October 1, 1999
NATURAL GAS PURCHASE AND SALE AGREEMENT
Duke Energy Trading and Marketing, L.L.C., a Delaware limited liability
company, ("DETM" or "Buyer") and Seagull Energy E&P Inc., a Delaware
corporation, SGO Petroleum Inc., an Oklahoma corporation, Global Natural
Resources Corporation of Nevada, a Nevada corporation, Ocean Energy, Inc., a
Louisiana corporation, and Ocean Energy Resources, Inc., a Delaware corporation
and any permitted successor(s) and assign(s) (collectively "Ocean" or "Seller"),
referred to collectively as the "Parties" and individually as "Party", enter
into this Natural Gas Purchase and Sale Agreement (this "Agreement") effective
as of the 1st day of October, 1999 (the "Effective Date").
ARTICLE I
Term and Scope
This Agreement shall be in effect from the Effective Date through the
later of September 30, 2000 or until terminated by either Party on thirty (30)
days prior written notice, subject however to the earlier termination pursuant
to other specific provisions of this Agreement.
ARTICLE II
Quantity Obligations and Notice Procedures
The Parties recognize that the natural gas market is volatile; and,
therefore, it is mutually desirable to arrange transactions verbally and to be
bound by such oral agreements confirmed later in writing. The Parties agree to
the following procedures for confirmations of and changes to the quantities and
points of equivalent value of Ocean's Gas to be delivered to the Delivery
Point(s) by Ocean. Any oral confirmation of or change to the quantities and
points of equivalent value of Ocean's Gas made by Ocean shall be binding until
superseded by an effective confirmation or change notice. Either Party's
telephones may be monitored by recording equipment to record such confirmations
and changes in quantities and points of equivalent value of Ocean's Gas. The
Parties hereby consent to such recordings and any such recordings shall serve as
the best evidence of any oral agreement.
Ocean shall sell and deliver and DETM shall, as the exclusive buyer,
purchase and receive Ocean's owned and controlled gas volumes ("Ocean's Gas")
from properties specified in Appendix "A". Each month during the term of this
Agreement, Ocean shall provide to DETM on or before 12:00 p.m. central clock
time five (5) Business Days prior to the first day of the next succeeding month
a confirmation notice, in the form of Exhibit "A" which shows the daily volumes
of Ocean's Gas to be sold and delivered by Ocean and to be purchased and
received by DETM at the Delivery Point(s) during the next succeeding month
("Ocean's Baseload Gas"). Any changes to the quantities of Ocean's Gas that will
be delivered by Ocean to the Delivery Point(s) will be made by Ocean at least
one (1) Business Day prior to the day on which the change is effective and will
be confirmed in writing in the form of change notice which is attached hereto as
Exhibit "B. "Business Day" shall mean any day on which the member banks of the
Federal Reserve System in New York City, New York are open for business.
Each party shall use reasonable means to identify as far in advance as
possible any scheduled maintenance of facilities producing, delivering or
receiving Ocean's Gas to the Delivery Point(s) hereunder and shall notify the
other Party as soon as reasonably practicable of such scheduled maintenance.
Should a Party not so notify the other Party of scheduled maintenance then such
scheduled maintenance will not be an event of Force Majeure hereunder.
ARTICLE III
Delivery Point
The delivery points for Ocean's Gas to be delivered by Ocean and
received by DETM hereunder shall be those points specified on Appendix "A"
("Delivery Point(s)").
ARTICLE IV
Purchase Price
Except as provided in Article X, the purchase price for all Ocean's Gas
delivered to the Delivery Point(s) during a month shall be the index price(s) as
specified in Appendix "A" ("Index Price") less any actual transportation and
fuel charges actually paid by DETM to move Ocean's Gas to the applicable
Delivery Point, plus or minus the applicable adjustment as specified in Appendix
"A". If a publication referenced in Appendix "A" ceases to exist or does not
post an index price representative of a Delivery Point(s), then the Parties
shall mutually agree to an alternative publication and posting which reflects
the market value of Ocean's Gas at such Delivery Point(s). If the Parties fail
to agree on an alternative publication and posting for a Delivery Point within
ten (10) Business Days of a notice by a Party to the other Party that an Index
Price fails to exist then the new publication and posting will be determined by
the one arbitrator procedure of Article XI.
