EXHIBIT 99.3
DELIVERY AGREEMENT
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This Delivery Agreement ("Agreement") is made and entered into this
24th day of April, 1998, by and between CROSS TIMBERS OIL COMPANY, whose address
is 810 Houston, Suite 2000, Xxxx Xxxxx, Xxxxx 00000 (herein called "CTOC") and
EEX CORPORATION., whose address is 0000 XxxxXxxx Xxxx., Xxxxx 0000, Xxxxxxx,
Xxxxx 00000 (herein called "EEX").
WITNESSETH:
THAT WHEREAS, CTOC has conveyed to EEX Operating L.P. a production
payment in gas to be produced from properties in Xxxxxxxxx County, Texas as
described in that certain Conveyance of Production Payment of even date
herewith; and
WHEREAS, CTOC and EEX desire to enter into an agreement for the
delivery of said gas and for the operation and maintenance of the properties
from which the gas is to be produced; and
WHEREAS, the parties desire to provide CTOC with an option to purchase
said production payment on certain terms and conditions;
NOW, THEREFORE, in consideration of the premises, the mutual
obligations of the parties hereto and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, CTOC and EEX hereby
agree as follows:
I. DEFINITIONS
Terms defined in the Conveyance and not defined herein shall have the
meaning given to such terms in the Conveyance. Unless another definition is
expressly stated, the following terms, where used in this Agreement, shall have
the following meaning:
1. "Btu" means British thermal unit.
2. "Conveyed Interest" shall have the meaning given in the
Conveyance.
3. "Conveyance" means that certain Conveyance of Production Payment
dated April 24, 1998 from CTOC, as Grantor, to EEX, as Grantee.
4. "CTOC's Delivery Capacity" means the maximum quantity of gas well
gas attributable to CTOC's and EEX's interest in the xxxxx located on the
Opelika Properties averaged over a seventy-two (72) hour period which, in the
course of prudent operations as determined by CTOC in good faith and consistent
with the lawful rules and regulations of the Texas Railroad Commission or other
governmental regulatory agencies having jurisdiction), can be delivered at a
stabilized flow rate at the Delivery Point.
5. "Day" means the 24-hour period commencing at 8:00 a.m. local time
on one calendar day and ending at 7:59 a.m. on the following calendar day.
6. "Effective Date" means January 1, 1998, the effective date of this
Agreement.
7. "Maximum Annual Quantity" shall have the meaning given in Article
III.
8. "Maximum Daily Quantity" shall have the meaning given in Article
III.
9. "MMBtu" means one million (1,000,000) Btu's.
10. "Month" means the period commencing at 8:00 a.m. on the first day
of a calendar month and ending at 7:59 a.m. on the first day of the next
calendar month.
11. "Natural gas" or "gas" means any mixture of hydrocarbons or of
hydrocarbons and noncombustible gases, in a gaseous state, including both gas
well gas and casinghead gas, consisting essentially of methane.
12. "Oil and gas lease" or "lease" means any written instrument which
gives CTOC the rights to drill for, produce and dispose of gas in, under, and
from the lands described herein.
13. "Opelika Properties" means certain valid and subsisting oil and
gas leases and/or oil and gas rights in, on and under the lands within the
Opelika Field located in Xxxxxxxxx County, Texas, which are more particularly
described on Exhibit "A" attached to the Conveyance.
14. "Production Payment" means all right, title and interest in and to
all natural gas produced (if, as and when produced) from the Recoverable Gas
Reserves (defined below), free of any expense of exploration, drilling,
development, operating, marketing and all other costs and expenses of any kind
whatsoever, incidental to, arising from or associated with the production and
sale of such natural gas.
15. "Recoverable Gas Reserves" means the volume of gas in place
attributable to CTOC's interests in the oil and gas leases and/or oil and gas
rights in the Opelika Properties as determined from time to time by CTOC's
independent petroleum consultant.
16. "Well" means a well that produces gas that is produced by CTOC
under this Agreement.
