Document:

exv10w40

 

EXHIBIT 10.40

CONTRAT DE TRAVAIL

ENTRE LES SOUSSIGNES

- VITRIA TECHNOLOGY INC, Société de capitaux, au
capital de 40.000 €, dont le siège social est 945
Stewart Drive, Sunnyvale, CA 94085, Etats-Unis,
représentée par M. Dale Skeen en sa qualité de
représentant légal, (ci-après dénommée la « Société »),

D’une part,

ET

	•  	Monsieur Paul Taylor demeurant [address], (ci-après dénommé le «Salarié»),

D’autre part,

Le présent contrat de travail annule et remplace
tout contrat, lettre ou autre document ou engagement
ayant pu intervenir ou être signé avant la date de
signature du présent contrat de travail entre le
Salarié et la Société ou tout autre société
appartenant ou ayant appartenu au groupe Vitria
Technology.

Article 1 – Conditions d’engagement

La Société engage le Salarié à compter du 1 juin
2004.

Toutefois, d’un commun accord, les parties
conviennent d’une reprise d’ancienneté de Monsieur
Paul Taylor à compter du 25 janvier 2002.

En conséquence, pour toutes dispositions
conventionnelles ou légales se référant à une
condition d’ancienneté, il sera tenu compte d’une
ancienneté décomptée à partir du 25 janvier 2002.

 EMPLOYMENT AGREEMENT

Translation for Information Purposes Only

BETWEEN THE UNDERSIGNED

	-  	VITRIA TECHNOLOGY INC, Corporation with a share
capital of 40.000 € euros, whose registered
office is located at 945 Stewart Drive,
Sunnyvale, CA 94085, U.S., represented by M. Dale
Skeen in his capacity as corporate representative
(hereafter referred to as the “Company”),

On the one hand,

AND

Mr Paul Taylor
residing [address],

(hereafter referred to as the “Employee”),

On the other hand,

This employment agreement renders void and replaces
any contract, letter or other document or commitment
which could have been sent or signed before the date
of this employment agreement between the Employee
and the Company or any other company belonging to or
having belonged to the Vitria Technology group.

 Article 1 – Conditions of employment

The Company hereby employs the Employee as from June
1rst, 2004.

However, it is agreed by the parties to take into
consideration the Employee’s length of service
accrued as from 25 January 2002.

Therefore, a length of service as from 25 January
2002 will be taken into account for the application
of any legal provision or provision of the
applicable collective bargaining agreement.

 

 

- 2 -

Le présent contrat de travail est régi par les
dispositions législatives et réglementaires en
vigueur et par celles résultant de la convention
collective applicable à la Société, actuellement la convention collective des bureaux d’études
techniques, cabinets d’ingénieurs-conseils, sociétés de conseils (« Syntec »), et par les conditions
particulières énoncées aux présentes.

Article 2  – Fonctions

2.1 Les fonctions du Salarié se composent comme suit:

	 	a)  	Senior vice-président des opérations
commerciales monde ;

	 	et   	  

	 	b)  	mandataire social d’une ou plusieurs sociétés
du groupe Vitria Technology, notamment en
Europe et en Asie, dont actuellement :

	•  	Vitria Technology SAS;
	 
	•  	Vitria Technology GmbH;
	 
	•  	Vitria Technology S.r.l.

Cette liste est purement indicative et peut varier à
tout moment en fonction de la chagement des mandats
sociaux et de nouvelles nominations.

Ces fonctions correspondent à la position 3.3,
coefficient 270 prévue par la convention collective
applicable.

2.2 Au titre de ses fonctions de vice-président
senior monde des opérations commerciales, le Salarié
aura, notamment et sans que la liste qui suit soit
limitative, les attributions suivantes :

	•  	impulsion et direction de l’organisation
commerciale des ventes au niveau mondial ; et
	 
	•  	management des opérations commerciales
mondiales.

2.3 Le salarié exercera ces fonctions sous
l’autorité et dans le respect des instructions
données par la Société, en la personne de son
représentant légal ou de toute autre personne qui
pourrait lui être substituée.

2.4 Les attributions du Salarié ont, par

This employment agreement is governed by the legal
provisions in effect and by the provisions of the
collective bargaining agreement applicable to the
Company, presently that of offices of technical
studies, of engineering consultants, consultancy
companies, and by the specific conditions set forth
in this agreement.

 Article 2 – Job description

2.1 The Employee’s functions shall be the following :

	 	a)  	Senior Vice-President of World Wide sales
operations ;

	 	and   	 

	b)  	Corporate representative for one or more
subsidiaries of the Vitria Technology
Group, in particular in Europe and Asia,
currently including :

	•  	Vitria Technology SAS;
	 
	•  	Vitria Technology GmbH;
	 
	•  	Vitria Technology S.r.l.

This list is being provided for information purposes
only and can vary at any time depending on the
change of corporate offices or the appointment to
new corporate offices.

These duties correspond to the following classification of the applicable collective
bargaining agreement: level 3.3, coefficient 270.

2.2 In his function as Senior VP of the WW-Sales,
the Employee’s attributions shall, in particular,
include but not be limited to:

	 	•  	Guidance and leadership to the worldwide
sales organisation ; and
	 
	 	•  	Management of the worldwide Operations.

2.3 Within the scope of his attributions, the
Employee shall be placed under the Company’s
authority and act pursuant to the instructions of
the Chief Executive Officer or any other person who
may be substituted to him.

 

 

- 3-

nature, un caractère évolutif tenant d’une part aux impératifs
d’adaptation de la Société et à ses besoins et,d’autre part, aux capacités du Salarié et à
l’approfondissement de ses compétences.

Article 3 – Lieu de travail

Dans la mesure où il réside en France, le Salarié
exercera ses fonctions au siège social de la Société
Vitria Technology SAS, actuellement situé au 12-14,
Rond point des Champs Elysées – 75008 Paris.

Toutefois, il est entendu que pour des raisons
touchant à l’organisation et au bon fonctionnement
de l’entreprise, la Direction se réserve la
possibilité de modifier le lieu de travail du
Salarié dans la limite de la région Ile de France.

Le changement de lieu de travail du Salarié ne
saurait constituer une modification du contrat de
travail mais un simple changement de ses conditions
de travail.

Il est également entendu que la nature de ses
fonctions exigera de nombreux et longs déplacements
en France et à l’étranger, notamment aux l’ASIE et
les Etats-Unis.

Article 4 – Rémunération – Durée du Travail

En contrepartie de son travail, le Salarié percevra une
rémunération fixée à la somme annuelle brute et
forfaitaire de [340,000] Euros €, payable en douze
mensualités La partie variable de la rémunération des
employés est placée à 180.000 Euros (€) pour dessus
l’accomplissement de cible des objectifs mutuellement
convenus.

Le Salarié pourra percevoir des bonus selon les
termes et conditions détaillées en ANNEXE 1. Cette
ANNEXE 1 sera renégociée périodiquement entre la
Société et le Salarié

La Société se réserve également, à sa seule et libre
discrétion, le droit d’octroyer toutes autres primes
ou gratifications, d’un montant variable ou non, à
une période donnée ou

2.4 The Employee’s attributions are of an evolving
nature due, on the one hand, to the Company’s
adaptation requirements and to its needs, and, on
the other hand, to the Employee’s capacities and the
improvement of his competences.

Article 3 – Place of work

As he is residing in France, the Employee’s place of
work shall be the Company’s (Vitria Technology
SAS’s) registered office, presently located at
12-14, Rond Point des Champs-Elysées – 75008 Paris.

However, it is agreed that for reasons relating to
the proper operation and organization of the
Company, the management of the Company may transfer
the Employee’s place of work to any other place
within the region Ile de France.

The Employee’s transfer shall not constitute a
modification of his employment agreement but a mere
change of the Employee’s working conditions.

It is also agreed that the nature of the Employee’s
duties shall require him to travel often and
sometimes for long periods of time within France and
foreign countries, in particular ASIA and the United
States.

 Article 4 – Remuneration – Working hours

In consideration for his work, the Employee shall be
paid a remuneration which is fixed at a gross annual
global amount of [340,000] Euros (€), payable in
twelve monthly instalments. The variable part of
the Employee’s remuneration is set at 180,000 Euros
(€) for the on target accomplishment of mutually
agreed objectives.

The Employee may also receive bonuses subject to the
terms and conditions detailed in the APPENDIX 1
hereto. This APPENDIX 1 will be periodically
renegotiated between the Company and the Employee.

The Company shall also have the right, at its sole
discretion, to grant other bonuses and incentives,
of a variable or fixed amount, at a given period or
at any period, to all or only part

 

 

- 4 -

non, à l’ensemble ou à unepartie seulement du personnel.

Durée du Travail : Compte tenu de vos responsabilités dont l’importance implique une
grande indépendance dans l’organisation de votre emploi du temps, une large autonomie dans la prise
de décisions et un niveau de rémunération des plus
élevés dans la Société, vous n’êtes soumis à aucun
horaire précis et déterminé.

of the personnel.

Working Hours: In view of the high level of the
Employee’s responsibilities, which involve a large
degree of independence in the organization of the
timetable, significant autonomy in decision-making
and among the top levels of remuneration within the
Company, the Employee will not be subject to
specific or pre-defined working
hours.

 

 

- 5 -

Article 5 – Options de souscription d’actions 

Le Salarié s’est vu attribué des options lui permettant de souscrire à 200.000 actions de la
société Vitria Technology Inc., conformément au plan d’option de souscription d’actions français
approuvé par le Conseil d’administration de cette dernière société. Les modalités d’attribution des
options ont été résumées dans un contrat qui a été signé par les deux parties.

Le Salarié se verra attribuer des options supplémentaires lui permettant de souscrire à
[_____________] actions de la société Vitria Technology Inc., conformément au plan d’option de
souscription d’actions français approuvé par le Conseil d’administration de cette dernière société.
Les modalités d’attribution des options seront résumées dans un contrat qui sera signé par les deux
parties.

Article 6 – Frais Professionnels

	6.1  	Le Salarié devant utiliser sa voiture personnelle pour les besoins de son activité
professionnelle, la Société lui alloue, au titre de cette utilisation une indemnité forfaitaire de
2,500 euros/mois. Par ailleurs, le Salarié aura droit au remboursement de ses frais d’essence,
conformément à la politique de remboursement de frais de la Société. Le montant et les modalités
des remboursements susvisés seront révisables en fonction des circonstances, par note de service.
Le Salarié s’engage à remettre à la Société, chaque mois, toutes pièces justificatives des dépenses
liées à l’usage professionnel du véhicule.
	 
	   	Afin d’éviter que la responsabilité civile de l’entreprise puisse se trouver engagée du fait
de l’utilisation professionnelle de la voiture personnelle du Salarié, celui-ci déclare avoir
contracté auprès d’une compagnie d’assurances notoirement solvable une assurance couvrant sans
limitation de somme sa responsabilité civile à l’égard des tiers et pour des besoins
professionnels. Le Salarié s’engage à communiquer à la Société sa police d’assurances qui
comportera obligatoirement une clause garantissant l’entreprise contre le recours des compagnies
d’assurances ou des tiers.

Article 5 – Stock options

The Employee has been granted an option to purchase 200.000 shares of Vitria Technology Inc. in
accordance with the Vitria Technology, Inc. board of directors approved French stock option plan.
Terms of the option grant have been outlined in an agreement, which has been signed by both
parties.

The Employee will be granted an option to purchase [_____________] further shares of Vitria
Technology Inc. in accordance with the Vitria Technology, Inc. board of directors approved French
stock option plan. Terms of the option grant will be outlined in an agreement which has been signed
by both parties.

Article 6 -Professional expenses

	6.1  	The Employee shall use his own car for purposes of his profession. Therefore, the
Company shall, in respect of such use, grant to the Employee, a fixed indemnity of 2,500 euros
per month. In addition, the Employee shall be entitled to the reimbursement of petrol costs,
in accordance with the Company’s policy with respect to reimbursement of expenses. The amount
and terms of the above mentioned reimbursements shall be reconsidered depending on the
circumstances, by means of an internal memorandum. The Employee undertakes, each month, to provide
the Company with all receipts relating to the use of the car for professional purposes.
	 
	   	In order to avoid the Company to be held liable on civil grounds in relation to the Employee’s
use of his car for professional purposes, the latter hereby declares that he has taken out,
with an insurance company renowned to be solvent, an insurance policy covering, without
limitation, his professional civil responsibility with respect to third parties. The Employee
undertakes to communicate to the Company the insurance policy which shall include a provision
guaranteeing the Company against claims made by other insurance companies and by third parties.
The insurance policy shall also mention an undertaking by the insurance company to notify the
Company in the case

 

 

- 6 -

	   	La police d’assurances devra également mentionner l’engagement pris par la compagnie
d’assurances de prévenir la Société en cas de diminution de la garantie ou de résiliation du
contrat pour quelque cause que ce soit. Le Salarié s’engage à demeurer assuré pendant toute
la durée du présent contrat de travail, à payer régulièrement les primes et à en justifier
sur demande de la Société.
	 
	   	En cas d’accident, le Salarié se conformera aux dispositions prévues par la loi et par sa
police d’assurances, de telle sorte que d’aucune manière, et à aucun moment, la responsabilité de
l’entreprise puisse se trouver engagée. Il informera la Société comme sa compagnie d’assurances
dans les 48 heures de l’accident par lettre recommandée.
	 
	6.2  	Les frais professionnels que le Salarié aura engagés au service de la Société, autres que ceux
visés au paragraphe 6.1 ci-dessus, lui seront remboursés chaque mois sur présentation des
justificatifs, conformément à la politique de remboursement de frais de la Société
	 
	6.3  	Considérant que sous la section 3. le Salarié accepte le déplacement lourd pour la compagnie,
une fois nécessaire, pour adapter aux buts convenus de ventes, renvoyez dedans la compagnie accepte
d’adapter à le Salarié avec le déplacement confortable raisonnnable, pour que le Salarié puisse
exécuter les activités prévues de ventes.

Article 7 – Avantages sociaux

Le Salarié aura droit à tous les avantages sociaux prévus par la réglementation en vigueur, la
convention collective applicable à la Société ainsi que des accords conclus par la Société en
faveur des salariés de sa catégorie.

Article 8 – Congés Payés

Le Salarié bénéficiera des congés payés institués en faveur des salariés de sa catégorie
conformément à la législation en vigueur ; la période de ces congés étant déterminée par accord
entre la direction et le Salarié compte tenu des nécessités de son service.

	  	of a reduction of the coverage or of termination of the policy for any reason whatsoever. The
Employee undertakes to remain insured during the entire term of the employment agreement, to pay
the insurance premiums regularly and to provide evidence of such insurance and payments upon the
Company’s request.
	 
	   	In the case of an accident, the Employee shall comply with the provisions provided for by the
law and by his insurance policy in order to avoid the Company’s liability from being held in any
way or at any time whatsoever. The Employee shall inform the Company as well as the insurance
company within 48 hours of the accident by registered letter.
	 
	6.2  	Professional expenses, other than those mentioned in paragraph 6.1 above, incurred by the
Employee while in the service of the Company shall be reimbursed upon the submission of receipts,
in accordance with the Company’s Travel Policy with respect to reimbursement of expenses.
	 
	6.3  	Whereas under Section 3. the Employee accepts heavy travelling for the Company, when needed,
to accommodate the agreed sales goals, in return the Company agrees to accommodate the Employee
with reasonable comfortable travelling, for the Employee to be able to perform the expected sales
activities.

Article 7 – Social benefits

The Employee shall be entitled to all social benefits provided for by the law, the applicable
collective convention and agreements entered into by the Company in favour of the employees of his
category.

Article 8 – Paid vacation

The Employee shall be entitled to paid vacation as granted to the employees of his category in
accordance with the applicable laws; the period of said vacation shall be determined by agreement
between the management and the Employee, taking

 

 

- 7 -

Article 9 – Obligations générales

Le Salarié s’engage à accomplir son emploi avec loyauté et avec soin et à protéger au mieux les
intérêts de la Société à tout moment.

Il s’engage, pendant toute la durée du présent contrat, à respecter toutes les instructions qui
pourront lui être données par la Société et à se conformer aux règles régissant le fonctionnement
interne de celle-ci.

Le Salarié s’engage à utiliser les moyens humains et matériels mis à sa disposition par la Société
exclusivement dans le cadre et pour l’exercice de ses fonctions telles qu’elles sont définies à
l’article 2 ci-dessus.

Le Salarié s’oblige également à informer la Société sans délai de tous changements, postérieurs à
son engagement, qui pourraient intervenir dans son état civil, sa situation de famille et/ou son
adresse.

Article 10 – Exclusivité des services

Pendant toute la durée du présent contrat, le Salarié devra réserver à la Société l’exclusivité de
ses services et ne pourra avoir aucune autre occupation professionnelle, rémunérée ou non, sauf
accord écrit préalable de la Société. Le Salarié s’interdit, en particulier, d’entreprendre ou de
participer à toute activité susceptible de concurrencer celle de la Société ou d’interférer, de
quelque manière que ce soit, avec la bonne exécution du présent contrat de travail.

Article 11 – Obligation de discrétion et de confidentialité

Le Salarié est tenu, indépendamment de son obligation générale de réserve et de secret
professionnel, à une discrétion absolue sur tous les faits qu’il peut apprendre en raison de ses
fonctions ou de son appartenance à la Société.

