PRECEDENT AGREEMENT by gjjur4356

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									                  PRECEDENT AGREEMENT
    FOR PROPOSED 2008 BC RECEIPT CAPACITY EXPANSION
                            Between
             Alliance Pipeline Limited Partnership
                              and

                   _______________________________



This Precedent Agreement (“Precedent Agreement”), dated this ________ day of
________, 2006, is made by and between Alliance Pipeline Limited
Partnership,(“Alliance”), and _________________________________________, a
_________________________________________________________________
with offices at ____________________________________________(“Shipper”).


         Alliance and Shipper hereby agree to enter into an agreement for the
natural gas transportation receipt capacity described herein, provided the
conditions and obligations set forth in this Precedent Agreement are satisfied in
accordance herewith. The commitment provided by Shipper under this Precedent
Agreement will be used as support for the construction and operation of certain
facilities by Alliance, which facilities are referred to herein as the “Expansion
Project.” Accordingly, Alliance and Shipper agree as follows:

WHEREAS Alliance proposes to construct and operate the Expansion Project,
which will create additional receipt capacity for natural gas receipts originating in or
around northeastern British Columbia; said Expansion Project is proposed to be in
service as of May 31, 2008 and consists of additional compression and
appurtenant facilities to be located on the Taylor-Aitken Creek lateral system
(TAC); and

WHEREAS, the facilities and capacities described herein may change based on
the final capacity requirements or project design as determined by Alliance in its
sole discretion; and

WHEREAS, this Precedent Agreement is executed as evidence of Shipper’s
request for incremental firm receipt capacity on the TAC and Alliance’s and
Shipper’s agreement to amend their existing Transportation Service Agreement(s)
(“TSA”) to allow for changes to designated Primary Receipt Point Capacities, the
inclusion of the Phase II TAC Surcharge and any other changes considered
necessary to achieve their mutual interests.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Alliance and Shipper agree as follows:

1. Effective Date and Term

       This Precedent Agreement shall become effective as of the date first stated
       above and shall remain in effect until the earlier of: (a) the actual in-service
       date of the Expansion Project, or (b) either Shipper’s or Alliance’s exercise
       of its termination rights pursuant to this Precedent Agreement.

2. Services

       Alliance agrees to construct the Expansion Project and provide Shipper, as
       conditioned herein, with firm receipt capacity service to meet Shipper’s
       requirements as set forth on the attached Appendix A. The construction and
       operation of these facilities are subject to the jurisdiction of the National
       Energy Board (“NEB”) and the transportation service will be provided
       pursuant to the terms of Alliance’s NEB-approved tariff (“NEB Gas Tariff”).

3. Rates

       Shipper agrees to pay a surcharge over and above any and all other rates
       being paid to Alliance for its services. The surcharge shall be based upon
       existing and approved tolling methodologies except that depreciation for the
       incremental facilities required to provide this service shall be accelerated for
       the initial 5 years of the term to allow the depreciated book value of the new
       assets to align, at the end of five years, with the net book value of existing
       Alliance facilities. This surcharge will be for firm receipt capacity in the TAC
       zone identified on the attached Appendix A and does not exclude Shipper’s
       obligation to pay any and all other rates as required under Alliance’s
       Transportation Tariff, as amended from time to time with the exception of
       the Demand Charge Surcharge for the first five (5) years of the term.

4. Volume, Receipt and Delivery Points

       The contract maximum daily capacity and associated primary receipt
       point(s) are stated on the attached Appendix A.

5. Alliance’s Obligations

       Upon its acceptance of the terms of this Precedent Agreement, Alliance
       shall perform its duties and obligations subject to the following conditions:

       (a) All requisite and final federal, provincial, and local governmental
          approvals and other applicable authorizations must be obtained and
          maintained on terms acceptable to Alliance in its sole discretion,
          including approval of construction, rates, and terms and conditions of
          service;

      (b) All rights-of-way and other surface rights required to situate and maintain
          the Expansion Project must be obtained on terms and conditions
          acceptable to Alliance in its sole discretion; and


      (c) The Expansion Project must remain economically viable, as determined
          in Alliance’s sole discretion.

