SPECIFIC TERMS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST TO THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED TERMS HAVE BEEN MARKED AT THE...
EXHIBIT
10.1
SPECIFIC
TERMS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST TO THE SECURITIES
AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN SEPARATELY FILED
WITH
THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED TERMS HAVE BEEN MARKED
AT
THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).
CARBON
DIOXIDE SALE & PURCHASE AGREEMENT
Effective
February 1, 2008
BETWEEN
EXXONMOBIL
GAS & POWER MARKETING COMPANY
(a
division of Exxon Mobil Corporation)
AND
CARBON
DIOXIDE SALE & PURCHASE AGREEMENT
|
ARTICLE
1 - DEFINITIONS
|
3
|
|
|
ARTICLE
2 - COMMITMENTS BY SELLER AND BUYER
|
7
|
|
|
ARTICLE
3 - NOMINATIONS, EARLY VOLUMES AND EXCESS VOLUMES
|
9
|
|
|
ARTICLE
4 - PRICE
|
10
|
|
|
ARTICLE
5 - BILLING AND PAYMENT
|
13
|
|
|
ARTICLE
6 - TERM
|
17
|
|
|
ARTICLE
7 - ROYALTY
|
17
|
|
|
ARTICLE
8 - TAXES
|
18
|
|
|
ARTICLE
9 - DELIVERY POINT, TITLE, RATE AND PRESSURE
|
19
|
|
|
ARTICLE
10 - MEASUREMENT AND COMPUTATION OF VOLUMES
|
20
|
|
|
ARTICLE
11 - MISCELLANEOUS
|
21
|
|
|
EXHIBIT
A - DAILY CONTRACT QUANTITY
|
34
|
|
|
EXHIBIT
B - EXPERT PROCEDURES
|
35
|
2
CARBON
DIOXIDE SALE AND PUCHASE AGREEMENT
THIS
CARBON DIOXIDE SALE AND PURCHASE AGREEMENT ("Agreement") is made and entered
into effective as of the 1st day of February, 2008, ("Effective Date") by and
between ExxonMobil Gas & Power Marketing Company (a division of Exxon Mobil
Corporation) ("Seller"), and Rancher Energy Corp., as operator of the Big Muddy,
South Glenrock, and Xxxx Creek South fields located in Converse County, Wyoming
("Buyer").
WHEREAS,
Buyer desires to purchase Carbon Dioxide from Seller for use in tertiary oil
recovery projects ("Project") including, but not limited to the Big Muddy,
South
Glenrock, and Xxxx Creek South fields; and
WHEREAS,
Seller is undertaking a CO2 Expansion Project and anticipates it will have
Carbon Dioxide available for sale after the Start-Up Date; and
WHEREAS,
Seller desires to sell Carbon Dioxide to Buyer from the XxXxxxx field in
Wyoming;
NOW
THEREFORE, for and in consideration of the premises and the mutual benefits
and
covenants herein contained, Buyer and Seller agree as follows:
ARTICLE
1 - DEFINITIONS
Defined
Words and Terms:
As used
in this Agreement, the following words and terms shall have the meanings
indicated:
| (a) |
"Affiliate"
with respect to a Party means any entity that directly or indirectly
(through one or more entities) controls, is controlled by, or is
under
common control with such Party. For the purposes of this definition
and
the definition of “Controlling Party” set forth below in this Article 1,
the term “control” means the right to cast more than 50% of the votes
exercisable at an annual general meeting (or its equivalent) of the
entity
concerned or, if there are no such rights, ownership of more than
50% of
the equity share capital of or other ownership interests in such
entity,
or the right to direct the policies or operations of such
entity.
|
|
(b)
|
"Annual
Contract Quantity" or "ACQ" means the total sum of all DCQ for a
Contract
Year.
|
| (c) |
"BCF”
means one billion Standard Cubic
Feet.
|
| (d) |
"Business
Day” means a day when banks are open for business in the United
States.
|
| (e) |
"Buyer's
Facilities" means the pipelines transporting the CO2 from the
Delivery
Point to the Buyer’s fields, the CO2 distribution and injection facilities
in the Buyer’s fields, Buyer’s CO2 compressors, and any metering related
to the aforementioned Buyer’s pipelines, injection and distribution
facilities, or CO2
compressors.
|
3
| (f) |
"Contract
Price" means the amount per MCF payable by Buyer to Seller for Carbon
Dioxide sold under this Agreement as set forth in Article 4, which
price
is exclusive of any royalty or tax reimbursement, if any, paid by
Buyer
pursuant to Articles 7 and 8.
|
| (g) |
"Contract
Year" means each successive twelve (12) Month period during the Term,
commencing on the first Day of the Month following the Start-Up Date
of
this Agreement.
|
| (h) |
"Carbon
Dioxide" or "CO2" means a substance primarily composed of molecules
containing one atom of carbon and two atoms of oxygen and secondarily
of
the other substances identified in the definition of Quality
Specifications.
|
| (i) |
"CO2
Expansion Project" means
Seller's project at its Xxxxx Creek plant whereby Seller will
install or
cause to be installed approximately 23,000 horsepower of additional
compression facilities, increasing the Carbon Dioxide sales capacity
from
the Xxxxx Creek plant.
|
| (j) |
"Controlling
Party" means
with
respect to a Party, any parent company or corporation of such Party
or any
of the companies constituting such Party which directly or indirectly
owns
more than fifty percent (50%) of the shares carrying voting rights
of such
Party.
|
| (k) |
"Daily
Contract Quantity" or "DCQ" means for each Day during the Term, the
volume
of Carbon Dioxide as set forth on Exhibit A, attached hereto and
made a
part hereof.
|
| (l) |
"Day"
means a period beginning at 7:00 a.m. Mountain Standard Time on a
calendar
day and ending at 7:00 a.m. Mountain Standard Time on the next succeeding
calendar day.
|
| (m) |
"Deficiency
Price" means the simple average Contract Price in effect as of the
first
(1st) Day of each Month during the relevant Contract
Year.
|
| (n) |
"Deficiency
Volumes" has the meaning ascribed to it in Article
2.2(b).
|
| (o) |
"Delivery
Point" has the meaning ascribed to it in Article
9.1.
|
| (p) |
"Early
Volumes" has the meaning ascribed to it in Article
3.2.
|
| (q) |
"Effective
Date" means the date upon which this Agreement came into force, which
is
the date specified as such in the preamble of this
Agreement.
|
| (r) |
"Excess
Volumes" means volume in excess of Buyer's nominated volume, as described
in Article 3.3.
|
| (s) |
"Expert"
shall have the meaning ascribed to it in Exhibit B, attached hereto
and
made a part hereof.
|
| (t) |
"Extension
Period" has the meaning ascribed to it in Article
2.2(f).
|
| (u) |
"ExxonMobil
CO2 Pipeline" means the pipeline constructed for the transportation
of
Carbon Dioxide and extending from Xxxxx Creek plant to various points
of
delivery including the Delivery
Point.
|
4
| (v) |
"Greenhouse
Gas Reduction Rights" or "GHGRR" has the meaning ascribed to it in
Article
11.22.
|
| (w) |
"Interconnect
Agreement" means that agreement between Buyer and Seller establishing
the
details, terms and conditions associated with the design, installation
and
construction of an alternate delivery
point.
|
| (x) |
"Interest
Rate" means thirty (30) day London Interbank Offered Rate, or LIBOR,
as
published in the Wall
Street Journal
"Money Rates" table on the first date of publication for the calendar
month in which the payment is due.
|
| (y) |
"Key
Terms" shall mean Daily Contract Quantity, Take-or-Pay Quantity,
Quality
Specifications, Greenhouse Gas Reduction Rights and Performance
Assurance.
|
| (z) |
"Make-Up
Volumes" has the meaning ascribed to it in Article
2.2(c).
|
| (aa) |
"MCF"
means one thousand Standard Cubic
Feet.
|
| (ab) |
"MMCF"
means one million Standard Cubic
Feet.
|
| (ac) |
"Month"
means a period beginning at 7:00 A.M. Mountain Standard Time on the
first
day of a calendar month and ending at 7:00 A.M. Mountain Standard
Time on
the first day of the next succeeding calendar
month.
|
| (ad) |
"Oil
Price Factor" has the meaning ascribed to it in Article 4, expressed
in
dollars per barrel.
|
| (ae) |
"Parties" means
the entities described in the preamble to this Agreement, collectively,
and "Party" means any of them, individually (and in each case their
successors and permitted assigns).
|
| (af) |
"Performance
Assurance" means any
assurance of performance of Buyer's obligations under this Agreement
by a
Performance Assurance Provider in favor of the Seller. Each Performance
Assurance shall be acceptable to Seller, provided in a form (including
but
not limited to cash or a letter of credit) as determined by Seller
from
time to time, and each in an amount as prescribed herein this
Agreement.
|
| (ag) |
"Performance
Assurance Provider" means a person or entity providing Performance
Assurance in respect of a Party's obligations under this Agreement
in
favor of the requiring
Party.
|
| (ah) |
"Primary
Term" has
the meaning ascribed to it in
Article 6.1.
|
| (ai) |
"Project"
has the meaning ascribed to it in the first "Whereas" clause,
above.
|
| (aj) |
"Psia"
means pounds per square inch
absolute.
|
| (ak) |
"Psig"
means pounds per square inch gauge.
|
5
| (al) |
"Quality
Specifications" means the following specifications for the Carbon
Dioxide
delivered hereunder:
|
| (i) |
Water:
Product shall contain no free water and shall not contain more than
thirty
(30) pounds of water per 1 MMCF in the vapor phase at 14.73 Psia
and 60
degrees Fahrenheit (60º F).
|
| (ii) |
Total
Sulfur:
Containing not more than thirty-five (35) grains of sulfur per one
hundred
(100) Standard Cubic Feet of Carbon
Dioxide.
|
| (iii) |
Purity:
Comprised of at least ninety-five percent (95%) by volume of Carbon
Dioxide.
|
| (iv) |
Nitrogen:
Containing not more than four percent (4%) by volume of nitrogen.
|
| (v) |
Temperature:
Product shall not exceed a temperature of one hundred twenty (120)
degrees
Fahrenheit (120º F).
|
| (vi) |
Hydrogen
Sulfide:
Product shall not contain more than forty (40) parts per million,
by
weight, of hydrogen sulfide.
|
| (am) |
"Seller's
Facilities" means the XxXxxxx field and associated production facilities,
the Xxxxx Creek plant, Carbon Dioxide compression facilities, the
ExxonMobil CO2 Pipeline, associated meter stations, and any new facilities
and appurtenances upstream of an alternate delivery
point.
|
| (an) |
"Standard
Cubic Foot" means the amount of Carbon Dioxide which would occupy
one
cubic foot of space at a base pressure of 14.73 Psia and at a base
temperature of sixty degrees Fahrenheit (60º
F).
|
| (ao) |
“Start-Up
Date” means the first Day of the Month following Seller's notice to Buyer
that Seller has completed the expansion of Seller's Facilities and
constructed the CO2 Expansion Project and is prepared to delivery
Daily
Contract Quantities. Seller agrees to keep Buyer informed of the
potential
Start-Up Date, and in no event shall Seller’s start-up notice be less than
fifteen (15) Days prior to the end of a Month. Seller anticipates,
but
neither warrants nor represents, that the Start-up Date will be between
(**).
|
| (ap) |
“Subsequent
Term" has the meaning ascribed to it in Article
6.1.
|
| (aq) |
“Take-or-Pay
Quantity" has the meaning ascribed to it in Article
2.2(b).