Il est reconnu de convention expresse entre les parties que l’intégralité des informations (“les
Informations Confidentielles”) relatives à la Société, à son domaine d’activité (actuel ou à venir)
ou à toutes sociétés qui lui sont

business requirements into account.

Article 9 – General obligations

The Employee undertakes to carry out his duties with loyalty and care and to protect the Company’s
interests as best as he can at all times.

The Employee undertakes, during the term of this agreement, to execute all instructions given to
his by the Company and to comply with the internal rules of the Company.

The Employee undertakes to use the human and material means placed at his disposal by the Company
exclusively within the scope and for purposes of carrying out his duties as defined in Article 2
above.

The Employee also undertakes to immediately notify the Company of any changes occurring after his
hiring, of his marital or family status and/or of his address.

Article 10 – Exclusivity of services

During the term of this agreement, the Employee shall perform services exclusively within the
Company and shall not have any other professional activity, remunerated or not, without the prior
written consent of the Company. In particular, the Employee shall not undertake or participate in
any activity which is likely to compete with the activities of the Company or interfere, in any
manner whatsoever, with the proper performance of this employment agreement.

Article 11 – Discretion and confidentiality

The Employee is, independent of his general obligation of reserve and professional secrecy, bound
by an obligation of absolute discretion in relation to all facts of which he may have knowledge
owed to his duties or to his presence in the Company.

It is expressly agreed between the parties that all the information (“the Confidential
Information”) relating to the Company, its (present or future) field of activity or to any of the
companies affiliated or associated with it in

 

 

- 8 -

ou lui seront affiliées ou associées à quelque titre que ce soit, notamment en ce qui concerne leur
activité scientifique, technique, industrielle ou commerciale, sont et doivent en tout temps
demeurer strictement confidentielles et appartiennent exclusivement, selon le cas, à la Société, ou
à toutes sociétés qui lui sont ou seront affiliées ou associées, qu’il s’agisse ou non
d’informations protégées au titre de la propriété intellectuelle, industrielle ou de la propriété
littéraire et artistique.

Article 12 – Obligation de loyauté et de non-débauchage

En cas de cessation de son contrat de travail, pour quelque cause que ce soit, le Salarié
s’interdit, pendant une période de un (1) an à compter de la date de son départ effectif de la
Société, que ce soit pour son propre compte ou pour le compte de tiers, qu’il s’agisse d’une
personne physique, ou d’une personne morale, de, directement ou indirectement :

	-  	solliciter ou tenter de détourner de la Société, ou de toute société qui lui est ou lui sera
affiliée ou associée, la clientèle ainsi que toute personne physique ou morale en relation
d’affaires avec la Société (fournisseur ou autre) ou avec toute société qui lui est ou lui sera
affiliée ou associée, avec laquelle le Salarié aura été en contact au cours de l’année précédent la
date à laquelle le présent contrat de travail aura pris fin ;

	-  	de proposer un emploi à toute personne qui était, à la date à laquelle le présent contrat de
travail aura pris fin ou au cours des douze (12) mois précédents, un salarié, un consultant ou un
mandataire social de la Société ou de toute société qui lui est ou lui sera affiliée ou associée ou
de tenter, par quelque moyen que ce soit, directement ou indirectement, de persuader ou d’inciter
cette personne à accepter un autre emploi ou à quitter la Société ou la société qui lui est ou lui
sera affiliée ou associée.

Article 13 – Clause de non-concurrence

	13.1  	Pour les besoins du présent article, les termes ci-après auront la signification suivante :

any manner whatsoever, in particular concerning their scientific, technical, industrial or
commercial activities, must, at all times, remain strictly confidential and is exclusively owned,
as the case may be, by the Company, or by any affiliated or associated company, whether the
information is or not protected pursuant to intellectual, industrial property law or to copyright
law.

Article 12 – Loyalty and non-solicitation

In the case of termination of this agreement, for any reason whatsoever, the Employee shall not,
for a period of one (1) year as from the date of the Employee’s effective departure from the
Company, whether for himself or on a third party’s behalf, whether an individual or a legal entity,
directly or indirectly:

	-  	solicit or attempt to divert from the Company or any affiliated or associated company, the
clientele, as well as any individuals or legal entities having business relations with the Company
(supplier or other) or any affiliated or associated company, with which the Employee has had
business relations during the year preceding the date at which this agreement terminated;

	-  	propose to any person who was, at the date at which this agreement terminated or during the
twelve (12) preceding months, an employee, consultant or officer of the Company or of any
affiliated or associated company or to attempt by any means, directly or indirectly, to persuade or
incite this person to accept another employment or to leave the Company or an affiliated or
associated company.

Article 13 – Non-competition undertaking

	13.1  	For the purposes of this clause the following words have the following meanings:

 

 

- 9 -

	   	les “Activités Restreintes” : la conception, la vente et le développement d’une clientèle
relativement aux Produits et la vente et le développement d’une clientèle pour des services
de formation à l’entretien et de consultant relatifs à l’installation et au fonctionnement
des Produits mais limités aux produits et services dont le Salarié a été responsable pour le
compte de la Société pendant les douze mois précédent la cessation de sa relation de travail
	 
	   	Le “Territoire Limité” : le territoire de la France, l’Allemagne, le Royaume-Uni, l’Italie,
l’Espagne, la Suisse et l’Autriche ;
	 
	   	les “Produits” : les logiciels distribués et les services offerts par la Société, en
particulier EAI, et tout logiciel actuellement en cours de création ou autrement développé
par ou pour le compte de la Société.
	 
	13.2  	En cas de cessation de son contrat de travail, pour quelque cause que ce soit, le Salarié
s’interdit pendant une période de 12 mois à compter de la date à laquelle le présent contrat de
travail aura effectivement pris fin, que ce soit pour son propre compte ou pour le compte de tout
tiers, qu’il s’agisse d’une personne physique ou d’une personne morale, de, directement ou
indirectement :
	 
	  	- d’occuper toute fonction de direction dans une entreprise ayant une activité ou dont il est
prévu que celle-ci aura une activité entrant dans le domaine des Activités Restreintes sur le
Territoire Limité ;
	 
	  	- d’occuper tout poste ou toutes fonctions permettant au Salarié d’exercer, en personne ou
par l’intermédiaire d’un mandataire, pour son compte ou en association avec ou au bénéfice
d’un tiers, une influence dominante ou lui donnant le contrôle dans toute entreprise ayant
une activité ou dont il est prévu que celle-ci aura une activité entrant dans le domaine des
Activités Restreintes sur

	   	the “Restricted Business”: the design, sale of and procuring of customers for the Products
and the sale and procuring of customers for maintenance training and consultancy services in
respect of the installation and running of the Products but limited to products and services
for which the Employee has been responsible on behalf of the Company during the twelve months
prior to the Employee ceasing to be employed;
	 
	   	the “Restricted Area”: the territory of France, Germany, United Kingdom, Italy, Spain,
Switzerland and Austria.
	 
	   	the “Products”: the software and services distributed by the Company, in particular EAI, and
any software currently being written or otherwise developed by or on behalf of the Company.
	 
	13.2  	In the event the employment agreement is terminated, for any reason whatsoever, the Employee
shall not, for a period of 12 months as from the date of the effective termination of this
employment agreement, for himself or on a third party’s behalf, whether an individual or a legal
entity, directly or indirectly:
	 
	  	- take up or hold any management office in any business which is engaged or is intended to be
engaged in the field of the Restricted Business within the Restricted Area;
	 
	  	- take up or hold any post or position which enables or permits the Employee to exercise
whether personally or by an agent and whether on his/his own account or in association with
or for the benefit of any other person either a dominant influence or a controlling influence
over any business which is engaged or is intended to be engaged in the field of the
Restricted Business within the Restricted Area;

 

 

- 10 -

	   	le Territoire Limité ;
	 
	  	- occuper tout emploi ou fonctions de consultant auprès d’une personne ayant une activité ou
dont il est prévu que celle-ci aura une activité entrant dans le domaine des Activités
Restreintes sur le Territoire Limité dont le résultat probable ou nécessaire serait
l’implication du Salarié, sur le Territoire Limité, dans des activités identiques ou
similaires aux Activités Restreintes.
	 
	13.3  	En contrepartie de l’interdiction de concurrence prévue à l’Article 13.2 ci-dessus, le
Salarié se verra octroyer une indemnité forfaitaire équivalente à 6 mois de la partie fixe de sa
rémunération (telle que définie à l’Article 4). Toutefois, la Société se réserve la possibilité,
lors de la cessation du contrat de travail, de libérer le Salarié de l’interdiction de concurrence
; dans ce cas, le Salarié ne recevra pas l’indemnité visée ci-dessus.

Article 14 – Restitution des documents et matériels

Durant l’exécution ou au terme du présent contrat, quelle qu’en soit la cause, le Salarié devra
restituer sur simple demande de la Société tous dessins, notes, memoranda,
spécifications, outils, formules et documents ainsi que toute copie de ces éléments en sa
possession, ainsi également que tout support comportant ou révélant toute Information
Confidentielle relative à l’activité, le fonctionnement, la gestion ou les projets de la Société
et, plus généralement, tout bien dont la Société est propriétaire.

Le Salarié reconnaît que les documents susmentionnés sont la propriété exclusive de la Société et
qu’il ne dispose d’aucun droit de rétention sur lesdits documents.

Article 15 – Arrêt de contrat 

Le contrat peut être terminé selon les conditions fournies aux termes du code de travail
français et de la convention collective de travail applicable.

	  	 - take up or hold any employment or consultancy with any person which is engaged or is
intended to be engaged in the field of the Restricted Business within the Restricted Area
which would have the necessary or probable result of the Employee being engaged within the
Restricted Area in business activities which are the same or similar to the Restricted
Business.
	 
	13.3  	In consideration for the undertaking provided for in Article 13.2 above, the Employee
shall receive an indemnity equal to 6 months of the fixed part of his remuneration (as defined
in Article 4). However, the Company may, upon the termination of the employment agreement, free
the Employee from the non-competition undertaking; in such a case, the Employee shall not be
entitled to the abovementioned indemnity.

Article 14 – Delivery and return of Company documents and equipments

During the execution and upon termination of this agreement for any reason whatsoever the
Employee shall have the obligation, immediately upon the Company’s request, to deliver to the Company any and all drawings, notes,
memoranda, specifications, devices, formulas and documents, together with all copies thereof,
and any other material containing or disclosing any Confidential Information relating to the
Company’s activity, operation, management or projects, and more generally any property owned by
the Company.

The Employee acknowledges that the above mentioned documents are exclusively owned by the
Company and that he has no right of retention in relation thereto.

Article 15 – Termination of Contract

The contract may be terminated in accordance with the conditions provided under the French labor
code and the applicable collective bargaining agreement.

 

 

- 11 -

Cependant, en cas d’un arrêt de cet accord d’emploi par la compagnie dans les 12 mois, suivant la
nomination d’un nouveau représentant de corporation (“Président”) ou le changement de la commande
de la compagnie, excepté l’arrêt pour l’offense sérieuse, l’employé recevra une indemnité de
licenciement de licenciement contractuelle s’élevant à une quantité brute égale à 12 mois de
salaire moyen comme défini ci-dessous. Cette indemnité de licenciement de licenciement
contractuelle ne sera pas due en cas de la démission des employés.

L’indemnité de licenciement de licenciement contractuelle sera payée à la fin de la période de
notification. Chaque partie payera ses propres impôts et contribution aux auxquels la quantité de
l’indemnité de licenciement de licenciement contractuelle peut être sujette.

On accorde cette indemnité de licenciement de licenciement contractuelle à l’employé prenant en
compte les dommages il souffrirait en cas d’un arrêt non justifié par une offense sérieuse, en
raison de son âge, sa longueur de service au sein de la compagnie et la perte qui auraient comme
conséquence son porteur, et couvrira ainsi dont n’importe quels dommages ou intérêt quelque nature ce puisse être et quelque base il peut
avoir (en particulier sur la base du provocant des raisons de l’arrêt) que l’employé pourrait
réclamer par suite de l’arrêt de cet accord d’emploi.

Le salaire moyen est défini comme salaire moyen mensuel brut payé à l’employé au cours des 12 mois
précédant la date de l’avis de l’arrêt de cet accord d’emploi, y compris la rémunération fixe, de
n’importe quel avantage en nature aussi bien que n’importe quelle bonification payée sur le salaire
fixe pendant ces 12 derniers mois.

Article 16 – Droit applicable – Tribunaux compétents

Le présent contrat de travail est régi par le droit français.

Tout différend lié à l’exécution, à l’interprétation ou à la résiliation du présent contrat sera de
la compétence exclusive des tribunaux français.

Fait à Sunnyvale, California

However, in the event of a termination of this employment agreement by the Company within 12
months, following the appointment of a new corporate representative (“CEO”) or the change of
control of the Company, with the exception of termination for serious offence, the Employee will
receive a contractual severance pay amounting to a gross amount equal to 12 months Average Salary
as defined below. This contractual severance pay will not be due in the event of the Employee’s
resignation.

The contractual severance pay will be paid at the end of the notice period. Each party will pay
its own taxes and contribution to which the amount of the contractual severance pay may be subject
to.

This contractual severance pay is granted to the Employee taking into consideration the damage that
he would suffer in the event of a termination not justified by a serious offence, in view of his
age, his length of service within the Company and the loss that would result in his carrier, and
will thus cover any damage or interest of whatever nature it may be and whatever basis it may have (in particular on the basis of
the challenging of the reasons for the termination) that the Employee could claim as a consequence
of the termination of this employment agreement.

The Average Salary is defined as the gross monthly average salary paid to the Employee over the 12
months preceding the date of notification of this employment agreement’s termination, including the
fixed remuneration, any benefit in kind as well as any bonus paid on top of the fixed salary during
these 12 last months.

Article 16 – Governing law – Jurisdiction

This agreement is governed by French law.

Any dispute arising out of the performance, interpretation or termination of this agreement shall
be subject to the exclusive jurisdiction of French courts.

Executed in Sunnyvale, California

 

 

- 12 -

Le 16 juin 2004

En deux (2) exemplaires

      /s/ Paul Taylor

—————————

Paul Taylor

     /s/    M.   Dale      Skeen

—————————————————

La Société VITRIA TECHNOLOGY INC

représentée par Mr. M. Dale Skeen

en sa qualité de Chief Executive Officer

On 16 June 2004

In two (2) counterparts

      /s/ Paul Taylor

————————————

Paul Taylor

      /s/  M.  Dale       Skeen 

————————————————

VITRIA TECHNOLOGY INC

Represented by Mr. M. Dale Skeen

In his capacity Chief Executive Officer

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	ANNEXE1
	 	 	APPENDIX 1
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	au Contrat de Travail de Paul Taylor.	 	 	to the Contract of Employment of Paul Taylor.	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Bonus plan pour la période du 1er juin
2004 au 31 janvier 2005

Bonus de motivation	 	 	Bonus scheme for the period 1 June 2004
to 31 January 2005
Incentive Bonus	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Une somme égale à 55,320.44 Euros (€)
sera versée au Salarié avec son salaire le
30 juin 2004.	 	 	An amount equal to 55,320.44 Euros
(€) will be paid to the Employee with his
salary on 30 June 2004.	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Ce bonus est un bonus exceptionnel. Ce
bonus ne sera, en aucun cas, exigible ou
renouvelé après juin 2004.	 	 	This is a one-time incentive bonus. This bonus
will, under no circumstance, be payable or
renewed after June 2004.	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Il sera déduit du montant de ce bonus le
montant des cotisations de sécurité sociale
ainsi que toute autre déduction exigée par
la loi.	 	 	This bonus will be subject to deductions for
social security contributions and other
deductions required by law.	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Bonification de ventes	 	 	Sales bonus	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Le Salarié pourra bénéficier d’un bonus en
fonction de l’atteinte par Vitria
Technology Inc. d’un objectif de revenus
générés par les contrats de licences de
logiciels conclus dans la région Amérique
du Nord, à l’exclusion des contrats de
licences de logiciels conclus avec des
sociétés du milieu médical, au cours des
deux derniers trimestres de l’année fiscale
2004 (l’“Objectif”). Tout revenu facturable
est pris en considération.	 	 	The Employee will be entitled to receive a
bonus based on Vitria Technology Inc.’s
achievement of target revenue generated by
North American software license sales,
exclusive of software license sales to
healthcare companies, in fiscal quarters three
and four of 2004 (the “Target”). All
recognized revenue is taken into account.	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	L’Objectif est défini dans le tableau joint.	 	 	The Target is defined in the schedule attached.	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Dans le cas où le Salarié bénéficie d’un
bonus, celui-ci serait versé en même temps
que la rémunération fixe le 31 janvier
2005.	 	 	In the event the Employee is entitled to a
sales bonus, it shall be paid with his salary
on 31 January 2005.	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Dans le seul cas de l’atteinte totale de
l’Objectif, le Salarié percevra un bonus
égal à 100% de 83.326,39 Euros (€) (le
“Bonus”).	 	 	In the event the Target is achieved, the
Employee will be entitled to a sales bonus
equivalent to 100% of 83,326.39 Euros (€)
(the “Bonus”).	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Dans le cas où l’Objectif n’est pas
atteint, Le Salarié pouvez percevoir un
pourcentage du Bonus. Le pourcentage du
Bonus que le Salarié pourra recevoir sera
déterminé de la manière suivante:	 	 	Where the Target is not achieved, the Employee
may be entitled to receive a portion of
the Bonus as defined above. The portion of the
Bonus the Employee may receive will be
determined in accordance with the following
schedule:	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	