ARTICLE V
Force Majeure
Except with respect to payment obligations, in the event either Party
is rendered unable, wholly or in part, by Force Majeure to carry out its
obligations hereunder, it is agreed that upon such Party's giving notice of such
Force Majeure to the other Party as soon as reasonably possible (to be confirmed
in writing via facsimile or email with particulars of the event or occurrence as
soon as reasonably possible), the obligations of the Parties, to the extent they
are affected by such event, shall be suspended from the inception and during the
continuance of the Force Majeure for a period of thirty (30) consecutive days
after which time the Party not giving the notice of Force Majeure may declare a
breach of this Agreement and terminate this Agreement with respect to Ocean's
Gas which was the subject of the notice of Force Majeure upon thirty (30) days
written notice to the Party which has given notice of Force Majeure.
"Force Majeure" means an event, not anticipated as of the Effective
Date which is not within the reasonable control of a Party, or in the case of
third party obligations or facilities, the third party, claiming Force Majeure,
and which by the exercise of due diligence such Party, or third party, is unable
to overcome. Force Majeure shall not include: (i) the loss of Buyer's markets;
(ii) Buyer's inability economically to use or resell Ocean's Gas purchased
hereunder or (iii) Seller's ability to sell Ocean's Gas to a market at a more
advantageous price. "Force Majeure" shall include but not be limited to the
following: (i) physical events such as acts of God, landslides, lightning,
earthquakes, fires, storms or storm warnings which result in evacuation of the
affected area, floods, washouts, explosions, breakage or accident or necessity
of repairs to machinery or equipment or lines of pipe (other than maintenance),
weather related events such as hurricanes or freezing or failure of xxxxx,
equipment or lines of pipe; (ii) acts of others such as strikes, riots,
sabotage, insurrections or wars; (iii) governmental actions such as necessity
for compliance with any court order, law, statute, ordinance, or regulation
promulgated by a governmental authority having jurisdiction; and (iv) any other
causes, whether of the kind herein enumerated or otherwise not reasonably within
the control of the affected Party to prevent or overcome. Seller and Buyer shall
make reasonable efforts to avoid Force Majeure and to resolve the event or
occurrence once it has occurred in order to resume performance with reasonable
dispatch.
Neither Party shall be entitled to the benefit of the provisions of
Force Majeure under either or both of the following circumstances: (i) to the
extent the failure to perform was caused by the sole or contributory negligence
of the Party claiming excuse; or (ii) to the extent the failure to perform was
caused by the Party claiming excuse having failed to remedy the condition and to
resume the performance of such covenants or obligations with reasonable
dispatch.
Force Majeure shall not excuse the payment of financial obligations
hereunder.
ARTICLE VI
Title, Risk of Loss, Indemnity and Imbalances
Seller warrants that title to Ocean's Gas is free from all liens and
adverse claims and warrants its right to sell the same. As between the Parties,
Seller shall be deemed to be in exclusive control and possession of Ocean's Gas
delivered hereunder and responsible for any damage or injury caused thereby or
loss thereto prior to the time the same shall have been delivered to Buyer at
the Delivery Point(s). After delivery of Ocean's Gas to Buyer at the Delivery
Point(s), Buyer shall be deemed to be in exclusive control and possession
thereof and responsible for any injury or damage caused thereby or loss thereto.
Each Party assumes all liability for and shall indemnify, defend and hold
harmless the other Party from any claims, including death or injury of persons
or damage to property arising from any act or incident occurring when title to
gas is vested in it. It is the intent of the Parties that this indemnity be
without regard to the causes thereof, including without limitation the
negligence of any indemnified Party, whether such negligence be sole, joint or
concurrent, or active or passive; provided, neither Party shall be liable in
respect of any claim to the extent same resulted from the gross negligence,
willful misconduct or bad faith of the indemnified Party. Title to Ocean's Gas
delivered hereunder shall pass from Seller to Buyer at the Delivery Point(s).
Notwithstanding the other provisions of this Article VI, as between
Seller and Buyer, Seller will be liable for all claims to the extent that such
arise from failure of Ocean's Gas delivered by Seller to the Delivery Point(s)
to meet the quality requirements of Article XIII.
The Parties shall use reasonable efforts to avoid imposition by any
transporter of Ocean's Gas of an imbalance charge, expense or penalty relating
to Ocean's Gas. Imbalance charges, expenses and penalties (including, but not
limited to, any cash-out costs) imposed by any transporter of Ocean's Gas prior
to, at or after the Delivery Point(s) will be the responsibility of and will be
paid by DETM unless such imbalance charge, expense or penalty was caused by
Ocean's failure to properly deliver, confirm or change its quantity of Ocean's
Gas as provided for hereunder and such failure causes a Party to incur and
actually pay an imbalance charge, expense or penalty to a transporter or other
third party.
