OMNIBUS AGREEMENT (this Agreement),
dated as of this 8th day of November, 2004 (Effective
Date), is made by and between Chevron U.S.A., Inc., a Pennsylvania corporation
with a place of business at 1111 Bagby Street, Houston, Texas 77002 (Customer); and Sabine Pass LNG, L.P.,
a Delaware limited partnership with a place of business at 717 Texas Avenue,
Suite 3100, Houston, Texas, 77002 (SABINE).
WHEREAS, the Parties are executing simultaneously herewith an LNG
Terminal Use Agreement (TUA), and the
Parties agree to condition the effectiveness of certain portions of the TUA on
the fulfillment of certain conditions precedent; and
WHEREAS, the Parties wish to memorialize and document other
understandings supplementing the TUA, including Customers obligation to pay
certain capacity reservation fees, Customers expansion rights, Customers
agreement to utilize dedicated tug services available at the Sabine Pass
Facility and certain equity participation rights;
for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the Parties hereto, SABINE and Customer hereby agree as
terms used in this Agreement and not otherwise defined herein have the meanings
given to them in the TUA; provided that
the terms defined below shall have the following meanings:
1.1 Capacity Reservation Fee
First Installment, -Second Installment, -Third Installment, and -Fourth
Installment shall have the respective meanings set out in the
applicable subsections of Clause 2.1 (collectively, the Capacity
Reservation Fees and individually a Capacity
1.2 Conditions Precedent
means either the Sabine Conditions Precedent or the Customer Conditions
Precedent or both, as the context may require.
1.3 Customer Conditions
Precedent has the meaning set out in Clause 3.2.
1.4 Equity Condition Precedent,
Financing Condition Precedent and Management Condition Precedent have the respective meanings
set out in Article 3 of this Agreement.
1.5 Equity Agreement
has the meaning set out in Clause 6.1.
1.6 FERC Application
means that certain application (as amended from time to time), filed by SABINE
with the FERC on December 22, 2003 in docket No. CP04-47-000 in relation to the
Sabine Pass Facility pursuant to Section 3(a) of the Natural Gas Act (NGA) and the corresponding regulations of the FERC.
1.7 FERC Approval
means the FERCs approval of the FERC Application.
1.8 Sabine Conditions
Precedent has the meaning set out in Clause 3.1.
CAPACITY RESERVATION FEES
2.1 Capacity Reservation Fees
remit the following amounts to SABINE, by wire transfer in immediately
available funds to an account specified in writing by SABINE, in accordance
with the following provisions:
Installment. No later than fifteen (15)
days following the Effective Date, Customer shall pay to SABINE five million
United States dollars (US$5,000,000) (the Capacity Reservation Fee
(b) Second Installment. No
later than fifteen (15) days following the satisfaction of the Management
Condition Precedent, unless this Agreement is earlier terminated by Customer
pursuant to Clause 3.3(c) below, Customer shall pay to SABINE seven million
United States dollars (US$7,000,000) (Capacity Reservation Fee
(c) Third Installment. No
later than fifteen (15) days following the later of (i) satisfaction of the
Management Condition Precedent, or (ii) receipt of FERC Approval and
fulfillment of the Financing Condition Precedent, unless this Agreement is earlier
terminated by Customer pursuant to Clause 3.3(c) below, Customer shall pay to
SABINE five million United States dollars (US$5,000,000) (Capacity
Reservation Fee Third Installment); and
(d) Fourth Installment. No
later than fifteen (15) days following the exercise of the option contained under
Clause 4.1(b), unless this Agreement is earlier terminated by Customer pursuant
to Clause 3.3(c) below, Customer shall pay to SABINE three million United States dollars (US$3,000,000) (Capacity Reservation Fee Fourth Installment).
Except as provided in Clause 2.2, SABINE shall have
no obligation to refund to Customer the Capacity Reservation Fees set out in
this Clause 2.1 for any reason.
2.2 Fee Adjustment for the Capacity
Reservation Fees. The Capacity Reservation Fees paid by
Customer to SABINE pursuant to Clause 2.1 above shall be recouped by Customer
through a pro-rata monthly reduction in the Fee otherwise due under the TUA each
month during the first one hundred and twenty (120) months following the
Commercial Start Date of the Sabine Pass Facility. For the relevant one hundred and twenty (120)
month period, the reduction will be reflected in the monthly statement SABINE
provides Customer pursuant to Section 11.1 of the TUA. If the TUA is terminated by Customer in
accordance with Clause 3.3(c) of this Agreement, any Capacity Reservation Fee
paid to SABINE prior to such termination shall be retained by SABINE without
recoupment by Customer.