	 	 	(1	)	 	Si moins de 75% de
l’Objectif est atteint, le Salarié ne
percevra pas de Bonus.
	 	 	 	 	 	(1	)	 	If less than 75% of the Target is
achieved, the Employee will receive no Bonus.	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	

	 	 	(2	)	 	Si 75%-80% de l’Objectif est
atteint,
	 	 	 	 	 	(2	)	 	 If 75%-80% of the Target is achieved,	 
	 	 	 	 	 	 

 

 

- 2 -

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	

	 	 	 	 	 	vous percevra 50% du Bonus.
	 	 	 	 	 	 	the Employee will receive 50% of the Bonus.	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	

	 	 	(3	)	 	Si 81-85% de l’Objectif est
atteint, le Salarié percevra 60% du
Bonus.
	 	 	 	 	 (3)
	 	 If 81-85% of the Target is achieved, the
Employee will receive 60% of the Bonus.	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	

	 	 	(4	)	 	Si 86-90% de l’Objectif est
atteint, le Salarié percevra 70% du
Bonus.
	 	 	 	 	 (4)
	 	 If 86-90% of the Target is achieved, the
Employee will receive 70% of the Bonus.	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	

	 	 	(5	)	 	Si 91-9
5% de l’Objectif est
atteint, le Salarié percevra 80% du
Bonus.
	 	 	 	 	 (5)
	 	 If 91-95% of the Target is achieved, the
Employee will receive 80% of the Bonus.	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	

	 	 	(6	)	 	Si 96-99% de l’Objectif est
atteint, le Salarié percevra 90% du
Bonus.
	 	 	 	 	 (6)
	 	 If 96-99% of the Target is achieved, the
Employee will receive 90% of the Bonus.	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	

	 	 	(7	)	 	Si 100% ou plus de l’Objectif est
atteint, le Salarié percevra 100% du
Bonus.
	 	 	 	 	 (7)
	 	 If 100% or more of the Target is achieved,
the Employee will receive 100% of the Bonus.	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Le représentant légal (“CEO”) de
Vitria Technology Inc. jugera de l’atteinte
de l’Objectif.	 	 	Vitria Technology Inc.’s Chief
Executive Officer (“CEO”) will judge the
achievement of the Target.	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	En cas de rupture du contrat de travail
avant le 31 janvier 2005, le Salarié pourra
bénéficier d’un prorata du Bonus en
fonction de la réalisation partielle de
l’Objectif.	 	 	In the event of a termination of the
employment contract before 31 January 2005,
the Employee can benefit of a Bonus pro rata,
depending on the partial achievement of the
Target.	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Il sera déduit du montant du Bonus ou du
pourcentage du Bonus le montant des
cotisations de sécurité sociale ainsi que
toute autre déduction exigée par la loi.	 	 	The Bonus or the portion of the Bonus is
subject to deductions for social security
contributions and other deductions required by
law.	 
	 	 	 	 	 	 
	 	Fait à Sunnyvale, Californie

Le 16 juin 2004	 	 	Executed in Sunnyvale, Cal.

June 16 2004	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	En deux (2) exemplaires	 	 	In two (2) counterparts	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	          /s/ M. Dale Skeen          
	 	 	          /s/ M. Dale Skeen          
	 
	 	Pour Vitria Technology Inc.
	 	 	For Vitria Technology Inc.
	 
	 	M. Dale Skeen, CEO
	 	 	M. Dale Skeen, CEO
	 
	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	          /s/ Paul Taylor          
	 
	 	Paul Taylor
	 
	 	 	 	 	 	 

 

 

- 3 -

Schedule 1 to Appendix 1

Employment Agreement between Paul Taylor and Vitria Technologies, Inc.

executed June 16, 2004

Target Revenue generated by North American software license sales, exclusive of software
license sales to healthcare companies in fiscal quarters three and four of 2004 (the “Target” ) is
$5,745,000

 

 

	 	 	 	 	 	 
	 	 	 	 	 	 
	 	AVENANT n°2

	 	 	APPENDIX 2	 
	 	 
	 	 	 	 
	 	au Contrat de Travail de Paul Taylor
(le “Salarié”).

	 	 	to the Contract of Employment of
Paul Taylor the “Employee”).	 
	 	 
	 	 	 	 
	 	Plan de prime pour la période du 1er
janvier 2005 au 30 juin 2005
Prime d’objectif

	 	 	Bonus scheme for the period 1
January 2005 to 30 June 2005
Incentive Bonus	 
	 	 
	 	 	 	 
	 	Une somme égale à 18.696 Euros
(€) sera versée au Salarié avec
son salaire le 31 mars 2005.

	 	 	An amount equal to 18,696 Euros
(€) will be paid to the Employee
with his salary on 31 March 2005.	 
	 	 
	 	 	 	 
	 	Une somme égale à 18.696 € sera
versée au Salarié avec son salaire
le 30 juin 2005, à condition que le
Salarié ait rempli les fonctions de
Chef des Ventes Mondiales (“les
Fonctions”) jusqu’à cette date.

	 	 	An amount equal to €18,696 will
be paid to the Employee with his
salary on 30 June 2005, provided
that Employee has served in the role
of Head of Worldwide Sales (the
“Role”) through that date.	 
	 	 
	 	 	 	 
	 	Dans le cas où le Salarié arrêterait
ses Fonctions avant le 30 juin 2005,
le montant indiqué au précédent
paragraphe sera pro ratisé jusqu’à
la date de cessation des Fonctions
et versé au Salarié dans les 30
jours de la date de cessation des
Fonctions du Salarié.

	 	 	In the event the Employee ceases
serving in the Role prior to 30 June
2005, the amount set forth in the
preceding paragraph will be prorated
through the date the Employee ceases
in the Role and paid to Employee
within 30 days of the date on which
the Employee ceases serving in the
Role.	 
	 	 
	 	 	 	 
	 	Cette prime d’objectif sera soumise
au prélèvement des cotisations
sociales et à tout autre prélèvement
prévu par la loi.

	 	 	This incentive bonus will be subject
to deductions for social security
contributions and other deductions
required by law.	 
	 	 
	 	 	 	 
	 	Prime de vente non-renouvelable

	 	 	Non-recurring sales bonus	 
	 	 
	 	 	 	 
	 	Le salarié pourra recevoir une prime
basée sur l’atteinte de l’objectif
de résultat de Vitria Technology Inc
généré par les ventes de licences de
logiciel nord-américaines à
l’exception des ventes de logiciels
aux sociétés de soins médicaux, dans
les deux premiers trimestres de
l’exercice 2005 (l’“Objectif”). Tout
le “recognized license revenue” est
pris en compte.

	 	 	The Employee will be entitled to
receive a bonus based on Vitria
Technology Inc.’s achievement of
target revenue generated by North
American software license sales,
exclusive of software license sales
to healthcare companies, in fiscal
quarters one and two of 2005 (the
“Target”). All recognized license
revenue is taken into account.	 
	 	 
	 	 	 	 
	 	L’Objectif est de 5.745.000 dollars
américains.

	 	 	The Target is US$5,745,000.	 
	 	 
	 	 	 	 
	 	Dans l’hypothèse où l’Objectif est
atteint, le Salarié aura droit à une
prime de vente équivalant à 100% de
74.783 € (la “Prime”).

	 	 	In the event the Target is achieved,
the Employee will be entitled to a
sales bonus equivalent to 100% of
€74,783 (the “Bonus”).	 
	 	 
	 	 	 	 
	 	Si l’Objectif n’est pas atteint, le
Salarié pourra recevoir une partie
de la Prime. La partie de la Prime
que le Salarié pourra recevoir sera
déterminée selon ce qui suit :

	 	 	Where the Target is not achieved,
the Employee may be entitled to
receive a portion of the Bonus. The
portion of the Bonus the Employee
may receive will be	 
	 	 	 	 	 	 

 

 

- 2 -

	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 	determined in accordance with the following:	 
	 	 
	 	 	 	 	 	 	 	 	 	 
	 	(1)

	 	Si moins de 75% de l’Objectif
est atteint, le Salarié ne recevra
aucune Prime.
	 	 	 	 	 (1)
	 	If less than 75% of the Target
is achieved, the Employee will
receive no Bonus.	 
	 	 
	 	 	 	 	 	 	 	 	 	 
	 	(2)

	 	Si 75-80% de l’Objectif est
atteint, le Salarié recevra 50% de
la Prime.
	 	 	 	 	 (2)
	 	If 75%-80% of the Target is
achieved, the Employee will receive
50% of the Bonus.	 
	 	 
	 	 	 	 	 	 	 	 	 	 
	 	(3)

	 	Si 81-85% de l’Objectif est
atteint, le Salarié recevra 60% de
la Prime.
	 	 	 	 	 (3)
	 	If 81-85% of the Target is
achieved, the Employee will receive
60% of the Bonus.	 
	 	 
	 	 	 	 	 	 	 	 	 	 
	 	(4)

	 	Si 86-90% de l’Objectif est
atteint, le Salarié recevra 70% de
la Prime.
	 	 	 	 	 (4)
	 	If 86-90% of the Target is
achieved, the Employee will receive
70% of the Bonus.	 
	 	 
	 	 	 	 	 	 	 	 	 	 
	 	(5)

	 	Si 91-95% de l’Objectif est
atteint, le Salarié recevra 80% de
la Prime.
	 	 	 	 	 (5)
	 	If 91-95% of the Target is
achieved, the Employee will receive
80% of the Bonus.	 
	 	 
	 	 	 	 	 	 	 	 	 	 
	 	(6)

	 	Si 96-99% de l’Objectif est
atteint, le Salarié recevra 90% de
la Prime.
	 	 	 	 	 (6)
	 	If 96-99% of the Target is
achieved, the Employee will receive
90% of the Bonus.	 
	 	 
	 	 	 	 	 	 	 	 	 	 
	 	(7)

	 	Si 100-109% de l’Objectif est
atteint, le Salarié recevra 100% de
la Prime.
	 	 	 	 	 (7)
	 	If 100-109% of the Target is
achieved, the Employee will receive
100% of the Bonus.	 
	 	 
	 	 	 	 	 	 	 	 	 	 
	 	(8)

	 	Si 110-119% de l’Objectif est
atteint, le Salarié recevra 112,5%
de la Prime.
	 	 	 	 	 (8)
	 	If 110-119% of the Target is
achieved, the Employee will receive
112.5% of the Bonus	 
	 	 
	 	 	 	 	 	 	 	 	 	 
	 	(9)

	 	Si plus de 120% de l’Objectif
est atteint, le Salarié recevra 125%
de la Prime.
	 	 	 	 	 (9)
	 	If over 120% of the Target is
achieved, the Employee will receive
125% of the bonus;	 
	 	 
	 	 	 	 	 	 	 	 	 	 
	 	

	 	Plus :
	 	 	 	 	 	 	Plus:	 
	 	

	 	1,8% de la somme au-delà de
l’Objectif (payé au taux de
change de 0,74783 € par
dollar).
	 	 	 	 	 	 	1.8% of the amount by which Target
has been exceeded (to be paid at the
exchange rate of .74783 Euros to the
dollar).	 
	 	 
	 	 	 	 	 	 	 	 	 	 
	 	Le Chief Executive Officer de Vitria
Technology Inc appréciera l’atteinte
de l’Objectif.	 	 	Vitria Technology Inc.’s Chief
Executive Officer will judge the
achievement of the Target.	 
	 	 
	 	 	 	 	 	 	 	 	 	 
	 	Dans l’hypothèse d’une rupture du
contrat de travail du Salarié avant
le 30 juin 2005, le Salarié pourra
recevoir un prorata de la Prime basé
sur l’atteinte partielle de
l’Objectif.	 	 	In the event of a termination of
Employee’s contract of employment
before 30 June 2005, the Employee
can receive a pro rata Bonus based
on the partial achievement of the
Target.	 
	 	 
	 	 	 	 	 	 	 	 	 	 
	 	Dans l’hypothèse où le Salarié a
droit à une prime de vente pour
atteinte de l’Objectif la prime de
vente sera payée avec le salaire le
31 juillet 2005. La prime de vente
est soumise au prélèvement des
cotisations de	 	 	In the event the Employee is
entitled to a sales bonus for
achieving the Target, the sales
bonus shall be paid with his salary
on 31 July 2005. The sales bonus is
subject to deductions for social
security contributions	 
	 	 	 	 	 	 

 

 

- 3 -

	 	 	 	 	 	 
	 	 	 	 	 	 
	 	sécurité sociale et à
tout autre prélèvement prévu par la
loi.

	 	 	and other deductions required by law.	 
	 	 
	 	 	 	 
	 	Signé à Sunnyval en Californie

	 	 	Executed in Sunnyvale, Cal.	 
	 	30 mars 2005

	 	 	30 March 2005	 
	 	 
	 	 	 	 
	 	En deux (2) exemplaires

	 	 	In two (2) counterparts	 
	 	 
	 	 	 	 
	 	/s/
M. Dale Skeen                                                     

	 	 	/s/
M. Dale Skeen                                                     
    	 
	 	Pour Vitria Technology Inc.

	 	 	For Vitria Technology Inc.	 
	 	M. Dale Skeen, CEO

	 	 	M. Dale Skeen, CEO	 
	 	 
	 	 	 	 
	 	/s/
Paul
Taylor                                                           

	 	 	/s/
Paul
Taylor                                                           
    	 
	 	Paul Taylor

	 	 	Paul Taylorexv10wxey

 

PORTIONS OF THIS EXHIBIT IDENTIFIED BY “***” HAVE BEEN DELETED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND THE FREEDOM OF INFORMATION ACT.

Exhibit 10(e)

STORAGE SERVICE AGREEMENT

BY AND BETWEEN

BAY GAS STORAGE COMPANY, LTD.

AND

BP ENERGY COMPANY

CONTRACT NUMBER FBP07

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	ARTICLE	 	 	 	PAGE
	I.

	 	Conditions Precedent
	 	 	2	 
	 
	 	 	 	 	 	 
	II.

	 	Commencement of Operations
	 	 	3	 
	 
	 	 	 	 	 	 
	III.

	 	Gas to be Received, Stored and Delivered
	 	 	3	 
	 
	 	 	 	 	 	 
	IV.

	 	Performance Obligations
	 	 	5	 
	 
	 	 	 	 	 	 
	V.

	 	Delivery Pressure
	 	 	5	 
	 
	 	 	 	 	 	 
	VI.

	 	Point(s) of Receipt and Delivery
	 	 	5	 
	 
	 	 	 	 	 	 
	VII.

	 	Title and Risk of Loss
	 	 	6	 
	 
	 	 	 	 	 	 
	VIII.

	 	Term
	 	 	6	 
	 
	 	 	 	 	 	 
	IX.

	 	Default and Termination
	 	 	7	 
	 
	 	 	 	 	 	 
	X.

	 	Rates
	 	 	8	 
	 
	 	 	 	 	 	 
	XI.

	 	Taxes
	 	 	8	 
	 
	 	 	 	 	 	 
	XII.

	 	Notices
	 	 	9	 
	 
	 	 	 	 	 	 
	XIII.

	 	Nominations
	 	 	11	 
	 
	 	 	 	 	 	 
	XIV.

	 	General Terms and Conditions;
Amended Statement of Conditions for Gas Storage
	 	 	11	 
	 
	 	 	 	 	 	 
	XV.

	 	Miscellaneous
	 	 	12	 

 

 

Exhibits 

Exhibit “A” – Points of Receipt and Delivery

Exhibit “B” – General Terms and Conditions

Exhibit “C” – Amended Statement of Conditions

Exhibit “D” – Sample Nomination Form

Exhibit “E” – Form of Assignment Consent

 ii

 

 

STORAGE SERVICE AGREEMENT

     THIS STORAGE SERVICE AGREEMENT (this “Contract” or “Agreement”) is made and entered into as of
the 31st day of March, 2005, by and between BAY GAS STORAGE COMPANY, LTD (“Bay Gas”), an
Alabama limited partnership, and BP ENERGY COMPANY (“Shipper”). Bay Gas and Shipper hereinafter
may be referred to individually as “Party” and collectively as “Parties”.

W I T N E S S E T H:

     WHEREAS, Bay Gas and Shipper executed a Storage Service Agreement dated March 31, 2005 -
Contract Number FBP05 (“Contract FBP05”); and

     WHEREAS, Bay Gas intends to develop certain new underground gas storage facilities (the “New
Storage Facilities”) to be constructed in connection with existing underground gas storage
facilities located near McIntosh, Alabama which are owned and operated by Bay Gas (the “Existing
Storage Facilities”; the Existing Storage Facilities and New Storage Facilities being referred to
herein collectively as the “Storage Facilities”); and

     WHEREAS, Shipper desires to contract for a portion of the storage capacity of the Storage
Facilities, and desires that Bay Gas receive at the Point(s) of Receipt specified on Exhibit “A”
attached hereto and made a part hereof, certain quantities of gas from the pipeline facilities
identified therein for the purpose of injecting and storing such gas for Shipper (or for its
account) in the Storage Facilities, and that Bay Gas deliver such gas into the pipeline facilities
identified on Exhibit “A” at the Point(s) of Delivery therein specified; and

     WHEREAS, Bay Gas desires to perform such services for Shipper, all to be provided pursuant and
subject to the terms and conditions hereof; and

     WHEREAS, all transactions for storage or transportation hereunder meet the Federal Energy
Regulatory Commission’s requirements of Subpart C – Certain Transportation by Intrastate Pipelines,
at 18 CFR 284.122(d)(1) and are on behalf of an interstate pipeline (Florida Gas); and

     WHEREAS, Shipper and Bay Gas intend this Contract, upon the occurrence of the Commencement
Date as defined in Section 2.1 herein, to replace Contract FBP05.

