithCustomerforCustomerto
potentiallyprovideorarrangethenecessaryequityordebtfinancingtoallowsuchconditionprecedenttobe
satisfied.
(i)
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(c)
BecausetheFreeportFacilitywillserveonlyasatollingfacility,FLNGdoesnotintend,underitsterminal
useagreements,totaketitletoanyLNG,GasorLiquids.Therefore,itiscontemplatedthatCustomer,if
Customersodesires,willneedtoenterintopurchaseorexchangeagreementswithOtherCustomersforthe
rightstoLiquidsfromtheLNGsuchOtherCustomersdelivertotheFreeportFacility.
(d)
FLNGshallingoodfaithdiscusswithCustomerthedevelopmentofandfinancingforaLiquidsextraction
projectaspartoftheFreeportFacilityandtheintegrationofCustomersexistingundergroundStratton
Ridge,Texasstoragefacilitiesfortheseproducts.Ifnecessary,thePartiesshallamendtheTerminalUse
Agreementtoreflectanyagreementregardingtheforegoingproject.SuchagreementregardingaLiquids
extractionprojectwouldcontainamutuallyagreeabledevelopmentandoperationfeetoFLNG.Customer
wouldhavetherighttoownershipinsuchextractionprojectofanamountatleastproportionaltoCustomers
shareoftheLiquidsextractedfromLNGattheFreeportFacility.
3.
AdjustmentsRelatedtoCompensationUnderOtherTerminalUseAgreements.
(a)
***
(i)
theFee(excludingtheExcessReceptionFee),
(ii)
theU.S.dollarvalueofRetainage,
(iii)
theConstructionCostDeviationAmountunderSection4.4(a),ifany,
(iv)
CustomersshareofanyAdditionalCapitalCostsunderSection4.4(b),ifany,
(v)
NewTaxesunderSection4.5,ifany,and
(vi)
ReservationFeeRebateAmountunderSection4.7,ifany,
suchsumadjustedtoadollarperMMBTUequivalentassumingthatCustomerdeliverstheMaximumLNG
ReceptionQuantity,isreferredtoasCustomersTUACompensation.
(b)
SubjecttoClause3(d)below,FLNGagreesthat,withrespecttoCustomersTUACompensationonly,FLNG
shallaccordtoCustomercompensationtermsthatarenolessfavorablethan***.
(c)
***
(d)
***
2
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4.
RighttoDeliveryofLNG.
IntheeventCustomerrequestsFLNGtodeliverCustomersLNGinliquidformratherthaningaseousformandto
deliversuchLNGatapointotherthantheDeliveryPoint,FLNGshallprovidereasonablecooperationtoCustomer
andshalldiscussingoodfaithwithCustomerthefollowing:
(a)
theconstruction,operationandmaintenance,atCustomerssolecostandexpense,ofpipelinesandother
facilitieswhichwouldbeutilizedtodeliverLNGfromanagreedLNGreceptionpointattheFreeportFacility
toCustomersdownstreamfacilitiesatFreeport,Texas
(b)
Customersobtainingalleasementsrequiredforsuchfacilities,providedthatFLNGshallusereasonable
effortstoassistCustomertoobtainatnocostanynecessaryeasementsleasedtoFLNGundertheFreeport
FacilityLeaseand
(c)
CustomersobtainingallApprovalsforsuchfacilitiesatitssolecost,riskandexpense.
5.
Inrelationtoconstructing,operatingandmaintaininganysuchfacilities,Customershallnotinterferewithoperation
oftheFreeportFacility.InrelationtoallsuchLNGdeliveredtoCustomerinliquidform,Customershallnotbe
obligatedtobearRetainage.ThePartiesacknowledgethattherequiredpipelinesandotherfacilitieswhichwouldbe
utilizedtodeliverLNGfromanagreedLNGreceptionpointattheFreeportFacilitytoCustomersdownstream
facilitiesatFreeport,TexashavenotbeenincludedinFLNGsapplicationforauthorizationfortheFreeportFacility
underSection3(a)oftheNaturalGasAct.IntheeventthePartiesagreetodeliverCustomersLNGinliquidform
ratherthaningaseousforminaccordancewiththeabove,thePartiesshallexecuteassoonasreasonablypossiblean
appropriateamendmenttotheTerminalUseAgreementconfirmingsucharrangements.
ConsultationRegardingFreeportFacilityProjectImplementation.
ExceptasotherwiseprovidedintheTerminalUseAgreement,FLNGisresponsibleforallaspectsandcostsofthe
FreeportFacilityhowever,FLNGshallseekinputfromCustomerwithregardtothefollowingmattersrelatingtothe
FreeportFacility:
(a)
FLNGsexistingapplicationforauthorizationfortheFreeportFacilityunderSection3(a)oftheNaturalGas
Act
(b)
executionoftheengineering,procurementandconstructioncontract
(c)
constructionmanagement
(d)
startupandLNGterminaloperationsand
3
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(e)
6.
7.
8.
9.
addingathirdstoragetank
(ii)
addingasecondberthingfacility
(iii)
addingfacilitiesnecessarytoallowdailydeliveriesofgasattheDeliveryPointinexcessoftwo
trillionBTUsperdayand
(iv)
increasingthevaporizationcapacityoftheFreeportFacility.
Exclusivity.
LNGSupplies.
FLNGshallprovideCustomerwithreasonableassistance,totheextentrequestedbyCustomer,ofFLNGscommercial
teaminlocatingandcontractingforLNGsupplies.
(i)
CustomerandFLNGeachagreesthat,throughanduntil***,itwillnot,withoutthepriorwrittenconsentoftheother
Party(initsSoleOpinion),(a)develop,build,ownoroperateanLNGreceivingfacilitywithina***radiusofthe
LNGberthingfacilitiesattheFreeportFacility,or(b)assistanotherPersonintheconstruction,developmentor
operationofanyLNGreceivingfacilitywithina***radiusofsuchsite.
expansionoftheFreeportFacilityinthefollowingways:
NotwithstandinganythingtothecontraryinthisClause5,FLNGshallnotberequiredtoobtainCustomersconsent
priortocarryingoutanyoftheabovementionedactivities.
AdditionalNegotiations.
ThePartiesshallnegotiateingoodfaithwithaviewtoagreeingbynolaterthan***anamendmenttoArticle21
allowingCustomertoterminatetheTerminalUseAgreement,subjecttoCustomerspaymenttoFLNGofanagreed
amountupontermination.FLNGspositioninthisregardisthatsuchamountshalltakeintoconsiderationthe
ReservationFeepayablefortheremainderoftheTerm,***.
Effectiveness.
ThePartiesrecognizeandagreethatonlytheprovisionsofClauses1,3,5,6,7and8andthisClause9shallbecome
effectiveandbindingasoftheEffectiveDate,andthattheprovisionsofClauses2and4shallnotbecomeeffective
andbindingunlessanduntilbothoftheConditionsPrecedentsetforthinArticle20havebeensatisfiedorwaived.
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