6. Shipper’s Obligations

      By executing and delivering to Alliance this Precedent Agreement, Shipper
      submits a binding offer to Alliance for firm receipt capacity service as
      described herein. This Agreement cannot be amended or withdrawn by
      Shipper other than as set out in Clause 8 hereto. Shipper further agrees to
      undertake the following acts in addition to those otherwise contained in this
      Precedent Agreement:

      (a) Shipper agrees that it will execute an amended TSA within ten (10)
          business days after tender by Alliance. The terms thereof will reflect the
          receipt point(s), volume, surcharge and other material matters in this
          Precedent Agreement and Appendix A hereto;

      (b) Upon request by Alliance, Shipper agrees to support any notification,
          tariff filing, application or certificate filing made to NEB or any other
          governmental body to obtain any necessary authorizations to construct
          the Expansion Project or to provide service as set out herein and at the
          rates set out herein;

      (c) Shipper shall possess and maintain such credit as is required by
          Alliance, in its reasonable discretion, including providing adequate
          financial assurances to Alliance for this incremental service in
          conjunction with its existing service(s), to satisfy Shipper’s financial and
          contractual obligations under this Precedent Agreement and under any
          TSA Agreement amended pursuant to this Precedent Agreement. Such
          credit assurances shall be in accordance with information and financial
          assurances specified in and required by Article 20 of Alliance’s
          Transportation Tariff in effect at the time of execution of this Precedent
          Agreement. Such assurances shall be provided by Shipper within fifteen
          (15) days of written notice by Alliance, which request may be made by
          Alliance at any time subsequent to Alliance’s execution of this Precedent
          Agreement;
      (d) Shipper acknowledges that Alliance is relying on Shipper’s commitments
          and obligations set forth in this Precedent Agreement in constructing the
          Expansion Project. In the event that Shipper defaults on any of these
          commitments or obligations, Alliance may immediately terminate this
          Precedent Agreement. Shipper and Alliance agree that the amount of
          damages incurred by Alliance in the event of such a default, which
          damages Shipper agrees to pay Alliance, shall not be less than
          Shipper’s proportionate share of the non-mitigatable cost to construct the
          Expansion Project. However, Shipper shall not be obligated for that
          portion of its proportionate share of the cost to construct the Expansion
          Project that is assumed by a replacement shipper within three (3)
          months from the date of Shipper’s default and that provides the same or
          greater net present economic value to Alliance as the defaulting Shipper;
          provided, further, that the replacement shipper satisfies all criteria for
          creditworthiness or the requirements of financial assurances established
          by Alliance. Shipper agrees that such damages shall be immediately due
          and owing to Alliance upon Shipper’s default under this Precedent
          Agreement and shall not serve as a penalty but rather constitute
          liquidated damages as agreed between Shipper and Alliance, it being
          the expressed mutual intention of Shipper and Alliance that until the
          actual in-service date of the Expansion Project this liquidated damages
          provision controls the parties’ relationship and shall take precedence
          over any damages provision to the contrary contained in any other
          agreement between the parties relating to the Expansion Project.

7. Timing

      Alliance anticipates that the Expansion Project will be ready for service on
      or about May 31, 2008, conditioned upon receipt of all necessary regulatory
      and other approvals. However, if Alliance is unable to commence this
      service as contemplated hereunder by May 31, 2008, Alliance will proceed
      with due diligence to commence the service for Shipper at the earliest
      practicable date thereafter. Shipper agrees that it shall have no cause of
      action against Alliance for any delays in the in-service date for the
      Expansion Project.

8. Termination Rights

      (a) Shipper may terminate this Precedent Agreement only if: (1) Alliance
          shall not have filed an application for certification of the Expansion
          Project to NEB prior to April 30, 2007; or (2) the construction of the
          Expansion Project shall not have commenced by August 31, 2007.
       (b) Alliance may terminate this Precedent Agreement only if: (1) the NEB
           denies any approval or certificate necessary for Alliance to proceed with
           the Expansion Project on terms acceptable to Alliance in its sole
           discretion; or (2) the NEB shall attach conditions or modifications to any
           order or certificate that results from the certification application that are
           unacceptable, as determined in Alliance’s sole discretion; or (3) Alliance
           determines in its sole discretion that it is not economically viable to
           proceed with the Expansion Project, with such determination to be made
           at any time after the close of the Open Season but no later than thirty
           (30) days following Alliance’s receipt of a final order from NEB acting
           upon its certificate application; or (4) Shipper fails to maintain
           creditworthiness as determined by Alliance in accordance with
           Paragraph 6 (c) above; or (5) Shipper defaults on any of its obligations
           under this Precedent Agreement.

