SPECIAL PROVISIONS FOR NAESB BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS
Exhibit 10.5
SPECIAL PROVISIONS FOR NAESB BASE CONTRACT
FOR SALE AND PURCHASE OF NATURAL GAS
FOR SALE AND PURCHASE OF NATURAL GAS
Seminole Energy Services, LLC (“Buyer”) and Xxxxxxxxx Petroleum, Inc. (“Seller”) hereby agree
as of July 15, 2009 (the “Effective Date”) to the following Special Provisions, which hereby amend
and modify the NAESB Base Contract for Sale and Purchase of Natural Gas (including the General
Terms and Conditions) (the “Base Contract”) executed by the parties on July 15, 2009. All
capitalized terms, unless otherwise defined herein, have the meanings set forth in the Base
Contract.
Modifications to Base Contract
1. Additional Definitions. Section 2 of the Base Contract is hereby amended to add the following definitions:
“Asset Purchase Agreement” is defined in the Gathering Agreement.
“Committed Reserves” means all of Seller’s Interests in and to all natural gas reserves in and
under or that otherwise may be attributable to any of the lands or geographic area covered by, or
included within the four corners of, the map depicted on Exhibit A, excepting and excluding
therefrom the Gausdale/KayJay, Fount, Pineville, and Xxxxxxx Production Areas.
“Contract Quantity” means the sum of Seller’s Daily Deliverability of Gas and the Existing
Contracts Volume, not to exceed an aggregate of 30,000 Mcf’s per Day.
“Delivery Points” means the points on the Gathering System described in Exhibit B
where Buyer purchases Seller’s Gas hereunder.
“Existing Contracts” means the Gas Gathering Agreement, dated March 14, 2006, between NGAS
Gathering, LLC and Chesapeake Appalachia, L.L.C. and the Gas Gathering Agreement, dated October 5,
2004, between Duke Energy Gas Services Corporation and Forexco, Inc.
“Existing Contracts Volume” means the volume of Gas to be gathered by Seller under the
Existing Contracts on any Day, together with volumes of Gas to be sold by Seller to Stand Energy
under the Stand Contract to the extent permitted herein below.
“Forward Sale Agreement” is defined in Section 15.13 hereof.
“Gathering Agreement” means the Gas Gathering Agreement, dated of even date herewith, between
Buyer and Seminole Stone Mountain, LLC and NGAS Gathering II, LLC.
“Gathering Fees” is defined in the Gathering Agreement.
“Gathering System” is defined in the Joint Ownership Agreement.
“Joint Ownership Agreement” is defined in the Asset Purchase Agreement, as such joint
Ownership Agreement may be amended from time to time.
“Processing Agreement” means the Gas Processing Agreement, dated September 14, 2007, among
Seller, as producer, and Seller and Seminole Gas Company, as plant owners.
“Receipt Points” means the points on the Gathering System described in Exhibit B where
Seller’s Gas is received by Buyer into the Gathering System.
“Rogersville Plant” means the Rogersville Gas Processing Plant in Christian County, Tennessee.
“Seller’s Daily Deliverability of Gas” means the volume of Gas which is physically capable of
being produced by Seller on any Day in accordance with applicable laws and good industry practices
from the Committed Reserves.
“Seller’s Interests” means the oil, gas, and mineral interests owned or controlled by Seller
or its Affiliates in and to any of the lands or geographic area covered by, or included within the
four corners of, the map depicted on Exhibit A, excepting and excluding therefrom the
Gausdale/KayJay, Fount, Pineville, and Xxxxxxx Production Areas, as the same may be extended or
expanded from time to time., whether now owned or hereafter acquired, and the production therefrom,
and all interests in any xxxxx, whether now existing or drilled hereafter, on or completed
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on any of the lands or geographic area covered by, or included within the four corners of, the
map depicted on Exhibit A, excepting and excluding therefrom the Gausdale/KayJay, Fount,
Pineville, and Xxxxxxx Production Areas, as the same may be extended or expanded from time to
time., or within any pooled area, communitized area, or unit, even though Seller’s Interest may be
incorrectly or incompletely stated, all as the same shall be enlarged by the discharge of any
burdens or by the removal of any charges or encumbrances to which any of same may be subject as of
the Effective Date, and any and all replacements, renewals, and extensions or amendments of any of
the same.
