EXHIBIT 10.16
GAS SALES AGREEMENT
Contract #GS 5132
BETWEEN
TYSON FOODS, INC.
AND
XXXXXXX GAS SERVICES, INC.
Rio Grande Valley Region
Harlingen, Texas
GAS SALES AGREEMENT
This Agreement, made and entered into this 1st day of June, 1995, by and
between TYSON FOODS, INC., a Delaware corporation, hereinafter called "Buyer",
and XXXXXXX GAS SERVICES, INC., a Delaware corporation, hereinafter called
"Seller".
WITNESSETH:
WHEREAS, Seller is a reseller as defined in regulations implementing the
Natural Gas Policy Act of 1978 (the "Act"); and
WHEREAS, Seller has a supply of gas available for delivery to Southern
Union Gas Company, which currently serves the Rio Grande Valley area; and
WHEREAS, any reference to Seller herein shall mean either Xxxxxxx Gas
Services, Inc., or its designated third-party representative; and
WHEREAS, Buyer has facilities located in or near Harlingen, Texas and
desires to purchase gas to fuel these facilities; and
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and intending to be legally bound, the parties hereto hereby agree as follows:
ARTICLE I
QUANTITY
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1.1 Subject to the other provisions of this Agreement, Seller agrees to
sell and deliver to Buyer, and Buyer agrees to purchase and receive from Seller
all of Buyer's gas requirements for Buyer's facilities in Cameron County, Texas
which receive transportation service from Southern Union Gas Company up to
99,100 Mcf per year with maximum daily rates not exceeding 500 Mcf per day. Gas
purchased under this Agreement shall be used in Buyer's facilities and none of
this gas shall be resold to a third party.
1.2 Seller shall not be obligated to make deliveries beyond the term of
this Agreement, or in any manner or under any condition other than specifically
provided herein.
1.3 Seller's obligations under this Agreement are contingent on Seller's
completion of all necessary transportation agreements and gas supply agreements
with third parties and continuation of such arrangements throughout the term of
this Agreement. If Seller has not completed all necessary agreements to begin
service to Buyer within sixty (60) days after full execution of this Agreement,
Buyer may terminate this Agreement with five (5) days notice to Seller. In the
event that any of such other contracts fail during the term hereof, Seller will
have the right to terminate this agreement.
1.4 The atmospheric pressure and pressure base conditions for the purpose
of billing and measurement of the volumes of gas transported hereunder are
specified in Paragraphs 2.2 and 2.3 of Appendix A to this Agreement,
respectively.
ARTICLE II
POINT(S) OF DELIVERY
--------------------
2.1 The gas purchased and sold hereunder shall be delivered:
(i) At the points listed on Exhibit "A" attached and made a part
hereto; and
(ii) At any other points or points mutually agreed to in writing.
2.2 Title to the gas sold and delivered hereunder shall pass to Buyer at
the Point(s) of Delivery. As between the parties hereto, Seller shall be in
control and possession of the gas and responsible for any loss and/or any damage
or injury occurring until same shall have been delivered to Buyer or third
parties for the account of Buyer at the Point(s) of Delivery, after which
delivery Buyer shall be deemed to be in exclusive control and possession thereof
and responsible for any loss and/or injury or damage caused thereby.
ARTICLE III
PRICE
-----
3.1 Buyer shall pay Seller for gas delivered at the following rates:
(a) From the date of first delivery hereunder through May 31, 1997,
Buyer shall pay a monthly indexed price equivalent to the price
published by Inside F.E.R.C.'s Gas Market Report's "Delivered Spot Gas
-------------------------------------
Prices" for the month of delivery under the heading "Houston Ship
Channel\Beaumont, Texas, Index (large packages only)", plus $.75 per
mmbtu.
Should Inside F.E.R.C. discontinue publication of the "Houston
---------------
Ship Channel" index, or should such index be unavailable, an alternate
index, mutually agreed upon by Buyer and Seller, shall be used for
calculating the price hereunder.