ARTICLE VII
Taxes
Seller shall be responsible for and will pay all taxes, transportation
charges and expenses and production related costs attributable to Ocean's Gas
prior to its delivery to the Delivery Point(s). Seller shall reimburse Buyer for
any such taxes, transportation charges and expenses and production related costs
actually paid on behalf of Seller by Buyer. Buyer shall be responsible for and
will pay all taxes and transportation charges and expenses related to Ocean's
Gas at or after the Delivery Point(s) including, but not limited to, all sales
or use, gross receipts, consumption and franchise taxes. Buyer shall provide
Seller with any applicable certificate or other documentation of sales or use
tax exemption; and Buyer shall be liable for any sales or use tax and associated
interest or penalties assessed against Seller due to Buyer's failure to timely
provide or properly complete any such certificate or documentation.
ARTICLE VIII
Financial Responsibility
If a Party has reasonable grounds to suspect that the other Party's
ability to meet its payment obligations hereunder are materially impaired then a
Party may require upon notice to the other Party that such other Party make
assurance of the other Party's ability to pay which may include (i) the required
posting of a letter of credit acceptable to the Party requiring further
assurances and the issuing bank; (ii) cash prepayments; (iii) corporate
guarantee or (iv) other acceptable security.
In the event a Party shall not make adequate assurances as provided
above within five (5) Business Days of receipt of the notice requiring same then
in addition to any and all other remedies available hereunder or pursuant to
law, the other Party shall have the right upon prior notice to such Party to
withhold or suspend deliveries or receipts of Ocean's Gas hereunder or terminate
the Agreement upon thirty (30) days notice to such Party.
ARTICLE IX
Billing and Payment
Billing and payment will be based on actual quantities of Ocean's Gas
delivered to the Delivery Point(s). Properly confirmed and changed quantities of
Ocean's Baseload Gas shall be used if such actual quantities are unavailable to
make payment by the 25th of the month following the month of deliveries of
Ocean's Gas. Within ten (10) days of the request of either Party, the other
Party shall provide, to the extent it has a legal right of access thereto and/or
such statement which is then available, a copy of the applicable transporter's
allocation or imbalance statement requested by the Party.
Buyer shall pay Seller the full amount due in U.S. Dollars by wire
transfer, Automated Clearinghouse (ACH), electronic funds transfer or other
similarly expeditious means, as provided below, on or before the twenty-fifth
(25th) day of the month immediately following the delivery month or the first
Business Day thereafter. On the day of such payment Buyer will forward to Seller
a statement showing the quantity of Ocean's Gas delivered to the Delivery
Point(s), the price paid for Ocean's Gas at each Delivery Point and the total
amount paid to Seller. In the event Buyer fails to pay the full amount payable
by it when due, interest on the unpaid portion shall accrue from the date due
until the date of payment at a rate equal to the lower of (i) the then effective
prime rate of interest for large U.S. Money Center commercial banks, published
under "Money Rates" by The Wall Street Journal, plus two percent (2%) per annum
from the date due until the date of payment, or (ii) the maximum applicable
lawful interest rate.
Each of the Parties, at its own expense, shall have the right, upon
reasonable notice and at reasonable times during regular business hours, to
examine the books and records of the other Party to the extent reasonably
necessary to verify the accuracy of any statement, payment, demand, charge, or
computation made under this Agreement. Any such audit and any claim based upon
errors in any statement must be made within two (2) years of the date of such
statement. Neither Party shall have the right to perform more than two (2) such
audits per calendar year. Such right to audit shall be available for the term of
this Agreement and for two (2) years after its termination.
In the event an error is discovered in the amount in any statement
rendered hereunder such error shall be rectified by payment within ten (10) days
after notice of the error from the discovering Party to the other Party. In the
event a dispute arises as to the amount payable in any statement rendered
hereunder, the disputing Party shall provide written notice to the other Party
indicating the disputed amount and the reason for such dispute. In the event a
difference for volumes of Ocean's Gas delivered cannot be reconciled, payment
shall be based upon the delivery volumes specified by the delivering
transporter(s) to the Delivery Point(s). For a period of ninety (90) days
following the date of a statement hereunder no interest shall accrue or be
payable by a Party on amounts paid by Buyer which are in dispute hereunder
because of the reconciliation in differences of volumes of Ocean's Gas. A
payment hereunder shall not be deemed to be a waiver of the right by Buyer to
recoup any overpayment, nor shall acceptance of any payment be deemed to be a
waiver by Seller of any underpayment except as otherwise provided herein.