“Stand Contract” means that certain Base Contract for Short-Term Sale and Purchase of Natural
Gas dated as of November 21, 2001, by and among Seller and Stand Energy, as amended, together with
any and all existing confirmations, purchase orders or other commitments remaining under (or
executed in connection with) this contract.
“Stand Energy” means Stand Energy Corporation.
“Stand Lockbox” means a new, segregated bank account established by Buyer, and which Buyer
shall have the sole right to withdraw funds or amounts. The purpose of the Stand Lockbox will be
to receive Stand Proceeds, and neither Buyer nor Seller shall deposit any other amounts therein.
“Stand Proceeds” means any payments, proceeds, fees or other amounts to be paid to Seller in,
under or in connection with the Stand Contract, together with any interest or earnings thereon, if
any, to the extent deposited in the Stand Lockbox.
2. Quantity. Section 3.1 is amended to add the following sentence:
“Seller shall deliver, and Buyer shall receive, the Contract Quantity each Day
on a Firm basis. Seller’s Gas and the Existing Contracts Volume shall be delivered
to Buyer at the Receipt Points for gathering on the Gathering System, and Seller’s
Gas shall be purchased by Buyer at the Delivery Points, all as set forth herein.
The Existing Contracts Volume shall be gathered, but not purchased, by Buyer
hereunder. For purposes of clarity, the Contract Quantity shall include only Gas
volumes attributable to the Committed Reserves and the Existing Contracts and Seller
shall not deliver, and Buyer shall have no obligation to receive hereunder, any Gas
volumes produced or owned by third parties, other than Gas produced by Seller and
its Affiliates in xxxxx located on the lands described in Exhibit A and the
Existing Contracts Volume, which shall be gathered, but not purchased, by Buyer
hereunder. Buyer shall never be obligated to receive on any Day volumes of Gas
hereunder in excess of 30,000 Mcf’s per Day, as such maximum volume is allocated to
each Receipt Point as shown in Exhibit B, except that Seller, prior to the
second anniversary of the Effective Date, shall have the right to deliver volumes to
the Fonde Receipt Point in excess of the maximum volume shown in Exhibit B
for such Receipt Point up to the lower of (x) the maximum available receipt capacity
at such Fonde Receipt Point, or (y) a volume that when added to all volumes
delivered by Seller at all Receipt Points does not exceed 30,000 Mcf’s per Day, by
written notice to Buyer. If Seller elects to deliver such additional volumes to the
Fonde Receipt Point, then Seller shall reduce (but not increase) the volumes
delivered at one or more of the other Receipt Points so that the total volumes
delivered hereunder never exceed 30,000 Mcf’s per Day. Any such election by Seller
shall remain in effect until the second anniversary of the Effective Date and, for
the term of the Contract, unless, prior to the second anniversary of the Effective
Date, Seller notifies Buyer of any additional increase (but not decrease) in the
volumes to be delivered to the Fonde Receipt Point (up to 30,000 Mcf’s per Day), and
the corresponding reductions in the volumes delivered at one or more of the other
Receipt Points necessary to cause the total volumes delivered hereunder to never
exceed 30,000 Mcf’s per Day. Such final election by Seller shall remain in effect
for the remaining term of this Agreement.”
3. Seller’s Reserves Commitment. The following Section 3.5 shall be added to Section 3 of the Base Contract:
3.5 Seller’s Reserves Commitment
(a) Commitment. Each Day Seller shall make available to Buyer at the Delivery Points
all of Seller’s Daily Deliverability of Gas. Subject only to Seller’s reservations below, Seller
exclusively commits to the performance of this Agreement the Committed Reserves, represents that
the Committed Reserves are not otherwise subject to any purchase and sale agreement, except as shown on Schedule
3.5, and agrees not to sell, transfer, or deliver to any third party any Gas produced from the
Committed Reserves. Seller agrees to cause any
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existing or future Affiliates of Seller to be bound by, and to execute and join as a party,
this Agreement. Seller agrees that this dedication is a covenant running with the land.