|
| (ar) |
"Term"
means the term of this Agreement, as described in Article
6.1.
|
|
(as)
|
"West
Texas Intermediate" or "WTI" shall mean the Mean WTI-Cushing price
in US
dollars per barrel for the month in which Carbon Dioxide was delivered
as
published by Platts.
|
6
ARTICLE
2 - COMMITMENTS BY SELLER AND BUYER
| 2.1 |
Commitments
by Seller
|
| (a) |
Subject
to the terms and conditions of this Agreement Seller agrees that
each Day
during the Term after the Start-Up Date it shall sell to Buyer and
deliver
to the Delivery Point the volume of Carbon Dioxide nominated by Buyer
in
accordance with Article 3.1, up to the DCQ, subject to the provisions
of
Article 2.4.
|
| (b) |
Seller
may sell to the Buyer and deliver to the Delivery Point Early Volumes
and
Excess Volumes as provided in Article 3.
|
| 2.2 |
Commitments
by Buyer
|
|
(a)
|
Each
Day during the Term, Buyer shall purchase from Seller and receive
at the
Delivery Point the volume nominated by Buyer in accordance with Article
3.1 and any Early Volumes and Excess Volumes requested by Buyer and
agreed
to by Seller in accordance with Article
3.
|
|
(b)
|
During
each Contract Year of the Term after the Start-Up Date, if Buyer
does not
purchase at least (**) percent ((**)%) of the ACQ for such Contract
Year
((**)% of the ACQ being the "Take-or-Pay Quantity"), then Buyer shall
pay
Seller for the volume difference between the Take-or-Pay Quantity
and the
volume actually purchased (such difference is hereinafter referred
to as
"Deficiency Volumes") at the Deficiency
Price.
|
The
Take-or-Pay Quantity for each Contract Year shall be reduced to the extent
that:
| (i) |
Buyer
does not receive volumes nominated by Buyer because of Seller's failure
to
deliver, up to the DCQ (including pro-rata deliveries made pursuant
to
Article 2.4) other than suspension due to Buyer's default as provided
in
Articles 5.3 and 5.4; or
|
| (ii) |
Seller
delivers Carbon Dioxide that does not meet Quality Specifications
and that
is refused by Buyer as provided in Article 11.3;
or
|
| (iii) |
Buyer
has planned maintenance, as described in Article 11.19
or;
|
| (iv) |
Either
Party's performance is suspended due to an event of Force Majeure;
|
provided,
however, that should any event qualify for simultaneous consideration under
more
than one of the conditions outlined above ((i), (ii), (iii) or (iv)), volumes
associated with the event will only be counted once in the Deficiency Volume
reduction.
|
|
(c)
|
Buyer
shall have the right, without making further payment, to take delivery
of
Carbon Dioxide and to make-up Deficiency Volumes for which it has made
payment under Article 2.2(b) (such deliveries and make-up are hereinafter
referred to as Make-Up Volumes), provided
that:
|
| (i) |
Buyer
has purchased and received one hundred percent (100%) of the ACQ
for the
Contract Year in which such Make-Up Volumes are scheduled to be delivered;
and
|
|
(ii)
|
all
such Make-Up Volumes are delivered during the Term;
and
|
|
(iii)
|
Seller,
in its sole judgment, has sufficient volumes to provide Make-Up Volumes
to
Buyer on the Day(s) on which Buyer requests delivery.
|
7
| (d) |
Buyer’s
requested Make-Up Volumes shall be given scheduling priority over
Seller's
other buyers' requests for volumes in excess of their contracted
volumes
unless such other buyers’ requests for excess volumes are also for their
make-up volumes (howsoever named in Seller's agreements with other
buyers), in which case Seller shall schedule Make-Up Volumes and
other
buyers' make up volumes pro-rata among Buyer and all other such buyers
based on the DCQ and the other buyers' contracted volumes. However,
Seller
shall have no obligation to reserve delivery capacity for Buyer's
Make-Up
Volumes by foregoing the opportunity to enter into new sales agreements
or
renew existing sales agreements with other buyers committing to
take-or-pay obligations.
|
|
(e)
|
Promptly
after written request from Buyer to Seller for delivery of Make-Up
Volumes, Buyer and Seller shall cooperate and use commercially reasonable
efforts to schedule delivery of Make-Up Volumes. Seller shall never
be
obligated to provide any volume that exceeds the DCQ for a Day. It
is
recognized that Deficiency Volumes result from Buyer's Take-or-Pay
obligation under this Agreement, and that upon termination or cancellation
of this Agreement for any reason, Seller shall have no obligation
to
provide any Make-Up Volumes to Buyer.
|
|
(f)
|
Buyer
may extend the Term for the purpose of taking Make-Up Volumes (“Extension
Period”) by providing notice to the Seller at least six (6) months in
advance of the expiration of the Primary Term, or if the Term has
been
extended, then at least six (6) months in advance of the expiration
of the
Subsequent Term. The term of the Extension Period shall be the lesser
of
(i) the time necessary for Buyer to take all Make-Up Volumes or (ii)
twelve (12) Months. Any provisions hereof to the contrary notwithstanding,
during the Extension Period one hundred percent (100%) of all volumes
received by Buyer shall be considered Make-Up Volumes. At expiration
of
the Extension Period, Seller shall retain all amounts paid by Buyer
pursuant to Article 2.2(b).
|
| 2.3 |
DCQ
and Take-or-Pay Reduction
|
| (a) |
Buyer
shall have the right with notice as outlined below, to offer to release
back to Seller portions of the DCQ, and to reduce Take-or-Pay obligations
accordingly, if Buyer estimates, in good faith, its future requirements
for Carbon Dioxide will be less than the DCQ. In its notice to release
a
portion of the DCQ, Buyer shall provide verification, satisfactory
to
Seller, that the release is a result of Buyer's reduced Carbon Dioxide
requirements and not because Buyer may purchase Carbon Dioxide from
a
third party seller at more favorable terms, including more favorable
pricing terms. Seller shall have the right but not the obligation,
in its
sole discretion, to accept the offer of permanent release.
|
| (b) |
If
Buyer elects to offer permanent release of DCQ, Buyer shall provide
Seller
with at least twenty-four (24) Month's notice of its request. Buyer's
request shall specify the amount of proposed DCQ reduction and the
proposed effective date of the reduction. Any proposed DCQ reductions
shall only be effective on an anniversary of the Start-Up Date.
|
| (c) |
Seller
shall respond to Buyer's offer of release with notice within ninety
(90)
Days of Buyer's offer to release. If Seller agrees to accept Buyer's
offer
of release of portions of DCQ, the Parties shall amend this Agreement
to
reflect the reduction, in quantity and term, of the
DCQ.
|
8
| 2.4 |
Other
Contracts
|
Subject
to Article 11.6 (Force Majeure), if Seller is unable to satisfy its daily
delivery obligations under all of Seller's XxXxxxx field / Xxxxx Creek plant
Carbon Dioxide sales agreements, including this Agreement, Seller shall use
commercially reasonable efforts to deliver Carbon Dioxide hereunder on such
Day(s), on a pro-rata basis based on the DCQ and the other buyers' contracted
volumes. Any volumes delivered pro-rata by Seller pursuant to this Article
2.4
shall be deemed to satisfy Seller's obligation to sell Carbon Dioxide to Buyer
on such Day(s), and Seller shall have no liability to Buyer for any undelivered
volumes. Buyer's Take-or-Pay Quantity shall be reduced proportionally, via
the
DCQ for such Day being deemed to be the actual quantity delivered by Seller.
Seller agrees to provide notice to Buyer within a reasonable time after Seller
has determined that it will make pro-rata deliveries as described in this
Article 2.4, specifying to the extent practicable the prorata volume to be
delivered to Buyer on the affected Day(s).
ARTICLE
3 - NOMINATIONS, EARLY VOLUMES AND EXCESS VOLUMES
| 3.1 |
Nominations
|
No
later
than five (5) days prior to the beginning of each Month, Buyer shall provide
Seller with notice of Buyer's nominations for each Day of such Month. Such
nomination shall specify daily deliveries at uniform rates not in excess of
the
applicable DCQ, unless otherwise agreed in advance by Seller pursuant to Article
3.3.
If
Buyer
fails to provide such nomination within the prescribed period, Buyer's
nomination shall be deemed to be the quantities which were nominated during
the
immediately preceding Month. Buyer shall use its best efforts to submit
nominations which accurately reflect Buyer's anticipated daily requirements.
Buyer
may
increase or decrease its nomination at any time during the Month with two (2)
days advance notice subject to Article 3.3.
| 3.2 |
Early
Volumes
|
| (a) |
If
after June 30, 2008 but prior to the Start-Up Date, Buyer has the
ability
and the desire to take Carbon Dioxide from Seller, Buyer shall provide
Seller with notice specifying its proposed purchase quantity ("Early
Volumes") and the proposed delivery commencement date. Seller shall
have
the right, but not the obligation, in its
sole discretion, to elect to supply all or any portion of the proposed
Early Volumes and shall notify Buyer of its election, specifying
with
notice the quantity of Early Volumes it agrees to supply, within
thirty
(30) days after receipt of Buyer's notice. If Seller has elected
to supply
only a portion of the Early Volumes requested by Buyer, then Buyer
may
accept or reject Seller's lesser proposed Early Volumes within three
(3)
days of receipt of Seller's proposal.
|
| (b) |
Buyer
shall have no take-or-pay obligation with respect to Early Volumes,
and no
Early Volumes purchased and sold shall affect, impact, offset, accrue
or
count towards ACQ, Take-or-Pay Quantity, Deficiency Volumes or Make-up
Volumes.
|
9
| (c) |
Either
Party may interrupt the purchase or sale of Early Volumes at any
time,
provided that the interrupting Party shall make commercially reasonable
efforts to provide at least two (2) days prior notice to the other
Party
of the interruption.
|
| 3.3 |
Excess
Volumes
|
| (a) |
If
on any Day Buyer determines that it requires more Carbon Dioxide
for the
Project than the DCQ that Buyer has nominated for any Day, Buyer
shall
make a written request to Seller for delivery of such volume ("Excess
Volumes"), up to 30 MMCF per Day. Seller shall have the right, but
not the
obligation to supply all or any portion of such Excess Volumes requested
by Buyer subject to (i) that within two (2) Business Days after such
request is made, Seller confirms in writing the amount (if any) of
Excess
Volumes it agrees to deliver and (ii) Seller can make such deliveries
within Buyer’s requested delivery schedule.
|
| (b) |
Excess
Volumes supplied pursuant to this Article 3.3 shall be counted first
toward current Contract Year ACQ and then toward Make-Up Volumes
attributable to previous Contract Years' Deficiency Volumes if one
hundred
percent (100%) of the current Contract Year ACQ has been delivered.
If the
current Contract Year ACQ has already been achieved and all previous
Contract Years’ Deficiency Volumes have been made up, Buyer may still
request other Excess Volumes. Other Excess Volumes shall not affect,
impact, offset, accrue or count towards ACQ, prospective Take-or-Pay
Quantity, Deficiency Volumes or Make-up Volumes.
|
| (c) |
Either
Party may interrupt the purchase or sale of Excess Volumes at any
time,
provided that the interrupting Party shall make commercially reasonable
efforts to provide at least two (2) days prior notice to the other
Party
of the interruption.
|
ARTICLE
4 - PRICE
| 4.1 |
Contract
Price
|
The
Contract Price to be paid by Buyer for all volumes purchased shall be calculated
as follows: (**)
| 4.2 |
Oil
Price Factor
|
The
"Oil
Price Factor" shall be WTI. Should Platts
cease to
publish a Mean WTI-Cushing price, the Parties shall mutually agree upon an
alternative Oil Price Factor within thirty (30) days of the last day of the
Month that there exists a Platts
Mean
WTI-Cushing published price. In selecting an alternative Oil Price Factor,
the
Parties shall strive to select the published price that is most comparable
to
the Mean WTI-Cushing published price.