(b) Should this Agreement be in effect on June 1, 1997, then effective
upon that date, and thereafter through the term of this Agreement, the
price may be redetermined, and mutually agreed upon in accordance with
the following procedure:
-2-
(i) On or before ten (10) days prior to any requested date of
redetermination, Seller may provide Buyer with written
notification of such redetermined price.
(ii) On or before five (5) days prior to any effective date of
redetermination, Buyer may furnish Seller written notification to
accept or reject Seller's proposal. If no notice is received by
Seller, then such proposed redetermined price shall become
effective. If Buyer rejects the proposed redetermination, the
parties shall attempt to negotiate an acceptable price within two
(2) days of Buyer's notice of rejection. If agreement is not
reached, Seller may continue the previous contract price, or
terminate this Agreement upon two (2) days notice to Buyer.
(c) In the event Seller does not submit a notice of redetermination
to Buyer, pricing in effect at the time shall continue unchanged.
3.2 Buyer agrees that the Btu content per Mcf of the gas volumes delivered
by Southern Union Gas Company to Buyer's end-use facilities, pursuant to a
transportation agreement, having Buyer as Shipper and Southern Union Gas Company
as Transporter, shall be assumed to be the same as the Btu content per Mcf of
the gas volumes deliveries by Seller at the Point(s) of Delivery, when
calculated at the same pressure.
ARTICLE IV
INTERRUPTION OF DELIVERIES
--------------------------
4.1 Notwithstanding any other provision to the contrary, Seller shall have
the unconditional right at Seller's discretion, without giving notice, at any
and all times during the term hereof, to immediately decrease, suspend or
discontinue in whole or in part the delivery of gas quantities under this
Agreement for any reason, including partial or complete failure of gas supplies
or partial or complete curtailment of the necessary third-party transportation
services, and Seller shall not be liable, in any respect, to Buyer by reason of
any exercise of said right.
ARTICLE V
FIRST RIGHT OF SUPPLY
---------------------
5.1 At the end of the primary term, any extension thereof, or at any time
at which Buyer may terminate this agreement, if Buyer receives a bona fide offer
from any third party seller to supply gas for such extended period or longer
which Buyer is willing to accept, Seller or Seller's affiliate shall have the
right and option, but not the obligation, to either amend this Agreement or to
enter into a new gas sales agreement with Buyer to supply gas under terms
substantially similar to those contained in said third-party offer.
-3-
Should Seller or Seller's affiliate not exercise its option, this Agreement
shall terminate at the end of the primary term or extension thereof.
ARTICLE VI
TERM
----
6.1 Subject to the terms hereof, this Agreement shall be effective June 1,
1995 and shall remain in full force and effect for a primary term extending
through May 31, 1997. This Agreement shall extend on a month-to-month basis
unless notice of termination is given thirty (30) days prior to the end of the
primary term or any extension thereof by either Buyer or Seller.
ARTICLE VII
NOTICES
-------
7.1 Any notice, request, demand, statement, or payment provided for in
this Agreement shall be in writing and deemed given when actually delivered or
when deposited in the United States mail, postage prepaid, directed to the post
office address of the parties:
BUYER: SELLER:
----- ------
All Notices All Notices
----------- -----------
Tyson Foods, Inc. Xxxxxxx Gas Services, Inc.
X.X. Xxx 0000 000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000 Xxxxxx, Xxxxx 00000
ATTN: Xxx Xxxx C.P.351 ATTN: Gas Supply Department
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
Invoices: Payments:
-------- --------
Tyson Foods, Inc. Xxxxxxx Gas Services, Inc.
X.X. Xxx 0000 000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000 Xxxxxx, Xxxxx 00000
ATTN: Accounts Payable ATTN: Gas Accounting
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Telecopy: () Telecopy: (000) 000-0000
-4-
or at such other address as either party may from time to time designate as the
address for such purposes by registered or certified letter addressed to the
other party.
7.2 Payments to Seller for services rendered hereunder shall be made in
accordance with Article V of the General Terms and Conditions attached as
Appendix A hereto, are incorporated by this reference and made a part of this
Agreement.