CONDITIONS PRECEDENT TO EFFECTIVENESS OF TUA
3.1 SABINE Conditions Precedent and
provision of the TUA notwithstanding, the Parties acknowledge and agree that
only the provisions of Article 1, Article 17, Article 18, Article 19, Article 20,
Article 21, Article 22, Article 23, and Article 25 of the TUA shall become
effective and binding as of the Effective Date, and that SABINEs obligations
with regard to all other provisions contained in the TUA shall not become effective and
binding unless and until both of the following conditions (SABINE Conditions Precedent)
have been satisfied or waived by SABINE no later than December 31, 2005:
(a) Approvals. SABINE shall have obtained the
FERC Approval, in form and content reasonably acceptable to Sabine;
(b) Financing. SABINE has provided to
Customer evidence that it can finance the expected cost of development and
construction of the Sabine Pass Facility Financing Condition
Precedent), notwithstanding that such financing is contingent on
receipt by SABINE of the FERC Approval. Such
evidence may be in the form of (i) commitment letters from banks and/or (ii) sufficient
evidence of in-house funds availability either through equity placements or
commitments to fund equity. Such written
commitments shall be deemed sufficient evidence of funding if the EPC contractor
responsible for constructing the Sabine Pass Facility accepts such evidence as
being sufficient to accept SABINEs notice to proceed with construction. In this regard, Customer acknowledges that SABINEs
ability to satisfy the Financing Condition Precedent is subject to Customers
full and timely performance, in good faith, of its obligations to assist with
obtaining the Financing under Section 17.2(c) of the TUA; and
(c) Guarantee. Within fifteen (15) days of satisfaction of the Management Condition
Precedent, Customer shall cause the Guarantor to execute and deliver to SABINE
the Guarantee in the form attached to the TUA.
3.2 Customer Conditions Precedent.
provision of the TUA notwithstanding, the Parties acknowledge and agree that
only the provisions of Article 1, Article 17, Article 18, Article 19, Article
20, Article 21, Article 22, Article 23, and Article 25 of the TUA shall become
effective and binding as of the Effective Date, and that Customers obligations
with regard to all other provisions contained in the TUA shall not become
effective and binding unless and until both of the following conditions (Customer Conditions Precedent) have been satisfied or
waived by Customer no later than December 20, 2004:
(a) Approvals. Customer shall have obtained
all corporate approvals necessary in connection with implementation of the
transactions contemplated by this Agreement, the TUA, the Guarantee and the
Equity Agreement including but not limited to the approval of the ChevronTexaco
Corporation Board of Directors by no later than December 20, 2004, except this
condition shall not apply to the obligation to pay the Capacity Reservation Fee
First Installment (Management Condition
(b) Equity Participation.
Customer and SABINE shall have negotiated definitive agreements
providing for Customers acquisition of a twenty percent (20%) limited partner
interest in SABINE on terms acceptable to both Parties by no later than
December 20, 2004 (Equity Condition Precedent).
3.3 Satisfaction of Conditions
Precedent; Notification; Waiver; Termination.
(a) General. Each Party shall endeavor to procure the satisfaction of their
respective Conditions Precedent by the dates as set forth in this Agreement,
and shall keep the other Party reasonably informed as to the progress being
made towards satisfaction of the Conditions Precedent. Notwithstanding the foregoing, it is acknowledged
and agreed that nothing in this Agreement shall obligate ChevronTexaco
Corporation in any way to approve the transactions contemplated by this
Agreement, the TUA, the Guarantee or the Equity Agreement and that such
approval may be withheld for any reason, except the foregoing condition shall
not apply to the obligation to pay the Capacity Reservation Fee First Installment
which is deemed approved upon execution of this Agreement.
(b) Notification. Either
Party shall notify the other Party of satisfaction of any Conditions
Precedent. Moreover, either Party shall
notify the other Party promptly upon that Partys determination that a
Condition Precedent cannot be met.
(c) Termination for Non-Satisfaction of the
Conditions Precedent. If the SABINE Conditions Precedent have not
been satisfied or waived by SABINE by December 31, 2005 or if Customers
Conditions Precedent have not been satisfied or waived by Customer by December
20, 2004, then either Party may thereafter terminate this Agreement and the TUA
with immediate effect by giving written notice of such termination to the other
Party within ten (10) Business Days after the above applicable date. In the event of a termination
of this Agreement under this Clause 3.3(c), SABINE and Customer shall each be
discharged from any further obligations or Liabilities under this Agreement and
the TUA without prejudice to any rights, obligations or Liabilities that may
have accrued up to such date of termination.