DELIVERY POINT(S)
For xxxxx drilled on the Opelika Properties after the date hereof and for
all existing xxxxx, the delivery point or points for gas delivered under this
Agreement shall be a the inlet to Lone
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Star Gas Company's meter(s) located at the outlet of CTOC's compressor station,
or such other point as the parties may mutually agree by negotiating in good
faith, hereinafter referred to as the "Delivery Point."
As between the parties hereto, CTOC shall be deemed to be in exclusive
control and possession of the gas delivered hereunder and responsible for any
damage or injury caused thereby until the same shall have been delivered to EEX
at the Delivery Point, after which EEX shall be deemed to be in exclusive
control and possession of the gas and responsible for any damage or injury
caused thereby.
III. QUANTITY
Notwithstanding any other provision of the Conveyance or this Agreement to
the contrary, EEX shall not be entitled to take delivery of gas hereunder before
January 1, 2002. From and after January 1, 2002, CTOC must first offer for
delivery to EEX from the Opelika Properties a quantity of gas each day equal to
the lesser of 30,000 MMBtu per day or CTOC's Delivery Capacity, which lesser
amount is hereinafter referred to as the "Maximum Daily Quantity"; provided,
however, that in any year EEX shall be entitled to take not more than the
"Maximum Annual Quantity" as set forth under "EEX Gross" below:
Maximum Annual Quantity
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Year EEX Gross EEX Net
---- ---------- ----------
2002 4,500,000 3,600,000
2003 4,500,000 3,600,000
2004 4,000,000 3,200,000
2005 3,700,000 2,960,000
2006 3,600,000 2,880,000
2007 3,500,000 2,800,000
2008 3,400,000 2,720,000
2009 3,300,000 2,640,000
2010 3,000,000 2,400,000
2011 2,500,000 2,000,000
---------- ----------
Total 36,000,000 28,800,000
In the event that CTOC's Delivery Capacity becomes less than the Maximum Daily
Quantity, CTOC shall make available for delivery to EEX at the Delivery Point,
or other mutually agreeable delivery point(s), a volume of gas from another
source sufficient to deliver to EEX the Maximum Daily Quantity each day.
If CTOC on any day in its sole discretion has gas available for delivery in
excess of the Maximum Daily Quantity, then CTOC shall have the right, but not
the obligation, to tender such
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gas to EEX, and EEX shall have the right but not the obligation to take such
gas, and the quantity of such gas taken by EEX shall be included in the quantity
of gas supplied by CTOC to fulfill its obligations to deliver the gas
attributable to the Conveyed Interest. If EEX on any day during the term hereof
does not take all of the gas made available to EEX by CTOC, including gas EEX
has agreed to take in excess of the Maximum Daily Quantity, then the quantity of
such gas not taken by EEX shall be credited toward the quantity of gas required
to be delivered by CTOC to fulfill its obligations to deliver the gas
attributable to the Conveyed Interest.
If at any time the Recoverable Gas Reserves as reflected in CTOC's
independent petroleum consultant's annual reserve report are less than the
quantity of gas then undelivered to EEX under this Agreement, then CTOC shall
discontinue all sales of gas to third parties from the Opelika Properties until
such time as the Recoverable Gas Reserves are again determined as herein
provided to be in excess of the quantity of gas then undelivered to EEX under
this Agreement. For purposes of this paragraph only, in determining "the
quantity of gas as yet undelivered to EEX under this Agreement," the volumes of
gas delivered by CTOC to EEX under that certain Gas Purchase Contract dated
April 24, 1998 shall be deemed to be gas delivered to EEX under this Agreement.
NOTWITHSTANDING ANYTHING CONTAINED IN THE CONVEYANCE OR THIS AGREEMENT TO
THE CONTRARY, CTOC WARRANTS AND AGREES TO DELIVER TO EEX AT THE DELIVERY POINT
36,000,000 MMBTU OF GAS, FROM WHATEVER SOURCE, AT NO ADDITIONAL COST TO EEX
EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT.
IV. NOMINATIONS
During the term of this Agreement, at least twenty-five (25) days prior to
the beginning of each calendar quarter, EEX shall notify CTOC in writing of
(nominate) the total volume of gas it intends to take during such quarter,
consistent with the provisions of Article III. hereinabove. EEX shall have the
right to take not more than 120%, and shall be obligated to take at least 80%,
of the volumes nominated by EEX each quarter, at rates which are reasonably
constant. In addition to EEX's nominations to CTOC, the parties hereto will
file appropriate monthly nominations with the Railroad Commission of Texas
consistent with this Agreement.