     NOW, THEREFORE, for and in consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt and sufficiency of

1

 

which are hereby acknowledged, Bay Gas and Shipper hereby agree as follows:

ARTICLE I

CONDITIONS PRECEDENT

     1.1 Following the date of this Agreement, Bay Gas shall exert its best efforts to obtain:

     (a) Satisfactory arrangements for financing the construction of New Storage Facilities
to provide services to Shipper as provided herein (it being understood and agreed that the
determinations of what New Storage Facilities shall be constructed and what financing is
satisfactory shall be in the sole discretion of Bay Gas); and

     (b) All permits, authorizations, certificates and approvals, as deemed necessary or
desirable by Bay Gas, from all appropriate local, state or federal agencies having
jurisdiction over the construction, operation or rates charged for services, to enable it to
perform its obligations and receive the benefits provided for hereunder.

     1.2 Promptly following the attainment by Bay Gas of satisfactory arrangements for financing,
and all permits, authorizations, certificates and approvals as set forth in Section 1.1(a) and
1.1(b) consistent with the terms of this Agreement (or the waiver thereof by Bay Gas and Shipper),
Bay Gas shall proceed with the necessary activity to commence the leaching of the required new
storage capacity. Upon or before commencement of the leaching activity Bay Gas shall provide
Shipper with written notice (the “Commitment Notice”) to such effect.

     1.3 Notwithstanding Section 1.1 and 1.2, Bay Gas shall provide Shipper with a Commitment
Notice no later than twenty-four (24) months following the date of this Contract, failing which
Shipper shall have the right to terminate this Contract by written notice to Bay Gas.

     1.4 If Bay Gas determines at any time that construction of all or any portion of the New
Storage Facilities would not be economic, in Bay Gas’ sole discretion, Bay Gas shall have the right
to terminate this Agreement upon 30 days prior written notice to Shipper (“Notice of Termination”).
This Agreement shall terminate upon the expiration of the 30-day period unless within such period
(a) Bay Gas withdraws such Notice of Termination in writing or (b) the Parties, in writing, enter
into a mutually acceptable amendment to the Agreement.

2

 

     ARTICLE II

     COMMENCEMENT OF OPERATIONS

     2.1 If Bay Gas provides the Commitment Notice described in ARTICLE I, Bay Gas shall thereafter
provide Shipper written notice when facilities to provide the services specified herein are to be
operational, and shall state in such notice a date upon which Bay Gas will be ready to receive gas
for storage and otherwise provide to Shipper the services specified herein (hereinafter referred to
as the “Commencement Date”). Such notice shall specify a Commencement Date not later than
twenty-four (24) months from the date of the Commitment Notice (except in the case of force majeure
as described in Bay Gas’ General Terms and Conditions, attached as Exhibit “B”). In the event of
such Force Majeure the twenty-four (24) months prescribed in the preceding sentence shall be
increased by a period of time equal to the time of the force majeure, but in no event shall such
twenty-four (24) month period, as it may be increased hereby, be a period greater than thirty (30)
months. If Bay Gas has not specified a Commencement Date or if the New Storage Facilities have not
been placed in service within the time required hereby either Party may terminate this contract by
written notice to the other.

     2.2 Upon the occurrence of the Commencement Date, this Contract shall replace Contract FBP05
and, except to the extent of obligations and liabilities occurring and accruing prior to the
Commencement Date under Contract FBP05, the Parties shall no longer be bound by the terms and
conditions of Contract FBP05.

     2.2 For a period not to exceed **** days following the Commencement Date (such period to be
referred to hereinafter as the ”Start-up Period”), the amount of firm injection capacity available
to Shipper shall be provided in accordance with the volumes set forth in Article 3.1 (d) below.

ARTICLE III

GAS TO BE RECEIVED, STORED AND DELIVERED

     3.1 Contract Quantities. Subject to the terms and conditions established herein and
in Bay Gas’ General Terms and Conditions, attached as Exhibit “B”, and made a part hereof, and
Amended Statement of Conditions, attached as Exhibit “C” and made a part hereof, Bay Gas shall
provide the following capacities to Shipper, provided that under no circumstances will Bay Gas be
obligated to provide to Shipper capacities in excess of the maximum quantities set forth below:

	 	(a)  	Firm Storage — a Firm Maximum Storage Quantity (“FMSQ”) in the Storage
Facilities equal to 1,000,000 MMBtu.

3

 

	 	(b)  	Firm Withdrawal — a Firm Maximum Daily Withdrawal Quantity (“FMDWQ”) of ****
MMBtu per day;
	 
	 	(c)  	Firm Injection — a Firm Maximum Daily Injection Quantity (“FMDIQ”) of ****
MMBtu per day.
	 
	 	(d)  	Firm Injection During Start-Up Period – a Firm Maximum Daily Injection Quantity
of **** MMBtu per day.

     3.2 Gas Tendered. Shipper shall tender or cause to be tendered to Bay Gas at the
Point(s) of Receipt specified on Exhibit “A” any gas which Shipper desires to have injected into
storage hereunder. The obligation of Bay Gas to receive gas shall not exceed: (a) at any Point of
Receipt the lesser of, (i) the Injection Quantities for such Point of Receipt, or (ii) the total
daily volume that Shipper or its designee is able and willing to tender at such Point of Receipt;
or (b) the aggregate Injection Quantities for all Points of Receipt. Shipper shall also receive or
cause to be received at the Point(s) of Delivery herein specified on Exhibit “A” gas it requests to
be withdrawn from storage by Bay Gas.

     3.3 Gas Received and Delivered. Subject to the operating conditions of the
pipeline(s) delivering or receiving gas for Shipper’s account and the terms hereof, Bay Gas shall
receive gas for injection from Shipper at the Point(s) of Receipt and deliver gas to Shipper at the
Point(s) of Delivery specified on Exhibit “A” as scheduled by Shipper from time to time; provided
that Bay Gas shall not be obligated to receive for injection any quantity of gas if the injection
of the same would cause the quantity of gas stored in the Storage Facilities for Shipper’s account
(“Shipper’s Gas Storage Inventory”) to exceed the total of Shipper’s FMSQ as stated above; nor
shall Bay Gas be obligated at any time to deliver more gas to Shipper than Shipper has in its
then-current Shipper’s Gas Storage Inventory.

     3.4 Gas to be Withdrawn on Termination. Shipper must have all of its gas withdrawn by
the end of the term of this Contract. If service pursuant to this Contract is canceled or
terminated prior to the end of the term specified herein, and Shipper has gas in its then-current
Shipper’s Gas Storage Inventory, Shipper shall be required to withdraw its gas within a thirty (30)
day period. During this period, this Contract shall continue in force and effect for the sole
purpose of withdrawal and delivery of and payment for storage services for said gas. If the gas is
not withdrawn within the specified time period, Bay Gas shall take title to such gas not withdrawn.

4

 

ARTICLE IV

PERFORMANCE OBLIGATION

     Firm Service. All Firm service rendered under this Contract shall be provided to
Shipper except in the case of force majeure as described in Bay Gas’ General Terms and Conditions
attached as Exhibit “B”. Bay Gas shall not be obligated to provide capacities in excess of those
stated in Article 3.1 of this Contract.

ARTICLE V

DELIVERY PRESSURE

     Delivery Pressure. Shipper is obligated to deliver gas at the Point(s) of Receipt
identified in Exhibit “A” at a pressure sufficient for Bay Gas to transport such gas to its storage
facility recognizing that the amount of such pressure required may vary based on the operations of
the Bay Gas pipeline; provided however, in no event shall such pressures be greater than Bay Gas’
maximum allowable operating pressures.

ARTICLE VI

POINT(S) OF RECEIPT AND DELIVERY

     6.1 Point(s) of Receipt. The Point(s) of Receipt for all gas to be tendered by
Shipper to Bay Gas for injection into the Storage Facilities shall be as specified on Exhibit “A”,
and the maximum daily quantity of gas which Bay Gas is obligated to receive from Shipper at each
individual Point of Receipt shall not exceed the maximum stated thereon.

     6.2 Point(s) of Delivery. The Point(s) of Delivery for all gas to be tendered by Bay
Gas to Shipper for delivery pursuant to the terms hereof shall be as specified on Exhibit “A”, and
the maximum daily quantities of gas which Bay Gas is obligated to deliver to Shipper at each such
individual Point of Delivery shall not exceed the maximum stated thereon.

     6.3 Addition / Deletion of Point(s) of Receipt or Delivery. Bay Gas and Shipper may
add or delete Point(s) of Receipt or Delivery from time to time by mutual agreement evidenced by a
signed amendment to Exhibit “A”.

5

 

ARTICLE VII

TITLE AND RISK OF LOSS

     7.1 Title. Title to the natural gas stored by Bay Gas and delivered to Shipper
hereunder shall, at all times, be in Shipper’s name. Bay Gas makes no warranty of title
whatsoever. Shipper warrants for itself, its successors and assigns, that it will have at the time
of delivery of gas for storage hereunder good title or valid right to deliver such gas stored
hereunder. Shipper warrants for itself, its successors and assigns, that the gas it delivers
hereunder shall be free and clear of all liens, encumbrances, or claims whatsoever; and that it
will indemnify Bay Gas and save it harmless from all claims, suits, actions, damages, costs and
expenses arising directly or indirectly from or with respect to the title to gas tendered to Bay
Gas hereunder.

     7.2 No Encumbrance on Stored Gas. Bay Gas covenants that it shall neither cause nor
allow any cloud or encumbrance of any nature to arise by, through or under Bay Gas with respect to
Shipper’s title to any gas tendered to Bay Gas for storage, and agrees to deliver such gas pursuant
to this Agreement free from all liens and adverse claims arising by, through or under Bay Gas, and
that it will indemnify, protect, and save Shipper harmless from all claims, suits, actions,
damages, costs and expenses arising directly or indirectly from the same.

     7.3 Control and Possession. As between Shipper and Bay Gas: Shipper shall be in
control and possession of the gas prior to delivery to Bay Gas for injection at the Point(s) of
Receipt and after delivery by Bay Gas to Shipper at the Point(s) of Delivery, and shall indemnify
and hold Bay Gas harmless from any damage or injury caused thereby except for damages and injuries
caused by the sole negligence of Bay Gas; and, Bay Gas shall be in control and possession of the
gas after the receipt of the same for injection at the Point(s) of Receipt and until delivery by
Bay Gas to Shipper at the Point(s) of Delivery, and shall indemnify and hold Shipper harmless from
any damage or injury caused thereby, except for damages and injuries caused by the sole negligence
of Shipper. The risk of loss for all gas injected into, stored in and withdrawn from the Storage
Facilities shall be and remain with the Party having control and possession of the gas as herein
provided.

ARTICLE VIII

TERM

	 	8.1  	Primary Term; Renewal. Subject to termination in accordance with the
provisions of ARTICLE I or ARTICLE II:

	 	(a)  	this Contract shall be effective as of its execution, provided
that this

6

 

	 	   	Contract shall not be an agreement for storage services unless and until the
occurrence of the Commencement Date; and
	 
	 	(b)  	upon the occurrence of the Commencement Date, this Contract
shall continue in full force and effect for a period of five (5) years
(“Primary Term”).

Following the Primary Term Shipper shall have a right to extend the term of the Contract for an
additional **** period under the same terms and conditions. Shipper shall provide written notice
to Bay Gas that it will extend the Contract not less than **** prior to the end of the Primary
Term.

ARTICLE IX

DEFAULT AND TERMINATION

     9.1 If either Party hereto shall fail to perform any of the covenants or obligations imposed
upon it by virtue of this Contract (except where such failure shall be excused under any of the
provisions of this Agreement or except where other termination remedies have been established under
this Agreement), then in such event the other Party may, at its option, terminate this Contract by
proceeding as follows: the Party not in default shall cause a written notice to be served upon the
Party in default, stating specifically the cause for terminating this Contract and declaring it to
be the intention of the Party giving the notice to terminate the same; whereupon, the Party in
default shall have thirty (30) days after receipt of the aforesaid notice within which to remedy or
remove the cause or causes of default stated in the notice of termination and if, within said
period of thirty (30) days, the Party in default does so remedy and remove such cause or causes,
and fully indemnifies the Party not in breach, then such notice shall be nullified and this
Contract shall continue in full force and effect. In the event the Party in default does not so
remedy and remove the cause or causes of default, or does not fully indemnify the Party giving the
notice for such Party’s actual damages as a result of such breach within said period of thirty (30)
days, then this Contract shall terminate after the expiration of said period; provided, however,
that if such default be remedied but no indemnification therefor has been made due to a bona fide
dispute between the Parties as to the amount thereof, then this Contract shall not terminate, but
the Party not in default shall have the right to seek recovery of its actual damages as provided by
law. Notwithstanding any provision to the contrary in the Amended Statement of Conditions or the
General Terms and Conditions, any termination for breach of this Contract shall be carried out
strictly in accordance with this section (it being the intent of this Agreement that the foregoing
language is an exception to the provisions of Article X of the Amended Statement of Conditions).

7

 

     9.2 Any cancellation of this Contract pursuant to the provisions of this Article IX shall be
without prejudice to the right of the Party not in default to collect any amounts then due it and
without waiver of any other remedy or performance to which the Party not in default may be
entitled.

ARTICLE X

RATES

     10.1 Storage Charges. In accordance with the billing procedures described in the
General Terms and Conditions, attached as Exhibit “B” beginning with the month in which the
Commencement Date occurs, Shipper shall pay to Bay Gas the following charges:

	 	(a)  	Firm Services Monthly Demand Charge - **** per MMBtu of Shipper’s FMSQ for each
month of the Primary Term and Renewal Term of the Contract; provided, however, that
during the Start-Up Period the Firm Services Monthly Demand Charge shall be **** plus;
	 
	 	(b)  	Injection and Withdrawal Charges - **** per MMBtu of gas received by Bay Gas
for injection into storage hereunder (excluding gas retained by Bay Gas as fuel)
(“Injection Charge”) and **** for each MMBtu of gas delivered by Bay Gas to Shipper
hereunder (“Withdrawal Charge”) during the Primary Term and Renewal Term of the
Contract.
	 
	 	(c)  	Fuel Charge — Bay Gas shall retain **** of all volumes of gas scheduled by
Shipper for injection at the Storage Facilities during the Primary Term and Renewal
Term of the Contract. The remaining **** shall be applied to computing compliance with
the FMSQ and computing the amount of Shipper’s Gas Storage Inventory.

ARTICLE XI

TAXES

     11.1 (a) Shipper agrees to pay Bay Gas, by way of reimbursement, within twenty (20) days of
receipt of an invoice for same, all taxes levied or imposed upon Bay Gas after the date hereof; and
any increases in existing taxes which may be made effective after the date hereof, with respect to
the storage of gas hereunder. Bay Gas agrees to pass through to Shipper in its monthly billings
any savings resulting from decreases in existing taxes which may be made effective after the date
hereof, with respect to the storage of gas hereunder. In the event that any additional taxes or

8

 

increases in taxes are imposed and, should Bay Gas elect not to challenge the same, then
Shipper shall be subrogated to Bay Gas’ rights to challenge the same. In no event shall Shipper be
required to pay any tax in a greater amount than its pro-rata share.

     (b) Shipper shall reimburse Bay Gas for Shipper’s pro-rata portion of all ad valorem taxes,
property taxes and/or other similar taxes.

     11.2 The term “taxes” as used in Section 11.1 shall mean all taxes which are now in existence
or which may in the future be levied upon Bay Gas, or its facilities or the storage of gas
hereunder (other than capital stock, income or excess profit taxes, or general franchise taxes
imposed on corporations on account of their corporate existence or on their right to do business
within the state as a foreign corporation and similar taxes), including, but not limited to, gross
receipts tax, street and alley rental tax, licenses, fees and any other taxes, charges or fees of
any kind levied, assessed or made by any governmental authority on the act, right or privilege of
transporting, handling or delivering gas or using Bay Gas’ Storage Facilities, or any fee in
respect to the gas or the storage, transportation or other handling thereof.

ARTICLE XII

NOTICES

     12.1 Whenever any notice, request, demand, statement, nomination or payment is required or
permitted to be given under any provision of this Contract, unless expressly provided otherwise,
such shall be in writing, signed by or on behalf of the person giving the same, and shall be deemed
to have been given and received upon the actual receipt thereof (including the receipt of a
telecopy or facsimile of such notice) at the address of the Parties as follows:

	 	 	 
	Notices and Contract Matters:
	 	 
	 
	 	 
	Bay Gas:

	 	Contact
	Bay Gas Storage Company, Ltd.

	 	Greg Welch /David Hayden
	Post Office Box 1368

	 	Telephone: (251) 450-4749
	Mobile, Alabama 36633

	 	Fax: (251) 476-8292
	 
	 	 
	Shipper:
	 	 
	BP Energy Company
	 	 
	605 Bel Air Blvd.
	 	 
	Mobile, AL 36606
	 	 
	Attn: Vice President, Fuel Services
	 	 

9

 

	 	 	 
	Invoices:
	 	 
	 
	 	 
	Bay Gas:

	 	Contact
	Bay Gas Storage Company, Ltd.