If
the
Parties fail to agree on an alternative Oil Price Factor within the thirty
(30)
day period, then a provisional Oil Price Factor shall be used to determine
a
provisional Contract Price until such time as the Parties settle on an
alternative Oil Price Factor. The provisional Oil Price Factor shall be the
last
published Mean WTI-Xxxxxxx price. Within thirty (30) days of agreement between
the Parties or issuance of an Expert decision regarding the alternative Oil
Price Factor, the Contract Price shall be recalculated using the alternative
Oil
Price Factor for the relevant Months, and the Seller shall issue an invoice
or
credit notice to the Buyer reflecting any sum which becomes owing as a result
of
an adjusted Contract Price becoming effective. Such sum shall be paid by the
Buyer or the Seller (as the case may be) ten (10) days after receipt of said
invoice or credit notice by the Buyer. Interest will be payable on such amount
calculated at an annualized rate equivalent to Interest Rate plus one per cent
(1%) (compounded monthly) from the effective date of the adjusted Contract
Price
until payment is made.
10
| 4.3 |
Redetermination
of Contract Price
|
| (a) |
Scheduled
Contract Price Redetermination.
|
Either
Party may request that the Contract Price for Months beginning on or after
May
1, 2012 be redetermined by giving notice to the other Party between November
1,
2011 and February 1, 2012.
Either
Party may also request that the Contract Price for Months beginning on or after
September 1, 2015 be redetermined by giving notice to the other Party between
March 1, 2015 and June 1, 2015.
If
the
Parties agree to extend the Agreement for a Subsequent Term pursuant to Article
6.1, (i) either Party may request that the Contract Price for Months beginning
on or after May 1, 2022 be redetermined by giving notice to the other Party
between November 1, 2021 and February 1, 2022; and (ii) either Party may also
request that the Contract Price for Months beginning on or after September
1,
2025 be redetermined by giving notice to the other Party between March 1, 2025
and June 1, 2025.
| (b) |
Unscheduled
Contract Price Redetermination:
|
In
addition to the scheduled Contract Price redeterminations pursuant to Article
4.3(a):
| (i) |
At
any time during the Primary Term, Seller and Buyer may each, on one
separate occasion, request that the Contract Price be redetermined
by
giving notice to the other Party. The effective date of a new Contract
Price determined pursuant to this Article 4.3(b) shall be the first
day of
the Month following one hundred twenty (120) Days after the date
of the
notice.
|
| (ii) |
If
the Parties agree to extend the Agreement for a Subsequent Term pursuant
to Article 6.1, then at any time during the Subsequent Term, Seller
and
Buyer may each, on one separate occasion, request that the Contract
Price
be redetermined by giving notice to the other Party. The effective
date of
a new Contract Price determined pursuant to this Article 4.3(b) shall
be
the first day of the Month following one hundred twenty (120) Days
after
the date of the notice.
|
| (c) |
Price
Redetermination Basis
|
The
purpose of any Contract Price redetermination shall be to determine the then
current market price for Carbon Dioxide sold and delivered under contracts
containing similar terms and conditions to those under this
Agreement.
11
| (d) |
Price
Redetermination Notice
|
A
Contract Price redetermination notice served pursuant to Articles 4.3(a) or
4.3(b) shall include the Contract Price proposed by the Party serving notice
together with substantiated reasons for the redetermination. Upon receipt of
the
Contract Price redetermination notice, the Parties shall negotiate in good
faith
to agree upon a new Contract Price.
| (e) |
Confidentiality
of Proceedings
|
No
Party
shall be required to divulge confidential information nor to provide information
in support of the other Party's claim unless required to do so by the laws
applicable to the arbitration procedures provided for in this Agreement.
| (f) |
Arbitration
|
If
agreement on a new Contract Price is not reached within ninety (90) Days of
the
date of the requesting Party's notice requesting redetermination, then the
requesting Party may submit the resolution of this matter to arbitration at
any
time within thirty (30) Days after the end of the ninety (90) Day negotiating
period by giving the other Party notice.
| (g) |
Payment
and Effect
|
For
as
long as no agreement has been reached between the Parties in respect of a
Contract Price redetermination and no arbitration decision has been issued
or
taken effect, the rights and obligations of the Parties and the prevailing
Contract Price under the Agreement shall continue in full force and
effect.
Following
agreement between the Parties or issuance of an arbitral decision, any
redetermined Contract Price shall be effective from the date specified in the
redetermination notice. Within thirty (30) days of agreement between the Parties
or an arbitral decision, the Seller shall issue an invoice or credit notice
to
the Buyer reflecting any sum which becomes owing as a result of an adjusted
Contract Price becoming effective. Such sum shall be paid by the Buyer or the
Seller (as the case may be) ten (10) days after receipt of said invoice or
credit notice by the Buyer. Interest will be payable on such amount calculated
at an annualized rate equivalent to Interest Rate plus one per cent (1%)
(compounded monthly) from the effective date of the adjusted Contract Price
until payment is made.
12
ARTICLE
5 - BILLING AND PAYMENT
| 5.1 |
Monthly
Statements
|
No
later
than the tenth (10th) Business Day of the Month following the Month of delivery,
Seller shall furnish Buyer a monthly statement specifying the following
information with respect to the Month of delivery and Contract
Year:
(a) Contract
Price to be paid by Buyer for Carbon Dioxide purchased in the Month of
delivery
(b) Quantity
of Carbon Dioxide delivered and purchased in the Month of delivery, including
applicable Excess Volumes. (Such quantities shall not include any Excess Volumes
counted toward Make-Up Volumes attributable to previous Contract Years'
Deficiency Volumes.)
(c) Total
Month of delivery Excess Volumes delivered and purchased (if any)
(d) Month
of
delivery Excess Volumes counted toward ACQ (if any)
(e) Month
of
delivery Excess Volumes counted toward Make-Up Volumes attributable to previous
Contract Years' Deficiency Volumes (if any)
(f) Other
Month of delivery Excess Volumes (if any)
(g) Payment
due by Buyer as a result of Carbon Dioxide purchased in the Month of
delivery
(h) Deficiency
Volumes balance at start of Month of delivery
(i) Deficiency
Price for Contract Year
(j) ACQ
(k) Contract
Year Take-or-Pay Quantity (reflecting reductions consistent with Article
2.2(b))
(l) Payment
due by Buyer attributable to Contract Year Take-or-Pay Quantity
(m) Deficiency
Volumes balance at end of Month of delivery
(n) Cumulative
volumes of Carbon Dioxide sold under this Agreement
Seller
will only report Items, (i), (j), (k) and (l) above on monthly statements for
the last Month of any Contract Year.
In
the
event that actual delivery data is not available by the tenth (10th) Day of
the
Month following the Month of delivery, then the Seller may render to the Buyer
a
provisional monthly statement in which the quantity of Carbon Dioxide shall
be
estimated by the Seller using the best data available to the Seller. The Seller
shall, as soon as practicable after the actual delivery
data becomes known, render to the Buyer a statement of adjustment showing the
appropriate adjustments to the monthly statement.
If
any
billing was based on a provisional quantity, the Seller shall, as soon as
reasonably practicable after the actual data is available, render to the Buyer
a
statement of adjustment showing the appropriate adjustments to the provisional
monthly statement in the same manner as described herein. The amount resulting
from the adjustment, including interest, shall be paid by the relevant Party
ten
(10) days after receipt of the statement of adjustment. Interest shall be at
an
annualized rate equivalent to Interest Rate plus one per cent (1%) (compounded
monthly) for the period starting from and including the due date of the relevant
provisional monthly statement and ending on the date of the payment of said
adjustment.
| 5.2 |
Auditing
|
Each
Party, at its own expense, shall have the right during reasonable business
hours
to examine the books, records, and measurement documents of the other Party
to
the extent necessary to verify the accuracy of any statement, payment,
calculation, or determination made pursuant to the provisions of this Agreement
for any calendar year within two (2) calendar years following the end of such
calendar year. If any such examination shall reveal, or if either Party shall
discover any error or inaccuracy on its own or the other Party's statement,
payment, calculation, or determination, then proper adjustment and correction
thereof shall be made as promptly as practicable thereafter. Each Party further
agrees to retain the books, records and measurement documents for the
above-stated period of time.
13
| 5.3 |
Payments
|
On
or
before (i) the twentieth (20th) day of a Month (or the next Business Day in
case
of weekends or holidays) in which the monthly statement is issued or (ii) ten
(10) days after Buyer's receipt of such monthly statement, whichever is later,
the Buyer shall pay to Seller the amounts due under such monthly statement.
Payment shall be made by wire transfer to the bank account as designated below,
without any discount associated with the transfer of moneys and at the expense
of the Buyer, except that any expenses charged by the Seller's bank with respect
to such payments shall be borne by the Seller.
Wire
Transfer Account:
Exxon
Mobil Corporation
Citibank,
N.A.
New
York,
NY ABA #000000000
Gas
Marketing Remittance Account #00000000
Seller's
designation of a bank account shall remain in effect during the Term unless
changed by notice to Buyer signed by a duly authorized representative of
Seller.
If
the
Buyer fails to make payment of any sum due hereunder which is not the subject
of
a bona fide dispute, interest thereon shall accrue at an annualized rate
equivalent to the Interest Rate plus four per cent (4%) (compounded monthly)
from the date when such payment was due until payment is made in full.
When
any
amount included within a monthly statement is the subject of a bona fide
dispute, the Buyer shall immediately notify the Seller in writing of the amount
in dispute and the reasons therefor. The undisputed portion shall promptly
be
paid and after settlement of the dispute any amount agreed, adjudged or
determined to be due shall be included in the next monthly statement to be
rendered hereunder together with interest thereon at an annualized rate
equivalent to the Interest Rate plus one per cent (1%) (compounded monthly)
from
the date when such payment would, in the absence of a dispute, have been payable
until payment is made. If the dispute is later determined not to be bona fide,
interest shall instead accrue at an annualized rate equivalent to the Interest
Rate plus four per cent (4%) (compounded monthly) from the date when such
payment would, in absence of a dispute, have been payable.
If
the
Buyer fails to pay any sum due hereunder which is not the subject of a bona
fide
payment dispute, the Seller may, immediately on giving notice to the Buyer
of
its intention to do so, suspend delivery of Carbon Dioxide hereunder until
payment is duly made; provided, however, that a suspension effected by the
Seller in accordance with the provisions of this Article 5.3 shall not,
in
any circumstances, relieve the Buyer of its accrued obligations under this
Agreement, or entitle the Buyer to any form of deduction from the Take-or-Pay
Quantity as described in
14
Article
2.2.
If
Buyer
fails to pay any sum due hereunder which is not the subject of a bona fide
payment dispute within thirty (30) days after the due date thereof, then the
Seller shall have the right, at the Seller’s sole election, to cancel this
Agreement in accordance with this paragraph. The Seller's right to cancel this
Agreement shall be conditioned upon the Seller having provided the Buyer a
minimum fourteen (14) days notice, which notice may be sent at any time after
the due date; provided, however, that regardless of the timing of the notice
the
Seller shall not have the right to cancel this Agreement any sooner than
thirty-one (31) days after the payment due date. Any cancellation shall be
without prejudice to any other rights and remedies that accrued to each Party
prior to cancellation, including but not limited to the right of a Party to
receive payment for all claims which arose or accrued prior to such
cancellation.
