EXHIBIT 10.7
GAS PURCHASE AGREEMENT
THIS AGREEMENT made and entered into this 1st day of March 1991, but with an
effective date to be retroactive to October 1, 1990, by and between ENERGAS
CORPORATION ("Seller") and ENERGAS PIPELINE COMPANY ("Buyer") concerns the
sale of natural gas by Seller to Buyer as follows:
I. NATURE OF SERVICE
1.1 The parties hereto recognize that the sale and purchase of gas
hereunder will be contingent on the execution by Buyer and Seller of a
PURCHASE NOMINATION NOTICE in the form attached hereto as Exhibit "A". It is
expressly understood that Buyer shall have no right to purchase and Seller
shall have no obligation to sell any gas under this Agreement unless there is
a fully executed PURCHASE NOMINATION NOTICE in effect. The parties hereto
further recognize that during any period in which a fully executed PURCHASE
NOMINATION NOTICE is in effect, the sale and purchase of gas hereunder will
also be contingent on Buyer arranging for the transportation of Seller's gas
to be purchased hereunder, on terms and conditions satisfactory to Buyer in
its sole discretion, by the Receiving Pipeline{s) described in the then
effective PURCHASE NOMINATION NOTICE, from the Seller's Delivery Point(s)
described therein to Buyer's resale markets.
II. TERM
2.1 This agreement shall become effective on the first of the month
of the date hereof and shall continue in full force and effect for a primary
term of five (5) Contract Years and from year to year thereafter. Either
party shall have the right to terminate this Agreement at the expiration of
the primary term or on any anniversary of said date thereafter by giving the
other party sixty (60) days prior written notice.
III. QUANTITY
3.1 Subject to the terms of this Agreement, Seller does hereby
commit to sell to Buyer, on a best reasonable efforts basis, and Buyer does
hereby agree, on a best reasonable efforts basis, to purchase a mutually
agreeable volume of gas as set forth in a then effective PURCHASE NOMINATION
NOTICE. Buyer and Seller recognize that, due to transportation limits and
market curtailments, Buyer may be unable to purchase and receive the entire
volume of gas contemplated by this Agreement, which may be available from
Seller during any effective PURCHASE NOMINATION NOTICE. Should Buyer be
unable to purchase and receive from Seller the entire volume of gas which is
available pursuant to the terms and conditions of this Agreement, then Seller
shall have the right to sell such excess gas to other parties until Buyer can
resume full contractual purchases. Notwithstanding any provision to the
contrary in this Section III, it is expressly understood that Buyer shall not
be obligated to purchase any minimum quantities of gas or pay
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for same if available and not taken.
IV. PRICE
4.1 Buyer shall pay Seller for all the gas delivered by Seller to
Buyer hereunder at the Delivery Point(s) described in the then effective
PURCHASE NOMINATION NOTICE the price specified in such PURCHASE NOMINATION
NOTICE for the Nomination Period set forth in such PURCHASE NOMINATION NOTICE.
4.2 In the event that Buyer and Seller do not reach an agreement on
the price, quantity or other terms and conditions of a PURCHASE NOMINATION
NOTICE, then the delivery of gas by Seller to Buyer hereunder shall be
temporarily suspended until such time as Buyer and Seller can mutually agree
on the terms and conditions of a Purchase Nomination Notice.
V. QUALITY AND MEASUREMENT
5.1 All gas delivered hereunder shall be measured by a meter or
other measuring device installed and operated by the Receiving Pipeline(s)
described in a then effective PURCHASE NOMINATION NOTICE, such Receiving
Pipeline(s)'s rules, guideline and policies, shall define and set forth,
among other things, the units of measurement, measurement specifications,
quality, heating value, testing specifications and delivery terms, and
specifications of the gas to be delivered to Buyer pursuant hereto. All such
specifications and procedures of such Receiving Pipeline(s) relating to the
delivery of gas are hereby expressly incorporated herein by reference and
shall be applicable to and binding upon the parties and all natural gas sold
by Seller to Buyer.
VI. PASSAGE OF TITLE
6.1 Title to all gas covered hereunder shall pass from Seller to
Buyer at the Delivery point(s) described in a then effective PURCHASE
NOMINATION NOTICE.