V. COVENANTS OF CTOC
CTOC shall conduct and direct and have full control of all operations in
the Opelika Properties. CTOC covenants that during the term hereof, and at its
own cost, it will cause:
1. The Opelika Properties to be developed and continuously operated for
the lifting and delivery of gas in a good and workmanlike manner and in
accordance with sound field practice, all applicable operating agreements,
contracts and other instruments and all applicable laws, rules and
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regulations, and all to be done according to the most approved practices of
prudent operators in the industry;
2. All rentals and royalties, and all liabilities of every kind and nature
incurred in or arising from the administration, operation, maintenance or
development of the Opelika Properties, or the producing, gathering, treating,
processing, storing, marketing or transporting of the gas, to be paid punctually
when due;
3. All machinery, equipment and facilities of any kind now or hereafter
located upon or used in connection with the Opelika Properties and necessary or
useful in the operation thereof for the production of the gas therefrom, to be
provided and to be kept in good and efficient operating condition, and all
repairs, renewals, replacements, additions and improvements thereof needful to
such end, to be promptly made;
4. All production, severance, ad valorem, occupation, gathering, sales,
excise, windfall profit and other taxes which are imposed or assessed with
respect to or measured by or charged against the Opelika Properties, and the gas
in and under and produced and saved therefrom, to be rendered, reported and paid
punctually before the same become delinquent;
5. The Conveyed Interest to be kept free and clear of liens, charges or
encumbrances of every character, other than (a) taxes constituting a lien but
not yet delinquent, (b) mechanic's and materialman's liens arising by operation
of law to the extent that such liens secure current amounts payable for
production expenses which are not past due and (c) those being contested in good
faith for which adequate reserves are being maintained in accordance with
generally accepted accounting principles;
6. All proper safeguards to be used and maintained to prevent damage to
the ecology and pollution of the environment and all applicable laws, rules,
orders and regulations pertaining thereto to be observed and complied with;
7. Except to the extent that CTOC in the exercise of business judgment
decides to be a self-insurer, insurance to be carried with respect to the
Opelika Properties and all operations in connection therewith with responsible
insurance carriers in such amounts and against such hazards as are customarily
insured against by operators of similar properties under similar circumstances,
and all proceeds of such insurance to be used to replace, restore, repair or
otherwise remedy and rectify any loss, damage or liability so insured against;
8. Written notice to be given to EEX of any proceedings instituted with
respect to the Conveyed Interest in any manner whatsoever, and all necessary and
proper steps to be diligently taken to protect and defend the Conveyed Interest
against any such adverse proceedings, including, but not limited to, the
employment of counsel for the prosecution or defense of litigation; and
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9. Upon giving at least twenty-four (24) hours' notice to CTOC, any one or
more representatives designated by EEX at all reasonable times to have access to
the Opelika Properties and to inspect or observe all or any facilities or
operations thereof and any and all books and records of CTOC with respect
thereto and to the Opelika Properties.
Except as herein provided, EEX shall never be responsible for payment of any
part of the costs, expenses or liabilities incurred in connection with the
exploring, developing, operating (including compression costs) and maintaining
of the Opelika Properties. CTOC will save harmless and indemnify EEX from all
claims, demands and liabilities arising from the failure of CTOC to perform or
comply with any provisions of this paragraph or to carry any insurance normally
carried by other operators under similar circumstances.
VI. QUALITY AND PRESSURE
Subject to Article VII.4. below, all gas delivered to EEX hereunder shall
conform to the current following specifications, which are subject to change in
accordance with Article VII.4.:
1. The gas shall not contain more than five (5) grains of total sulfur,
and shall not contain more than one-fourth (1/4) grain of hydrogen sulfide and
one (1) grain of mercaptin sulfur per one hundred (100) cubic feet of gas.