Payment: Duke Energy Trading and Marketing, L.L.C.
By Wire Transfer: Chase Manhattan Bank New York
For the Acct of: Duke Energy Trading and Marketing, L.L.C.
Account No. 000-0-000000
ABA No. 000000000
Payment: Duke Energy Trading and Marketing, L.L.C.
By Check: X.X. Xxx 000000
Xxxxxxx, XX 00000-0000
Payment: Ocean Energy Inc.
By Wire Transfer: Chase Bank of Texas
Houston, Texas
Account No. 00101766047
ABA No. 000000000
ARTICLE X
Damages
For a breach of this Agreement for which an express remedy or measure
of damages is herein provided, such express remedy or measure of damages shall
be the sole and exclusive remedy hereunder, the obligor's liability shall be
limited as set forth herein and all other remedies or damages at law or in
equity for any such breach are waived. If no remedy or measure of damages is
expressly herein provided for a breach of this Agreement, the obligor's
liability shall be limited to actual damages only, such actual damages shall be
the sole and exclusive remedy hereunder for any such breach and all other
remedies or damages at law or in equity thereof are waived.
For a breach of this Agreement involving the failure of Buyer to
purchase and receive Ocean's Baseload Gas from Seller at the Delivery Point(s)
("Buyer's failure") the following liquidated damages will be the sole remedy
Seller will have for such breach. For Buyer's failure, Seller shall be entitled
to receive liquidated damages equal to an amount calculated by multiplying the
quantity of Ocean's Baseload Gas (expressed in MMBtu) that was required to be
purchased and received by Buyer from Seller at the Delivery Point(s) pursuant to
the terms and conditions of this Agreement which was not actually purchased and
received by Buyer from Seller at the Delivery Point(s) ("DETM's Default Gas")
times an amount per MMBtu equal to the positive difference between the price to
be paid by Buyer to Seller hereunder for DETM's Default Gas and the price
received by Seller for selling and delivering DETM's Default Gas to other
parties at the Delivery Point(s).
For breach by Seller in failing to deliver to the Delivery Point(s)
Ocean's Baseload Gas, the following liquidated damages will be the sole remedy
for such breach.
Instead of the purchase price for Ocean's Gas provided for in Article
IV above, the purchase price for all volumes of Ocean's Gas delivered on a day
to Delivery Point(s) which share a common Index Price in excess of one hundred
five percent (105%) of Ocean's Baseload Gas at such Delivery Point(s) shall be
the "Daily Midpoint" price published in Gas Daily for such day for the
applicable Delivery Point(s) where greater than one hundred five percent (105%)
of Ocean's Baseload Gas is delivered by Ocean ("Daily Midpoint Price") less any
actual transportation and fuel charges paid by DETM to move Ocean's Gas to the
applicable Gas Daily Point ("Adjusted Daily Midpoint Price").. If the downstream
transporter(s) does not provide or is unable to make available accurate daily
data for Ocean's Gas then the purchase price for such excess Ocean's Gas
delivered to a Delivery Point shall be the simple arithmetic average of the
Daily Midpoint Price for all of the days in the month (the "Averaged Daily
Midpoint Price") less any actual transportation and fuel charges paid by DETM to
move Ocean's Gas to the applicable Gas Daily Point.
In the event that Ocean fails to deliver to Delivery Point(s) which
share a common Index Price a quantity of Ocean's Gas at such Delivery Point(s)
that is at least ninety-five percent (95%) of Ocean's Baseload Gas, the
following adjustments will be made in a monthly statement and in the purchase
price to be paid by Buyer as appropriate for Ocean's Gas delivered to a Delivery
Point(s) which was less ninety-five percent (95%) of Ocean's Baseload Gas at
such Delivery Point(s) ("Undelivered Baseload"):
(i) If the Daily Midpoint Price on the day of Undelivered
Baseload is less than the Index Price, the purchase price will be
increased by an amount equal to the difference between the Index Price
and the Daily Midpoint Price (or the Averaged Daily Midpoint Price, as
appropriate, multiplied by the difference between ninety-five percent
(95%) of Ocean's Baseload Gas and the actual delivered quantity of
Ocean's Gas for the applicable day(s).