Seller's
drawing on Buyer's Performance Assurance shall not effect Seller's termination
or suspension rights under this Article 5.3.
| 5.4 |
Financial
Circumstances
|
| (a) |
Seller
shall have no obligation to commence deliveries of Carbon Dioxide
under
this Agreement until Buyer provides Seller with adequate Performance
Assurances. Before the Start-Up Date such Performance Assurances
shall not
be less than that necessary to cover four (4) Months of delivery
and sales
of anticipated Early Volumes. After the Start-Up Date such Performance
Assurances shall not be less than that necessary to cover
four (4) Months of delivery and sales of the DCQ plus anticipated
Excess
Volumes. In the
event Buyer does not provide adequate initial Performance Assurances
within thirty (30) days after the Start-Up Date, Seller shall have
the
right to cancel this agreement with thirty (30) days
notice.
|
| (b) |
Following
the end of any Month after the Start-Up Date, if Seller determines
the
cumulative quantity of Carbon Dioxide that the Buyer has purchased
and
received in the current Contract Year is less than (**) percent ((**)%)
of
the product of the DCQ and the number of Days since the start of
the
current Contract Year, then within ten (10) Days following receipt
of
notice from Seller, Buyer shall provide Seller revised or additional
Performance Assurances such that all active Performance Assurances
shall
not be less than that necessary to cover (i) the amount specified
in
Article 5.4(a) plus (ii) the difference between (**) percent ((**)%)
of
the product of the DCQ and the number of Days since the start of
the
current Contract Year and the amount of Carbon Dioxide that Buyer
has
purchased and received in the Contract Year. If Buyer fails to provide
the
revised or additional Performance Assurances within the prescribed
period,
Seller shall have reasonable grounds for believing that Buyer
may be unable to meet its obligations under this
Agreement.
|
| (c) |
If
at any time within the Term, Seller has reasonable grounds for believing
that: (i) the Buyer or its Performance Assurance Provider may be
unable to
meet its obligations under this Agreement or under any Performance
Assurance; or (ii) the financial circumstances of any or all of the
Buyer,
its Performance Assurance Provider, or Buyer's Controlling Party
have
deteriorated to a level unacceptable to the Seller; then the Seller
may
give notice to the Buyer and request a new or replacement Performance
Assurance.
|
15
Seller
may suspend its obligations under this Agreement with immediate effect of said
notice until such time as the Buyer provides such adequate Performance Assurance
if reasonably requested by the Seller; provided, however, that a suspension
effected by the Seller in accordance with the provisions of this Article 5.4
shall not, in any circumstances, relieve the Buyer of its accrued obligations
under this Agreement, or entitle the Buyer to any form of deduction from the
Take-or-Pay Quantity as described in Article 2.2. In the event the Buyer
is unable
or
unwilling to provide adequate Performance Assurance within thirty (30) days
of
receipt of said notice, the Seller shall have the right to cancel this Agreement
with immediate effect upon providing notice of such cancellation to the Buyer.
Such cancellation shall be without prejudice to any other rights and remedies
that accrued to each Party prior to cancellation, including but not limited
to
the right of a Party to receive payment for all claims which arose or accrued
prior to such cancellation.
| (d) |
Either
Party shall have the right to terminate this Agreement immediately,
by
giving notice, in the event the other Party, its Controlling Party,
or, if
applicable, its Performance Assurance Provider (collectively, the
“Defaulting Party”):
|
| (i) |
files
a voluntary application in or for liquidation, receivership or
bankruptcy;
|
| (ii) |
has
an involuntary petition in bankruptcy filed against
it;
|
| (iii) |
is
finally and validly declared and adjudged to be liquidated, bankrupt
or
insolvent;
|
| (iv) |
is
subject to a resolution passed by its members for the purposes of
placing
it in voluntary administration;
|
| (v) |
is
subject to an order by any court of competent jurisdiction for its
winding
up;
|
| (vi) |
is
the subject of an appointment of a receiver or receiver and manager
or
like officer of the whole or any part of its
assets;
|
| (vii) |
has
a secured party take possession of all or substantially all its assets
or
has a distress, execution, attachment, sequestration or other legal
process levied, enforced or sued on or against all or substantially
all
its assets;
|
| (viii) |
is
the subject of an appointment of an administrator, official manager
or
like officer in circumstances where the Defaulting Party is or is
likely
to become insolvent; or
|
| (ix) |
enters
into a scheme of arrangement with its creditors or any of them, provided
that the foregoing shall not include any voluntary proceeding for
the
purpose of amalgamation, reconstruction or reorganization not taken
at the
request or to meet the requirements of the Defaulting Party’s
creditors.
|
| 5.5 |
Greenhouse
Gas Reduction Rights
|
At
such
time during the Term of this Agreement (**) as contemplated under Article 11.22,
Buyer shall promptly notify Seller.
| (a) |
(**)
Until the actions contemplated under Article 5.5(b) are completed,
Buyer
shall continue to provide
Seller with revised or additional Performance Assurances such that
all
active Performance Assurances shall not be less than that necessary
to
cover the amounts specified in Article 5.4 (**).
If
Buyer fails to provide the revised or additional Performance Assurances
within the prescribed period, Seller shall have reasonable grounds
for
believing that Buyer
may be unable to meet its obligations under this
Agreement.
|
| (b) |
The
Parties shall work together to timely revise Articles 5.1, 5.2, 5.3,
5.4
and 5.5(a) as necessary to accommodate (**), including statement
details
and timing, payment details and timing, special audit considerations
and
Performance Assurances quantification and timing.
|
16
ARTICLE
6 - TERM
6.1
Term
This
Agreement shall become effective as of the Effective Date, but pursuant to
the
terms of this Agreement the rights and obligations associated with the delivery,
sale, receipt and purchase of the DCQ shall commence on the Start-Up Date.
Subject to termination and cancellation as otherwise provided herein, the
Agreement shall continue for a primary term of ten (10) years from the Start-Up
Date (“Primary Term”). Seller agrees to keep Buyer informed of the potential
Start-Up Date, so as to allow Buyer to be ready to receive its DCQ on the actual
Start-Up Date.
Either
Party may exercise an election to extend this Agreement for a second term of
(10) years ("Subsequent Term") by providing notice to the other Party at least
thirty-six (36) months but no more than thirty-nine (39) months in advance
of
the expiration of the Primary Term. Any extension shall be subject to the
Parties agreeing to the following within six (6) months of the electing Party's
notice: (i) a Contract Price to be effective from the first Day of the
Subsequent Term until any Subsequent Term Contract Price redetermination
pursuant to Article 4.3; and (ii) amendments to any Key Terms. If the Parties
fail to agree on a new Contract Price or amended Key Terms within the prescribed
six (6) months, then this Agreement shall terminate at the end of the Primary
Term.
The
Primary Term, the Subsequent Term and the Extension Period are hereinafter
collectively known as the “Term”.
| 6.2 |
Force
Majeure Termination
|
If
an
event of Force Majeure affects deliveries by Seller or receipts by Buyer for
a
consecutive period of twenty-four (24) months or more, then, at any time after
such period has elapsed but prior to the time such event has been remedied,
either Party may terminate this Agreement by giving thirty (30) days notice
to
the other Party.
ARTICLE
7 - ROYALTY
| 7.1 |
Payment
of Royalty
|
As
between Seller and Buyer, Seller shall be responsible for all payments to the
owners of all working interests, mineral interests, royalties, overriding
royalties, bonus payments and production payments. Buyer assumes no liability
to
Seller’s working or mineral interest, royalty, or other owners under this
Agreement except as provided for in Article 7.2.
| 7.2 |
Royalty
Reimbursement
|
If,
due
to circumstances not within Seller's control or pursuant to the terms of a
good
faith settlement of a royalty dispute, Seller is required to pay excess royalty
(royalty based on a value higher than the price paid by Buyer for Carbon Dioxide
delivered by Seller under this Agreement) to any royalty owner including the
United States of America, the State of Wyoming and any overriding royalty owner,
with respect to Carbon Dioxide delivered by Seller under this Agreement, Buyer
shall reimburse Seller one hundred percent (100%) of the amount of such excess
royalty. Seller must notify Buyer of a potential claim or bring its claim to
Buyer within three (3) years of the date the Carbon Dioxide delivery in question
was made. Seller represents that as of the date of this Agreement, Seller has
not received a notice of (actual, constructive or otherwise) nor is Seller
aware
of any royalty assessment requiring the payment of excess royalty and is not
aware of any royalty underpayment claim against it involving the Carbon Dioxide.
17
For
the
purposes of this Article 7.2, "excess royalty" as it applies to royalty paid
the
United States of America shall be the royalty paid in excess of the royalty
calculated pursuant to any methodology in use by the Minerals Management Service
as of the date of this Agreement based on the statutes, regulations and leases
in effect on the date of this Agreement.
ARTICLE
8 - TAXES
| 8.1 |
Payment
of Taxes
|
Subject
to the reimbursement provisions of Articles 8.2 and 8.3, Seller shall pay or
cause to be paid all taxes and assessments imposed on Seller with respect to
the
Carbon Dioxide delivered by Seller under this Agreement prior to its delivery
to
Buyer at the Delivery Point.
Buyer
shall pay or cause to be paid all taxes and assessments imposed on Buyer with
respect to the Carbon Dioxide delivered hereunder at and after its receipt
by
Buyer at the Delivery Point, including, but not limited to, sales taxes imposed
by any applicable state, county, municipality or other governmental authority
located therein. Neither Party shall be responsible or liable for any taxes
nor
other statutory charges levied or assessed against any of the facilities of
the
other Party used for the purpose of carrying out the provisions of this
Agreement.
| 8.2 |
Reimbursement
of Sales Taxes
|
Buyer
shall reimburse Seller for one hundred percent (100%) of all sales or use taxes
paid by Seller which may be imposed or assessed currently or hereafter with
respect to the transaction between Buyer and Seller which is the subject of
this
Agreement unless Buyer has previously furnished Seller with and maintained
with
Seller a valid exemption certificate for such taxes.
| 8.3 |
Reimbursement
of Certain Other Taxes
|
Buyer
shall, subject to the conditions hereinafter specified, reimburse Seller for
one
hundred percent (100%) of any new, increased or additional tax paid by Seller
which is attributable to the deliveries of Carbon Dioxide made by Seller under
this Agreement. The term "new, increased or additional tax" shall mean
production and severance taxes, taxes based on extraction of Carbon Dioxide
from
the ground, ad valorem taxes calculated on the basis of production or sales
of
Carbon Dioxide, taxes based on gathering or transportation occurring up to
the
Delivery Point, and any other tax, assessment, or fee of a similar nature or
equivalent in effect levied, assessed, or fixed by governmental authority for
which Seller may be liable in addition to or greater than those in effect on
the
date of full execution hereof. For purposes of this Article 8.3, the term "new,
increased or additional tax" shall not include any income, excess profit,
capital stock, or excise tax, any sales or use tax which is covered under
Article 8.2, and any ad valorem or general property tax (to the extent such
ad
valorem or general property tax may be assessed on or attributable to the value
of surface and subsurface production equipment and manufacturing and
transmission facilities utilized by Seller to deliver Carbon Dioxide hereunder).
Seller must bring its claim for such tax reimbursement within three (3) years
of
the date of delivery of the Carbon Dioxide at issue.