       (c) Any such termination shall be effected by delivery by the terminating
           party of written notice to the other party within twenty (20) business days
           after the occurrence of the event relied upon to terminate. Notice of
           termination delivered later than twenty (20) business days after the relied
           upon occurrence shall not be effective; provided that notice under
           Paragraph 8(b) may be given by Alliance at any time while Shipper is in
           default of its obligations under Paragraph 6(c).

9. Authorities

       This Precedent Agreement and performance of the obligations hereof are
       subject to all present and future applicable valid laws, orders, decisions,
       rules and regulations of duly constituted governmental authorities having
       jurisdiction over the provision of natural gas transportation service in
       Canada. Nothing contained herein shall be construed as a waiver of any
       right to question or contest any such law, order, decision, rule or regulation
       in any forum having jurisdiction. Should Alliance or Shipper, by force of any
       such law, order, decision, rule or regulation, at any time during the term of
       this Precedent Agreement be ordered or required to do any act inconsistent
       with the provisions hereof, then for the period during which the requirements
       of such law, order, decision, rule or regulation are applicable, this Precedent
       Agreement shall be deemed modified to conform with the requirement of
       such law, order, decision, rule or regulation; provided, however, nothing
       herein shall alter, modify or otherwise affect the respective rights of Alliance
       or Shipper to terminate this Precedent Agreement under the terms and
       conditions hereof.
10. Assignment


      This Precedent Agreement may be assigned by Alliance, in whole or in part,
      to a wholly or partially-owned affiliate or special purpose joint venture,
      partnership, or other affiliated entity, including a parent company or
      partnership. Shipper may assign this Precedent Agreement and any of the
      rights or obligations hereunder, only to a wholly-owned affiliate that satisfies
      Alliance’s creditworthiness standards and the provisions of Paragraph 6
      herein and that is a successor to the business for which the TSA was
      initially secured and then only upon Alliance’s prior written approval, which
      approval shall not be unreasonably withheld.

11. Choice of Law

      This Precedent Agreement shall be interpreted, construed and governed by
      the laws of Alberta, including the laws of Canada therein applicable to this
      Agreement.


12. Further Assurances

      Alliance and Shipper shall enter into such additional agreements as may be
      necessary in furtherance of this Precedent Agreement.



14. Notices

      Notices under this Precedent Agreement shall be addressed:

      To Alliance:

      Alliance Pipeline Ltd
      600, 605 – 5 Avenue S.W.
      Calgary, AB, Canada
      T2P 3H5
      Attn: Eric Besseling
      Fax: (403) 234-0717

      To Shipper:

      ________________________________________
      ________________________________________
      ________________________________________
      ________________________________________
16. Entire Agreement

       This Precedent Agreement represents the entire agreement between the
       parties with respect to the matters specified herein and supersedes and
       cancels any prior or contemporaneous arrangements, understandings, or
       agreements, whether written or oral, by and between the parties relative to
       the subject matter hereof. No amendments may be made to this Agreement
       except in a writing signed by both parties.



This irrevocable Precedent Agreement is offered for Alliance’s acceptance by

____________________________________________ (SHIPPER) this ____

day of _________, 2006.

Signature: _________________________________

Printed Name: ______________________________

Title: ______________________________________

The representative identified above is a duly authorized agent of and has the

authority to bind _______________________________.
                            (Insert Shipper name)

Printed Name: ______________________________

Title: ______________________________________




Accepted and agreed to as of the date first set forth above:

Alliance Pipeline Limited Partnership by its
General Partner Alliance Pipeline Ltd.


Signature: _________________________________

Printed Name: ______________________________

Title: ______________________________________

								
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