(b) Seller’s Reservations. Seller reserves the following rights (and reasonable
quantities of Gas to satisfy same): (i) to operate xxxxx producing from the Committed Reserves as
a reasonably prudent operator, (ii) to separate or process the Gas using only mechanical, ambient
temperature equipment located at surface production facilities on the Subject Leases, (iii) to use
Gas produced from the Committed Reserves for operating the xxxxx located thereon, (iv) to pool or
unitize the Committed Reserves, in which event this Agreement shall cover Seller’s Interest
therein, and (v) to process Gas delivered hereunder in the Rogersville Plant for the extraction of
natural gas liquids under the Processing Agreement. In addition, Seller’s reservations also
include the volumes of Gas sold under the Stand Contract, subject to the provisions of Section
3.6 and 3.7 below with regard thereto.
(c) Memorandum. Seller shall enter into and deliver to Buyer, at Buyer’s request, a
fully recordable memorandum of this Contract, in a form acceptable to Buyer.
4. Contract Price. The following Section 3.6 and Section 3.7 and Section 3.8 shall be
added to Section 3 of the Base Contract:
3.6. Contract Price.
(a) Net Proceeds. As full and complete consideration for the purchase of Seller’s
Gas hereunder, Buyer shall remit to Seller the amount by which (i) the proceeds from all physical
sales received by Buyer from the resale of such Gas at or downstream of the Delivery Points,
adjusted for any and all credits or debits from Fixed Price Trigger Transactions as may be entered
into and identified as such from time to time, together all Stand Proceeds received by Buyer or
deposited in the Stand Lockbox during the Month in question (collectively, the “Monthly Net
Proceeds”) exceeds (ii) the Gathering Fees for the same Month under the Gathering Agreement, less
an administrative fee of $0.015 per MMBtu of Seller’s Gas purchased hereunder; provided, however,
that the $0.015 administrative fee will not be deducted or charged by Buyer with regard to either
(x) the volumes of Gas sold directly by Seller under the Stand Contract, or (y) volumes of Gas
purchased by Buyer where there is no back-to-back contract with a third party, as contemplated in
Section 3.6(d) below.
(b) Seller’s Payment Obligation. Seller shall owe and pay to Buyer all of the same
Gathering Fees as are provided as Gathering Fees under the Gathering Agreement. Notwithstanding
the netting permitted by Buyer under Section 3.6(a) above, Seller shall always be
obligated each Month to pay to Buyer the amount, if any, by which (i) the Gathering Fees for that
Month exceeds (ii) the Monthly Net Proceeds for such Month. For example, if, for any reason
(including the occurrence of a Force Majeure event or diminished Committed Reserves), the Gas
volumes delivered by Seller in a Month are insufficient to result in Monthly Net Proceeds received
by Buyer that exceed the Gathering Fees in the same Month, Seller shall be required to pay to
Buyer the amount of such difference.
(c) Annual Adjustment. The term “Gathering Fees,” when used in Section
3.6(a) and (b), means all of the Gathering Fees as defined in the Gathering Agreement,
as adjusted from time to time under Section 4.2, Section 4.3 and Section
4.5 of the Gathering Agreement.