(ii) If the Daily Midpoint Price on the day of the
Underdelivered Baseload is greater than the Index Price, the purchase
price will be decreased by an amount equal to the difference between
the Daily Midpoint Price (or the Averaged Daily Midpoint price, as
appropriate) and the Index price multiplied by the difference between
ninety-five percent (95%) of Ocean's Baseload Gas and the actual
delivered quantity of Ocean's Gas for the applicable day(s).
Both Parties shall use commercially reasonable efforts to notify the
other Party of any deficiencies in the receipt or delivery of Ocean's Gas. The
Parties recognize that each Party may have access to certain information
necessary to confirm deliveries and receipts of Ocean's Gas hereunder
("confirming information") and agree to share such confirming information on a
commercially reasonable basis. Therefore, a Party shall not be considered to be
in default of its obligation to deliver or receive Ocean's Gas hereunder until
it has received the confirming information. A Party shall have until the end of
the Business Day following the day it received the confirming information to
eliminate the deficiencies in deliveries or receipts of Ocean's Gas. If Ocean's
Gas is delivered and received at a Delivery Point(s) where there is an operator
balancing agreement or similar agreement in place, then no default hereunder
shall be deemed to have occurred so long as DETM pays Ocean for all Ocean's Gas
delivered pursuant to this Agreement at such Delivery Point(s). For purposes of
this paragraph, a DETM default shall not be deemed to have occurred unless, and
then only to the extent that, Ocean's Gas is curtailed and not actually
delivered to the Delivery Point(s).
UNLESS EXPRESSLY OTHERWISE HEREIN PROVIDED, NEITHER PARTY SHALL BE
LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, EXEMPLARY,
INDIRECT OR PUNITIVE DAMAGES OF ANY CHARACTER, INCLUDING BUT NOT LIMITED TO LOSS
OF USE, LOST PROFITS (PAST AND FUTURE), OR OTHER BUSINESS INTERRUPTION DAMAGES,
IRRESPECTIVE OF WHETHER SUCH DAMAGES (OR CLAIMS OR ACTIONS THEREFOR) ARE BASED
UPPON CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE
Notwithstanding any other provision in this Agreement, in no event
shall a Party be liable to the other Party for any penalties or charges assessed
by a transporter to a Party for the unauthorized delivery of Ocean's Gas.
ARTICLE XI
Arbitration
In the event the Parties are unable to resolve any dispute regarding
this Agreement and such dispute involves less than U.S. $5,000,000, both Parties
agree to resolve such dispute through the arbitration provisions of this Article
XI.
Within twenty (20) Business Days of either Party's written notice to
the other Party to arbitrate a dispute which arises under this Agreement
involving less than U.S. $500,000, the Parties shall agree on one arbitrator to
decide any such dispute. As to disputes involving between U.S. $500,000 and U.S.
$5,000,000, each Party shall choose one arbitrator within twenty (20) Business
Days of either Party's written notice to the other Party to arbitrate, and
within ten (10) Business Days after both such arbitrators are chosen, such
arbitrators shall choose a third arbitrator thus completing the whole
arbitration panel. In the event of a dispute as to whether the applicable amount
in dispute is less than U.S. $500,000, or if the Parties are unable to agree to
a single arbitrator, the arbitration panel shall consist of three arbitrators.
Any arbitrator chosen shall be a disinterested party with knowledge of the
industry.
The arbitrator(s), once chosen, shall consider any documents, tapes or
any other evidence which the arbitrator(s) deem necessary and shall then accept
sealed written resolutions of the subject dispute from each Party on a
confidential basis to be submitted within twenty (20) Business Days of
establishment of the arbitration panel. The written submissions shall be in a
form and subject to any limitations as may be prescribed by the arbitrator(s).
The arbitrator(s) shall then choose one of the proposed solutions, (without
modification) as the fairest solution to the dispute within ten (10) Business
Days of receipt of the written submissions of both Parties. In the event of a
three member arbitration panel, a majority vote shall govern. The decision of
the arbitrators shall be final and nonappealable.
Any expenses of the arbitrator(s) shall be shared and paid equally
between the Parties. Each Party shall bear and pay its own expenses incurred by
each in connection with the arbitration, unless otherwise included in a solution
chosen by the arbitration panel. In the event either Party must file a court
action to enforce an arbitration award under this Article XI, the prevailing
Party shall be entitled to recover its court costs and reasonable attorney fees.
This Article XI shall not apply to any disputes involving U.S.