7.3 The General Terms and Conditions attached as Appendix A hereto, are
incorporated by this reference and made a part of this Agreement.
ARTICLE VIII
CONFIDENTIALITY
---------------
8.1 The terms of this contract, including but not limited to the price
paid for the gas, and all other material items of this contract shall be kept
confidential by the parties hereto, except to the extent that any information
must be disclosed to a third party as required by law or for the purpose of
effectuating the purchase and third party transportation of the subject gas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year hereinabove written.
ATTEST: BUYER:
TYSON FOODS, INC.
/s/ By: /s/
--------------------------- Title: Executive VP, Finance
ATTEST: SELLER:
XXXXXXX GAS SERVICES, INC.
/s/ By: /s/
--------------------------- Title: Executive Vice President
-5-
EXHIBIT "A"
To the Gas Sales Agreement between XXXXXXX GAS SERVICES, INC. (Seller)
TYSON FOODS, INC., (Buyer), dated _________________________.
Point(s) of Delivery
--------------------
1. All existing delivery points under the Gas Sales Contract by and between
Reata Industrial Gas Company (Reata # 8000-88) and Southern Union Gas
Company dated January 1, 1986, as amended.
APPENDIX A
GENERAL TERMS AND CONDITIONS
----------------------------
TABLE OF CONTENTS
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Page Number
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ARTICLE I DEFINITIONS 1
ARTICLE II MEASUREMENT AND TESTS 2
ARTICLE III DELIVERY PRESSURE 4
ARTICLE IV QUALITY 4
ARTICLE V PAYMENTS 4
ARTICLE VI TAXES 5
ARTICLE VII WARRANTY OF TITLE 5
ARTICLE VIII FORCE MAJEURE 5
ARTICLE IX GOVERNMENTAL RULES, REGULATIONS
AND AUTHORIZATIONS 6
ARTICLE X ASSIGNMENT 6
ARTICLE XI MISCELLANEOUS 7
APPENDIX A
GENERAL TERMS AND CONDITIONS
----------------------------
Attached to and made a part of that certain Gas Sales Agreement dated
June 1, 1995, between TYSON FOODS, INC., (Buyer) and XXXXXXX GAS SERVICES, INC.,
(Seller).
ARTICLE I
DEFINITIONS
-----------
Except in those certain instances where the context states another meaning,
the following terms when used in this Agreement shall mean:
1.1 Natural Gas and Gas: Natural gas produced from gas xxxxx and gas
-------------------
produced in association with oil (casinghead gas) and/or the residue gas
resulting from processing both casinghead gas and gas-well gas.
1.2 Day: The period of twenty-four (24) consecutive hours beginning at
---
8:00 am. Central Time on any calendar day and ending at 8:00 a.m. Central Time
on the calendar day immediately following.
1.3 Month: A period beginning at 8:00 am. Central Time on the first day
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of a calendar month and ending at 8:00 a.m. Central Time on the first day of the
calendar month immediately following, except that the first month shall begin on
the date of initial deliveries of natural gas hereunder and shall end at 8:00
am. Central Time on the first day of the calendar month immediately following.
1.4 Mcf: One thousand (1000) cubic feet.
---
1.5 Btu: British thermal unit. The term MMBtu shall mean one million
---
(1,000,000) Btu.
1.6 Heating Value: The gross number of British thermal units (Btu's)
-------------
which would be contained in the volume of one (1) cubic foot of gas at a
temperature of sixty degrees (60 degrees) Fahrenheit, when saturated with water
vapor and under a pressure of fourteen and sixty-five hundredths (14.65) pounds
per square inch absolute and adjusted to reflect the actual water vapor content
of the gas delivered; however, if the water vapor content is seven (7) pounds
per million cubic feet or less, the gas shall be deemed dry.
1.7 The term "psig" shall mean pounds per square inch gauge.
1.8 The term "psia" shall mean pounds per square inch absolute.
1.9 The term "Equivalent Quantity" shall mean the volume in Mcfs of gas
delivered by Seller for Buyer at the Point(s) of Delivery hereunder during a
given period of time.