(d) Marketing Efforts/Prices. Except as hereinafter provided in Section 3.7,
Buyer and Seller agree that Buyer shall be the first purchaser (First Purchaser) of Seller’s Gas
at the Delivery Points hereunder. The price paid to Seller by Buyer as First Purchaser shall be
identical to the price received by First Purchaser from a Second Purchaser, as hereinafter
defined, for Gas at the Delivery Points less an administrative fee of $0.015 per MMBtu. Using
commercially reasonable efforts First Purchaser shall coordinate with Seller regarding the various
terms, prices, and other conditions pursuant to which Gas shall be sold by First Purchaser to
third parties (Second Purchaser[s]) at the Delivery Points. Accordingly, Buyer as First Purchaser
shall solicit offers from potential Second Purchaser(s) it deems appropriate to purchase Gas at
the Delivery Points. To the extent First Purchaser elects to do so, at its sole option and
election, First Purchaser shall have the right to propose terms and prices for its purchase of the
Seller’s Gas as a Secondary Purchaser or to match the terms and price of the then highest-priced
offer received from a third-party Secondary Purchaser (if First Purchaser elects to match, then
preference will be given to First Purchaser’s offer and First Purchaser shall purchase and pay the
offered amounts, subject to the other terms hereof). In addition, Seller shall have the right and
option to notify First Purchaser by verbal or written communication of possible sales
opportunities with potential Second Purchaser(s) of Seller’s Gas (insofar as the proposed term of
such opportunities would not extend beyond the term of this Agreement). Using commercially reasonable efforts, First Purchaser shall timely present to Seller (whether
verbally or in writing) such offers as it may obtain from potential third-party Second Purchasers
for such volumes of Gas at the Delivery
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Points, and if it so elects to also present to Seller the First Purchaser’s own offer or
offers to match the then highest-priced third-party offer received and currently presented. Seller
shall elect and direct at its sole discretion which offer First Purchaser should pursue, accept,
and confirm (or if First Purchaser has offered to match the highest-priced offer from a
third-party Second Purchaser currently presented to Seller then to accept the matching offer of
First Purchaser); further provided, however, that it shall be Seller’s sole choice and election
as to which of the offer(s) presented by First Purchaser to Seller (or which Seller forwarded to
First Purchaser) are the highest or best offer(s) for First Purchaser to accept and confirm. If
Seller fails to respond and confirm to First Purchaser which offer(s) to accept and pursue prior
to the time when First Purchaser must commit, make a purchase election, or make any proposed
nominations in connection with such sales opportunity, then in order to avoid the constraint or
shut-in of gathered volumes, First Purchaser shall have the right to elect, in its sole
discretion, which sales opportunity (and the terms and prices referred to in First Purchaser’s
notice to Seller) represents the best offer in its reasonable commercial judgment, to accept for
the limited purpose of avoiding constraint or shut in of such volumes, but only insofar as First
Purchaser does NOT enter into sales commitments with regard to such uncommitted volumes that have
a term longer than 45 days. If (x) Seller provides First Purchaser, prior to First Purchaser’s
commitment of such volumes to a sales opportunity solely in order to avoid constraint or shut in
of such volumes, with the above described directions (any verbal response or direction from Seller
must be followed-up in writing to First Purchaser within 24 hours by Seller) regarding a sales
opportunity to sell the Gas purchased hereunder at the Delivery Points to a Second Purchaser (or
to First Purchaser directly or in connection with an election by First Purchaser to match such
third-party offer[s]) and having a term no longer than the term of this Agreement, or (y) Seller
selects sales opportunity identified by First Purchaser (assuming First Purchaser notified Seller
of multiple sales opportunities), then (A) First Purchaser shall enter into a sales contract to
sell such volumes on such terms as so directed by Seller, and providing that such Second Purchaser
meets the standard credit qualifications and requirements of First Purchaser, then First Purchaser
shall take all credit risk (including risk of collection and payment) of such sale of Gas; or, (B)
in the event that Seller accepts and directs the sale of Gas by First Purchaser to a Second
Purchaser that fails to meet the standard credit qualifications and requirements of First
Purchaser then Seller shall assume and bear all credit risk (including risk of collection and
payment) of such purchasers by Second Purchaser but First Purchaser shall forego the $0.015
administrative fee hereinabove referenced. In addition, however, and notwithstanding the above,
Seller shall continue to assume and bear all such credit risk regarding volumes of Gas sold to
Stand Energy under the Stand Contract.
3.7 Stand Contract; Direction of Stand Proceeds; Appointment of Agent
(a) Stand Contract. To the extent the Stand Contract can be assigned to Buyer, Seller
shall assign its rights under the Stand Contract to Buyer as part of the assets under the Asset
Purchase Agreement. To the extent that the Stand Contract cannot be assigned to Buyer at the
Closing under the Asset Purchase Agreement, then:
(i) Seller shall, simultaneous with the Closing under the Asset Purchase Agreement,
notify Stand Energy in writing, stating that Seller thereafter directs and requires (and
take such other action as may be required to cause) Stand Energy to pay and deposit all
Stand Proceeds into the Stand Lockbox. Such direction of payment of the Stand Proceeds
shall not be changed or modified by Seller during the term of this Agreement, without
Buyer’s prior written approval. In addition, Seller shall not agree to any new
confirmations, sales of Gas, or other commitments to sell Gas with Stand Energy under the
Stand Contract without Buyer’s prior written approval; and any further sales or commitments
to sell any of Seller’s Gas to Stand Energy during the term of this Agreement, if any, shall
be made only through Buyer under this Agreement; provided, however, that to the extent Buyer
does consent to a subsequent sales transaction under the existing Stand Contract, the other
provisions below (including, without limitation, the direction of payments to the Stand
Lockbox and the appointment of Buyer as agent, shall apply with regard thereto).