$5,000,000 or more, and each Party retains its respective rights to pursue all
legal and equitable remedies regarding any such disputes. The Parties, however,
may consent to resolve such disputes by the provisions of this Article XI.
ARTICLE XII
Quality
Seller represents that all Ocean's Gas shall meet the
effective tariff or published quality specifications of the receiving
transporter at the applicable Delivery Point(s) or in the case of Ocean's Gas
Processed in a Processing plant downstream of the Delivery Point(s) the quality
specifications of the receiving transporter at the tailgate of such Processing
plant. Buyer shall have the right not to purchase and receive Ocean's Gas that
does not meet such quality specifications. Unless otherwise agreed nothing
herein, including an event of Force Majeure, shall require or permit either
Party to schedule Ocean's Gas at a point other than a Delivery Point or in
excess of Ocean's nominated quantity of Ocean's Gas on such day. If either Party
receives an operational flow order from a transporter requiring action (the
"OFO"), such Party shall immediately notify the other Party of the OFO and
provide a copy of same by facsimile. Each Party shall take all OFO actions
required by it and shall indemnify, defend and hold harmless the other Party
from any claims related to the OFO under which the indemnifying Party failed to
take the action required thereby.
ARTICLE XIII
Pressure and Measurement
DETM will receive Ocean's Gas at the Delivery Point(s) at the pressure
prevailing from time to time in the facilities delivering Ocean's Gas thereto.
Measurement of Ocean's Gas quantities hereunder shall be in accordance with the
effective tariff or published procedures of the receiving transporter(s) at the
Delivery Point(s).
ARTICLE XIV
Processing
Seller reserves the ongoing right, at its sole cost and expense, to
Process at a Processing plant all Ocean's Gas hereunder upstream and/or
downstream of the Delivery Point(s), provided that Processing does not render
such gas incapable of meeting the quality specification set forth in Article
XII. Seller shall reimburse Buyer for all transportation costs actually paid by
Buyer to transport Ocean's PTR and PVR from the Delivery Point(s) to a
Processing plant for Processing.
"Processing" or "Process" shall mean to separate and/or extract, by
whatever method, from gas liquid and liquefiable hydrocarbons and
non-hydrocarbons, including any commercially valuable constituents other than
methane that are entrained in the gas (together with such methane as must be
removed to effect the recovery of the components being extracted).
Buyer shall be responsible for and obligated to obtain and maintain
during the term of this Agreement transportation agreements to transport Ocean's
PTR and PVR from the Delivery Point(s) to Processing plant(s) as shown on
Appendix "A". Seller shall reimburse Buyer for all costs incurred for
transportation of PTR/PVR.
"PTR" shall mean the Btu equivalent of products extracted from Ocean's
Gas by a Processing plant, plus the gas used as plant fuel in the Processing
plant to Process such gas and to extract those products, plant flare and other
plant losses in the Processing plant. When expressed as a volume (in Mcf rather
than in Btu) PTR shall mean "PVR".
ARTICLE XV
EQUAL EMPLOYMENT OPPORTUNITY
The Equal Employment Opportunity Clause required under Executive Order
No. 11246, the affirmative action commitment for veterans set forth in 41 CFR
60-250.4, the affirmative action clause for handicapped workers set forth in CFR
650-741.4, and the related regulations of the Secretary of Labor, 41 CFR Chapter
60, are incorporated by reference in this Agreement, with which compliance
therewith is certified by each Party to the other Party.
ARTICLE XVI
EVENTS OF DEFAULT
Event of Default. Notwithstanding anything herein to the contrary, the
occurrence of any of the following events will constitute an event of default
under this Agreement (an "Event of Default") with respect to a Party:
(a) a failure to pay when due under this Agreement and such failure is not
remedied on or before the fifth Business Day after receipt of notice of such
failure;
(b) a failure to comply with or perform any obligation, other than failure to
deliver or receive Ocean's Gas for which a liquidated remedy is provided herein,
and such failure is not remedied within five Business Days after receipt of
notice of such failure;
(c) a general assignment or arrangement for the benefit of creditors;
(d) a filing of a petition or otherwise commencing a proceeding under any
bankruptcy, insolvency, reorganization or similar law, or having any such
petition filed or commenced against it;
(e) becoming insolvent, however evidenced, or unable to pay its debts as they
fall due;
(f) having a liquidator, administrator, receiver, trustee, conservator or
similar official appointed with respect to it or any substantial portion of its
property or assets;
(g) challenging its own legal authority or capacity to enter into natural gas
purchase and sale agreements with other third parties;
(h) is a Defaulting Party under any ISDA Agreement executed between the Parties;
(i) is in breach of a representation and warranty of this Agreement and such
breach is not remedied on or before the fifth Business Day after receipt of a
notice of such breach.