VII. WARRANTY TO TITLE
7.1 Seller warrants for itself, its successors and assigns, that it
will at the time of delivery and throughout the term of this Agreement have good
title to all gas delivered by it hereunder, free and clear of all liens,
encumbrances and claims whatsoever; that it will at such time of delivery and
throughout the term of this Agreement have good right and title to sell and
deliver said gas; and that it will indemnify Buyer and save Buyer harmless from
all suits, actions, debts, accounts, damages, costs, losses and expenses arising
from or out of adverse claims of any and all persons to said gas or to
royalties, taxes, or other charges thereon. In the event of any claim asserted
against Seller's title to the gas delivered hereunder, Seller's right to deliver
same or the Seller's right to receive payment for all gas delivered hereunder,
Buyer may withhold payment of sums due hereunder up to the amount of such claim
until such claim is finally determined,
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either by agreement of the parties or by litigation, or until Seller
furnishes a bond in sufficient amount, with sureties satisfactory to Buyer,
conditioned to save Buyer free and harmless from any such claim and all
expenses incurred in investigating or defending such claim, including,
without limitation, attorney fees and costs of court.
VIII. BILLING AND PAYMENT
8.1 On or before the 15th day following the month of deliveries of
gas hereunder, Seller shall deliver to Buyer an invoice accompanied by a
statement for the preceding month properly identified as to the delivery
location, showing the daily and total volume of gas delivered, the amount due
and information sufficient to explain and support any calculations made by
Seller in determining the amount billed (i.e., pipeline volume statement).
8.2 Buyer will pay Seller at the address as shown hereunder by the
later of: (i) fifteen (15) days following receipt of invoice, (ii) the twenty
fifth (25th) day of the second month following deliveries, (iii) five (5)
days following receipt of all signed Agreements and/or PURCHASE NOMINATION
NOTICES, or (iv) five (5) days following receipt of a verifiable supporting
statement. If any overcharge or undercharge in any form whatsoever shall at
any time be found and the xxxx therefore has been paid, Seller shall refund
the amount of the overcharge received by Seller and Buyer shall pay the
amount of the undercharge within thirty (30) days after final determination
thereof; however, no retroactive adjustment will be made for any overcharge
or undercharge beyond a period of twenty-four (24) months from the date a
discrepancy occurred. In the event a dispute arises as to the amount payable
in any statement rendered, Buyer shall nevertheless pay the amount not in
dispute to Seller pending resolution of the dispute. If it is determined that
Buyer owes Seller the disputed amount, Buyer will pay Seller that amount.
8.3 Every notice, request, statement or xxxx provided for in this
Agreement shall be in writing directed to the party to whom given, made or
delivered at such party's address as set forth below and as such address may
be changed from time to time with written notice to the other party.
NOTICES/CORRESPONDENCE & PAYMENTS:
SELLER: Energas Corporation
0000 Xxxx Xxxx Xxxxxx - Xxxxx 000
Xxxxxx, XX 00000
NOTICES/CORRESPONDENCE & INVOICES:
BUYER: Energas Pipeline Company
0000 Xxxx Xxxx Xxxxxx - Xxxxx 000
Xxxxxx, XX 00000
8.4 If Seller's title is questioned or involved in any action,
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Buyer may withhold payment (without interest) of sums due hereunder up to the
amount of the claim until title is free from such questions or such action is
finally determined, or until such time as Seller furnishes bond conditioned
with sureties satisfactory to Buyer to save Buyer harmless.
IX. INDEMNITY
9.1 Buyer shall indemnify and hold Seller harmless against any
claims for damages (including damages caused by gas) arising subsequent to
the delivery of gas hereunder at the Delivery Point(s) described in a then
effective PURCHASE NOMINATION NOTICE. Likewise, Seller shall indemnify and
hold Buyer harmless against claims for damages (including damages caused by
gas) arising prior to and upon the delivery of gas hereunder at the Delivery
Point(s) described in a then effective PURCHASE NOMINATION NOTICE.
X. FORCE MAJEURE
10.1 This Agreement is subject to all present and future valid and
applicable laws, orders, rules and regulation of any duly constituted
authorities having jurisdiction or control over the parties, their
facilities, gas supply, operations, or this Agreement or any provisions
hereof.
10.2 This Agreement shall be governed, construed and applied in
accordance with the laws of the State of Oklahoma.
10.3 In the event either party is rendered unable, wholly or in
part, by force majeure to carry out its obligations under this Agreement
(except the obligation of Buyer to pay for gas received by Buyer hereunder),
the obligations of such party, insofar as they are affected by such force
majeure, shall be suspended during the period of any inability so caused, but
for no longer period, and such cause shall be so far as reasonably practical
be remedied with reasonable dispatch. The term "force majeure", as employed
herein, shall mean acts of God, acts of the public enemy, wars, blockades,
insurrections, strikes or differences with workmen, riots, disorders,
epidemics, land slides, lightening, earthquakes, fires, storms, floods,
washouts, arrests and restraints, civil disturbances, explosions, breakage,
accident or repair of machinery or lines of pipe, freezing of xxxxx or lines
of pipe, requisitions, diversion, embargoes, priorities or expropriations of
government or governmental authorities, delays resulting from inability to
secure materials and equipment under governmental authorization and clearance
at mill or factory prices, and likewise delays caused by scarcity of
materials, supplies and equipment, interference by civil or military
authorities, legal or defacto, law or otherwise, failure of pipelines or
other carriers to transport or furnish facilities for transportation, partial
or complete failure of Buyer to secure or maintain a market for the gas,
failure of xxxxx or other sources of supply, inability to obtain easements at
reasonable costs, rules and regulations with regard to transportation by
pipelines and without limitation by enumeration, any other cause or causes,
whether of the kind
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enumerated or otherwise not reasonably within the control of the party in
default.