EXPANSION AND EXPANSION RECEPTION QUANTITY
4.1 LNG Reception Quantity Options. Customer shall have the right either, but
(a) upon written notice received by SABINE, on or
before 5:00 p.m. on July 1, 2005 to elect to decrease Customers Maximum LNG
Reception Quantity as stated in the TUA, from 282,761,850 MMBTUs per Contract
Year to 201,972,750 MMBTUs per Contract Year and to decrease its Gas Redelivery
Rate from 759,500 to 542,500 MMBtu per day; or
(b) upon written notice received by SABINE, on or
before 5:00 p.m. on December 1, 2005, provided Customer has not exercised its
option in Clause 4.1(a) above, to elect to increase Customers Maximum LNG
Reception Quantity as stated in the TUA, from 282,761,850 MMBTUs per Contract
Year to 403,945,500 MMBTUs per Contract Year, to increase its Gas Redelivery
from 759,500 to 1,085,000 MMBtu per day and to receive LNG storage capacity
up to a maximum storage quantity of four (4) billion standard cubic feet.
Promptly following a notice, the Parties shall amend the TUA to reflect
such decreased or increased contract entitlements, which shall be subject to
the same terms and conditions as currently set forth in the TUA. The Parties hereto agree that Clause B,
Section 4.2 and Section 18.1(a)(ii) of the TUA shall
be adjusted for such decreased or increased contract entitlements. SABINE agrees that it shall not during the
period prior to December 1, 2005, take any action that would render it unable
to make available to Customer the increased contract entitlements contemplated
by Clause 4.1(b).
4.2 Future Vaporization Expansion. No
later than two (2) years after the Effective Date, either Party may provide
written notice to the other Party of its desire to expand the LNG
regasification (vaporization) capacity at the Sabine Pass Facility. Subject to the prior right of an existing
Other Customer to negotiate exclusively for such expansion for a ninety (90)
day period, Customer shall have the right with Other Customers to negotiate the
proposed terms and conditions of such expansion in good faith for a period of
ninety (90) days from the earlier of (i) the expiration of the existing Other
Customers period of exclusive negotiation or, (ii) if the Other Customer
elects not to negotiate for such expansion or terminates it early, such earlier
date; provided that SABINE shall be obliged to
enter into such negotiations only if Customer desires to increase its Maximum
LNG Reception Quantity (as determined by Customer in its sole discretion) by an
amount equal to between 182,500,000 MMBTUs per Contract Year and 365,000,000
MMBTUs per Contract Year effective the date commercial operations commence with
respect to the expansion. The expansion
quantity shall be subject to the same terms and conditions as currently set
forth in the TUA except that the Reservation Fee for the expansion quantity
shall equal $0.28 multiplied by the expansion quantity or, if the option
provided in Clause 4.1(b) has been previously exercised and consummated, the
Reservation Fee for such expansion quantity shall equal $0.20 multiplied by the
expansion quantity. The Operating Fee
for any expansion quantity shall be calculated in accordance with the terms of
the TUA. Any requests made by Customer
for expansion beyond the aforementioned two (2) year period or beyond the first
expansion, if any, shall require the mutual agreement of the Parties. Additionally, notwithstanding the foregoing undertaking
of the Parties to negotiate the proposed terms and conditions of the expansion
in good faith, Customer acknowledges and agrees that the timing of the
development and construction of the expansion shall be at SABINEs sole and
TUG AND LINE HANDLING BOATS
The Parties acknowledge that
three (3) 5,000-horsepower, greater than 50 ton bollard pull tug boats with
fire-fighting capability and two (2) line handling boats to assist with the
safe berthing of LNG Vessels will be dedicated to the Sabine Pass
Facility. Such tug and line handling
boats will be available to Customer and all Other Customers of the Sabine Pass
Facility on a non-discriminatory basis.
The Parties agree to cooperate in seeking competitive bids to fulfill
the dedication requirements for these tugs in accordance with the TUA. Customer shall have the right to nominate
potential vendors to bid on these services for SABINE. It is the intent of SABINE to select the
supplier which has the most competitive bid taking into account multiple
factors including, without limitation, price, contractual
and conditions, specifications of the bid, the
reputation, financial condition and technical capability of the bidders and
responsiveness of service.