18
ARTICLE
9 - DELIVERY POINT, TITLE, RATE AND PRESSURE
| 9.1 |
Delivery
Point
|
| (a) |
The
Delivery Point shall be the flange connection between the ExxonMobil
CO2
Pipeline at mile post 112 and the Anadarko CO2 pipeline near Bairoil,
Fremont County unless and until Buyer and Seller otherwise mutually
agree
pursuant to Article 9.1(b). Nothing in this Agreement shall require
either
Party to enter into an Interconnect Agreement and implement an alternate
delivery point under terms it determines to be unacceptable.
|
|
(b)
|
If
Buyer seeks to implement an alternate delivery point other than the
Delivery Point specified in Article 9.1(a), Buyer shall provide Seller
with a notice to this effect. The Parties may then work together
to
develop and execute a mutually acceptable Interconnect Agreement
specifying the terms necessary to implement the alternate delivery
point.
The Parties anticipate that the Interconnect Agreement would include,
but
not be limited to, terms specifiying the
following:
|
|
(i)
|
a
definitive location of the alternate delivery
point;
|
|
(ii)
|
an
engineering, procurement and construction schedule to effect CO2
deliveries to the alternate delivery
point;
|
| (iii) |
Buyer's
and Seller's respective roles in, liabilities asscoiated with,
and
financial responsibility related to the design, installation
and
construction of new facilities associated with the alternate
delivery
point; provided however, Buyer and Seller agree in principle
under this
Agreement that Buyer shall either pay for or shall reimbuse Seller
for
costs and expense Seller incurs as a result of modifications
or additions
to Seller's Facilities;
|
| (iv) |
Seller's
and Buyer's respective ownership of facilities upstream and downstream
of
the alternate delivery
point.
|
| 9.2 |
Passage
of Title
|
Title
to,
risk of loss of or damage to, liability for injury of damage caused by, and
ownership of all Carbon Dioxide delivered hereunder shall pass to and vest
in
Buyer at the Delivery Point.
19
| 9.3 |
Constant
Deliveries
|
To
the
best of their abilities, Seller shall deliver and Buyer shall accept Carbon
Dioxide hereunder at a daily rate which is as reasonably constant as is
practicable.
| 9.4 |
Delivery
Pressure
|
Seller
shall cause the delivery of Carbon Dioxide hereunder at the pressure prevailing
from time to time in ExxonMobil’s CO2 Pipeline, but not less than 1750
Psig.
ARTICLE
10 - MEASUREMENT AND COMPUTATION OF VOLUMES
| 10.1 |
Measurement
Point
|
The
Carbon Dioxide delivered hereunder shall be measured and/or allocated at the
Delivery Point.
| 10.2 |
Procedure
|
Measurement
of Carbon Dioxide shall be determined on the basis of pound-mass quantities,
which shall be converted to Standard Cubic Feet quantities. The molecular weight
of the metered stream of Carbon Dioxide, calculated from compositional analyses,
shall be the basis for conversion of pound-mass measurement units to Standard
Cubic Feet. The compressibility factor of the Carbon Dioxide shall be determined
in accordance with the NIST
Standard Reference Database 14
with any
subsequent amendments, revisions and additions which are mutually acceptable
to
Seller and Buyer. Seller shall, if requested, furnish a detailed explanation
of
the Carbon Dioxide volume calculation used by Seller per this Article
10.2.
| 10.3 |
Meter
Stations
|
At
or
near the Delivery Point, Seller or its representative shall ensure that a meter
station for purposes of determining the volume of Carbon Dioxide purchased
and
received hereunder is constructed and installed in accurate working order at
Buyer's cost and expense. Seller or its representative shall operate and
maintain the meter station in accurate working order at Seller’s risk, cost and
expense. The station shall be equipped in accordance with the standards
referenced in Article 10.5 and shall initially consist of orifice meters, an
on-line recording thermometer, and a flow computer for real-time calculation
of
metered flow.
| 10.4 |
Atmospheric
Pressure
|
The
atmospheric pressure at the Delivery Point shall be deemed to be 14.73 Psia
at
sea level corrected to actual elevation.
| 10.5 |
Meter
Standards
|
The
Carbon Dioxide delivered hereunder shall be measured with orifice meters.
Seller's computations of pound-mass shall be made in accordance with the latest
revision of American Petroleum Institute Manual of Petroleum Measurement
Standards, Chapter 14, Parts 1, 2 and 4 with any subsequent amendments,
revisions, and additions which may be mutually acceptable to Seller and
Buyer.
20
| 10.6 |
Temperature
|
The
temperature of the Carbon Dioxide shall be determined by an on-line recording
thermometer so installed that it will sense the temperature of the Carbon
Dioxide flowing through the meters.
| 10.7 |
Meter
Tests
|
Seller
shall ensure that the measuring equipment is accurate and in repair, and that
such periodic tests as Seller may deem necessary are made, at least once each
calendar quarter. Seller agrees to ensure that Buyer is given reasonable notice
of each such test of the measuring equipment in order that, if Buyer desires,
Buyer may have its representative present to witness such tests. Such
representative shall comply with all relevant site access policies and
agreements. If, upon any test, any measuring equipment is found to be
inaccurate, such equipment shall be recalibrated, and, to the extent that it
affects the aggregate measurement accuracy by an amount exceeding two percent
(2%), registrations thereof shall be corrected for a period extending back
to
the time such inaccuracy occurred, if such time is ascertainable, and, if not
ascertainable, then back one-half of the time elapsed since the last date of
calibration; provided no retroactive correction shall be made for recorded
inaccuracies of less than two percent (2%) in the aggregate. Either party may
request special or additional tests of the measuring equipment at the requesting
party’s’ sole expense.
| 10.8 |
Meter
Out of Service
|
If,
for
any reason, any meter is out of service or out of repair so that the amount
of
Carbon Dioxide delivered cannot be ascertained or computed from the readings
thereof or corrected under Article 10.7, the Carbon Dioxide delivered during
the
period such meter is out of service or out of repair shall be estimated and
agreed upon by the parties upon the basis of the best data available, using
the
first listed of the following methods which is feasible:
| (a) |
by
using the registration of any check meter, if installed and accurately
registering;
|
| (b) |
by
correcting the error if the percentage of error is ascertainable
by
calibration, test, or mathematical
calculation;
|
| (c) |
by
using other meters on the ExxonMobil CO2 Pipeline to calculate such
an
estimate by use of material
balance;
|
| (d) |
by
estimating the quantity delivered on the basis of deliveries
during
preceding periods under similar conditions when the meter was
registering
accurately.
|
ARTICLE
11 - MISCELLANEOUS
| 11.1 |
Warranty
of Title
|
Notwithstanding
anything herein to the contrary, at its sole option Seller may from time to
time
and at any time deliver to Buyer, in lieu of Carbon Dioxide owned by Seller,
Carbon Dioxide which is attributable to other working interest owners owning
Carbon Dioxide which is produced at XxXxxxx field. As between the Parties,
any
such Carbon Dioxide delivered to Buyer shall be deemed Carbon Dioxide purchased
by Buyer from Seller under this Agreement. Seller warrants title to all Carbon
Dioxide sold to Buyer hereunder and that it has the right to control and to
dispose of all Carbon Dioxide delivered to Buyer under this Agreement and shall
indemnify Buyer against all damages, costs, losses and expenses arising from
or
out of adverse claims of ownership in or to such Carbon Dioxide and/or sales
proceeds, royalties or charges thereon.
21
| 11.2 |
Disclaimer
of Certain Warranties
|
EXCEPT
AS EXPRESSLY PROVIDED IN ARTICLE 11.1, SELLER MAKES NO WARRANTIES OF ANY KIND
OR
CHARACTER EITHER EXPRESS OR IMPLIED UNDER THIS AGREEMENT.
SELLER
EXPRESSLY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE EITHER EXPRESS OR IMPLIED WITH RESPECT TO THE CARBON DIOXIDE DELIVERED
HEREUNDER.
SELLER
AND BUYER UNDERSTAND AND AGREE THAT THE DCQ PROVIDED HEREIN IS ONLY AN ESTIMATE
OF THE VOLUME OF CARBON DIOXIDE WHICH MAY BE AVAILABLE HEREUNDER, AND NO
GUARANTEE OR WARRANTY OF ANY SPECIFIC VOLUME OF CARBON DIOXIDE TO BE DELIVERED
HEREUNDER IS MADE BY SELLER INITAILLY OR AT ANY TIME DURING THE TERM OF THIS
AGREEMENT.
| 11.3 |
Failure
of Carbon Dioxide to Meet Quality Specifications
|
| (a) |
In
the event that either Party becomes aware that Carbon Dioxide actually
delivered or expected to be delivered by Seller to the Delivery Point
does
not meet Quality Specifications, such Party shall promptly notify
the
other Party. Buyer, upon prompt notice to or from Seller (as the
case may
be), shall have the right to refuse to accept delivery of Carbon
Dioxide
that does not meet Quality Specifications in whole or part and Seller,
upon receipt of such notice, shall reduce or cease deliveries of
Carbon
Dioxide in accordance with Buyer's instructions. Buyer shall also
have the
right to waive objection to such deliveries and to continue to accept
and
receive such Carbon Dioxide. Buyer's failure to provide the above
described notice to Seller within forty-eight (48) hours of delivery
of
such off-specification Carbon Dioxide shall be deemed an election
by Buyer
to waive its right to refuse in whole or part to accept delivery
of Carbon
Dioxide that does not meet Quality Specifications. Notwithstanding
the
preceding sentence, Buyer shall also have the right, at any time
except as
provided for in Article 11.3 (b) (III), upon notice to the Seller
to cease
accepting deliveries by Seller of Carbon Dioxide that does not meet
Quality Specifications. Seller shall provide Buyer with a copy of
Seller's
monthly report of the average daily Carbon Dioxide quality data at
Buyer's
request, and Buyer shall have the right to obtain samples of the
Carbon
Dioxide for analysis upon request.
|
| (b) |
IF
SELLER HAS REDUCED OR CEASED DELIVERIES HEREUNDER IN RESPONSE TO
A NOTICE
FROM BUYER AS PROVIDED IN ARTICLE 11.3 (a),
SELLER SHALL HAVE THE RIGHT TO ELECT, BY NOTICE TO BUYER GIVEN WITHIN
SIXTY (60) DAYS AFTER RECEIPT OF BUYER'S NOTICE TO CEASE OR REDUCE
DELIVERIES, TO CURE THE CAUSE OF SUCH FAILURE, AND, IF SELLER SO
ELECTS,
SELLER SHALL PROCEED WITH ALL DUE DILIGENCE, TO TIMELY EFFECT SUCH
CURE.