Upon the occurrence of an Event of Default, the Party not affected by
the event, (hereinafter referred to as the "Non-Defaulting Party") shall be
entitled to exercise the remedies as hereinafter set forth in this Article XVI.
After an occurrence of an Event of Default, the Non-Defaulting Party
shall have the right to terminate this Agreement upon five (5) Business Days
prior written notice to the other Party ("Early Termination Date").
ARTICLE XVII
Notices
All notices, invoices, payments, statements and communications made
pursuant to this Agreement shall be in writing and made as follows:
BUYER: SELLER:
----- ------
Duke Energy Trading and Ocean Energy, Inc.
Marketing, L.L.C. 0000 Xxxxxx, Xxxxx 0000
10777 Westheimer, Suite 650 Houston, Texas 77002
Xxxxxxx, Xxxxx 00000
Attention: Contract Administration Attention: Marketing Contract
Administration
Telephone: 000-000-0000 Telephone: 000-000-0000
Facsimile: 000-000-0000 Facsimile: 000-000-0000
All notices required pursuant to this Agreement may be sent by
facsimile or mutually acceptable electronic means, a nationally recognized
overnight courier service, first class mail, certified mail-return receipt
requested, or hand delivered.
Notice shall be given when received on a Business Day by the addressee.
In the absence of proof of the actual receipt date, the following presumptions
will apply. Notices sent by facsimile shall be deemed to have been received upon
the sending Party's receipt of its facsimile machine's confirmation of
successful transmission, if the day on which such facsimile is received is not a
business day or is after five p.m. (at the receiving Party's place of business)
on a business day, then such facsimile shall be deemed to have been received on
the next following business day. Notice by overnight mail or courier shall be
deemed to have been received on the next business day after it was sent or such
earlier time as is confirmed by the receiving Party. First class mail is deemed
delivered three (3) days after mailing.
ARTICLE XVIII
Assignment and Confidentiality
This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the Parties hereto, and the covenants, conditions,
rights and obligations of this Agreement shall run for the full term of this
Agreement. No assignment of this Agreement, in whole or in part, will be made by
a Party except that a Party may make an assignment of this Agreement, in whole
or in part, to a wholly owned affiliate or to any other party with the consent
of the non-assigning Party which consent will not be unreasonably withheld.
Notwithstanding any of the other provisions of this Article XVIII to the
contrary, if Seller sells any property specified on Appendix "A" then effective
at the end of the day on the last day of the month following the closing date of
the sale of any such property by Seller this Agreement will terminate as to such
property except for the provisions hereof which survive termination of this
Agreement in accordance with such provisions.
The terms and conditions of this Agreement including, but not limited
to, the price, the quantity, the term, the identified transporter(s) and all
other material terms hereof shall be kept confidential by the Parties hereto,
except to the extent that any information must be disclosed to a third party for
the purpose of transporting Ocean's Gas subject to this Agreement, to respond to
an audit request or to comply with any order, rule, regulation or directive of
any court, legislative body or governmental entity having jurisdiction or to
obtain any financing. As a condition of conducting an audit pursuant to the
terms of this Agreement, the auditing Party acknowledges that the documents and
records provided may contain proprietary or competitively sensitive information,
which the auditing Party shall treat as confidential and not use in competition
with the audited Party.
ARTICLE XIX
Forward Contract
The Parties agree this Agreement is a forward contract within the
meaning of and for the purposes of the United States Bankruptcy Code, as
amended. Further, each Party represents to the other Party that it is a forward
contract merchant as such term is defined in and for the purposes of the
Bankruptcy Code, as amended. Ocean recognizes DETM is not an end user of Ocean's
Gas.