Customer Equity Participation
and SABINE agree to negotiate expeditiously and in good faith mutually
agreeable definitive agreements ( Equity Agreement) providing for the contribution
of $200 million by Customer in consideration of the acquisition of a twenty
percent (20%) limited partnership interest in Sabine Pass LNG,L.P.
6.2 The Parties agree that Customers opportunity
to negotiate for and acquire equity in SABINE shall expire on December 21,
and Customer agree to collaborate in the assessment and selection of the optimum
pipeline route from the Sabine Pass Facility to adjacent interstate pipelines.
substantive laws of the State of New York, United States of America, exclusive
of any conflicts of laws principles that could require the application of any
other law, shall govern this Agreement for all purposes, including the
resolution of Disputes between the Parties.
Dispute arising under this Agreement shall be exclusively and definitively
resolved through final and binding arbitration pursuant to the provisions of
Section 20.1 of the TUA. For the
purposes of this Agreement, Dispute means
any dispute, controversy, or claim (of any and every kind or type, whether
based on contract, tort, statute, regulation, or otherwise) arising out of,
relating to, or connected with this Agreement, including any dispute as to the
construction, validity, interpretation, termination, enforceability, or breach
of this Agreement, as well as any dispute over arbitrability or jurisdiction.
Party acknowledges and agrees that it shall be bound by the rights, duties and
obligations set forth in Section 21.1 of the TUA with respect to the disclosure
of information or documents that come into such Partys possession in
connection with this Agreement.
notices authorized or required between the Parties shall be provided in the
manner set forth in Article 23 of the TUA.
Agreement may not be amended, modified, varied or supplemented except by an
instrument in writing signed by SABINE and Customer.
12.2 Successors and Assigns.
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the Parties in accordance with the
provisions of Article 17 of the TUA.
failure to exercise or delay in exercising any right or remedy arising from
this Agreement shall operate or be construed as a waiver of such right or
remedy. Performance of any condition or
obligation to be performed hereunder shall not be deemed to have been waived or
postponed except by an instrument in writing signed by the Party who is claimed
to have granted such waiver or postponement.
No waiver by either Party shall operate or be construed as a waiver in
respect of any failure or default not expressly identified by such written
waiver, whether of a similar or different character, and whether occurring
before or after that waiver.
12.4 No Third Party Beneficiaries.
interpretation of this Agreement shall exclude any rights under legislative
provisions conferring rights under a contract to Persons not a party to that
contract. Nothing in this Agreement
shall otherwise be construed to create any duty to, or standard of care with
reference to, or any liability to, any Person other than a Party.
(a) Headings. The topical headings used in
this Agreement are for convenience only.
(b) Singular and Plural.
Reference to the singular includes a reference to the plural and vice versa.
(c) References. Unless otherwise provided,
reference to any Clause means a Clause of this Agreement and reference to a
Section means a Section of the TUA.
(d) Include. The words include and
including shall mean include or
including without limiting the generality of the description preceding such
term and are used in an illustrative sense and not a limiting sense.
(e) Time Periods.
References to day, month,
quarter and year
shall mean a day, month, quarter and year of the Gregorian calendar,
(f) Statutory References.
Unless the context otherwise requires, any reference to a statutory
provision is a reference to such provision as amended or re-enacted or as
modified by other statutory provisions from time to time and
includes subsequent legislation and regulations made under the relevant
(g) Currency. References to United States
dollars shall be a reference to the lawful currency from time to time of the
United States of America.
12.6 Severance of Invalid Provisions.
If and for so long as any
provision of this Agreement shall be deemed to be judged invalid for any reason
whatsoever, such invalidity shall not affect the validity or operation of any
other provision of this Agreement.
Each Party shall be
responsible for and bear all of its own costs and expenses incurred in
connection with the preparation and negotiation of this Agreement.
12.8 Entire Agreement; Conflicts.
constitutes the entire agreement between the Parties relating to the subject
matter hereof and supersedes and replaces any provisions on the same subject
contained in any other agreement between the Parties, whether written or oral,
prior to the date of the original execution hereof. In the event any conflict arises between this
Agreement and the TUA, this Agreement shall prevail.
12.9 Counterpart Execution.
Agreement may be executed in any number of counterparts and each such counterpart
shall be deemed an original Agreement for all purposes.
WITNESS WHEREOF, each Party has caused this Agreement to be duly executed and
signed by its duly authorized officer as of the Effective Date.
Pass LNG, L.P.
Pass LNG-GP, Inc., its General Partner