2. The gas shall contain no oxygen, shall not contain more than three
percent (3%) by volume of carbon dioxide, shall not contain more than seven
pounds (7#) of water vapor per million cubic feet and shall be commercially free
from crude oil, mineral seal oil, distillate and other impurities, or
noncombustible gases. The gas shall be at temperatures not in excess of one
hundred twenty degrees (120 degrees) Fahrenheit.
3. The gas shall be at a pressure which is sufficient to enter the
transporting pipeline at the point of delivery to EEX; provided, however, that
CTOC's delivery pressure into the transporting pipeline shall not exceed the
transporting pipeline's maximum allowable operating pressure.
4. The gas shall have a heat content of not less than nine hundred fifty
(950) nor more than eleven hundred fifty (1150) Btu's per cubic foot under the
conditions of measurement contained in this Article VII. and specific gravity
with ranges that will permit efficient utilization thereof, and EEX shall not be
obligated to take any gas tendered to it hereunder which , in the judgment of
EEX, is not interchangeable with the gas in that portion of the pipeline system
to which CTOC's delivery line is connected.
VII. MEASUREMENT
1. Whenever the conditions of pressure and temperature differ from those
set out herein, the volume of gas delivered shall be converted to the pressure
base of 14.65 pounds per square inch absolute (psia) and temperature base of
sixty degrees (60 degrees) Fahrenheit and properly corrected
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for deviation from the Ideal Gas Laws. Gas measurement computations shall be
made in accordance with the American Gas Association Report No. 3 "Orifice
Metering of Natural Gas" and applicable state regulations. Flowing temperature
may be obtained by periodic tests conducted by EEX or EEX's Agent (provided,
however, either party may at its expense properly install and operate a
recording thermometer of standard make, and in this event the flowing
temperature as recorded shall be used). A specific gravity may be obtained by
periodic tests to be conducted by EEX or EEX's Agent with a specific gravity
instrument of standard type (provided, however, either party may at its expense
properly install and operate a recording gravitometer of standard make and in
this event the specific gravity as recorded shall be used). All of the gas
received hereunder shall be measured by means of a meter or meters of standard
type, which shall be installed operated and maintained by EEX or EEX's Agent and
placed at the aforesaid Delivery Point(s). The accuracy of EEX's or EEX's
Agent's measuring equipment shall be verified by test, using means and methods
generally acceptable by the gas industry, at least every sixty (60) days. When
any test shows an error of more than one percent (1%) in the measurement,
correction shall be made for the period during which the measurement instruments
were in error, first, by using the registration of CTOC's check meter, if
installed and registering accurately; if no check meter is installed and
registering accurately or if this period cannot be ascertained, correction shall
be made for one-half ( 1/2) of the period elapsed since the last date of test,
and this measurement instrument shall be adjusted immediately to measure
accurately; provided, however, no adjustment or corrections for meter inaccuracy
or failure shall be made for a period longer than ninety (90) days.
2. The Btu heat content shall be computed on the basis of a temperature of
sixty degrees (60 degrees) Fahrenheit and pressure equivalent to 14.65 psia and
adjusted for the actual water vapor content of the gas as delivered hereunder.
Such determination shall be made by EEX or EEX's Agent promptly following
initial deliveries and on each succeeding January 1 and July 1 thereafter, or at
such intervals as may be mutually agreed upon or found necessary in practice.
The determination shall be made by, at EEX's option, fractional analysis,
manually operated calorimeter of a type approved by the United States Bureau of
Standards and operated in accordance with the methods recommended by said
Bureau, or a recording calorimeter of a type acceptable to both parties
installed at the point of deliver, in which case the gross heating value of the
gas delivered each day shall be determined by the arithmetical average of the
daily records of such recording calorimeter.
3. CTOC may at its option and expense install and operate check meters to
check EEX's or EEX's Agent's meters. Such meters shall be for check purposes
only and shall not be used in the measurement of gas for the purposes of this
Agreement. Check meters shall be subject at all reasonable times to inspection
and examination by EEX. The installation and operation thereof shall, however,
be done entirely by CTOC.