(ii) Seller assigns and transfers to Buyer all rights to receive all Stand Proceeds,
subject to the provisions of Section 3.6 above. Any Stand Proceeds paid to Seller
shall immediately be deposited by Seller in the Stand Lockbox.
(iii) In addition, Seller irrevocably designates and appoints Buyer as its sole and
exclusive marketing agent under the Stand Energy Contract, and Buyer is hereby granted the
authority, in Seller’s place and stead, to receive and deliver any notices or
communications, nominations, or other notices in, under or pursuant to the Stand Energy
Contract. When requested by Buyer, Seller shall notify Stand Energy in writing, stating
that Buyer is Seller’s exclusive agent for such purposes and Seller thereafter directs and
requires (and Seller shall take such other action as may be required to cause) that any
further communications or notices under the Stand Energy Contract should be directed to
Buyer with a copy to Seller. This appointment of Buyer is irrevocable until the earlier of (1) the
termination of the Stand Energy Contract (including all remaining confirmations and
commitments thereunder) or (2) the
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termination of this Agreement. Seller shall not change or modify the directions to
Stand Energy described above without Buyer’s prior written approval. Notwithstanding any
provisions hereof or in the Stand Energy Contract to the contrary, Buyer shall have no
liability or obligation to pay any amount or sum whatsoever to Stand Energy (or any other
interested parties thereunder) under the Stand Energy Contract and Buyer shall not have any
other liability or obligation to Seller with regard to the Stand Energy Contract, except
solely with regard to Buyer’s liability to Seller under Section 3.6 above,
REGARDLESS OF WHETHER ARISING FROM OR ATTRIBUTABLE TO, IN WHOLE OR IN PART, THE STRICT
LIABILITY, NEGLIGENCE OR OTHER FAULT OF SELLER, BUYER, STAND ENERGY, OR ANY OTHER PERSON.
3.8 Appointment as Administrative Agent. Buyer also is hereby appointed, and shall
be, the point operator and administrative agent at the delivery point for purposes of
confirming downstream nominations of the Seller’s Gas purchased or received at the Delivery
Points, and for purposes of confirming operational volume imbalance receipts and deliveries
at the Delivery Points, as well as such related functions related thereto.
5. Gathering. Section 4.1 of the Base Contract shall be amended in its
entirety as follows:
“Seller shall have sole responsibility for transporting gas to the Receipt
Points. Buyer shall cause Seller’s gas to be received at the Receipt Points and
shall cause Seller’s gas to be gathered and redelivered to the Delivery Points.
Seller shall bear line loss, dehydration fuel, and applicable compression fuel which
may occur or be necessary to accomplish the gathering of Seller’s Gas from the
Receipt Points to the Delivery Points, other than any extraordinary line losses
retained by the Gathering System operator under the Gathering Agreement. Line loss
(or gain), dehydration fuel, and applicable compression fuel shall be measured for
each Month as the difference between the total volume of Gas received by the
Gathering System from all shippers at the Receipt Points less the total volume of
Gas delivered by the Gathering System operator on behalf of all shippers to the
Delivery Points and then allocated by Buyer to Seller’s Gas at each Delivery Point.