ARTICLE II
MEASUREMENT AND TESTS
---------------------
The measurement and tests for quality of gas delivered hereunder shall be
governed by the following:
2.1 The volume shall be measured by meters installed, maintained and
operated by or on behalf of Seller. Computations shall be made in accordance
with industry practice.
2.2 For the purpose of measurement, calculation and meter calibration, the
average absolute atmospheric (Barometric) pressure shall be assumed to be
fourteen and four tenths (14.40) psia at the Point(s) of Delivery irrespective
of variations in natural atmospheric pressure from time to time.
2.3 The unit of volume for purposes of measurement shall be one (1) cubic
foot of gas at a temperature base of sixty degrees (60 degrees) Fahrenheit and
at a pressure base of fourteen and sixty-five hundredths (14.65) psia.
2.4 The temperature shall be adjusted to standard conditions and
corrections shall be made in accordance with industry practice.
2.5 Specific gravity shall be determined with accuracy to the nearest one-
thousandth by taking samples of the gas at the point of measurement at such
times as may be determined to be necessary in practice by the use of an
instrument commonly used and accepted in the industry.
2.6 Tests for carbon dioxide, sulfur, and hydrogen sulfide content of the
gas delivered hereunder shall be made by approved standard methods from time to
time as requested by any party hereto, but not more often than once each three
(3) months.
2.7 The total Heating Value of the gas shall be determined by taking
samples of the gas the Point(s) of Delivery at such times as may be determined
by Seller or its designee and by having the British thermal unit content per
cubic foot determined by calorimeter or by other means acceptable in the
industry at Seller's expense. Buyer shall have the right at such time or times
as it may desire to determine the Heating Value of the gas using the Xxxxxx
Principle of calorimetry or its equal. In the event of any material variance
between such test by Buyer and the last or next succeeding test made by Seller,
a joint test will be run employing the method utilized by Seller, and the result
thereof will be controlling, effective the first day of the calendar month
preceding such joint test.
-2-
2.8 All measuring equipment, housing devices, and materials shall be of
standard manufacture and shall, with all related equipment, appliances and
buildings, be installed, maintained, and furnished by Seller or its designee at
Seller's expense. Buyer may install and operate check-measuring equipment,
which shall not interfere with the use of Seller's equipment. All testing
equipment shall be of standard manufacture and shall be maintained, operated and
furnished by Seller or its designee at Seller's expense.
2.9 The accuracy of Seller's measuring and testing equipment shall be
verified by Seller at necessary intervals to insure accurate measurement. Tests
for quality of the gas may be made at the time of equipment testing, or at other
times, as deemed necessary by Seller. Notice of the time and nature of each
test shall be given Buyer sufficiently in advance to permit Buyer to have a
representative present. Measuring and testing equipment shall be tested by
reasonable means and methods in the presence of representatives of both Seller
and Buyer, if present. If Buyer fails to have a representative present after
proper notice, the results of such tests shall be provided to Buyer and shall
nevertheless be considered accurate until the next test. All tests shall be
made at Seller's expense, except that Buyer shall bear the expense of tests made
at its request, if the inaccuracy found is two percent (2%) or less.
2.10 If at any time any of the measuring or testing equipment is found to
be out of service, or registering inaccurately in any percentage, it shall be
adjusted at once to read accurately within the limits prescribed by the
manufacturer. If such equipment is out of service, or inaccurate by an amount
exceeding two percent (2%) at a reading corresponding to the average rate of
flow for the period since the last preceding test, the previous reading of such
equipment shall be disregarded for any period definitely known or agreed upon,
or if not so known or agreed upon, for a period of sixteen (16) days or one-half
(1/2) of the elapsed time since the last test, whichever is shorter. The volume
of gas delivered during such period shall be estimated by:
(a) Using the data recorded by any check-measuring equipment if
installed and accurately registering; or
(b) If not installed or registering accurately, by correcting the
error if the percentage of error is ascertainable by calibration, test or
mathematical calculation; or
(c) If neither such method is feasible, by estimating the quantity, or
quality, delivered based upon deliveries under similar conditions during a
period when the equipment was registering accurately.