4. Notwithstanding anything contained herein to the contrary, all gas
delivered by CTOC hereunder shall meet the quality, pressure and temperature
requirements of the transporting pipeline(s) and all gas delivered hereunder
shall be measured at the Delivery Point by the pipeline
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receiving the gas at that point. Such determinations shall be accepted and used
by EEX and CTOC for all purposes under this Agreement.
VIII. TAXES
CTOC shall pay all production, severance, gathering, and similar taxes
imposed by state or federal authority with respect to the gas delivered
hereunder and all ad valorem and similar taxes with respect to the Conveyed
Interest imposed by state or local authorities. EEX shall reimburse CTOC in the
amount of one hundred percent (100%) of any such existing or future taxes paid
by CTOC pursuant to the terms of the Conveyance and this Agreement. With
respect to ad valorem taxes, the total taxes due for the tax year shall be
allocated annually between EEX and CTOC based on a ratio of estimates of the
"fair market value" on January 1 of the future expected gas deliveries to each
party. The fair market value will be determined using (i) the product prices
and price escalations as offered by Enron Transport & Trading contemporaneously
with the evaluation, less an appropriate basis adjustment, (ii) severance tax
rate, ad valorem tax rate and operating costs assumed in a reserve report
prepared for CTOC's lenders by an independent licensed reservoir engineer, and
(iii) a discount rate of ten percent (10%). CTOC or CTOC's lenders shall
utilize an independent licensed reservoir engineer to estimate the total future
production stream on the basis of the Recoverable Gas Reserves, development
costs and rework costs. The term "taxes" as used herein does not include
capital stock, income, excess profits or franchise taxes.
IX. ROYALTIES
EEX shall notify CTOC on or before the fifteenth (15/th/) day of each month
as to the appropriate price for royalty payment purposes for gas produced and
delivered to EEX under this Agreement during the preceding month. Provided
further, EEX will reimburse CTOC for said royalty payments (for royalties and
overriding royalties in effect on January 1, 1998) by the 25/th/ day of such
month. CTOC shall at all times have the obligation to make settlement for all
royalties, overriding royalties and other payments due to the owners of the
mineral royalty and other interests under CTOC's leases as modified by such
assignments, unitization agreements and other documents as may appear of record
or otherwise be binding upon CTOC, and to make settlement with all other persons
having any interest in the lands and leases within the Opelika Properties. EEX
shall indemnify, save and hold harmless CTOC from any liability, damages, costs
or attorneys' fees CTOC may suffer as a result of any claims or lawsuits by
royalty owner or owners under leases owned by CTOC within the Opelika Properties
from which gas is produced and delivered hereunder, under applicable laws and
regulations, requiring CTOC to pay such royalties and overriding royalties
on the gas delivered to EEX under this Agreement based on a price other than the
price specified by EEX in the notice to CTOC provided for hereinabove.
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X. OPERATING FEE
As consideration for the operating services provided for herein, EEX shall
pay CTOC a fee of $0.257 per MMBtu payable monthly as the gas is delivered to
EEX from whatever source. After commencement of first deliveries hereunder,
said fee shall escalate at the rate of 5.5% per year compounded annually; so
that the fee shall escalate to $0.271 per MMBtu on the first anniversary of
initial deliveries, to $0.286 per MMBtu on the second anniversary, and in like
manner thereafter for the term hereof.
XI. PAYMENT
1. On or before the 15/th/ day following the end of each calendar month
during the terms hereof, CTOC agrees to furnish EEX with a statement setting out
the volume of gas produced from the Opelika Properties subject to the Conveyed
Interest during the preceding calendar month. EEX shall pay CTOC within fifteen
(15) days after receipt of CTOC's statement the fees and reimbursements
attributable to the Conveyed Interest and to the gas delivered to EEX hereunder
during the preceding calendar month in accordance with this Agreement.