Seller shall retain the right to process its Gas delivered hereunder in the
Rogersville Plant for the extraction of natural gas liquids under the terms of the
Processing Agreement. The quantity (in MMBtu’s) of Seller’s Gas purchased hereunder
by Buyer at the Delivery Points (which shall exclude the Existing Contracts Volume)
shall be deemed to be equal to the sum of (in MMBtu’s) (i) for Seller’s Gas
processed in the Rogersville Plant, the quantity of residue gas remaining at the
tailgate of the Rogersville Plant as measured under the Processing Agreement and
(ii) for Seller’s Gas delivered to other Delivery Points, the quantity of Seller’s
Gas sold and measured under the Gas Sales Contracts under which Buyer resells such
Gas at such Delivery Points. Seller grants to Buyer and its Affiliates or designees
the right to monitor the receipt and delivery point meters constituting a portion of
the Gathering System for purposes of verifying compliance with this Agreement and
the Gathering Agreement, and, if the Seller or its Affiliate fail to take any meter
readings and measurements when and as required under this Agreement or the Gathering
Agreement, Seller, on behalf of itself and its Affiliates, authorizes Buyer or any
Buyer Affiliate or designee to take such required meter readings and measurements.”
6. Scheduling. Section 4.2 of the Base Contract shall be amended in its
entirety as follows:
“Seller shall Notify Buyer not less than 5 Business Days before the last day of
each Month of the total volume of Gas (in Mcf/d and MMBtu’s) that Seller expects to
deliver to in the following Month, specifying the volumes to be delivered at each
Receipt Point. Seller may modify their nominations at any time upon at least 24
hours Notice. The parties shall coordinate their nomination activities, giving
sufficient time to meet the deadlines of the Gathering System operator and the
Receiving Transporters at the Delivery Points. Each party shall give the other
party timely prior Notice, sufficient to meet the requirements of the Gathering
System operator and the Receiving Transporters involved in the transaction, of the
quantities of Gas to be delivered to each Delivery Point each Day. If either party
becomes aware that actual deliveries at the Receipt Points or Delivery Points are
greater or lesser than the quantities of scheduled Gas, such party shall promptly
Notify the other party. Throughout the term of this Agreement, the parties agree to
work together to refine and improve the scheduling, nominating, and balancing
procedures applicable to Seller’s Gas to accommodate the Gathering System operator
and each Receiving Transporter’s nomination procedures (or changes to such
procedures) and the operational requirements of both Seller and Buyer.”
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7. Quality and Measurement. Section 5 of the Base Contract shall be amended
in its entirety as follows:
“All gas delivered by Seller shall meet the pressure, quality, and heat content
requirements set forth in the Gathering Agreement, as amended from time to time.
Measurement of gas quantities shall be in accordance with Article 7 of the
Gathering Agreement.”
8. Taxes. Section 6 of the Base Contract shall be amended in its entirety as
follows:
“Seller shall pay or cause to be paid all taxes, fees, levies, penalties,
licenses or charges imposed by any government authority (“Taxes”) on or with respect
to the Gas prior to the Delivery Points and all Taxes at the Delivery Points, other
than Taxes payable in respect of the gathering of Seller’s Gas from the Receipt
Points to the Delivery Points which shall be paid by Buyer. Buyer shall pay or
cause to be paid all Taxes on or with respect to the Gas after the Delivery Point(s)
and all Taxes payable in respect of the gathering of Seller’s Gas from the Receipt
Points to the Delivery Points, other than Taxes payable in respect of the processing
of Seller’s Gas under the Processing Agreement which shall be paid by Seller. If a
party is required to remit or pay Taxes that are the other party’s responsibility
hereunder, the party responsible for such Taxes shall promptly reimburse the other
party for such Taxes. Any party entitled to an exemption from any such Taxes or
charges shall furnish the other party any necessary documentation thereof.”
9. Section 7.2. Section 7.2 of the Base Contract shall be amended in its entirety as follows:
“Buyer shall remit to Seller all amounts due hereunder, in the manner specified
in the Base Contract, in immediately available funds, on or before the Payment Date
but no earlier than the first to occur of (i) the date on which the purchaser of
Seller’s Gas pays Buyer for Seller’s Gas purchased in the prior Month or (ii) thirty
(30) Days after the end of the production Month for such Gas; provided,
however, that if any of the customers listed in Exhibit C hereto
shall fail to pay Buyer for gas purchased and delivered the prior month, payment of
such quantity of Seller’s Gas shall not be made until the third Business Day after
such customer remits payment to Buyer for such quantity of Seller’s Gas. If such
date is not a Business Day, payment is due on the next Business Day following such
date. In the event any payments are due Buyer hereunder, payment to Buyer shall be
made in accordance with this Section 7.2, including any payments that may be
due by Seller to Buyer under Section 3.6(b) above.”