No corrections shall be made for recorded inaccuracies of two
percent (2%) or less.
2.11 Buyer and Seller shall have the right to inspect equipment installed
or furnished by the other, and the charts and other measurement or testing data
of the other,
-3-
at all times during business hours, but the reading, calibration
and adjustment of such equipment and changing of charts shall be done only by
the party owning such equipment. Each party shall preserve all original test
data, charts and other similar records in party's possession for a period of at
least two (2) years from the date such records were generated.
ARTICLE III
DELIVERY PRESSURE
-----------------
3.1 The gas sold and purchased hereunder shall be delivered to Buyer at a
pressure sufficient to effect delivery into the facilities of Buyer or Buyer's
designee at the Point(s) of Delivery set forth herein against the pressure
prevailing therein from time to time. Neither Buyer nor Seller shall have an
obligation to compress or to continue compression of the gas delivered
hereunder.
ARTICLE IV
QUALITY
-------
4.1 The gas delivered by Seller hereunder shall be commercially free of
gum, gum-forming constituents, gasoline and other solid and/or liquid matter
that may become separated from the gas during transportation thereof, and shall
conform to the following specifications:
(a) Dust, rust & other solids None
(b) Carbon Dioxide and Nitrogen Not more than 3.0% by volume
(c) Oxygen Not more than 1.0% by volume
(d) Hydrogen Sulfide Not more than 1/4 grain per 100 cubic feet
(e) Total Sulfur Not more than 5 grains per 100 cubic feet
(f) Free Water None
(g) Heating Value Not less than 1000 Btu per cubic foot.
(h) Temperature Not more than 120 degrees F or less than 40 degrees F.
(i) Water Vapor Not more than 7# per million cubic feet
4.2 Buyer, at its option, may refuse to accept delivery of any gas not
meeting the quality specifications set out above; thereafter, Seller shall have
the right to conform or cause the gas to be conformed to the above
specifications. If Seller does not elect to conform the gas to said
specifications, then Buyer at its sole option may accept or reject any such gas.
ARTICLE V
PAYMENTS
--------
5.1 After delivery of gas has commenced, Seller shall, on or before the
twentieth (20th) day of each month, render to Buyer a statement showing the
quantity of gas delivered by Seller to Buyer at the Delivery Point(s) and the
amount owed Seller.
-4-
Buyer shall pay Seller the amount so billed, or Buyer shall remit payment to
Seller by wire transfer to Texas Commerce Bank, Austin, Texas, ABA #000000000
for credit to Xxxxxxx Gas Services, Inc., Account #00000000 or as may be
designated in writing from time-to-time, within ten (10) days after the receipt
of the statement.
5.2 In the event Buyer shall fail to pay any amount due Seller when the
same is due, then interest shall accrue each day at a per annum rate equal to
the prime rate as published by Texas Commerce Bank Austin, or its successor,
plus two percent (2%) from the date when such amount is due Seller, and in
addition to any other remedy it may have hereunder, Seller may suspend further
delivery of gas until such amount is paid. In the event such rate is deemed
usurious under Texas law, the default rate of interest will be the highest rate
permitted by Texas law.
5.3 In the case of disputed accounts, Buyer shall pay the disputed xxxx
under protest. Seller shall then promptly make a complete investigation of the
matter and, if the xxxx is correct, shall explain all points in question. If
the xxxx is in error, Seller shall promptly submit a corrected xxxx to Buyer,
together with any necessary refund.
5.4 At any time during the term of this Agreement or any extension
thereof, Seller may require Buyer to provide such deposits, letters of credit or
other security as Seller may reasonably require to ensure Buyer's payments for
gas purchased hereunder.
5.5 Each party hereto shall have the right, at any and all reasonable
times to examine the books and records of the other, to the extent necessary to
verify the accuracy of any statement, charge, computation or demand made under
this Agreement.