IF SELLER DOES NOT SO ELECT TO CURE SUCH FAILURE WITHIN SUCH PERIOD
OR
SELLER ELECTS BUT DOES NOT THEREAFTER CURE SUCH FAILURE TO BUYER’S
SATISFACTION WITHIN THIRTY (30) DAYS OF SELLER'S DELIVERY TO BUYER
OF
NOTICE OF ITS ELECTION TO CURE, THEN BUYER, UPON NOTICE TO SELLER,
SHALL
HAVE THE RIGHT TO EITHER (I) ADJUST THE DCQ DOWNWARD, OR (II) CANCEL
THIS
AGREEMENT WITHOUT FURTHER LIABILITY EXCEPT FOR PREVIOUSLY ACCRUED
OBLIGATIONS, OR (III) PERMANENTLY WAIVE THE NONCONFORMITY TO THE
QUALITY
SPECIFICATIONS THAT EXIST AT THE TIME OF THE WAIVER.
|
22
| (c) |
Buyer's
elections under Article 11.3 (b) to adjust the DCQ, cancel the Agreement
or waive the nonconformity to the quality specifications shall be
Buyer's
sole and exclusive remedy for failure of the Carbon Dioxide to meet
such
Quality Specifications and Buyer waives all other rights or remedies
at
law or in equity regarding such failure.
|
| 11.4 |
Limitation
of Liability and General
Indemnities
|
| (a) |
Except
as otherwise expressly provided in this Agreement, including but
not
limited to Article 11.4(b), each Party shall indemnify, defend and
hold
the other Party harmless from all claims, demands and causes of action
asserted against the other Party by any other persons (including
employees
of either Party) for personal injury, loss of or damages to property,
or
for alleged violations of law resulting directly
from:
|
| (i) |
the
gross negligence, willful misconduct or negligent acts or omissions
of the
indemnifying Party; and
|
| (ii) |
any
act, omission or accident occurring while title to and risk of the
Carbon
Dioxide is vested in the indemnifying Party, except to the extent
such
damages, claims, demands, proceedings and causes of action are caused
by
the other Party; provided that where personal injury, death or loss
of or
damage to property is the result of joint negligence or misconduct
of the
Parties, the Parties expressly agree to indemnify each other in the
proportion to their respective share of such joint negligence or
misconduct.
|
| (b) |
NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS AGREEMENT, ANY REMEDIES OR DAMAGES
ARISING FROM A BREACH OF THIS AGREEMENT BY EITHER SELLER OR BUYER
SHALL BE
LIMITED TO ACTUAL DIRECT AND FORESEEABLE COSTS, LOSSES, OR DAMAGES
CAUSED
BY OR RESULTING FROM THE BREACH AND INCURRED BY THE PARTY CLAIMING
DAMAGES. NO PARTY SHALL BE LIABLE TO ANY OTHER PARTY FOR ANY LOSS
OF
PROFIT OR ANTICIPATED PROFIT, BUSINESS INTERRUPTION, LOSS OF REVENUE,
LOSS
OF USE, LOSS OF CONTRACT, LOSS OF GOOD WILL, INCREASED COST OF WORKING
OR
LOSS OF BUSINESS OPPORTUNITY, NOR FOR ANY INDIRECT LOSS, CONSEQUENTIAL
LOSS, OR EXEMPLARY DAMAGES SUFFERED BY A PARTY OR ANY OTHER PERSON,
ALL OR
ANY PART OF WHICH ARISE OUT OF OR RELATE TO THIS AGREEMENT OR THE
PERFORMANCE OR BREACH OF THIS AGREEMENT, OR TO ANY ACT OR OMISSION
RELATED
TO THIS AGREEMENT, WHETHER IN CONTRACT, WARRANTY, TORT (INCLUDING
BUT NOT
LIMITED TO GROSS NEGLIGENCE OR WILLFUL MISCONDUCT), STRICT LIABILITY,
OR
ANY OTHER THEORY IN CONTRACT, LAW, OR EQUITY. FOR THE PURPOSES OF
THIS
AGREEMENT, “DIRECT COSTS, LOSSES, OR DAMAGES” SHALL NOT INCLUDE ANY COST,
EXPENSE, LOSS, AWARD OR DAMAGE SUFFERED OR INCURRED BY A PARTY IN
RESPECT
OF ANY ACTIONS, PROCEEDINGS, CLAIMS, OR DEMANDS MADE AGAINST THAT
PARTY BY
ANY OF ITS CUSTOMERS OR ANY OTHER THIRD PARTY.
|
23
|
(c)
|
If,
for reasons other than Force Majeure or Buyer's failure to take,
Seller
fails to deliver the volumes nominated by Buyer for a period of thirty
(30) consecutive Days, Buyer shall have the right to cancel this
Agreement
by so notifying Seller in writing. Such election to cancel this Agreement
shall be Buyer's sole and exclusive remedy for this particular breach
and
Buyer waives all other rights and remedies at law or equity with
respect
to this particular breach.
|
| (d) |
This
Article 11.4 shall survive termination or cancellation of this
Agreement.
|
| 11.5 |
Choice
of Law
|
This
Agreement shall be governed by and construed under the laws of the State of
Texas, excluding any choice of law that would refer a matter to another
jurisdiction. The
forum
of any litigation arising out of this Agreement shall be exclusively in a state
or federal court in Xxxxxx County, Texas and the Parties hereby consent to
the
jurisdiction and venue of such courts.
| 11.6 |
Force
Majeure
|
Force
Majeure means acts of God, lightning, earthquakes, fires, storms, floods,
strikes, lockouts, or other industrial disturbances, acts of the public enemy,
wars, insurrections, riots, blockades, epidemics, sabotage, acts of terrorism,
embargoes or other import or export restrictions, civil disturbances,
explosions, breakage, malfunction, freezing or accident resulting in the partial
or complete shutdown to machinery, equipment, lines of pipe, facilities,
equipment or xxxxx, reservoir failure, any laws, orders, rules, regulations,
acts, or restraints of or delays caused by any government body or authority,
civil or military, and any other cause or causes, whether of the kind herein
enumerated or otherwise, not reasonably within the control of the Party claiming
suspension and which by the exercise of due diligence such Party is unable,
wholly or in part, to prevent or overcome. Such term shall likewise include
(a)
in those instances where either Party hereto is required to obtain servitudes,
right-of-way grants, permits or licenses to enable such Party to perform
hereunder, the inability of such Party in acquiring, at reasonable cost and
after the exercise of reasonable diligence, such servitudes, right-of-way
grants, permits, or licenses, and (b) in those instances where either Party
hereto is required to furnish materials and supplies for the purpose of
constructing or maintaining facilities or is required to secure permits or
permissions from any governmental agency to enable such Party to perform
hereunder, the inability of such Party to acquire, or the delays on the part
of
such Party in acquiring, at reasonable cost and after the exercise of reasonable
diligence, such materials and supplies, permits and permissions, or (c) in
the
event either Party is required to secure permits or permissions from any
governmental agency or is required by any governmental agency to modify or
add
facilities, the, cost of such permits, permissions, modifications, or additions
render uneconomic the operation of XxXxxxx field, Xxxxx Creek plant, or the
Project and results in the cessation of such operation.
In
the
event of any Party being rendered unable, wholly or in part, by Force Majeure
to
carry out its obligations under this Agreement, such Party shall give notice
and
reasonably full particulars of such Force Majeure in writing or by facsimile
to
the other Party within a reasonable time after the occurrence of the Force
Majeure event; provided, however, that this Force Majeure provision shall take
effect as of the moment the Force Majeure event occurs.
The
obligations of the Party claiming Force Majeure, so far as they are affected
by
such Force Majeure shall be suspended during the continuance of any inability
so
caused, but for no longer period, and such cause shall so far as possible be
remedied with all reasonable dispatch; provided any obligation of Buyer to
make
payments for Carbon Dioxide theretofore delivered hereunder shall not be
suspended. The Term of this Agreement shall not be extended due to Force
Majeure, and the DCQ shall be adjusted proportionally to reflect all volumes
that are not delivered or purchased as a result of Force Majeure.
24
| 11.7 |
Assignment
|
| (a) |
Written
Consent:
Except as provided in Article 11.17 (c), neither this Agreement nor
any
rights or obligations hereunder may be assigned to any other person,
without the prior written consent (which shall not be unreasonably
withheld or delayed) of the non-assigning
Party.
|
| (b) |
Assignment: Any
Party wishing to assign this Agreement or any of its rights or obligations
hereunder must give notice of its intended assignment to the non-assigning
Party, at least ninety (90) days prior to the proposed effective
date of
the assignment, provided that notice of an intended assignment to
an
Affiliate may be given forty-five (45) days prior to the proposed
effective date of the assignment.
|
| (c) |
Assignment
to Affiliate:
|
| (i) |
A
Party having satisfied the notice requirement of Article 11.7 (b)
may
without the consent of the non-assigning Party, assign this Agreement
or
any of its rights or obligations hereunder to an Affiliate provided
that
the assigning Party shall remain jointly and severally liable with
the
assignee (and any subsequent Affiliate assignees of such assignee)
for the
performance by the assignee (and any subsequent Affiliate assignees
of
such assignee) of all such rights, duties, liabilities and obligations
so
assigned.
|
| (ii) |
The
Affiliate assignee shall covenant directly with the non-assigning
Party
(in a document acceptable to the non-assigning Party) to observe
and
perform all of the assigning Party's rights and obligations under
this
Agreement which have been assigned to it and to be bound by this
Agreement
in every way as if the Affiliate assignee were a Party to this
Agreement.
|
| (d) |
Notice:
The
notice referred to in Article 11.7 (b) shall contain all particulars
relevant to the proposed assignment, including but not limited to
the
following information:
|
25
|
(i)
|
The
identity and all other relevant information in respect of the proposed
assignee for the purposes of this
Agreement;
|
| (ii) |
In
a case where part of the Agreement is proposed to be assigned, a
clear
identification, by means of referral to the articles of this Agreement,
of
which rights and obligations would be assigned to the proposed assignee
and which rights and obligations, if any, would remain with the assigning
Party;
|
| (iii) |
A
description of the relationship, if any, between the assigning Party
and
the proposed assignee; and
|
| (iv) |
A
description of the proposed assignee's financial resources and
organizational relationship to companies which would be its Affiliates
if
it were a Party to this Agreement.
|
| (e) |
Release
of Assigning Party: Subject
to Article 11.7 (g), the assigning Party under an assignment consented
to
by the non-assigning Party in accordance with this Article 11.7 shall
be
relieved and released of all rights, duties, liabilities and obligations
so assigned, except with respect to any and all such rights, duties,
liabilities and obligations that have arisen or accrued prior to
the
effective date of the assignment.
|
| (f) |
Deemed
Consent: If
the Party in receipt of a timely notice pursuant to Article 11.7
(b) above
fails to provide a notice giving or refusing consent at least thirty
(30)
days prior to the proposed effective date of the assignment, such
Party
shall be deemed to have given prior written consent. This Article
11.7 (f)
shall not apply to assignments to Affiliates pursuant to Article
11.7
(c).
|
| (g) |
Effective
Date of Assignment: Subject
to the other provisions of this Article 11.7, an assignment shall
be
effective as of the date proposed in the notice given pursuant to
Article
11.7 (b) provided that no assignment under this Article 11.7 (excepting
assignments to Affiliates) shall be effective, unless and
until:
|
| (i) |
the
proposed assignee covenants directly with the non-assigning Party
(in a
document acceptable to the non-assigning Party) to observe and perform
all
of the assigning Party's rights and obligations under this Agreement
which
have been assigned to it and to be bound by this Agreement in every
way as
if the assignee were a Party to this Agreement;
and
|
| (ii) |
the
assigning Party has provided to the non-assigning Party a certified
copy
of the assignment document (excluding the consideration paid or payable
for, and any other commercial terms relating to such assignment which
can
have no effect upon the non-assigning Party).
|
26
| 11.8 |
Notices
|
All
notices, statements, and other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been given effectively
when deposited in the United States Mail, postage prepaid, sent by mutually
acceptable electronic means, delivered by courier service with charges prepaid,
or transmitted by a facsimile transmission device (telecopier), as the case
may
be, and addressed as follows:
Buyer:
000
-00xx
Xxxxxx,
Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
Attention:
Chief Operating Officer
Telephone:
000-000-0000
Telecopier:
000-000-0000
Seller:
ExxonMobil
Gas & Power Marketing Company
000
Xxxx
Xxxxxx, XXXX-XXX-0000X
Xxxxxxx,
Xxxxx 00000
Attention:
Manager - CO2 Business
Telephone:
(000) 000-0000
Telecopier:
(000) 000-0000
or,
to
such other address as a Party shall hereafter direct by notice to the other
Party from time to time. If an emergency affects significantly the ability
of a
party to perform under this Agreement, such Party shall notify the other Party
by telephone or in person as soon as possible of the consequences and
anticipated duration of such emergency and confirm such notification in writing
as soon thereafter as is practicable.
| 11.9 |
Waiver
|
| (a) |
No
waiver by or on behalf of a Party for any breach of a provision of
this
Agreement or failure to require performance of any obligation arising
under this Agreement shall occur unless expressed in writing, duly
executed and delivered by the waiving Party in accordance with the
notice
provisions of this Agreement.
|
| (b) |
No
waiver by either Party shall operate or be construed as a waiver
in
respect of any failure or default not expressly identified by such
written
waiver, whether of a similar or different character, and whether
occurring
before or after that waiver.
|
| (c) |
No
failure to exercise or delay in exercising any right or remedy arising
from this Agreement shall operate or be construed as a waiver of
such
right or remedy.
|
| 11.10 |
Headings
|
The
topical headings and table of contents used herein are inserted for convenience
only and shall not be construed as having any substantive significance or
meaning whatsoever or as indicating that all of the provisions of this Agreement
relating to any particular topic or to be found in any particular
section.