10. Title and Indemnity. Section 8.1, 8.2, and 8.3 of the
Base Contract shall be amended in their entirety as follows:
8.1. Title to the Gas shall pass from Seller to Buyer at the Delivery Points,
Existing Gas Volumes other than Existing Gas Volumes gathered hereunder, the title
to which shall not pass to Buyer. Seller shall have responsibility for and assume
any liability with respect to Gas prior to its delivery to Buyer at the Receipt
Points. Buyer shall have responsibility for and assume any liability with respect
to Gas after its delivery to Buyer at the Receipt Points, other than matters related
to title to the Gas which shall remain with Seller until title has passed to Buyer
at the Delivery Points for Gas purchased hereunder.
8.2. Seller warrants that they will have the right to convey and will transfer
good and merchantable title to all Gas sold to Buyer hereunder, free and clear of
all liens, encumbrances, and claims. EXCEPT AS PROVIDED IN THIS SECTION 8.2 AND IN
SECTION 15.8 AND SECTION 15.15, ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE, ARE
DISCLAIMED.
8.3. Seller agrees to indemnify Buyer and save it harmless from all losses,
liabilities or claims including reasonable attorneys’ fees and costs of court
(“Claims”), from any and all persons, arising from or out of personal injury
(including death) or property damage from said Gas prior to delivery to Buyer at the
Receipt Points. Buyer agrees to indemnify Seller and save it harmless from all
Claims from any and all persons arising from or out of claims regarding personal
injury (including death) or property damage from said Gas or other charges thereon
after delivery to Buyer at the Receipt Points. In addition, Seller agrees to
indemnify Buyer and save it harmless from all Claims from any and all persons
arising from or out of (i) title to Gas prior to the Delivery Points, (ii) breach or default by Seller of its obligations under any contract,
agreement, or applicable law to pay or perform any amounts due to any royalty owner,
partner, or limited partner of any
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partnership or limited partnership of which Seller is an Affiliate or to any
other third party, and (iii) personal injury (including death) or property damage
from Gas after redelivery by Buyer to the Delivery Points, other than the Rose Hill
Delivery Point. IT IS THE INTENT OF THE PARTIES THAT THE INDEMNITIES SET FORTH IN
THIS SECTION BE WITHOUT REGARD TO THE CAUSES THEREOF, INCLUDING, WITHOUT LIMITATION,
THE NEGLIGENCE OF ANY INDEMNIFIED PARTY OR OTHER PERSON, WHETHER SUCH NEGLIGENCE BE
SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE, OR THE STRICT LIABILITY OF ANY
INDEMNIFIED PARTY OR OTHER PERSON
11. Section 10.1. Section 10.1 shall be deleted for all purposes.
12. Delivery Period. The first sentence of Section 12 shall be amended in its entirety to read as
follows:
“The Delivery Period, and the primary term of this Agreement, shall commence on
the Effective Date shown in the Base Contract and continue in effect until the
fifteenth (15th) anniversary of such Effective Date (the “Primary Term”),
and, if not terminated during the Primary Term, shall continue in effect for a
second fifteen (15) year term (“Secondary Term”) on the same terms and conditions
herein, and thereafter from year-to-year unless terminated by either party upon
written notice by either party not less than sixty (60) days prior to the end of
such then current one-year term..”
13. Assignment. Section 15.1 shall be amended in its entirety to read as follows:
“No party may assign or delegate any of its rights or obligations under this
Agreement, by operation of law, change of control, or otherwise, without the prior
written consent of the other party, which consent may be withheld at the discretion
of such other party. If an Affiliate of Buyer exercises its option under the Asset
Purchase Agreement to acquire all of the ownership interests in the Gathering
System, then, effective upon completion of such acquisition, either party may assign
or delegate its rights or obligations under this Agreement with the consent of the
other party, which consent shall not be unreasonably withheld, conditioned, or
delayed. Any purported assignment or delegation without any such consent shall be
void and ineffective. Subject to the foregoing provisions, this Agreement binds and
inures to the benefit of the parties hereto and their respective successors and
assigns.”