ARTICLE VI
TAXES
-----
6.1 Seller shall pay or cause to be paid the taxes lawfully levied on
Seller, or otherwise to be borne contractually by Seller, and applicable to the
gas delivered hereunder prior to its delivery to Buyer. Buyer shall pay all
taxes lawfully levied on Buyer applicable to such gas after delivery to Buyer or
Buyer's designee.
ARTICLE VII
WARRANTY OF TITLE
-----------------
7.1 Seller warrants title to all gas delivered by it, that it has the
right to sell the same, and that such gas is free from liens and adverse claims
of every kind. Seller shall pay or cause to be paid all sums due on the
gathering or handling of the gas delivered by Seller. Seller shall indemnify
and save Buyer harmless from and against all taxes, payments, liens or other
charges applicable to said gas arising prior to its delivery to Buyer or Buyer's
designee.
-5-
ARTICLE VIII
FORCE MAJEURE
-------------
8.1 Except for Buyer's obligations to make payments hereunder, neither
party hereto shall be liable for any failure to perform the terms of the
Agreement when such failure is due to force majeure as hereinafter defined. The
term "force majeure" as employed in this Agreement shall mean acts of God,
strikes, lockouts, or industrial disputes or disturbances, civil disturbances,
arrests and restraint from rulers or people, interruptions or terminations by or
as a result of government or court action or orders, or present and future valid
orders of any regulatory body having jurisdiction, acts of the public enemy,
wars, riots, blockades, insurrections, inability to secure or delay in securing
labor or materials by reason of allocations promulgated by authorized
governmental agencies, epidemics, landslides, lightning, earthquakes, fire,
storm, floods, washouts, explosions, breakage or freezing of pipelines,
inability to obtain easement or rights-of-way, the making of repairs or
alterations to lines of pipe or plants, partial or entire failure of gas supply,
partial or complete interruption of necessary third-party transportation
services, failure or inability or any other cause, whether of the kind herein
enumerated or otherwise not reasonably within the control of the party claiming
force majeure. The force majeure shall, so far as possible, be remedied with
all reasonable dispatch. If Seller claims force majeure that affects one or
more Delivery Point(s), nothing herein shall require Seller to make deliveries
or to take gas at an alternative Delivery Point. The settlement of strikes or
lockouts or industrial disputes or disturbances shall be entirely within the
discretion of the party directly involved therein, and the above requirement
that any "force majeure" shall be remedied with all reasonable dispatch shall
not require the settlement of strikes, lockouts, or industrial disputes or
disturbances by acceding to the demands of any opposing party therein when such
course is inadvisable in the discretion of the party directly involved therein.
A decision to close a facility due to business or economic conditions shall not
fall within the meaning of force majeure.
ARTICLE IX
GOVERNMENTAL RULES, REGULATIONS AND AUTHORIZATION
-------------------------------------------------
9.1 This Agreement shall be subject to all valid applicable state, local
and federal laws, orders, directives, rules and regulations of any governmental
body, agency or official having jurisdiction over this Agreement and the sale
and purchase of gas hereunder.
9.2 If at any time during the term hereof, any governmental authority
having jurisdiction over this Agreement and the sale and purchase of gas
hereunder shall take any action as to Seller or Buyer or any transporter whereby
the sale, transportation, other handling (compression or treating), delivery,
receipt and use of gas as contemplated hereunder shall be proscribed or
subjected to terms, conditions, regulations, restraints, or price or rate
controls, ceilings or limits that in the sole judgment of Seller or Buyer are
unduly or overly burdensome to that party, such party may at any time thereafter
cancel
-6-
and terminate this Agreement without further liability hereunder, except as to
payments due at the time of such termination.
9.3 Buyer and Seller agree to file or have filed in a timely manner all
applications, affidavits, statements and notices required for sale,
transportation and delivery necessary of the gas hereunder.