27
|
11.11
|
Right
of Ingress and Egress
|
Buyer
hereby grants unto Seller, to the extent it has a right to do so, full right
of
ingress or egress across properties of Buyer (or those of a third party, if
applicable) for purposes of carrying out its obligations under this
Agreement.
Seller
hereby grants unto Buyer right of ingress or egress across properties of Seller
for purposes of carrying out Buyer's rights under Article 10.7 subject to
Buyer's compliance with relevant site access policies and agreements of Seller
and its Affiliates.
| 11.12 |
Compliance
with Laws and Regulations
|
This
Agreement shall be subject to all valid and applicable laws, orders, rules,
and
regulations of any duly constituted governmental authority or body having
jurisdiction hereof; but nothing contained herein shall be construed as a waiver
by either party of any right to question or contest to final conclusion any
such
law, order, rule, or regulation in any forum having jurisdiction in the
premises.
It
is
recognized that it may be necessary for Seller and/or Buyer to make certain
filings with federal or state regulatory authorities with respect to the sale
and purchase of Carbon Dioxide hereunder. Each Party hereto agrees to file
promptly with the applicable regulatory authority and to prosecute diligently
to
final conclusion all such required applications, notices, or
reports.
In
the
performance of this Agreement, the Parties hereto shall not engage in any
conduct or practice which violates any applicable law, order, or regulation
prohibiting discrimination against any person by reason of race, color,
religion, national origin, sex, or age.
If
this
is an Agreement subject to the rules and regulations approved by the Secretary
of Labor under Executive Order 11246, as amended to date, the provisions of
that
Executive Order and the implementing rules and regulations of the Secretary
of
Labor are by reference hereby incorporated in and made a part of this
Agreement.
If
this
is a Agreement subject to the Affirmative Action Regulations with respect to
Disabled or Vietnam Era Veterans, regulations contained in the United States
Code of Federal Regulations (41 CFR §60-741.1 et seq. and 41 CFR §60-250.1 et
seq.) are by reference hereby incorporated in and made a part of this
Agreement.
| 11.13 |
Business
Practices
|
| (a) |
Each
Party shall establish precautions to prevent its employees, agents
or
representatives from making, receiving, providing or offering any
substantial gifts or entertainment, or any payments, loans or other
considerations to or from the other Party's employees, agents or
representatives. This obligation shall apply to the activities, arising
from the Agreement, of employees of a Party in their relations with
the
employees of the other Party, their families and/or third party
representatives.
|
| (b) |
All
statements rendered by a Party to the other Party under or pursuant
to
this Agreement including, but not limited to, Monthly Statements,
xxxxxxxx, notices, reports, financial settlements and other undertakings
between the Parties, shall accurately reflect the facts about all
activities and transactions between the Parties, and those renderings
may
be relied upon as being complete and accurate in any further reportings
made by the other Party or its representatives for whatever
purpose.
|
28
| (c) |
Should
any Party to this Agreement discover a failure to comply with any
portion
of this Article 11.13 by its company, or any employee, agent or
representative acting on behalf of its company, that Party shall
promptly
notify the other Party.
|
| 11.14 |
Dispute
Resolution:
|
| (a) |
Except
for matters related to the replacement of the Oil Price Factor or
to
technical matters related to Carbon Dioxide measurement, disputes
shall be
resolved first through good-faith negotiations between the Parties
and
then through arbitration as outlined in Article 11.14(b). Disputes
related
to replacement of the Oil Price Factor or to technical matters related
to
Carbon Dioxide measurement shall be resolved first through good-faith
negotiations between the Parties and then through the Expert procedures
as
outlined in Exhibit B.
|
| (b) |
Arbitration:
If a dispute has not been resolved within forty-five (45) days after
receipt of the original notice of a dispute or, in the case of Contract
Price redetermination, within ninety (90) Days of the date of the
requesting Party's notice requesting redetermination, then either
Party
may provide the other Party with notice to initiate arbitration
proceedings, which proceedings shall be conducted as provided herein
below.
|
| (i) |
Scope/Final
and Binding
--
Any dispute, controversy or claim, of any and every kind or type,
whether
based on contract, tort, statute, regulations, or otherwise, arising
out
of, connected with, or relating in any way to this Agreement, the
relationship of the Parties, the obligations of the Parties or
the
operations carried out under this Agreement, including without
limitations, any dispute as to the existence, validity, construction,
interpretation, negotiations, performance, non-performance, breach,
termination, or enforceability of this Agreement, shall be settled
through
final and binding arbitration, it being the intention of the Parties
that
this is a broad form arbitration agreement designed to encompass
all
possible disputes among the parties relating to the Agreement.
Initiation
of arbitration shall toll the running of all statutes of limitation
relating to the matters in
dispute.
|
| (ii) |
Institutional
Arbitration
--
The arbitration shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association ("AAA")
as in
effect on the date of commencement of the arbitration proceeding,
except
as modified herein.
|
| (iii) |
Number
of Arbitrators
--
If the amount in dispute involves less than $1 million, exclusive
of
interest and costs, then the arbitration shall be conducted and
finally
settled by a sole arbitrator. If the amount in controversy, exclusive
of
interest and costs, is $1 million or more, if the amount in dispute
is
unknown, or if relief other than damages is sought, then the arbitration
shall be conducted and finally settled by the majority vote of
three (3)
arbitrators.
|
29
| (iv) |
Method
of Selecting Arbitrators
--
If the arbitration is to be conducted by a sole arbitrator, then
the
arbitrator will be jointly selected by the Parties. If the Parties
fail to
agree on the arbitrator within thirty (30) days after the initiation
of
the arbitration, then the AAA shall appoint the arbitrator. If
the
arbitration is to be conducted by three (3) arbitrators, each Party
shall
within fifteen (15) days after initiation of the arbitration select
one
arbitrator, and these two arbitrators shall select a third presiding
arbitrator. If the two party-appointed arbitrators fail to agree
on the
third arbitrator within fifteen (15) days after the appointment
of the
later of the two, then the third arbitrator shall be appointed
by the
AAA.
|
| (v) |
Place
of Arbitration
--
Unless otherwise agreed by all Parties to the arbitration, the
situs of
the arbitration under this Agreement shall be Houston,
Texas.
|
| (vi) |
Qualifications
and Conduct of the Arbitrators
--
The arbitrators selected to act hereunder shall be qualified by education,
experience, and training to decide upon the particular question in
dispute, and shall not be an employee or former employee of either
Party
or an affiliate of either Party. All arbitrators, no matter how selected,
shall be and remain at all times wholly independent, unbiased and
impartial and shall provide the parties with a statement that they
can and
shall decide the case impartially.
|
| (vii) |
Decision
--
The arbitrators so appointed, after giving the Parties due notice
of
hearing and responsible opportunity to be heard, shall promptly hear
and
determine the question submitted and shall render their decisions
within
one hundred twenty (120) days after the appointment of the third
or sole
arbitrator. The decision of the arbitrators, or of a majority thereof,
made in writing, shall be final and binding upon the Parties hereto
as to
the questions submitted, and the Parties will abide by and comply
with
such decisions.
|
| (viii) |
Interim
Measures
--
The arbitrators, or in an emergency the presiding arbitrator acting
alone
in the event one or more of the other arbitrators are unable to be
involved in a timely fashion, may grant interim measures including
injunctions, attachments and conservation orders in appropriate
circumstances, which measures the parties agree may be immediately
enforced by the arbitrators or by a court of competent jurisdiction.
Notwithstanding the requirement for negotiation, prior to the constitution
of the arbitration tribunal and thereafter as necessary to enforce
the
arbitrators' rulings or in the absence of the jurisdiction of the
arbitrators to rule on interim measures in a given jurisdiction,
any Party
may apply to a court of competent jurisdiction for interim measure,
and
the Parties agree that seeking and obtaining such measures shall
not waive
the right to arbitration. Furthermore, notwithstanding the above
provisions regarding negotiation, if either Party deems that time
is of
the essence in resolving the dispute, it may initiate arbitration
and seek
interim measures, as provided herein, and then comply with the
requirements for negotiations as long as they are fully completed
before
the commencement of the final hearing on the merits in the arbitration
proceeding.
|
| (ix) |
Waiver
of Appeals
--
To the extent permitted by law, any right to appeal from or to cause
a
review of any arbitral award by any court is hereby waived by the
Parties
except for claims of actual fraud.
|
30
| (x) |
Costs
and Attorneys' Fees
--
Each Party shall bear the expense of its arbitrator and attorneys'
fees
and the expenses of the third arbitrator shall be borne equally by
Buyer
and Seller.
|
| (xi) |
Interest
--
The award may include interest from the date of any breach or violation
of
this Agreement, as determined by the arbitral award, and from the
date of
the award until paid in full. Interest shall be awarded at an annualized
rate equivalent to the Interest Rate plus one per cent (1%) (compounded
monthly).
|
| (xii) |
Punitive
Damages
--
Penal, punitive, treble, multiple, consequential, incidental or similar
damages may not be recovered or
awarded.
|
| 11.15 |
Severability
|
If
any
provision (or part thereof) of this Agreement is or becomes unlawful or void,
the legality, validity, or enforceability of any other part of that provision
or
any other provision of this Agreement shall not be affected, but shall continue
in force and effect. The unlawful or void provision shall be deleted from this
Agreement by written consent of the Parties or final court order, but only
to
the extent of any invalidity so as to preserve the Agreement to the maximum
extent.