	 	Greg Welch / David Hayden
	Post Office Box 1368

	 	Telephone: (251) 450-4749
	Mobile, Alabama 36633

	 	Fax: (251) 476-8292
	 
	 	 
	Shipper:
	 	 
	BP Energy Company
	 	 
	605 Bel Air Blvd.
	 	 
	Mobile, AL 36606
	 	 
	Attn: Vice President, Fuel Services
	 	 
	 
	 	 
	Delivery Notifications, Nominations:
	 
	 	 
	Bay Gas:

	 	Contact
	Bay Gas Storage Company, Ltd.

	 	Greg Welch / Harris Oswalt
	Post Office Box 1368

	 	Telephone: (251) 450-4749
	Mobile, Alabama 36633

	 	Fax: (251) 476-8292
	

	 	Nights/Weekends: (251) 476-2120
	

	 	Fax (251) 450-4758
	 
	 	 
	Shipper:

	 	Contact:
	BP Energy Company
	 	 
	605 Bel Air Blvd.

	 	Telephone
	Mobile, AL 36606

	 	Nights/Weekends:
	Attn: Vice President, Fuel Services

	 	Fax:

     12.2 Operating communications made by telephone or other mutually agreeable means shall be
confirmed in writing or by telecopy within two (2) hours following same if confirmation is
requested by either Party. To facilitate such operating communications on a daily basis, lists of
names, telephone and telecopy numbers of appropriate operating personnel shall be exchanged by and
between Bay Gas and Shipper before commencement of service under this Contract. Such lists shall
be updated from time to time.

     12.3 Either Party may revise its addresses by giving notice in accordance herewith,
designating in such writing the new address of such Party.

10

 

ARTICLE XIII

NOMINATIONS

     13.1 Bay Gas shall accept intra-day nominations until 10:00 AM central time. Scheduled
quantities resulting from such intra-day nominations will be effective at 5:00 PM central time that
day. Such intra-day nominations from firm Shippers will bump any previously scheduled
interruptible quantity.

     After the 10:00 AM deadline, Bay Gas shall continue to accept intra-day nominations until 5:00 PM
central time. Scheduled quantities resulting from such intra-day nominations will be effective at
9:00 PM central time. Bumping of previously scheduled interruptible quantities is not allowed for
such nominations.

     13.2 Bay Gas will maintain personnel and equipment available to receive and act upon
nomination changes and confirmations twenty-four (24) hours per day.

     13.3 Written nominations and confirmations of verbal nominations will be made on the
nomination form attached hereto as Exhibit “D”.

     13.4 In the event that Bay Gas fails to obtain confirmation from Shipper’s transportation
service of Shipper’s nomination, Bay Gas shall notify Shipper of such failure as soon as
practicable.

ARTICLE XIV

GENERAL TERMS AND CONDITIONS;

STATEMENT OF CONDITIONS FOR GAS STORAGE

     The following are hereby incorporated herein and made a part of this Contract as if fully set
forth herein: (a) the General Terms and Conditions attached hereto as Exhibit “B” (the “General
Terms and Conditions”); and the Statement of Conditions for NGPA Section 311(a)(2) Gas Storage
Services attached hereto as Exhibit “C” (the “Statement of Conditions”). In the event of any
conflict or inconsistency between the terms hereof and the General Terms and Conditions or the
Statement of Conditions, such conflict or inconsistency shall be resolved in favor of the terms
hereof (it being the intent of this Agreement that the foregoing language is an exception to the
provisions of Article X of the Statement of Conditions).

11

 

ARTICLE XV

MISCELLANEOUS

     15.1 Amendment. Neither this Contract nor any provisions hereof may be amended,
changed, modified or supplemented except by an agreement in writing, duly executed by the Party to
be charged with the same.

     15.2 Assignment. Either Party may assign its rights, titles or interests hereunder to
any individual, bank, trustee, company or corporation (“Lender”) as security for any note, notes,
bonds or other obligations or securities of such assignor. In the event of such assignment by Bay
Gas, Shipper shall execute an assignment consent substantially in the form as attached hereto as
Exhibit “E”, as well as cause to be delivered to Bay Gas an opinion of counsel of Shipper to the
effect that the Contract has been duly authorized, executed and delivered by Shipper and is
enforceable against Shipper in accordance with it’s terms. Shipper shall provide such financial
information to the Lender which is the assignee of Bay Gas as may be reasonably requested by Bay
Gas and which may be required under this Agreement. Except as specified in the first sentence of
this Article 15.2, no assignment shall be made without the written consent of the other Party
hereto, which consent shall not be unreasonably withheld. No assignment provided for hereunder
shall in any way operate to enlarge, alter or change any obligation of the other Party hereto nor
shall the assignee be relieved of its obligations hereunder without the express written consent of
the non-assigning Party.

     15.3 Invalid Provision. In the event one or more of the provisions contained herein
shall be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision hereof and this Agreement shall be
construed as if such invalid, illegal, or unenforceable provision had never been contained herein,
provided that the deletion of such invalid, illegal or unenforceable provision does not materially
change the intended nature and risk of the services provided hereunder.

     15.4 Regulatory Approvals. This Contract shall be subject to the approval of any
Federal or State regulatory agency with appropriate jurisdiction in accordance with Article 1.2.

     15.5 Creditworthiness. Shipper agrees it shall have a rating on its senior long-term
debt of “BBB-“ or better as rated by Standard & Poor’s Ratings Group, or an equivalent rating from
another nationally recognized credit rating agency. Should Shipper’s rating on its senior
long-term debt fall below “BBB-“ then Shipper shall provide a payment guarantee from an affiliate
with a rating on it’s senior long-term debt of “BBB-“ or better as rated by Standard & Poor’s
Ratings Group, or an equivalent rating from another nationally recognized credit rating agency.

12

 

     15.6 Entire Agreement. This Agreement and the exhibits attached hereto contain the
entire agreement between the Parties and there are no representations, understandings or
agreements, oral or written, between the Parties which are not included herein.

     15.7 Governing Law. As to all matters of construction and interpretation, this
Contract shall be interpreted, construed and governed by the laws of the State of Alabama,
excluding any conflict of laws rule which would direct the application of the law of another
jurisdiction.

     IN WITNESS WHEREOF, the Parties have executed, or caused to have executed, this Contract in
one or more copies or counterparts, each of which shall constitute and be an original of this
Contract effective between the Parties as of the date first-above written.

	 	 	 	 	 
	 	 	BAY GAS:
	 
	 	 	 	 
	WITNESS:	 	BAY GAS STORAGE COMPANY, LTD.
	 	 	By MGS Storage Services, Inc., its managing
	 	 	general partner
	 
	 	 	 	 
	/s/ Marie Butler

	 	By:
	 	/s/ Greg Welch
	 

	 	 	 	 
	

	 	Its:
	 	President
	 
	 	 	 	 
	 	 	SHIPPER:
	 
	 	 	 	 
	WITNESS:BP ENERGY COMPANY
	 	 	 	 
	 
	 	 	 	 
	/s/ Sam Weaver

	 	By:
	 	/s/ Orlando Alvarez
	 

	 	 	 	 
	

	 	Its:
	 	Vice President, Eastern U.S.

13

 

EXHIBIT “A”

TO STORAGE AGREEMENT (“CONTRACT”) BETWEEN BAY GAS STORAGE

COMPANY, LTD. AND BP ENERGY COMPANY

	 	 	 
	 	 	FMDIQ
	POINT(S) OF RECEIPT	 	(MMBtus)
	Interconnection between the Storage
Facilities and the pipeline facilities of
FGT in Mobile County, Alabama
(Interconnect ID: BG- 1002)

	 	****

Gas may be scheduled for receipt at the Point of Receipt, in quantities up to the maximum
quantities indicated for such Point in Article I herein for firm injection, unless otherwise agreed
by Bay Gas

	 	 	 
	 	 	FMDIQ
	POINT(S) OF RECEIPT	 	(MMBtus)
	Interconnection between the Storage Facilities and
the pipeline facilities of FGT
in Mobile County, Alabama
(Interconnect ID: BG-1002)

	 	****

Gas may be scheduled for delivery at the Point of Delivery, in quantities up to the maximum
quantities indicated for such Point in Article I herein for firm withdrawal, unless otherwise
agreed by Bay Gas.

 

 

EXHIBIT “B”

TO STORAGE AGREEMENT (“CONTRACT”) BETWEEN BAY GAS STORAGE

COMPANY, LTD. AND BP ENERGY COMPANY

GENERAL TERMS AND CONDITIONS

TO

BAY GAS STORAGE COMPANY, LTD.

STORAGE AND TRANSPORTATION SERVICE AGREEMENTS

 

 

GENERAL TERMS AND CONDITIONS

TO

BAY GAS STORAGE COMPANY, LTD.’S (“COMPANY”)

STORAGE AND TRANSPORTATION SERVICE AGREEMENTS

CONTENTS

	 	 	 	 	 	 	 
	SECTION	 	DESCRIPTION	 	PAGE
	 
	I.

	 	Definitions
	 	 	1	 
	 
	 	 	 	 	 	 
	II.

	 	Nominations, Balancing And Excess Deliveries
	 	 	3	 
	 
	 	 	 	 	 	 
	III.

	 	Construction of Facilities
	 	 	7	 
	 
	 	 	 	 	 	 
	IV.

	 	Rate Adjustment
	 	 	7	 
	 
	 	 	 	 	 	 
	V.

	 	Regulatory Requirements
	 	 	8	 
	 
	 	 	 	 	 	 
	VI.

	 	Pressures
	 	 	9	 
	 
	 	 	 	 	 	 
	VII.

	 	Measurement
	 	 	9	 
	 
	 	 	 	 	 	 
	VIII.

	 	Measuring Equipment and Testing
	 	 	10	 
	 
	 	 	 	 	 	 
	IX.

	 	Quality
	 	 	11	 
	 
	 	 	 	 	 	 
	X.

	 	Billing, Accounting, Taxes and Reports
	 	 	12	 
	 
	 	 	 	 	 	 
	XI.

	 	Possession and Non-Odorization of Gas
	 	 	14	 
	 
	 	 	 	 	 	 
	XII.

	 	Warranty
	 	 	14	 
	 
	 	 	 	 	 	 
	XIII.

	 	Government Regulations
	 	 	15	 
	 
	 	 	 	 	 	 
	XIV.

	 	Force Majeure
	 	 	15	 
	 
	 	 	 	 	 	 
	XV.

	 	Notices
	 	 	16	 
	 
	 	 	 	 	 	 
	XVI.

	 	Creditworthiness
	 	 	17	 
	 
	 	 	 	 	 	 
	XVII.

	 	Miscellaneous
	 	 	18	 

 

 

GENERAL TERMS AND CONDITIONS

SECTION I.

Definitions

	A.  	The term, “gas”, as used herein, shall mean natural gas as produced in its natural
state that meets the quality standards contained in these General Terms and Conditions.
	 
	B.  	The term, “new taxes”, as used herein, shall mean any tax, license, fee or charge
hereafter levied, assessed or made by any governmental authority on the gas itself or on the
act, right or privilege of producing, severing, gathering, storing, transporting, handling,
selling or delivering gas which is measured by the volume, value, or sales price of the gas.
	 
	C.  	The term, “cubic foot of gas”, as used herein, for the purpose of measurement of the
gas delivered hereunder is the amount of gas necessary to fill a cubic foot of space when the
gas is at an absolute pressure of fourteen and seventy-three hundredths (14.73) pounds per
square inch and at a base temperature of sixty (60) degrees Fahrenheit.
	 
	D.  	The term, “BTU”, as used herein, shall mean British Thermal Unit and, where
appropriate, the plural thereof, and the term, “MMBtu”, shall mean one million
(1,000,000) BTU.
	 
	E.  	The term, “MCF”, as used herein, shall mean one thousand (1,000) cubic feet of gas.
	 
	F.  	The term, “day”, as used herein, shall mean a period of twenty-four (24) consecutive
hours beginning and ending at 9:00 a.m., Central Clock Time.
	 
	G.  	The term, “thermally equivalent”, as used herein, shall mean an equal amount of
heating value, expressed in BTU and measured under the specifications and conditions contained
hereunder.
	 
	H.  	The term, “month”, as used herein, shall mean a period beginning on, and including,
the first (1st) day of the calendar month and extending to but not including the first (1st)
day of the following calendar month.
	 
	I.  	The term, “Storage Service Agreement”, as used herein, shall mean an

1

 

	   	agreement for the provision by Company of firm or interruptible storage services; and the term,
“Transportation Service Agreement”, as used herein, shall mean an agreement for the
provision by Company of firm or interruptible transportation services.
	 
	J.  	The term, “Maximum Daily Injection Quantity”, as used herein, shall mean the maximum
volume of gas that Company will accept for injection into storage for Shipper in any one day,
as provided for in the Storage Service Agreement.
	 
	K.  	The term, “Maximum Daily Withdrawal Quantity”, as used herein, shall mean the maximum
volume of gas that Company will deliver from storage for Shipper in any one day, as provided
for in the Storage Service Agreement.
	 
	L.  	The term, “Maximum Storage Quantity”, as used herein, shall mean the maximum volume
of gas that Company will store for Shipper at any one time, as provided for in the Storage
Service Agreement.
	 
	M.  	The term, “Maximum Daily Transportation Quantity”, as used herein, shall mean the
maximum volume of gas that Company will take delivery of, and transport for redelivery, in any
one day, as provided for in the Transportation Service Agreement.
	 
	N.  	The term, “Point(s) of Receipt”, as used herein, shall mean the point at which
Shipper delivers to Company certain quantities of gas for injection into storage or for
transport to a Point(s) of Delivery.
	 
	O.  	The term, “Point(s) of Delivery”, as used herein, shall mean the point at which
Company delivers to Shipper certain quantities of gas that have been withdrawn from storage or
transported from a Point(s) of Receipt.
	 
	P.  	The term, “processed gas”, as used herein, shall mean natural gas from which gas
liquids have been extracted.
	 
	Q.  	The term, “Unit Rate”, as used herein, shall be defined for interruptible storage
service Shippers as follows:

Unit Rate = {[ MDC x IMSQ x (12 or PT if < 12)] + Rev.} / IMSQ)

Where:

“MDC” equals the Monthly Demand Charge

“IMSQ”
equals the Interruptible Maximum Storage Quantity

“PT” equals the Primary Term of the Agreement

2

 

	 	“REV”   	 equals all other storage revenues excluding Fuel Charges assessed
for interruptible services for the last 12 billed months

	R.  	The term, “work day” or “working day”, as used herein, shall mean the days
Monday through Friday, inclusive, but excluding any federal holidays.

SECTION II.

 Nominations, Balancing and Excess Deliveries

	A.  	Nominations. Shipper shall furnish to Company a nomination on a form acceptable to
Company. All quantities shall be expressed in MMBtu per Day and shall separately state Points
of Receipt, Points of Delivery or Points of Redelivery.

	 	1.  	Shipper must deliver the nominations to Company by 11:30 A.M. Central Clock
Time the working day prior to gas flow. Shipper may submit nominations after such
deadline up to 1:00 P.M. Central Clock Time for the upcoming gas day. However, if
acceptance of Shipper’s nomination submitted between 11:30 and 1:00 P.M. Central Clock
Time would exceed Shipper’s Maximum Daily Injection Quantity or Maximum Daily
Withdrawal Quantity or Maximum Storage Quantity or Maximum Daily Transportation
Quantity, or would cause interruption of another shipper’s scheduled service, then such
nomination will be accepted or rejected by Company at Company’s sole discretion.
	 
	 	2.  	Shipper may submit, and Company will accept, nominations after 1:00 P.M. for
the upcoming gas day or during the current gas day on a best efforts basis. If
acceptance of Shipper’s nomination for service would exceed Shipper’s Maximum Daily
Injection Quantity or Maximum Daily Withdrawal Quantity or Maximum Storage Quantity or
Maximum Daily Transportation Quantity, or would cause interruption of another shipper’s
scheduled service, then such nomination will be accepted or rejected at Company’s sole
discretion.
	 
	 	3.  	Nominations made in accordance with this Section II A shall not become
effective until Company has confirmed the nominated storage receipts (injections) and
deliveries (withdrawals), or transportation deliveries and redeliveries, with upstream
and downstream parties. Shipper shall designate the appropriate person(s) with
authority to confirm nominations and to resolve allocation issues on a 24-hour-basis.

3

 

	 	4.  	The parties intend that the volumes of gas received or delivered or redelivered
will be equal to the confirmed nominations. To the extent that gas quantities actually
received or delivered or redelivered may be greater than or less than the confirmed
nominations, the parties intend that such variance will be treated in accordance with
an Accounting Allocation Agreement entered into between the parties.
	 
	 	5.  	Company shall not be obligated, during any hour, to receive or to deliver or to
redeliver a total volume of gas in excess of one twenty-fourth (1/24th) of
the lesser of (a) Shipper’s aggregate Maximum Daily Injection Quantity or Maximum Daily
Withdrawal Quantity, or Maximum Daily Transportation Quantity or (b) Shipper’s accepted
nomination volumes. The parties intend that from time to time Shipper and Company may
mutually agree to a flow rate above or below a uniform hourly rate.