2. If any information required to compute any payment provided for under
this Agreement is not available by the payment date, payment will be on the
paying party's estimate, with such estimate corrected to an actual total as soon
thereafter as available. Either party will bring any adjustments it deems
necessary to the immediate attention of the other party and neither party shall
have the right to question or contest any charge or credit if the matter is not
brought to the attention of the other Party in writing in any event no later
than twenty-four months after receipt of the statement in question. If a party
is entitled to a refund of amounts paid, such party shall also receive interest
at the rate set forth below. If there is a dispute as to the amount due, the
obligor shall pay the undisputed amount and notify the other party of the
disputed amount and the reasons for the dispute. If the obligee is ultimately
found to be entitled to the payment of disputed amounts, such party shall also
receive interest at the rate set forth below. If the Parties are unable to
resolve the dispute within sixty (60) days, then the matter will be submitted to
arbitration in accordance with Article XV. Should any party fail to remit the
undisputed amount when due, interest on the unpaid portion shall accrue at a
rate equal to the then effective "Prime Rate" plus 2% of interest for large
U.S. money center commercial banks published under "Money Rates" by the Wall
Street Journal from the date due until the date of payment.
XII. PURCHASE OPTION
1. CTOC will have the option to purchase portions of the Production
Payment, exercisable under the terms of this provision, which options will
include the entire Production Payment. On or before December 15 of each year,
EEX will provide written notice of the eligible volume for that year's purchase
option, being a volume equal to the lesser of (a) the amount of
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"imbalance" which EEX has made up to Encogen One Partners, Ltd. (which imbalance
presently stands at 36,000,000 MMBtu) during the current calendar year (or from
May 1 during the first year) -using the best available estimates for December
deliveries or (b) a scheduled percentage volume of twenty (20%) percent of the
original Production Payment amount for the production year 1998, and 26.66% (1/3
of 80%) for the production years 1999, 2000 and 2001. CTOC will thereafter
notify EEX, during the period from December 15 through January 3 of the
following year, if CTOC elects to exercise the purchase option for the given
year.
2. The cost paid for the exercise of each option will be made up of two
elements: (a) a price equal to 83 and 1/3 cents per MMBtu, and (b) interest
which will be calculated, as to the principal carried during the respective
periods identified below, on the basis of 8% per annum during the period from
May 1, 1998, to May 1, 1999, at 9% per annum, during the period from May 1,
1999, to May 1, 2000, and thereafter at the rate of 10% per annum. The cost for
the exercise of the option, if elected by CTOC, will be paid to EEX on or before
the 25/th/ of January following the option exercise.
3. Upon the exercise by CTOC of any option hereunder, the gas purchased
will be the first gas which would have been available under the Production
Payment. If in any year CTOC elects not to exercise its purchase option, then
the option on that portion of the Production Payment will terminate and will not
be applicable in future years. However, it is expressly provided that if the
option volume is limited under the terms of this Article, CTOC will nevertheless
have the right to exercise the option as to all remaining volumes on or before
January 3, 2002, subject only to the satisfaction by that date of the
"imbalance" obligations of EEX to Encogen. In the event such obligations are
not satisfied until after January 1, 2002, then within 30 days after the
satisfaction thereof EEX will notify CTOC and provide CTOC a period of 30 days
within which to elect to purchase any remaining volumes of the Production
Payment on the same basic terms as provided herein for the earlier options.
4. In addition to the calculation and obligation of CTOC to pay Ad Valorem
Tax pursuant to Article XII, if CTOC fails to purchase the portion of the
production payment equal to the volumes of gas delivered by EEX to Encogen above
the scheduled percentage volume ("Incremental Volume"), CTOC shall thereafter be
liable for the Ad Valorem Tax assessed against the Incremental Volume.
5. Should CTOC elect to exercise its purchase option, payment will be due
by wire transfer on or before the 25/th/ day of the month in which the purchase
option is exercised.
XIII. TERM
This Agreement shall become effective as of the Effective Date and shall
continue in effect until CTOC has delivered to EEX all of the gas required to be
delivered pursuant to the
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provisions hereof; provided, however, EEX shall not be entitled to take delivery
of gas hereunder before January 1, 2002.
XIV. FORCE MAJEURE
1. If either party, because of force majeure, is rendered wholly or partly
unable to perform any of its obligations under this agreement, that party shall
be excused from whatever performance is affected by the force majeure to the
extent so affected provided that: (i) the non-performing party, as soon as
possible and in any event not more than within two (2) weeks after the
occurrence of the force majeure, gives the other party written notice describing
the particulars of the occurrence, the date of its commencement, its estimated
duration, and its effect to date; provided, however, that verbal notice of any
such event is given to the performing party within three (3) business days of
the occurrence of such event; (ii) the suspension of performance is of no
greater scope and of no longer duration than is required by the force majeure;
and (iii) the non-performing party uses its best efforts to remedy its inability
to perform.