14. Section 15. The following sections shall be added to Section 15 of the Base Contract:
15.13. A reference is herein made to the Forward Sales Agreement, in substantially the form
attached hereto as Exhibit 15.13 (“Forward Sales Agreement”) At Buyer’s sole election (so
indicated to Seller in writing at the time this Agreement is executed), the Buyer and Seller shall
contemporaneously execute and deliver such Forward Sales Contract, consistent with the volumes and
weighted average fixed price contemplated therein.
15.14. This Agreement shall be construed, enforced, and interpreted according to the laws of
the State of Texas, without regard to the conflicts of law rules thereof. Each party hereby
irrevocably submits to the jurisdiction of the courts of the State of Texas and the federal courts
of the United States of America located in Houston, Texas over any dispute or proceeding arising
out of or relating to this Agreement or any of the transactions contemplated hereby, and each party
irrevocably agrees that all claims in respect of such dispute or proceeding shall be heard and
determined in such courts. Each party hereby irrevocably waives, to the fullest extent permitted
by applicable law, any objection which it may now or hereafter have to the venue of any dispute
arising out of or relating to this Agreement or any of the transactions contemplated hereby or
thereby brought in such court or any defense of inconvenient forum for the maintenance of such
dispute or action. Each party agrees that a judgment in any dispute heard in the venue specified
by this section may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by applicable law.
15.15. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR TRANSACTION HEREUNDER.
15.16. Each party represents to the other party during the term hereof as follows: (i) there
are no suits, proceedings, judgments, or orders by or before any governmental authority that
materially adversely affect its ability to perform this Agreement or the rights of the other party
hereunder, (ii) it is duly organized, validly existing, and in
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good standing under the laws of the jurisdiction of its formation, and it has the legal right,
power and authority and is qualified to conduct its business, and to execute and deliver this
Agreement and perform its obligations hereunder, (iii) the making and performance by it of this
Agreement is within its powers, and has been duly authorized by all necessary action on its part,
(iv) this Agreement constitutes a legal, valid, and binding act and obligation of it, enforceable
against it in accordance with its terms, subject to bankruptcy, insolvency, reorganization and
other laws affecting creditor’s rights generally, and with regard to equitable remedies, to the
discretion of the court before which proceedings to obtain same may be pending, and (v) there are
no bankruptcy, insolvency, reorganization, receivership or other arrangement proceedings pending or
being contemplated by it.
15.17. The obligations of Seller under this Agreement are guaranteed by Xxxxxxxxx Petroleum,
Inc., a Kentucky corporation and NGAS Resources, Inc., a British Columbian corporation as provided
in that certain Guaranty dated of even date herewith.
15.18. If any new or amended law, rule, or regulation materially prohibits Buyer from
receiving or purchasing Gas from Seller hereunder substantially in accordance with the original
terms of this Agreement or if results in the performance of this Agreement being rendered
uneconomic, in the good faith opinion of Buyer, then Buyer and Seller shall negotiate in good faith
to amend the terms of this Agreement so that (i) the new or amended law, rule, or regulation may be
complied with and (ii) Buyer and Seller will both continue to receive the rights and benefits
originally provided for herein, and (iii) Buyer receives the net economic benefit originally
contemplated herein.
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IN WITNESS WHEREOF, Buyer and Seller have executed these Special Provisions to supplement and,
where applicable, to modify and amend the Base Contract by and between the Buyer and Seller,
effective for all purposes as of the Effective Date.
| SEMINOLE ENERGY SERVICES, LLC |
||||
| By: | /s/ Xxxxxx X. Xxxxxx, Xx. | |||
| Xxxxxx X. Xxxxxx, Xx., | ||||
| President | ||||
| XXXXXXXXX PETROLEUM, INC. |
||||
| By: | ./s/ Xxxxxxx X. Xxxx III | |||
| Xxxxxxx X. Xxxx III, | ||||
| Chief Executive Officer | ||||
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