	B.  	Balancing. Company will accept for storage injection or deliver for withdrawal, or
for transportation delivery and redelivery, on a daily basis, volumes thermally equivalent to
volumes nominated and scheduled, less appropriate compressor fuel and lost-and-unaccounted-for
gas (collectively called “Company Use”) charges, unless otherwise mutually agreed to in
writing. All imbalances between actual and nominated injection volumes or withdrawal volumes,
or between delivery volumes and redelivery volumes, shall be treated as imbalance under, and
received in accordance with, the Storage or Transportation Service Agreement(s) under which
the gas in question is delivered to or from the storage or transportation facilities. Gas
delivered to Company for withdrawal or redelivery hereunder on each day shall be at constant
uniform rates as practicable throughout such day.

	 	1.  	If Shipper is advised by any upstream third party of the need to reduce or
suspend deliveries of gas scheduled for delivery to or from storage, or for
transportation delivery and redelivery, Shipper shall immediately notify Company
orally, and shall confirm such notification in writing, of such reduction or
suspension.
	 
	 	2.  	Nothing in this Section II B shall limit Company’s right to take action as may
be required to adjust injections or withdrawals of gas, including suspending storage
services or to adjust deliveries and redeliveries, including suspending transportation
services, in order to alleviate conditions that threaten the integrity of its system.
	 
	 	3.  	In the absence of an executed Accounting Allocation Agreement between Shipper
and Company as described in Section II A. 4, balancing

4

 

	 	   	procedures shall be as specified in this Section II B. If an Accounting Allocation
Agreement is in effect between Shipper and Company, such Agreement shall take
precedence over the provisions specified in this Section II B.

	4.  	If there is more than one supply source (whether at a single or at multiple Points of Receipt
or Delivery) nominated to be received for Storage or Transportation, the nomination will
identify how and which supply source(s) should be allocated by means of a Receipt
Pre-Determined Allocation (“RPDA”) specified in the nomination. In accounting for the volumes
delivered or redelivered by Company, in circumstances where multiple services are provided at
any Point of Delivery or Redelivery, the sequence of volumes delivered shall be determined by
the Delivery Pre-Determined Allocation (“DPDA”) specified by Shipper in its most recent
nomination. The nomination will identify which supply source(s) should be allocated in the
event gas is not or cannot be delivered or redelivered as nominated.
	 
	5.  	To the extent feasible, all volumes received by or delivered to Company at a Point of Receipt
or Delivery shall be allocated in accordance with the confirmed nominations for that point. In
the event the actual volumes received by Company do not equal the confirmed nominations for
that point, any underage or overage will be allocated as follows:

	 	(a)  	First, in accordance with the effective RPDAs
submitted by Shipper (or Shipper’s suppliers). Shipper agrees that such
an allocation is binding on Shipper.
	 
	 	(b)  	Then, if there is no effective RPDA, pro rata
to the extent applicable based on confirmed nominations, as applicable.
Shipper agrees that such an allocation is binding on Shipper.

	6.  	To the extent feasible, all volumes delivered or redelivered by Company at a Point of
Delivery or Redelivery shall be allocated in accordance with the confirmed nominations for
that point. In the event the actual volumes delivered by Company do not equal the confirmed
nominations for that point, any underage or overage will be allocated as follows:

	 	(a)  	First, in accordance with the effective DPDAs
submitted by Shipper (or Shipper’s suppliers). Shipper agrees that such
an allocation is binding on Shipper.
	 
	 	(b)  	Then, if there is no effective DPDA, pro rata
to the extent

5

 

	 	   	applicable based on confirmed nominations, as applicable. Shipper
agrees that such an allocation is binding on Shipper.

	 	7.  	Each Shipper shall be responsible for ensuring that its suppliers submit
re-Determined Allocations (“PDAs”, which include RPDAs or DPDAs) as provided herein
using a form acceptable to Company. Unless otherwise agreed, all PDAs must be
submitted to Company via facsimile or other agreed upon electronic means on or before
the date the PDA is to be effective. Such PDA shall specify how any underage or
overage from the confirmed nominated volumes should be allocated among the entities
listed on the PDA. Company shall acknowledge receipt and acceptance of the PDA by
returning acknowledgment of the PDA to Shipper via mutually agreeable means. Company
acceptance is contingent on Company being able to administer the allocation submitted
by the Shipper.
	 
	 	8.  	To the extent that actual injections or actual withdrawals, or actual
deliveries or actual redeliveries, for each Shipper do not exactly match confirmed
nominations for any day, Company will attempt to balance any such differences among
Company and the upstream or downstream entities, without impacting Shipper, whenever
possible. If an upstream or downstream entity requires a Balancing Agreement for which
any fee is required, Shipper agrees to reimburse Company for any incurred expenses.

	C.  	Storage Balance Reconciliation. To the extent Shipper and Company agree, in writing,
that imbalances may be accounted for under the Shipper’s Storage Service Agreement, and to the
extent Shipper has sufficient storage capacity, Company will issue a formal storage balance
notice to Shipper by the 20th of the month following the injection/withdrawal month (“the
Notice Month”), reflecting the effect of Shipper’s storage balance or any imbalance. Shipper
understands and agrees to contact or cause to be contacted, the parties that deliver injection
volumes to Company, or receive withdrawal volumes from Company, for the Shipper’s account to
confirm any imbalance.
	 
	   	Following the termination of the Storage Service Agreement, Shipper shall be required to
either (a) transfer title to any volumes of gas in storage to a third party with whom
Company has a Storage Service Agreement, with such transfer to be subject to any injection
conditions or charges applicable to such third party, or (b) withdraw such volumes from
storage within a sixty (60) day balancing period after the determination by Company that any
such volumes exist, or within such longer period of time mutually agreed upon by Shipper and
Company. Shipper agrees that at the end of the above sixty (60) day balancing period,
Company

6

 

	   	will, for any storage volumes not withdrawn, take title to such gas and such title is to
pass automatically without cost to Company.
	   	 
	D.  	Excess Deliveries. In the event that Shipper, from time to time, desires to have
injected into or withdrawn from storage, or to have transported, quantities of gas in excess
of the Maximum Daily Injection Quantity or Maximum Daily Withdrawal Quantity, or Maximum Daily
Transportation Quantity, respectively, which Company is obligated to accept or deliver or
redeliver under storage or transportation arrangements for Shipper on any day under a Storage
or Transportation Service Agreement, Shipper may request injection or withdrawal or
transportation of such excess gas, and Company in its sole discretion may accept or deliver or
redeliver all or any part of such gas subject to the restrictions of these General Terms and
Conditions.

SECTION III.

Construction of Facilities

     Under no circumstances shall Company be obligated to construct or add facilities to receive or
deliver or redeliver gas under a Storage or Transportation Service Agreement, or to increase the
capacity of Company’s pipeline system or storage or transportation facilities. Upon Shipper’s
written request to evaluate connections of new facilities, Company will prepare and submit to
Shipper a construction cost estimate. All new or additional facilities that may be required for
the delivery of acceptable gas to Company, or for the delivery or redelivery of gas to the
receiving party or parties will be constructed, maintained, owned and operated by Company, except
as may otherwise be expressly agreed in writing. The design and installation of all facilities
shall be in accordance with the specifications then used by Company for like or similar facilities.
Shipper shall bear the cost of all such new connections, unless otherwise mutually agreed.

SECTION IV.

Rate Adjustment

	A.  	Rates charged for services shall be negotiated between Company and Shipper. Company reserves
the right to seek authorization from the Federal Energy Regulatory Commission (“FERC”) or
other appropriate agency to increase, decrease or restructure the rates (including market
based rates), and Company Use charges in effect at any time as may be found necessary to
assure Company’s right to charge and collect fair and equitable rates within the meaning of
Section 311 (a)(2) of the Natural Gas Policy Act of 1978 (“NGPA”) and the

7

 

	   	FERC’s rules and regulations thereunder. Nothing herein contained shall be construed to deny any
Shipper any rights which it may have under FERC rules and regulations, including the right to
participate fully in rate proceedings by intervention or otherwise to contest changes in rates
and Company Use charges in whole or part. In addition to the rates above, Shipper shall pay
in advance all applicable state and federal filing, reporting and application fees incurred by
Company for providing such services.
	 
	B.  	Company may at any time provide firm or interruptible storage services at different rates
from the market based rates approved by the FERC for Company’s NGPA Section 311(a)(2)
services. Nothing herein shall obligate or require, or be construed to obligate or require,
Company to offer or continue such different rates.

SECTION V.

Regulatory Requirements

     Company’s interstate services shall be in accordance with and subject to the requirements of
Section 311(a)(2) of the NGPA and the rules and regulations of the FERC thereunder. Company’s
intrastate services shall be in accordance with and subject to the laws, rules and regulations of
the State of Alabama.

     Company agrees to proceed with reasonable diligence during the term of the Storage or
Transportation Service Agreement with the filing for and prosecution of any authorizations as may
be required for the storage or transportation of the gas hereunder or the rate(s) charged
therefore. Company reserves the right to pursue any necessary regulatory filings with FERC and any
other governmental or regulatory body having jurisdiction in such matter as it deems to be in its
best interest, including the right to file whatever pleadings and motions it deems desirable. In
the event Company has obtained such necessary regulatory authorization, but the terms and
conditions are significantly different than those terms originally filed with the regulatory
agency, or in the event FERC rejects or modifies Company’s Statement of Conditions for NGPA Section
311(a)(2) Gas Storage and Transportation Services, as same may be amended by Company from time to
time, Company shall pursue other reasonable options to continue providing such services or, at
Company’s option, shall terminate such services as provided in Article VII, Right to Terminate
Services, of Company’s Statement of Conditions.

8

 

SECTION VI.

Pressures

Company shall operate its storage facilities at pressures which will accommodate the withdrawal of
gas in accordance with Company’s outstanding firm service storage commitments. Company shall
operate its transportation facilities at pressures which will accommodate the redelivery of gas in
accordance with Company’s outstanding firm service transportation commitments. Shipper shall be
obligated to deliver gas for injection or for transportation, at a pressure sufficient for Company
to transport such gas to and inject into its storage facility, or to transport such gas for
redelivery, recognizing that the amount of such pressure will vary based on the operation of the
Company pipeline.

SECTION VII.

Measurement

	A.  	The gas received for injection or delivered for withdrawal at the storage facilities, or
delivered or redelivered at the transportation facilities, shall be measured with meters
constructed and installed, and whose computations of volume are made, in accordance with the
provisions of ANSI-API 2530-AGA-3, latest revision as adopted by Company.
	 
	B.  	The temperature of the gas shall be determined by a recording thermometer so installed that
it will record the temperature of the gas flowing through the meters. The average of the
record to the nearest one degree (1o) Fahrenheit, obtained while gas is being delivered, shall
be the applicable flowing gas temperature for the period under consideration. For all
measurement of gas required in this Section, the BTU content per cubic foot shall be
determined for a cubic foot of gas at a temperature of sixty degrees (60o) Fahrenheit, at an
absolute pressure of fourteen and seventy-three hundredths (14.73) pounds per square inch on a
dry basis.
	 
	C.  	The BTU, specific gravity, carbon dioxide, and nitrogen content of the gas shall be
determined by the use of an on-line chromatograph or by a chromatographic analysis of the gas
obtained by a continuous sample or spot sampling method. The results of any sample taken with
an on-line chromatograph shall be applied to the month in which the sample was taken.
	 
	D.  	Adjustment for the effect of supercompressibility shall be made according to the provisions
of the latest version of either NX-19 or AGA Committee Report No. 8,

9

 

	   	as required by Paragraph A. of this Section and as adopted by Company, for the average
conditions of pressure, flowing temperature, and specific gravity at which the gas was
measured during the period under consideration and with the proportionate values of carbon
dioxide and nitrogen in the gas delivered included in the computation of the applicable
supercompressibility factors.
	 
	E.  	If at any time during the term hereof a new method or technique is developed with respect to
gas measurement or the determination of the factors used in such gas measurement, such new
method or technique may be substituted for the gas measurement set forth in this Section on
the date such method or technique is adopted by Company.

SECTION VIII.

Measuring Equipment and Testing

	A.  	General. The construction, ownership, operation and maintenance of any measuring
equipment necessary to accomplish the storage receipt of gas for injection by Company for the
account of Shipper and the delivery of gas withdrawn by Company for the account of Shipper, or
the transportation delivery of gas to Company for the account of Shipper and the redelivery of
gas by Company for the account of shipper shall be the responsibility of Company. Shipper
shall at all reasonable times have access to the premises of Company for inspections, insofar
as such premises are connected with any matter or thing covered hereby. The operation of
measuring equipment and changing of charts shall be done only by the employees or agents of
Company.
	 
	B.  	Testing and Repair of Equipment.

	 	1.  	Company shall keep its own measuring equipment accurate and in repair, making
periodic tests to verify the condition of meter tubes, orifice plate, and chart
recorder or flow computer. Company agrees to give Shipper(s) seven (7) calendar days
notice prior to such tests of the measuring equipment so that, if desired, Shipper(s)
may have its representative present. Shipper(s) shall have the right to challenge the
accuracy of Company’s equipment, and when challenged, the equipment shall be tested,
calibrated and, if required, repaired by Company, the cost of such special test to be
borne by Company if the percentage of the inaccuracy is found to be more than two
percent (2%), but if the percentage of inaccuracy is found to be two percent (2%) or
less, the cost of such special test shall be borne by the Shipper(s). If upon any test
the percentage of inaccuracy is found to be in excess of two percent (2%),
registrations thereof shall be corrected for a period extending back to the

10

 

	 	   	time such inaccuracy occurred, if such time is ascertainable, and if not
ascertainable, then back one-half (1/2) of the time elapsed since the last date of
calibration. Any measuring equipment found to be measuring inaccurately by one
percent (1%) or more shall be adjusted at once to read accurately.
	 
	 	2.  	If, for any reason, the meter(s) are out of service or out of repair so that
the amount of gas received or delivered cannot be ascertained or computed from the
readings thereof, the gas received or delivered during the period such meter(s) are out
of service or out of repair shall be estimated and agreed upon by the parties hereto by
the use of the first applicable of the following methods:

	 	(a)  	By comparative utilization of any like check measuring
equipment if such check measuring equipment can be proven and verified to be
measuring accurately; or
	 
	 	(b)  	By computing the error if the percentage of error is
ascertainable by calibration, test or mathematical calculation; or
	 
	 	(c)  	By estimating the quantity received or delivered by reference
to actual receipts or deliveries during preceding periods under similar
conditions when Company’s measuring equipment was registering accurately.

	C.  	Inspection of Charts and Records. The charts and records from the measuring
equipment shall remain the property of Company and shall be kept on file for a period of time
not less than two (2) years from the end of the calendar year in which the charts and records
were generated or prepared. At any time within such period, upon written request by Shipper,
records or charts from the measuring equipment, together with calculations therefrom, will be
submitted for Shipper’s inspection and verification subject to return to Company within thirty
(30) days from receipt thereof. All inquiries regarding this Section VIII, including but not
limited to, measurement charts, records or audits of charts and records, shall be directed to
Company.

SECTION IX.

Quality

     The gas delivered by either party to the other hereunder shall meet or exceed the quality
specifications of the transporting pipeline which receives or delivers such gas to the other party
hereunder.

11

 

SECTION X.

Billing, Accounting, Taxes and Reports

	A.  	Billings and Payments.

	 	1.  	For the purpose of billing and accounting for the gas delivered hereunder, the
day shall begin at 9:00 a.m. Central Clock Time and extend to 9:00 a.m. the following
day, and the month (hereinafter called “billing month”) shall begin at 9:00 a.m.
Central Clock Time on the first (1st) day of the calendar month and extend to 9:00 a.m.
on the first (1st) day of the following calendar month.
	 
	 	2.  	Company shall render to its Shippers, by mail or facsimile, on or before the
first (1st) day of each month an invoice setting forth the demand charges as
applicable. Within ten (10) days from the date of the invoice, Shipper agrees to make
payment to Company by wire transfer to the AmSouth Bank of Alabama, crediting Company’s
account number 83794638 for such firm demand charges for the account of Shipper at the
Delivery Point(s) during the current month.
	 
	 	3.  	On or before the fifteenth (15th) day of each calendar month, Company shall
render or cause to be rendered, by mail or facsimile, to all Shippers an invoice of the
amount due for the preceding month setting forth the total quantity of gas (1) received
by Company from Shipper for injection into the storage facilities, or delivered by
shipper to Company for transportation; (2) delivered by Company to Shipper for
withdrawal from the storage facilities, or redelivered by Company to Shipper after
transportation; (3) gas balance at the beginning and end of the injection/withdrawal,
or transportation, month and (4) the rates and charges for storage or transportation
services hereunder during such billing month. Billings for volumes transported shall
be determined on a dry basis.
	 
	 	4.  	Within ten (10) days from the date of the fifteenth (15th) day invoice, Shipper
shall pay Company the amount due for all gas injected, withdrawn or stored, or
transported, by Company for the account of Shipper during the injection/withdrawal, or
transportation, month. Payments to Company shall be made either by wire transfer to
the AmSouth Bank of Alabama, crediting Company’s account number 83794638, or by check
such that funds are available to Company on or before the tenth (10th) day after the
date of the invoice. If rendering of an invoice by Company is delayed after

12

 

	 	   	the fifteenth day of the month, then the time of
payment shall be extended accordingly unless Shipper is responsible for such delay.