2. The term "force majeure," as used herein, means acts of God, including
sudden or unusually severe actions of the elements, such as floods, hurricanes,
windstorms, freezes, or tornadoes, strikes, lockouts or other industrial
disturbances, actions by federal, state, county, municipal or any other
government or quasi-government authority, entity or agency, sabotage, terrorist
action, fire, earthquake, exercise of eminent domain, explosion, radiation
contamination, toxic fumes, falling objects, train wrecks, war, or riots,
equipment malfunction(s), breakage or accident to machinery or lines of pipe,
the necessity for making repairs or alterations to machinery or lines of pipe,
freezing of xxxxx or lines of pipe, partial or entire failure of xxxxx, loss,
interruption, or curtailment of firm transportation of gas hereunder on Lone
Star Gas Company's (or its successor) pipeline system, but only to the extent
such events do not result from the intentional or grossly negligent acts or
failures of the non-performing party; and all other sudden interferences or
causes beyond the reasonable control of and not attributable to gross negligence
or intentional breach of this Agreement by the party relying thereon as
justification for not performing an obligation hereunder. Such term shall also
include the inability to acquire, or the delays in acquiring, at reasonable cost
and after the exercise of reasonable diligence, any servitudes, right-of-way
grants, permits or licenses required to be obtained to enable a party hereto to
fulfill its obligation hereunder. Notwithstanding anything to the contrary
contained herein, "force majeure" does not include any changes in market
conditions or governmental action that affect the cost or price of gas, or
market conditions which affect availability of gas, but shall include domestic
governmental action which directly limits Seller's ability to deliver said gas.
Further, except as provided above, the term "force majeure" does not include the
loss, interruption or curtailment of firm or interruptible transportation. Any
excuse of performance by reason of a force majeure shall not extend for a time
period greater than six (6) months except upon the written consent of the
performing party, which consent will not be unreasonably withheld. Provided,
that the performing party may, in its sole unfettered discretion, agree to
further extend the period of excuse of performance by reason of a force majeure.
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XV. ARBITRATION
Pursuant to the Federal Arbitration Act, the parties hereby agree that any
controversy, claim, or alleged breach, including but not limited to torts and
statutory claims, arising out of or related to this Agreement shall be settled
by binding arbitration administered by the American Arbitration Association
("AAA") in accordance with its Commercial Arbitration Rules. Demand for
arbitration may be made no later than the time that such action would be
permitted under the applicable Texas statute of limitation. Any disputes
regarding the timeliness of the demand for arbitration shall be decided by the
arbitrator(s). Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof in order to obtain compliance
therewith. Any case in which any claim, or combination of claims, exceeds
$500,000 shall be subject to the AAA's Large, Complex Case Procedures and
decided by the majority of a panel of three (3) neutral arbitrators. In
rendering the award, the arbitrator(s) shall determine the rights and
obligations of the parties according to the laws of the State of Texas. The
arbitration proceedings and hearing shall be conducted at the Houston Regional
Office of the AAA or at such other place as may be selected by mutual agreement.
No party nor the arbitrator(s) may disclose the existence, content, or results
of any arbitration hereunder with the prior written consent of all parties.
XVI. GOVERNMENT REGULATION
1. This Agreement and all provisions herein shall be subject to all
applicable and valid statutes, rules, orders and regulations of any federal,
state, or local governmental authority having jurisdiction over the parties,
their facilities, or gas supply, this Agreement or any provisions thereof.
2. Neither party shall be held in default for failure to perform
thereunder if such failure is due to compliance with such rules, regulations,
laws, orders or directives of any state, federal or other governmental
regulatory authority.
3. Should either of the parties by law or regulation be ordered or
required to do any act inconsistent with the provisions of this Agreement, this
Agreement shall be deemed modified to conform with such law or regulations.