ARTICLE X
ASSIGNMENT
----------
10.1 This Agreement shall extend to and be binding upon the parties, their
successors and assigns, but no transfer of whatsoever kind, wholly or partially,
shall be made without the prior written consent of the non-transferring party
other than the assignment by Seller of its obligations hereunder to an
affiliate. Nothing herein contained shall in any way prevent either party
hereto from pledging or mortgaging all or any part of such party's property as
security under any mortgage, deed of trust, or other similar lien or from
pledging this Agreement or any benefits accruing hereunder to the party making
the pledge, without the assumption of the obligations hereunder by the
mortgagee, pledgee, or other grantee under such an instrument.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 No waiver by either Seller or Buyer of any default of the other under
this Agreement shall operate as a waiver of any future default, whether of like
or different character or nature.
11.2 This Agreement may be amended only by a written instrument executed
by the parties hereto and expressly stating that it is an amendment to this
Agreement.
11.3 The headings used throughout this Agreement are inserted for
reference purposes only, and are not to be construed or taken into account in
interpreting the terms and provisions of any Article, nor to be deemed in any
way to qualify, modify or explain the effects of any such term or provision.
11.4 As to all matters of performance, default, breach, enforcement,
construction and interpretation, this Agreement and the rights and duties of the
parties hereunder shall be governed by the laws of the State of Texas.
-7-
November 11, 1996
Via FedEx - Priority
--------------------
Xx. Xxxxxx X. Xxxxxxx
Manager of Gas Services
XXXXXXX GAS SERVICES, INC.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
RE: SALE OF BEEF DIVISION OF TYSON FOODS, INC. ('Tyson")
Dear Xx. Xxxxxxx:
On October 17, 1996 Tyson entered into a definitive agreement (the
"Purchase Agreement') pursuant to which it agreed to sell its beef further
processing facilities and operations (the "Business") to Gorges/Quik-to-Fix
Foods, Inc. ("Buyer"), an entity formed by CGW Southeast Partners III, L.P.
("CGW") for the purpose of acquiring the Business. Under the terms of the
Purchase Agreement, the sale of the Business is expected to be consummated (the
"Closing") on November 22, 1996. Until such date, Tyson will own and operate
the Business. After the Closing, the Business will continue to be operated with
the same facilities employed by Tyson in its operation of the Business and will
be managed primarily by the people who now manage the Business for Tyson.
Pursuant to the Purchase Agreement, Tyson has agreed to assign all of its
rights, and Buyer has agreed to assume all of Tyson's obligations arising on or
after the Closing, under that certain Gas Sales Agreement the "Contract") dated
June 1, 1995 by and between Tyson and Xxxxxxx Gas Services, Inc. ("Xxxxxxx").
Pursuant to Article X, Section 10.1 of the General Terms and Conditions of the
Contract, Xxxxxxx'x consent is required in order for Tyson to assign the
Contract to Buyer.
On behalf of Tyson and Buyer, I am writing to request Xxxxxxx'x consent to
Tyson's assignment of the Contract to Buyer. Please sign below where indicated
to confirm Xxxxxxx'x consent to the assignment and return a copy of this letter
to my attention via fax (000-000-0000) and the original via the enclosed FedEx
envelope. By consenting to this assignment, Xxxxxxx acknowledges and affirms
its duties and obligations under the Contract as if the Contract were entered
into between Xxxxxxx and Buyer. This consent does not constitute a consent to
further assignment of the Contract and, except as set forth herein, the Contract
remains in full force and effect, enforceable against Xxxxxxx and Buyer.
Xxxxxxx Gas Services, Inc.
November 11, 1996
Page 2
Your assistance in this matter is greatly appreciated. If you have any
questions, please contact Xxxxxxxx Xxxxx (501-290-7330) or Read Xxxxxx (501-
290-7023) in Tyson's legal department, or Xxx X'Xxxxxxx with Buyer (404-816-
3255).
TYSON FOODS, INC.
/s/ Xxxxxxxx X. Xxxxx
Xxxxxxxx X. Xxxxx
Corporate Counsel
The undersigned hereby consents to the assignment of the Contract (as
defined hereinabove) from Tyson Foods, Inc. to Gorges/Quik-To-Fix Foods, Inc.
XXXXXXX GAS SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Executive Vice President
cc: Xxx Xxxx