	B.  	Late Payment. In the event Shipper shall fail to pay any amount due Company when the
same is due, Company shall have the option of accruing interest at a varying rate per annum
(based on a year of 365 or 366 days, as the case may be) which shall be one hundred fifteen
percent (115%) of the prime rate charged by the AmSouth Bank of Alabama to its largest and
most creditworthy commercial borrowers on ninety (90) day commercial loans (but in no event
greater than the maximum rate of interest permitted by law) with adjustments in such rate, for
any period during which the same shall be overdue, such interest to be paid when the amount
past due is paid. Shipper shall not be required to pay interest on any amount billed which is
in good faith disputed in writing by Shipper and is ultimately determined to be in error;
provided, however, interest shall be due if such amount billed is found not to be in error.
If a portion of an invoice is disputed, Shipper shall pay when due the portion of the invoice
not in dispute. If such failure to pay continues for thirty (30) days after the payment due
date, Company may suspend deliveries of gas, subject to Company providing forty-eight (48)
hours written notice, during normal working hours, of such intention to suspend deliveries;
provided, however, that if Shipper, in good faith, disputes the amount of any such bill or
part thereof and pays to Company such amounts as Shipper concedes to be correct, and furnishes
and maintains a good and sufficient surety bond in an amount, and with sureties satisfactory
to Company, conditioned upon the payment of any amounts ultimately found due upon such bills
after a final determination, then Company shall not be entitled to suspend further delivery
due to failure to pay such bills. In the event Shipper’s financial position significantly
deteriorates from that on the execution date of the Storage or Transportation Service
Agreement, advance cash payments or acceptable security (including but not limited to an
irrevocable letter of credit from a financial institution in an amount acceptable to Company)
shall be given by Shipper upon demand of Company. Company may, without waiving any other
rights or remedies it may have, withhold further delivery until such payment is received. In
the event Company pursues collection on late payment, Shipper shall be liable for all expenses
and costs, including court costs and attorneys’ fees, incurred as a result of such failure to
pay on time.

	C.  	Tax Reimbursement. Shipper agrees to reimburse Company for all new taxes (federal,
state, local or other) that may be levied upon or paid by Company, with respect to the
services performed hereunder.

	D.  	Examination of Books, Records and Charts. Each party shall have the right during
reasonable working hours to examine the books, records and charts of
the other party to the extent necessary to verify the accuracy of any statement,

13

 

	   	payment
calculations or determinations made pursuant to the provisions contained herein. If any such
examination shall reveal, or if either party shall discover, any error in its own or the
other party’s statements, payment calculations or determinations, then proper adjustment and
correction thereof shall be made as promptly as practicable thereafter. The accuracy of any
statement, payment calculations or determinations made pursuant to the provisions contained
herein shall be conclusively presumed to be correct after two (2) years from the end of the
calendar year in which the charts and records were generated or prepared if not challenged
in writing prior thereto.

SECTION XI.

Possession and Non-Odorization of Gas

     As between Shipper and Company, Shipper shall be in exclusive control and possession of the
gas deliverable and responsible for any damage or injury caused thereby until the same shall have
been received by Company for injection at the storage facilities, or until delivered at the
transportation facilities, and after delivery of the gas for the account of Shipper for withdrawal
at the storage facilities, or after redelivery for the account of Shipper at the transportation
facilities. After delivery of gas for injection or transportation by Shipper to Company, and until
delivery by Company to Shipper or Shipper’s designee upon withdrawal or until redelivery after
transportation, Company shall be in exclusive control and possession thereof and responsible for
any injury or damage caused thereby. Neither Company nor Shipper assume any obligation to odorize
any gas delivered to the other.

SECTION XII.

Warranty

     Shipper warrants that it will have and maintain good and marketable title or the right to
deliver for a third party owning good and marketable title all gas tendered for injection, storage
and withdrawal under a Storage Service Agreement, and all gas delivered for transportation under a
Transportation Service Agreement, and that such gas shall be free and clear of all liens and
adverse claims; and each party agrees, with respect to the gas delivered by it, to indemnify the
other against all suits, actions, debts, accounts, damages, costs (including attorney’s fees),
losses and expenses arising from or out of any adverse claims of any and all persons to or against
said gas.

14

 

SECTION XIII.

Government Regulations

	A.  	All of the provisions of any Storage or Transportation Service Agreement are hereby expressly
made subject to all present and future applicable federal or state laws, orders, rules and
regulations of governmental authorities having jurisdiction. Except as otherwise provided
herein, in the event any provision of a Storage or Transportation Service Agreement or of
these General Terms and Conditions is found to be inconsistent with or contrary to any such
law, order, rule or regulation, the latter shall be deemed to control, and the Storage or
Transportation Service Agreement and these General Terms and Conditions, to the extent
possible, shall be regarded as modified accordingly and as so modified shall continue in full
force and effect.
	 
	B.  	The parties hereto recognize that a Storage or Transportation Service Agreement has been
entered into by Company in the good faith understanding that all acts, obligations and
services performed by Company hereunder, and the charges therefore, are exempt from the
regulation of FERC or any successor federal governmental authority, except as presently
provided by Section 311(a)(2) of the NGPA and FERC’s relevant regulations thereunder. Company
reserves the right to terminate a Storage or Transportation Service Agreement immediately if,
in the opinion of counsel for Company, any act shall occur or be seriously threatened which is
in any way inconsistent with such understanding.
	 
	C.  	Equal Employment Opportunity. Company and Shipper agree to comply with any and all
applicable executive orders and acts pertaining to equal employment opportunity.

SECTION XIV.

Force Majeure

	A.  	In the event of either party being rendered unable, wholly or in part, by reason of force
majeure to carry out its obligations under any Storage or Transportation Service Agreement
(other than the obligation to make payment of amounts due hereunder), it is agreed that such
party shall give notice and reasonably full particulars of such force majeure, in writing or
by facsimile, to the other party within a reasonable time after the occurrence of the cause
relied on, and the obligations of the party giving such notice, so far as they are affected by
such force majeure, shall be suspended during the continuance of any inability so

15

 

	   	caused, but for no longer period, and such cause shall, so far as possible, be remedied with
all reasonable dispatch.
	 
	B.  	The term, “force majeure,” as employed herein shall mean acts of God; strikes, lockouts, or
other industrial disturbances; conditions arising from a change in governmental laws, orders,
rules or regulations; acts of public enemy; wars; blockades; insurrections; riots; epidemics;
landslides; lightning; earthquakes; fires; storms; floods; washouts; arrests and restraints of
governments and people; civil disturbances; explosions; breakage or accident to machinery or
lines of pipe; the necessity for making repairs, tests or alterations to machinery or lines of
pipe; freezing of wells or lines of pipe; partial or entire failure of wells, processing or
gasification and gas manufacturing facilities; and any other causes, whether of the kind
herein enumerated or otherwise, not within the control of the party claiming suspension, and
which by the exercise of due diligence, such party is unable to prevent or overcome. Such
term shall likewise include: (a) those instances where either Company or Shipper is required
to obtain servitudes, rights-of-way, grants, permits or licenses to enable such party to
fulfill its obligations under a Storage or Transportation Service Agreement; the inability of
such party in acquiring, at reasonable costs, and after the exercise of reasonable diligence,
such servitudes, rights-of-way, grants, permits or licenses, and (b) those instances where
either Company or Shipper is required to furnish materials and supplies for the purpose of
constructing or maintaining facilities or is required to secure permits or permissions from
any governmental agency to enable such party to fulfill its obligations under a Storage or
Transportation Service Agreement; the inability of such party to acquire, or the delays on the
part of such party in acquiring, at reasonable costs, and after the exercise of reasonable
diligence, such materials and supplies, permits and permissions. Force majeure shall not
include failure of gas supply due to pricing considerations.
	 
	C.  	It is understood and agreed that the settlement of strikes or lockouts shall be entirely
within the discretion of the party having the difficulty, and that the above requirement that
any force majeure shall be remedied with all reasonable dispatch shall not require the
settlement of strikes or lockouts by acceding to the demands of the opposing party when such
course is inadvisable in the discretion of the party having the difficulty.

SECTION XV.

Notices

Except as herein otherwise provided, any communication, notice, request, demand, statement or bill
provided for in a Storage or Transportation Service Agreement which

16

 

any party may desire to give to any other party shall be made in writing and mailed by first class
mail to the post office address of the party intended to receive the same, as the case may be, at
the addresses each respective party shall designate in the Storage or Transportation Service
Agreement or change by subsequent formal written notice to the other. Routine communications,
including monthly statements and payments, may be mailed by either certified or ordinary first
class mail.

SECTION XVI.

Creditworthiness

Company shall not be required to commence service or, subject to the following timing provisions,
to continue to provide service under a Storage or Transportation Service Agreement with any
Shipper, that (a) is or has become insolvent; (b) has applied for bankruptcy under Chapter 11 of
the Bankruptcy Code, or which is subject to similar proceedings under state or federal law; or (c)
when requested by Company to demonstrate creditworthiness, fails to do so in Company’s reasonable
judgment, in light of previous payment experience and the prudent credit analysis of information
available; provided, however, that any such Shipper that is receiving service shall continue to
receive service for a period of fifteen (15) days after written notice by Company of any such
circumstance, and shall continue thereafter to receive service if, within such fifteen (15) day
notice period, such Shipper (a) deposits with Company and maintains, on account, an amount which
would be due for three (3) months service at the full Maximum Daily Withdrawal Quantity, or the
full Maximum Daily Transportation Quantity, including an amount of the current gas imbalance plus,
an amount equal to the three (3) highest cashout payments, if any, incurred during the previous
twelve months, or (b) furnishes good and sufficient security, which may include an acceptable
standby letter of credit, or monthly prepayment agreement or other security as reasonably
determined by Company, of a continuing nature and in an amount equal to such amounts which would be
due for service. If such payment on account or payment security is not received within such
fifteen (15) day notice period, Company may, without waiving any rights or remedies it may have,
suspend further service for a period of ten (10) days. If such payment on account or a payment
security is not received within such ten (10) day suspension period, then Company shall no longer
be obligated to continue to provide service to such Shipper. Further, if such payment on account
or a payment security is not received within sixty (60) days after the end of such suspension
period, Company may terminate its obligations to provide service under all agreements between
Shipper and Company, which termination shall not affect any of Company’s claims or remedies it may
have under any Storage or Transportation Service Agreement.

17

 

SECTION XVII.

Miscellaneous

	A.  	Headings and Subheadings. The headings and subheadings contained in the Storage or
Transportation Service Agreement are used solely for convenience and do not constitute a part
of the Storage or Transportation Service Agreement between the parties hereto, nor should they
be used to aid in any manner in construing the Storage or Transportation Service Agreement.
	 
	B.  	Successors and Assigns. The Storage or Transportation Service Agreement shall be
binding upon and inure to the benefit of the respective successors and assigns of the parties
hereto, but no assignment shall relieve any party of its obligations hereunder unless such
party is expressly released in writing from said obligations by the party to which it is
obligated.
	 
	C.  	Entire Agreement. The Storage or Transportation Service Agreement, the Statement of
Conditions for NGPA Section 311(a)(2) for Gas Storage and Transportation Services, and these
General Terms and Conditions constitute the entire agreement of the parties hereto as to the
matters contained herein, and there are no oral promises, agreements or warranties affecting
same.
	 
	D.  	Non-Waiver. The waiver of any default or right to require performance under a
Storage or Transportation Service Agreement shall not operate as a waiver of any future
default or right to require performance, whether of like or different character or nature.
	 
	E.  	Jurisdiction and Venue. The parties agree that a Storage or Transportation Service
Agreement shall be governed by and construed in accordance with the laws of the State of
Alabama, excluding any conflicts of law, rule or principle that might refer such construction
to the laws of another state and that venue shall be in the State of Alabama for services
performed in Alabama, with respect to any cause of action brought under or with respect to a
Storage or Transportation Service Agreement.
	 
	F.  	Confidentiality. The terms of any Storage or Transportation Service Agreement shall
be kept confidential by the parties except to the extent that any information must be
disclosed to a third party as required by law, for either party’s financial needs or for the
purpose of effectuating any Storage or Transportation Service Agreement.

18

 

EXHIBIT “C”

TO STORAGE AGREEMENT (“CONTRACT”) BETWEEN BAY GAS STORAGE

COMPANY, LTD. AND BP ENERGY COMPANY

BAY GAS STORAGE COMPANY, LTD.

AMENDED STATEMENT OF CONDITIONS FOR

NGPA SECTION 311 (a)(2)

GAS STORAGE AND TRANSPORTATION SERVICES

Dated December 22, 1998

 

 

BAY GAS STORAGE COMPANY, LTD.

STATEMENT OF CONDITIONS FOR

NGPA SECTION 311 (a)(2)

GAS STORAGE AND TRANSPORTATION SERVICES

Dated December 22, 1998

CONTENTS

	 	 	 	 	 	 	 
	SECTION	 	DESCRIPTION	 	PAGE	 
	 
	I.
	 	Bay Gas Basic Status and Function	 	 	1	 
	 
	 	 	 	 	 	 
	II.
	 	Qualified Shippers	 	 	1	 
	 
	 	 	 	 	 	 
	III.
	 	Capacity Availability, Scheduling and Allocations And Curtailments	 	 	2	 
	 
	 	 	 	 	 	 
	IV.
	 	Minimum Storage Service Volume	 	 	5	 
	 
	 	 	 	 	 	 
	V.
	 	Receipt and Delivery	 	 	6	 
	 
	 	 	 	 	 	 
	VI.
	 	General Terms and Conditions for Gas Storage And Transportation	 	 	6	 
	 
	 	 	 	 	 	 
	VII.
	 	Right To Terminate Services	 	 	7	 
	 
	 	 	 	 	 	 
	VIII.
	 	Compliance With Lax and Survivability	 	 	7	 
	 
	 	 	 	 	 	 
	IX.
	 	Changes to This Statement of Conditions	 	 	7	 
	 
	 	 	 	 	 	 
	X.
	 	Authority of Statement of Conditions	 	 	7	 

 

 

BAY GAS STORAGE COMPANY’S

STATEMENT OF CONDITIONS FOR

NGPA SECTION 311 (a)(2)

GAS STORAGE AND TRANSPORTATION SERVICES

Dated December 22, 1998.

     Bay Gas Storage Company, Ltd. (“Bay Gas”), a natural gas storage public utility that qualifies
as an intrastate pipeline company providing services within the meaning of Natural Gas Policy Act
of 1978 (“NGPA”) Section 2 (16) and Section 284.1 (a) of the Federal Energy Regulatory Commission’s
(“Commission”) regulations, files this amended Statement of Conditions For NGPA Section 311 (a)(2)
Gas Storage and Transportation Services, pursuant to the Commission’s regulations. 18 C.F.R. §
284.123 (e). Firm and interruptible gas storage and transportation-only services, on terms and
conditions authorized by the Commission and accepted by Bay Gas, shall be provided by Bay Gas
pursuant to NGPA Section 311 (a)(2), 15 U.S.C. §3371 (a)(2), and the Commission’s implementing
Orders, Rules and Regulations, to qualified Shippers that comply with the conditions set forth in
this Statement and with the terms and conditions contained in Bay Gas’ Storage or Transportation
Service Agreement executed with Shipper.

I.

BAY GAS’ BASIC STATUS AND FUNCTION

     Bay Gas is a gas storage public utility, certificated by the Alabama Public Service Commission
and subject to regulation by that Commission, which qualifies as an intrastate pipeline company
providing storage and transportation services within the meaning of NGPA Section 2 (16) and Section
284.1 (a) of this Commission’s regulations. Any such NGPA Section 311 (a)(2) services that Bay Gas
provides will be consistent with, and shall not infringe on, Bay Gas’ status and function as a
non-Federal-jurisdictional intrastate pipeline, and shall not subject Bay Gas to this Commission’s
Natural Gas Act jurisdiction. 18 C.F.R. § 284.3.

II.

QUALIFIED SHIPPERS

     Besides other conditions contained in this Statement, Bay Gas’ services are available only to
a Shipper that enters into a Service Agreement mutually acceptable to Bay Gas and Shipper. All
transactions for storage or transportation of gas that has flowed, or will flow, in interstate
commerce must qualify under NGPA Section 311 (a)(2)

1

 

and 18 C.F.R. Part 284 of Subchapter I. If, in the opinion of Bay Gas’ counsel, such qualified
status of Shipper or its proposed transaction is in doubt, then Shipper must apply for and receive
a final, non-appealable ruling from this Commission, or successor agency thereto, affirming such
qualifying status of Shipper and its proposed transaction, prior to commencement of services by Bay
Gas.

III.

CAPACITY AVAILABILITY, SCHEDULING AND ALLOCATIONS 

AND CURTAILMENTS

	A.  	Capacity Availability

	 	1.  	Storage service shall be conditioned on availability of sufficient injection
rate capacity, field storage capacity and withdrawal rate capacity (collectively called
“Capacity,” and including pipeline transportation service capacity) to perform the
service in accordance with the terms and conditions set forth in this Statement of
Conditions without detriment or disadvantage to services by or for the account of Bay
Gas. Transportation service shall be conditioned on availability of sufficient
Capacity to perform the service in accordance with the terms and conditions set forth
in this Statement of Conditions without detriment or disadvantage to services by or for
the account of Bay Gas. Bay Gas reserves all rights to retain sufficient Capacity for
its intrastate, non-Federal-jurisdictional firm and interruptible services and for its
operational swings attributable to firm and interruptible storage services prior to
making Capacity available by contract to NGPA Section 311 (a)(2) Shippers. Once
Capacity is made available to NGPA Section 311 (a)(2) Shippers, such Capacity shall be
scheduled, allocated or curtailed only as set forth in Sections III. B and C here.
	 