Nothing in this Agreement shall prevent either party from contesting the
validity of any such law, order, rule or regulation, nor shall anything in this
Agreement be construed to require either party to waive its right to assert the
lack of jurisdiction over such regulatory body, governmental entity, or agency
over this Agreement or any party thereto.
4. Each of the parties understands that should any governmental agency or
body with jurisdiction over the transaction require approval for the sale and
purchase of gas (or transportation, or receipt of supply) under this Agreement,
then each of the parties shall make any necessary applications or filings and
shall submit any records or data to the regulatory body so that requisite
regulatory authorization may be granted.
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XVII. NOTICES
8. Any notices (including invoices), communications or documents that may
be required to be delivered to a party hereto shall be in writing and sent via
facsimile, delivered in person or sent certified mail, postage prepaid, return
receipt requested, addressed to the parties at the following respective
addresses stated for each:
EEX Corporation
0000 Xxxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention:
Telephone:
Facsimile:
Cross Timbers Oil company
000 Xxxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention:
Telephone:
Facsimile:
For purposes hereof, if facsimile or personal delivery is not possible, refusal
by any party hereto to accept correspondence sent by certified mail or two (2)
unsuccessful attempts by the U.S. Postal Service to serve any communication sent
by certified mail shall be deemed receipt of such correspondence. Any notice
delivered on Saturday, Sunday, a legal holiday or after 4:00 p.m. in the office
of recipient shall be deemed to have been delivered on the business day next
following the date of actual receipt. Either party may change its address for
notices by written notice to the other of them.
XVIII. MISCELLANEOUS
1. Reserve Report: Upon request EEX shall have the right at all reasonable
times to review the oil and gas reserves report with respect to the Opelika
Properties prepared by CTOC's independent petroleum consultant. EEX shall keep
such report strictly confidential.
2. Waiver of Breach: The waiver of either party of any breach of any of the
provisions of this Agreement shall not constitute a continuing waiver of other
breaches of the same or other provisions of this Agreement.
3. Captions: The captions or headings preceding the various parts of this
agreement are inserted and included solely for convenience and shall never be
considered or given any effect in
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construing this Agreement or any part hereof in connection with the intent,
duties, obligations or liabilities of the respective parties hereto.
4. Assignments: The provisions of this Agreement shall extend to the
parties hereto and to their successors and assigns, but neither party shall
assign any of its rights or obligations hereunder without the consent of the
other party. No assignment by a party shall relieve such party of its
obligations hereunder unless agreed to in writing by the other party. Nothing
in this paragraph shall in any way prevent Buyer from mortgaging or assigning
its interest in this Agreement as security.
5. Complete Agreement: Except for the Assignment and Conveyance, this
Agreement supersedes any and all previous agreements, written or oral, between
the parties relating to the subject matter hereof and the terms and conditions
hereof contain the entire and complete agreement of the parties hereto, and no
other agreements, covenants, conditions, warranties or representations, either
written or oral, made prior to the date hereof, regarding the subject matter
hereof shall be binding on the parties hereto. Any amendments to this Agreement
shall be in writing and executed by the parties hereto of their successors and
assigns.
6. South Texas Properties: In consideration of the agreements made
herein, EEX agrees that in the event it decides to sell or dispose of all or any
part of its South Texas Properties, then CTOC will be promptly notified and
given the opportunity to review the properties and related financial data in
order to participate in the bidding for any such proposed sale.
7. Governing Law: THE INTERPRETATION AND PERFORMANCE OF THIS GAS PURCHASE
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
EXCLUDING ANY CONFLICT OF LAWS RULES THAT WOULD REQUIRE THE APPLICATION OF THE
LAWS OF ANOTHER JURISDICTION.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement effective
as of the Effective Date; provided, however, EEX shall not be entitled to take
delivery of gas hereunder before January 1, 2002.
CROSS TIMBERS OIL COMPANY
By: /s/ XXXXXX X. XXXXXXXXXX, XX
---------------------------------
Name: Xxxxxx X. Xxxxxxxxxx, XX
Title: Senior Vice President - Land
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EEX CORPORATION
By: /s/ XXXXXX X. XXXXX
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: Attorney-In-Fact
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