ARTICLE XX
Set Off
Both Parties hereto acknowledge and agree that upon the designation or
deemed designation of an Early Termination Date under this Agreement the
Non-Defaulting Party may set off (i) all amounts, that are due to the Defaulting
Party hereunder, plus any cash or other form of collateral then available to the
Non-Defaulting Party pursuant to any collateral agreement with the other Party
plus any or all other amounts due to the Defaulting Party under any other
forward contract with the other Party (including, but not limited to, amounts
owed, but not yet paid, for commodities previously delivered in accordance with
the forward contracts) and, to the extent it is permitted by law, any amounts
due to the Defaulting Party pursuant to the ISDA Agreement (and the Exhibits and
Annexes thereto) entered into between the Parties ("ISDA") plus any cash or
other form of collateral then available to the Non-Defaulting Party pursuant
thereto, against (ii) all such amounts that are due to the Non-Defaulting Party
by the other Party, plus any cash or other form of collateral then available to
the other Party pursuant to any collateral agreement agreed to by the Parties
plus any or all other amounts due to the Non-Defaulting Party under any other
forward contracts between the Parties (including, but not limited to, amounts
owed, but not yet paid, for commodities previously delivered and reasonable
attorney's fees incurred by the Non-Defaulting Party) and, to the extent it is
permitted by applicable law, any amounts due to the Non-Defaulting Party
pursuant to the ISDA plus any cash or other form of collateral then available to
the Defaulting Party pursuant thereto, so that all such amounts shall be netted
to a single liquidated amount (the "Termination Payment") payable by one Party
to the other Party. The Termination Payment shall be made by the owing Party
within five (5) Business Days after notice requesting such is given. The
obligations of the Parties under this Agreement, any other forward contract
executed by the Parties and the ISDA in respect of such amounts shall be deemed
satisfied and discharged to the extent of any such set off. A Party performing a
set off under this Article XX will give the other Party notice of such set off
as soon as practicable thereafter provided that the failure to give such timely
notice shall not affect the validity of the set off. Notwithstanding any
contrary provision of this Agreement, where an Event of Default specified in
sub-sections (c), (d), (e) or (f) of Article XVI is governed by law which does
not permit an Early Termination Date to be declared on or after such an Event of
Default then termination of this Agreement shall be deemed to have taken place
at a time immediately preceding the occurrence of such Event of Default, and
upon the occurrence of any such automatic termination of this Agreement, the
Party causing the Event of Default shall indemnify the Non-Defaulting Party on
demand against all expense, loss, damage or liability that the Non-Defaulting
Party actually incurs with respect to this Agreement as a consequence thereof.
ARTICLE XXI
Miscellaneous
There are no third party beneficiaries to this Agreement and none are
intended by the Parties.
If any provision of this Agreement is determined to be invalid, void or
unenforceable by any court having jurisdiction, such determination shall not
invalidate, void or make unenforceable any other provision, agreement or
covenant of this Agreement.
No waiver of any breach of this Agreement shall be held to be a waiver
of any other or subsequent breach.
All rights, duties and obligations arising under this Agreement shall
be exercised and discharged in good faith and in a commercially reasonable
manner.
Each Appendix and Exhibit referenced herein and attached hereto is made
a part of this Agreement for all purposes. This Agreement sets forth all
understandings between the Parties respecting the subject matter hereof, and any
prior contracts, understandings and representations, whether oral or written,
relating to such matters are merged into and superseded by this Agreement. This
Agreement may be amended only by a writing executed by both Parties.
Each Party to this Agreement represents and warrants that it has full
and complete authority to enter into and perform this Agreement, including
having obtained any regulatory authority necessary to transact business under
this Agreement. Each person who executes this Agreement on behalf of either
Party represents and warrants that he/she has full and complete authority to do
so and that such Party will be bound thereby.
Compliance with the confirmation and change in quantities of Ocean's
Gas procedures of this Agreement satisfies any "writing" requirements imposed
under the Uniform Commercial Code or any other applicable contract law.
The interpretation and performance of this Agreement shall be governed
by, construed, interpreted and enforced in accordance with the substantive laws
of the State of Texas, without reference to its choice of law doctrine. Each
Party agrees to submit to the nonexclusive jurisdiction of the courts of the
State of Texas.
IN WITNESS WHEREOF, the Parties have executed this Agreement in
duplicate originals to be effective as of the day and year first written above.
DUKE ENERGY TRADING AND MARKETING, L.L.C.
By: ____________________________________________
Name: ____________________________________________
Title: ____________________________________________
SEAGULL ENERGY E&P INC.
By: ____________________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President & Chief Financial Officer
SGO PETROLEUM INC.
By: ____________________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President & Chief Financial Officer
GLOBAL NATURAL RESOURCES
CORPORATION OF NEVADA
By: ____________________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President & Chief Financial Officer
OCEAN ENERGY RESOURCES, INC.
By: ____________________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President & Chief Financial Officer
OCEAN ENERGY, INC.
By: ____________________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President & Chief Financial Officer