	 	2.  	Storage service availability further shall be conditioned on Bay Gas receiving
an acceptable market value, in Bay Gas’ sole judgment, for such storage services,
determined when a request for storage service is received. Bay Gas reserves all rights
to refuse a request for storage service that, in Bay Gas’ sole judgment, might provide
less than market value. Apart from such Bay Gas judgment as to market value, Bay Gas’
judgment shall be exercised on a non-discriminatory basis.
	 
	 	3.  	Criteria applied to requests for NGPA Section 311 (a)(2) services shall be the
same as criteria applied to requests for intrastate, non-Federal-jurisdictional
services.
	 
	 	4.  	Shipper shall be responsible for making all arrangements for its

2

 

	 	   	transportation of gas to be injected into or withdrawn from storage through Bay Gas’
storage services. Bay Gas reserves all rights to refuse storage service for any
otherwise qualified Shipper if Bay Gas determines that such storage would be
detrimental to Bay Gas’ storage operations in any way, including, without limitation,
Bay Gas’ storage compression and affected processing operations.

	B.  	Scheduling and Allocations

     Bay Gas shall schedule contracted services according to these principles:

	 	1.  	Nomination deadlines shall be as prescribed in Bay Gas’ General Terms and
Conditions.
	 
	 	2.  	Bay Gas will be under no obligation to schedule the injection of gas into
storage or the withdrawal of gas from storage until Bay Gas has confirmed the
availability of Shipper’s transportation service to or from Bay Gas’ storage services
for the gas concerned. Subject to the foregoing subsection “1.” and this subsection
“2.”, firm storage and transportation services shall be scheduled before interruptible
services in all instances, regardless of the relative service rates to be paid.
	 
	 	3.  	In-field transfer of title (transfer of gas balances in the storage field
between storage service agreements) may be made only with Bay Gas’ approval.
	 
	 	4.  	Interruptible storage service Shippers paying a higher Unit Rate, as defined in
Bay Gas’ General Terms and Conditions, shall be scheduled ahead of interruptible
storage service Shippers paying a lower Unit Rate. If, because of changes in available
Capacity at any time, Bay Gas is required to reschedule interruptible Shippers that are
injecting, storing or withdrawing gas and are paying the same Unit Rate, then the
Capacity shall be rescheduled pro rata based on applicable contract quantities for said
Shippers.
	 
	 	5.  	Bay Gas reserves the right to interrupt service to an interruptible Shipper
injecting, storing or withdrawing gas, in order to enable Bay Gas to provide service to
another, bumping, interruptible Shipper injecting, storing or withdrawing gas, if such
Shipper is paying a higher Unit Rate to Bay Gas.
	 
	 	6.  	All overrun volumes in excess of a storage service Shipper’s contract
quantities nominated for delivery by Shipper shall be scheduled according to the above
subsections “4.” and “5.” only after all other storage service Shippers’ nominated
volumes equal to or less than each Shippers’

3

 

	 	   	Maximum Daily Injection Quantity or Maximum Daily Withdrawal Quantity are scheduled.
	 
	 	7.  	Bay Gas may reschedule Capacity on a daily basis, or on such other periodic
basis as is necessary for Bay Gas to recognize the priority of new storage or
transportation service Shippers or any changes in the priorities of existing such
Shippers, and to conform to its storage system operational requirements. Such
priorities or changes will include, but will not be limited to, those instances
involving a storage service Shipper paying a higher Unit Rate for interruptible service
and firm storage service Shippers changing volumes within their Maximum Daily Injection
Quantity or Maximum Daily Withdrawal Quantity. However, such changes in scheduling
shall not at any time bump any existing firm Shipper.

	C.  	Curtailments

	 	1.  	General. If curtailment of storage or transportation service is required,
volumes shall be curtailed in the reverse order of the priority in effect at the time
of curtailment established during scheduling as set forth in Section “III. B” above.
Intrastate, non-Federal-jurisdictional firm and interruptible services shall be
curtailed in a manner determined solely by Bay Gas, but in no event shall such
curtailments have a different priority than similar types of services for NGPA Section
311 (a)(2) Shippers.
	 
	 	2.  	Reduction of Services. Without limitation to the foregoing, Bay Gas shall have
the right to reduce receipts, deliveries, injections or withdrawals of gas on any day
below a storage service Shipper’s Maximum Daily Injection Quantity or Maximum Daily
Withdrawal Quantity, or below the storage rights applicable, for repair, overhaul,
replacement or construction of pipelines, compressors, metering, regulating or other
production, gathering and transmission facilities and equipment, or to maintain system
integrity; provided, however, that with respect to routine repair and maintenance, Bay
Gas will implement restrictions for scheduling purposes only, not for curtailment, and
will attempt to schedule such activity during a period when it will not result in
limitation of firm service or when such limitation will be minimized, and after
consulting with the Shippers that could be affected.
	 
	 	3.  	Notice of Curtailment. For shippers under all firm services, Bay Gas shall
provide notice of any curtailment as far in advance as feasible. Services reserved by
Bay Gas for system operations shall be curtailed last, in consideration of the need to
preserve system integrity. If capacity is curtailed and two or more firm Shippers have
the same priority according to this Section “III. C”, firm Shippers shall be allocated
their pro rata share

4

 

	 	   	of capacity based on their Maximum Daily Injection Quantity or Maximum Daily
Withdrawal Quantity or Maximum Daily Transportation Quantity, as applicable. If firm
Shippers nominate fewer than their respective curtailment period entitlements, the
difference shall be allocated pro rata among those firm Shippers with unsatisfied
nominations. All non-firm Shippers shall be allocated their pro rata share of
Capacity based on their nominations in effect at the time of the curtailment.
	 
	 	4.  	Limitation of Firm Services. While firm services are not ordinarily interrupted
by nominations for firm service within Shipper’s Maximum Daily Injection Quantity or
Maximum Daily Withdrawal Quantity or Maximum Daily Transportation Quantity, Bay Gas may
decline to schedule firm service for any of the following reasons:

	 	(a)  	if Shipper tenders gas which does not conform to applicable
pressure requirements of the Storage or Transportation Service Agreement
	 
	 	(b)  	if Shipper tenders gas which does not conform to the gas
quality requirements of both the upstream and downstream entities’ gas quality
requirements
	 
	 	(c)  	for reasons of force majeure
	 
	 	(d)  	due to routine repair and maintenance to be reasonably
determined by Bay Gas
	 
	 	(e)  	due to delinquency in payment by Shipper
	 
	 	(f)  	to rectify imbalances or to conform physical flows to nominations
	 
	 	(g)  	to maintain system integrity, or
	 
	 	(h)  	if there is a dispute over title, ownership or right to tender,
receive or deliver gas.

IV.

MINIMUM STORAGE SERVICE VOLUME

     Bay Gas shall not be obligated to furnish storage service to any Shipper whose average daily
gas volume tendered for storage in a given month is less than 100 MMBtu per day. Such storage
Shipper’s obligation to tender gas for delivery shall be suspended and modified for the time and to
the extent that Bay Gas does not accept

5

 

deliveries due to Shipper’s inability to deliver such minimum average daily volume. If the amount
of gas subsequently tendered for delivery once again is less than such minimum average daily
volume, Bay Gas shall have the right to cancel the Storage Service Agreement at any time on thirty
(30) days written notice to Shipper. Bay Gas shall be deemed released from all obligations and
liabilities, direct or indirect, under such Storage Service Agreement on the effective date of such
a cancellation.

V.

RECEIPT AND DELIVERY

     Bay Gas shall have sole operational control over the injection of gas into, the retention of
gas within, and the withdrawal of gas from, Bay Gas’ system storage facilities. A Shipper seeking
to direct gas into storage shall nominate “Storage” as the Point of Delivery on Bay Gas’ system
and shall identify the number of the Storage Service Agreement to be used for the receipt of such
gas into storage. A Shipper seeking to withdraw gas from storage shall nominate “Storage” as the
Point of Redelivery from Bay Gas’ system and shall identify the number of the Storage Service
Agreement under which the gas is to be withdrawn from storage. Bay Gas shall have sole operational
control over the transportation of gas on Bay Gas’ system from the Point of Delivery to the Point
of Redelivery. For transportation service, “Delivery” shall mean the act of causing gas to be
transported to the Points of Delivery, and “Redelivery” shall mean the transportation of gas from
the Points of Delivery to the Points of Redelivery.

VI.

GENERAL TERMS AND CONDITIONS

FOR GAS STORAGE AND TRANSPORTATION

     Amended General Terms and Conditions to Bay Gas Storage Company, Ltd.’s Storage and
Transportation Service Agreements, dated December 22, 1998, are incorporated by reference as part
of this Statement of Conditions. Shipper’s failure to comply with the provisions in Section II,
Nominations, Balancing And Excess Deliveries, of such General Terms and Conditions shall relieve
Bay Gas of its obligation to perform services, and, if such failure to comply unreasonably
interferes, in Bay Gas’ judgment, with Bay Gas’ control over its system facilities, then Bay Gas
may, at its option, cease services and terminate any related Service Agreements or other
agreements, without limitation of Bay Gas’ rights or remedies at law or in equity.

6

 

VII.

RIGHT TO TERMINATE SERVICES

     Bay Gas reserves the right to discontinue, on a non-discriminatory basis, all services that
subject Bay Gas to the non-discriminatory access requirements of 18 C.F.R. Part 284, and any
subsequent Commission Orders, Rules or Regulations applicable to such services. Bay Gas may cancel
the affected Service Agreements at any time on ninety (90) days prior written notice to Shippers if
Bay Gas has no other reasonable options available that will allow the continuation of such Service
Agreements. Bay Gas shall be relieved of all obligations and liabilities on the effective date of
such notice of discontinuance and cancellation. Bay Gas additionally reserves the right to
terminate any interruptible Service Agreement if the Shipper either has not executed the Service
Agreement within thirty (30) days of receiving such Agreement, or has failed to nominate service
under such Agreement within one (1) year after execution of the Agreement.

VIII.

COMPLIANCE WITH LAW AND SURVIVABILITY

     If any part of this Statement of Conditions conflicts with, or violates, any Commission or
other Judicial, Governmental or Regulatory Body’s Orders, Rules or Regulations, such part shall be
deemed void, but shall not affect the remaining provisions of this Statement. Bay Gas shall not be
liable to any party with a Service Agreement subject to this Statement that loses priority status
or any other rights enumerated in this Statement because of the issuance by the Commission or other
Judicial, Governmental or Regulatory Body of any Orders, Rules or Regulations affecting this
Statement of Conditions.

IX.

CHANGES TO THIS STATEMENT OF CONDITIONS

     Bay Gas reserves the right to add to, delete or modify the conditions in this Statement
without prior notice.

X.

AUTHORITY OF STATEMENT OF CONDITIONS

     This Statement of Conditions, and the incorporated General Terms and

7

 

Conditions (see Section “VI.” above) take precedence over conflicting language in any of Bay
Gas’ Service Agreements or amendments thereto, unless such language specifically states that
it is an exception to this Statement, and then only to the extent of such stated exception.

8

 

EXHIBIT “D”

Sample Nomination Form

	 	 	 	 	 
	Nomination To:

	 	Bay Gas Storage	 	 
	

	 	 	 	 
	 

	 	 	 	 
	Nomination From:

	 	BP Energy Company	 	 
	

	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Daily	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Nom	 	 	Start	 	 	End	 	 	Volume	 	 	Delivery	 	 	Delivery	 	 	Upstream	 
	 	Type	 	 	Date	 	 	Date	 	 	(MMBtu)	 	 	Pipe	 	 	Point	 	 	Contract	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Inject
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	DAILY
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	TOTAL:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Daily	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Nom	 	 	Start	 	 	End	 	 	Volume	 	 	Delivery	 	 	Delivery	 	 	Upstream	 
	 	Type	 	 	Date	 	 	Date	 	 	(MMBtu)	 	 	Pipe	 	 	Point	 	 	Contract	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Withdrawal
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	DAILY
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	TOTAL:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

Exhibit “E”

Form of Assignment Consent

_____________________, 2005

Bay Gas Storage Company, Ltd.

2828 Dauphin Street

Mobile, Alabama 36606

Attention: Chief Financial Officer

Regions Bank, as Trustee

106 St. Francis Street

Mobile, Alabama 36602

Attention: Corporate Trust Department

     Ladies and Gentlemen:

     Reference is made to that certain Storage Service Agreement made as of ___, 2005
(the “Subject Agreement”) between Bay Gas Storage Company, Ltd. (the “Company”) and BP Energy
Company (the “Customer”). Under the Subject Agreement, the Company has agreed to provide natural
gas storage services in accordance with the terms and conditions of said Agreement. At the request
of the Company, the Customer has been asked to enter into this Assignment Consent.

     The Customer hereby (i) acknowledges that the Company has granted a security interest in and
assigned, as a collateral assignment, all its right, title and interest in, to and under the
Subject Agreement to Regions Bank (the “Trustee”), as trustee for the benefit of the holders of
certain Senior Secured Notes of one or more series (the “Notes”) of the Company issued pursuant to
a Trust Indenture and Security Agreement, dated as of December 1, 2000 (the “Indenture”), between
the Company, as debtor, and the Trustee, as secured party, which Indenture will secure the Notes,
and (ii) consents to such grant and assignment.

     In addition, the Customer acknowledges that, (i) upon the occurrence of an Event of Default
under the Indenture, the Trustee may elect by written notice delivered to the Customer to require
that any and all permitted payments from time to time by the Customer to the Company under the
Subject Agreement be paid to an account as directed by the Trustee, (ii) the Indenture provides
that the Trustee, as secured party, shall have the right, upon the occurrence of an Event of
Default under the Indenture, to collect amounts payable under the Subject Agreement and to take
actions to enforce collection of payments thereunder as fully as could the Company, and (iii) the
Indenture

2

 

restricts waivers, modifications or amendments by the Company with respect to the Subject
Agreement, as well as any subsequent assignment by the Company of any sums payable thereto or
rights thereof under the Subject Agreement to any party other than the Trustee without the prior
written consent of the Trustee so long as any Notes remain outstanding thereunder

     The Customer hereby confirms and agrees that:

	 	(i)  	The Subject Agreement has not been amended, modified or altered
and is in full force and effect and neither the Company nor the Customer is in
default thereunder;
	 
	 	(ii)  	The Customer will not, without the prior written consent of the
Trustee, assign any of its obligations under the Subject Agreement; and
	 
	 	(iii)  	The Customer will provide such financial information to the
Trustee as may from time to time be reasonably requested by the Company.

     The assignments referred to herein shall not be deemed to relieve the Company from any of its
obligations under the Subject Agreement. The parties hereto agree that this Consent may be
executed in counterparts.

     This Consent and all undertakings herein contained shall be binding upon and inure to the
benefit of the Trustee and all holders of the Notes from time to time and their respective
successors and assigns.

     This Consent shall be governed by and construed in accordance with Alabama law, without
reference to its conflicts of laws principles.

     All modifications to the undertakings provided in this Consent shall be effective only if the
same shall be in writing and signed by all parties hereto.

     The parties hereto agree that all notices and communications to be sent pursuant to this Form
of Assignment Consent, shall in each case be sent (in the manner provided for notices in the
Subject Agreement) to (i) the Trustee at the following address (or as the Trustee shall otherwise
direct in writing):

Regions Bank, as Trustee

106 St. Francis Street

Mobile, Alabama 36602

Attention: Corporate Trust Department

3

 

and (ii) to the Customer at the following address (or as the Customer shall otherwise direct in
writing):

BP Energy Company

605 Bel Air Boulevard

Mobile, Alabama 36606

Attention: Vice President, Fuel Services

* * * *

     The parties hereto, acting through their duly authorize representatives, have executed this
Consent as of the date first aforesaid.

	 	 	 	 	 
	 	 	BP Energy Company
	 
	 	 	 	 
	

	 	By	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Its	 	 
	

	 	 	 	 

Secretary’s Certificate

     I, ______, do hereby certify that I am a duly qualified and acting
[Secretary] of BP Energy Company, an [Alabama] ______, and that the signature
subscribed to the foregoing certificate purporting to be the
signature of ______ is
the genuine signature of said person and that said
______ is the duly elected,
qualified and acting ______ of said BP Energy Company.

[Secretary]

[Affix Corporate Seal]

4

 

     The undersigned, Bay Gas Storage Company, Ltd., hereby acknowledges the execution and
delivery of this Assignment Consent and agrees to be bound by the terms hereof.

	 	 	 	 	 
	 	 	Bay Gas Storage Company, Ltd.
	 	 	By MGS Storage Services, Inc., its General
	 	 	Partner
	 
	 	 	 	 
	

	 	By	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Its	 	 
	

	 	 	 	 

Accepted and agreed to:

Regions Bank,

As Trustee on behalf of the holders of the Notes

	 	 	 	 	 
	By
	 	 	 	 
	

	 	

	 	 
	 
	 	 	 	 
	Its
	 	 	 	 
	

	 	 	 	 

5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}]]