10.4 The settlement of strikes or differences with workmen shall be
entirely within the discretion of the party having the difficulty.
XI. ASSIGNMENT
11.1 This Agreement may not be assigned without the prior written
consent of both parties. Change of control, merger, consolidation or
re-capitalization of either party shall not be considered an assignment.
XII. NOTICES
12.1 Routine communications and statement shall be considered duly
delivered when mailed by first class mail. All notices, including notices of
termination or default, shall be sent by certified mail, return receipt
requested, and shall be considered delivered as of the date receipt is
acknowledged.
XIII. MISCELLANEOUS
13.1 Seller represents and warrants that the sale of gas hereunder
by Seller to Buyer qualifies as a first sale as defined in Section 2(21) of
the Natural Gas Policy Act of 1978 ("NGPA"). Seller further represents and
warrants that all gas sold to Buyer hereunder shall either be: (1) gas "not
committed or dedicated to interstate commerce" on or before November 8,1978,
(2) gas finally determined to qualify as NGPA Section 102(c), 103(c), 107(c)
gas, or (3) gas which has otherwise been deregulated pursuant to the Natural
Gas Wellhead Decontrol Act of 1989.
13.2 No failure by any party to insist upon compliance with any term
of this Agreement, to exercise any option, enforce any right, or seek any
remedy upon any default of any other party shall affect, or constitute a
waiver of the first party's right to insist upon such strict compliance,
exercise that option, enforce that right, or seek that remedy with respect to
that default or any prior, contemporaneous, or subsequent default; nor shall
any custom or practice of the parties at variance with any provision of this
Agreement affect, or constitute waiver of, any party's right to demand strict
compliance with all provisions of this Agreement.
13.3 The terms contained in this Agreement constitute the entire
agreement of the parties and there are no agreements, understanding,
obligations, promises, assurances or conditions, precedent or otherwise,
except those expressly set out herein.
13.4 This Agreement was prepared jointly by the parties hereto and
not by either party to the exclusion of the other.
13.5 The terms of this Agreement, including but not limited to, the
price paid for gas, the identified transporting pipelines, the
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quantities of gas purchased or sold and all other material terms of this
Agreement shall be kept confidential by the parties hereto, and shall not be
disclosed to any third party except that any information must be disclosed to
a third party for the purpose of effectuating transportation of the gas
delivered hereunder.
EXECUTED in duplicate this 1ST day of MARCH, 1991
--- -------
BUYER
ENERGAS PIPELINE COMPANY
Witness:
/s/ Xxxxx X. Xxxxxx By /s/ Xxxxxx Xxxx
-------------------------- ------------------------------
President
SELLER
ENERGAS CORPORATION
Witness:
/s/ Xxxxx X. Xxxxxx By /s/ Xxxxxx Xxxx
-------------------------- ------------------------------
President
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EXHIBIT "A"
Gas Purchase Agreement between ENERGAS PIPELINE COMPANY and ENERGAS CORPORATION,
dated October 1, 1990.
PURCHASE NOMINATION NOTICE
On this _______ day of ___________, Energas Pipeline Company ("Buyer") hereby
gives notice to Energas Corporation ("Seller") that the Purchase Nomination
Notice under the above referenced Gas Purchase Agreement, shall be as set forth
below:
NOMINATION PERIOD: ______________________
PURCHASE PRICE: $ _______________ /Mcf
QUANTITY: 100% of production
PRESSURE BASE: 14.73
RECEIVING PIPELINE(S): Xxxx Xxxxx Gas System
DELIVERY POINT(S): Various wellhead Delivery point(s)
into Buyer's Xxxx Xxxxx Gas System in
Atoka County, OK.
This PURCHASE NOMINATION NOTICE is incorporated by reference and
shall be part of the above referenced Gas Purchase Agreement between Buyer
and Seller when executed by the parties in the space provided below.
AGREED and ACCEPTED this __________________ day of ______, 199__
BUYER:
ENERGAS PIPELINE COMPANY
By
---------------------
President
SELLER:
ENERGAS CORPORATION
By
---------------------
President
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