The
Parties agree to negotiate in good faith to replace those provisions (or parts
thereof) deleted from the Agreement pursuant to the paragraph above within
ninety (90) Days of such deletion, so as to restore the original economic value
of each Party's obligations. The Agreement shall continue in force with the
deletion of the unlawful or void provisions (or part thereof) notwithstanding
that agreement cannot be reached between the Parties on replacement provisions
within such ninety (90) Day period.
| 11.16 |
Variations
to Agreement
|
Any
variations or additions or amendments to this Agreement shall be in writing
and
shall not be valid unless duly signed and executed by the Parties.
| 11.17 |
Entire
Agreement
|
This
Agreement, including its exhibits, contains the entire agreement between the
Parties relating to the subject matter hereof, and supersedes all previous
negotiations, agreements (including but not limited to the letter agreement
dated June 28, 2007), understandings, undertakings, representations, documents,
minutes of meetings, letters and notices (whether oral or written) between
the
Parties and/or their respective Affiliates with respect to such subject matter.
| 11.18 |
Confidentiality
|
Except
as
required by law, regulation or order of governmental authority, Seller and
Buyer
shall keep and maintain this Agreement and all the terms and provisions hereof
in confidence for the term of the Agreement and will not transmit, reveal,
disclose or otherwise communicate the
substance or any of the terms or provisions of this Agreement to any other
person not an employee, officer, director, attorney, partner, working interest
owner, agent or contractor of Seller or Buyer, provided that Seller may make
such disclosures as may be required in its lease agreements with royalty owners
and taxing authorities or any litigation or arbitration concerning Carbon
Dioxide prices. The terms of this Agreement may be disclosed in any litigation
or arbitration involving this Agreement and to the Affiliates (and their
respective agents, employees, officers, directors and attorneys), investors,
auditors, counsel, lenders or potential
lenders, and other professional advisors, and agents or contractors of Seller
or
Buyer, or potential purchasers of Buyer’s properties in which Carbon Dioxide is
injected; provided that, (i) in any such disclosure other than litigation
involving this Agreement, the person or party to whom such disclosure is made
agrees to be bound by this confidentiality provision and (ii) the Party making
such disclosure shall be responsible for the compliance of persons to whom
such
disclosure is made.
31
| 11.19 |
Maintenance
|
Seller's
Facilities and Buyer's Facilities may require periodic maintenance shutdowns.
A
Party anticipating maintenance shall use commercially reasonable efforts to
give
at least thirty (30) days prior notice to the other Party. During periods of
maintenance for which notice has been properly given and maintenance was
performed, the Parties shall be relieved of all volume delivery and take
obligations that otherwise would accrue during such periods; provided, however,
that Buyer shall be entitled to a maximum of five (5) Days of such maintenance
for Buyer's Facilities in a Contract Year. The DCQ shall be adjusted to reflect
only actual volume reductions resulting from such maintenance. Subject
to the foregoing, each Party shall reasonably cooperate with the other Party
to
minimize interruptions in volume delivery and take schedules.
| 11.20 |
Drug
and Alcohol Policy
|
Each
Party agrees that its employees, personnel, and contractors shall not use,
be
under the influence of, possess, distribute, or sell alcohol beverages, illicit
or unprescribed controlled drugs, drug paraphernalia, or impairment causing
drugs while performing their respective obligations under this Agreement. Each
Party has or will adopt its own policy (including testing policy) to assure
a
drug and alcohol free workplace. Each Party will not use an employee, personnel
or contractor to perform the obligations under this Agreement who either refuses
to take, or tests positive in any alcohol or drug test or who refuses to
cooperate with any search. Each Party will comply with applicable laws
concerning employee alcohol and drug use and assure that its contractors agree
to do so.
| 11.21 |
Survival
|
Except
as
expressly provided otherwise in this Agreement, termination or cancellation
of
this Agreement, regardless of cause, shall be without prejudice to any rights
or
remedies that may have accrued to any of the Parties prior to the date thereof.
In addition, the provisions of Articles 11.4 (Limitation
of Liability and General Indemnities),
11.14
(Dispute
Resolution),
11.1
(Warranty of Title), 11.2 (Disclaimers
of Certain Warranties),
5.2
(Auditing),
5.4
(Financial
Circumstances)
and any
other Article or Exhibit either expressed to survive termination of this
Agreement or requiring either Party to indemnify the other Party pursuant
hereto, shall survive the termination of this Agreement.
32
| 11.22 |
Greenhouse
Gases
|
(**)
GHGRR shall mean the recognition, award, or allocation of credits, allowances,
permits, or other tangible rights or obligations, whether created through
government program or private contract now or in the future, associated with
the
production, avoidance, capture, sequestration, or other control of greenhouse
gases subject to this Agreement. (**) This right includes the right to count
or
claim any applicable reductions pursuant to the U.S. Department of Energy’s
Climate Challenge Program as modified from time to time, to register all such
reductions pursuant to Section 1605 of the Energy Policy Act of 1992 and other
related public and private registries, and any other governmental, public,
or
private program designed to encourage or reward the reduction of greenhouse
gas
emissions or emission reductions. (**)
(**)
| 11.23 |
Relationship
of the Parties
|
Nothing
in this Agreement and no action taken by the Parties pursuant to this Agreement
shall constitute, or be deemed to constitute, a partnership, unincorporated
association or other co-operative entity. The obligations and liabilities
of the
Parties to this Agreement are several and not joint, nor joint and
several.
|
"
SELLER "
EXXONMOBIL
GAS & POWER MARKETING COMPANY
(a
division of ExxonMobil Corporation)
By:
Name:
______________________
Title:
_________________________
DATED
this ___ day of ______, 20__
|
"BUYER"
By:
Name:
_______________________
Title:
_________________________
DATED
this ___ day of ______ 20__
|
33
EXHIBIT
A - DAILY CONTRACT QUANTITY
DCQ
-
MMCFD
|
Contract
Year 1
|
70.0
|
|||
|
Contract
Year 2
|
70.0
|
|||
|
Contract
Year 3
|
70.0
|
|||
|
Contract
Year 4
|
70.0
|
|||
|
Contract
Year 5
|
70.0
|
|||
|
Contract
Year 6
|
70.0
|
|||
|
Contract
Year 7
|
70.0
|
|||
|
Contract
Year 8
|
70.0
|
|||
|
Contract
Year 9
|
70.0
|
|||
|
Contract
Year 10
|
70.0
|
|||
|
|
34
EXHIBIT
B - EXPERT PROCEDURES
| B.1. |
Appointment
of Expert
|
"Expert
means an individual selected by the Parties to resolve a dispute as outlined
in
this Exhibit B.
Whenever
an Article of this Agreement provides for a matter to be referred to an Expert,
or whenever the Parties agree that a disputed matter shall be resolved by an
Expert, the following procedures shall apply:
| B.1.1 |
The
Party wishing the appointment to be made shall give notice to that
effect
to the other Party and with such notice shall give details of the
matter
which is proposed to be resolved by the
Expert.
|
| B.1.2 |
The
Parties shall meet in an endeavor to agree upon a single Expert to
whom
the matter in dispute shall be referred for
determination.
|
| B.1.3 |
If
within twenty-one (21) days from the service of a notice pursuant
to
Article B.1.1 the Parties have either failed to meet or failed to
agree
upon an Expert, then the matter may forthwith be referred by either
Party,
together with a copy of this Exhibit B, to the American Arbitration
Association which shall be requested to select an Expert by notice
to the
Parties within thirty (30) days, and in so doing, a Party considering
referral, may take such independent advice as it thinks
fit.
|
| B.1.4 |
Upon
an Expert being agreed or selected under the foregoing provisions
of this
Exhibit B, the Parties shall forthwith notify such Expert of the
selection
together with a copy of Articles B.2 and B.4 of this Exhibit B, and
shall
request advice within fourteen (14) days as to whether or not the
appointment will be accepted.
|
| B.1.5 |
If
such Expert shall be either unwilling or unable to accept such appointment
or shall not have confirmed willingness and ability to accept such
appointment within the said period of fourteen (14) days, then (unless
the
Parties are able to agree upon the appointment of another Expert)
the
matter shall again be referred (by either Party) in the aforesaid
manner
to the American Arbitration Association,which shall be requested
to make a
further selection, and the process shall be repeated until an Expert
is
found who accepts the appointment.
|
| B.2 |
Qualification
|
| B.2.1 |
No
person shall be appointed or accept appointment to act as the Expert
under
this Exhibit B unless qualified by education, experience and training
to
determine the matter in dispute.
|
| B.2.2 |
Any
person appointed or selected as the Expert in accordance with the
above
provisions shall be entitled to act as such Expert provided that
before
accepting such appointment the proposed Expert shall have fully disclosed
to the Parties any relationship, interest, or duty which could, in
the
reasonable view of either Party, materially conflict with performing
functions required by appointment and/ or prejudice the Expert's
ability
to render an independent, impartial determination.
|
35
| B.2.3 |
No
person, without the prior written agreement of both Parties, shall
be
appointed as the Expert who is (or has been at any time within the
preceding six years) an employee of either Party or of an Affiliate
of
either Party or who is (or has been at any time within the preceding
three
(3) years) a consultant to or contractor of either Party or of an
Affiliate of either Party or who has served in a similar expert capacity
for either Party or who holds any significant financial interest
in either
Party.
|
| B.3 |
Confidentiality
|
No
person
shall be appointed as an Expert who has not agreed to hold in confidence any
and
all information furnished by each of the Parties in connection with the dispute
under this Agreement, the existence of such dispute and his determination
thereof.
| B.4 |
Remuneration
|
The
appointment of the Expert shall only take effect after agreement has been
reached between the Parties and the Expert as to the Expert's remuneration.
The
arrangement agreed on shall be clearly set out in writing and shall be part
of
the agreement between the Parties and the Expert.
| B.5 |
Determination
|
| B.5.1 |
The
Expert may request data, information or submissions as the Expert
thinks
fit, and the Parties shall use reasonable endeavors to comply promptly
with such requests. However, no Party shall be required to divulge
confidential information nor to provide information in support of
the
other Party's claim. All information supplied to the Expert in writing
by
a Party shall be served by notice simultaneously to the other Party.
In
the event that the Expert shall request oral submissions to be made,
the
Party requested to make such submissions shall give the other Party
not
less than four (4) Business Days' notice of the time and place where
such
submissions are to be made and shall promptly afford the other Party
the
opportunity to be present.
|
| B.5.2 |
The
Expert shall make a determination in writing and in such determination
give reasons for the determination, not later than thirty (30) days
after
acceptance of the appointment and shall ignore data, information
and
submissions supplied and made after such thirty (30) days unless
the same
are furnished in response to the Expert's specific
request.
|
| B.5.3 |
The
Expert may obtain such independent professional and/or technical
advice,
as the Expert may reasonably require, from a person meeting the
Qualifications requirements of Articles B.2.2 and B.2.3, provided
that
disclosure required by Article B.2.2 shall be made by the prospective
advisor to the Expert who shall promptly forward same to the Parties.
Consent of both Parties must be obtained before the advisor is
engaged.
|
| B.5.4 |
If
within a reasonable period (which shall not without the prior written
consent of both Parties exceed sixty (60) days after the acceptance
by an
Expert of the appointment), the Expert shall not have rendered a
determination then (at the request of either Party) a new Expert
shall be
appointed under the provisions of this Exhibit B and upon the acceptance
of the appointment by such new Expert the appointment of the previous
Expert shall cease. Provided however, that if the previous Expert
shall
have rendered a determination prior to the date upon which the new
Expert
accepts the appointment such determination shall be binding upon
the
Parties and the instructions to the new Expert shall be
withdrawn.
|
36
| B.5.5 |
The
Expert shall be deemed not to be an arbitrator but shall render a
determination as an Expert and the law or legislation relating to
arbitration shall not apply to such Expert or the determinations
or the
procedure by which such determinations are
reached.
|
| B.5.6 |
The
determination of the Expert shall be final and binding upon the Parties
save in the event of fraud, manifest error or failure by the Expert
to
disclose any relevant interest or duty in accordance with this Exhibit
B.
|
| B.5.7 |
Each
Party shall bear the costs and expenses of all counsel, witnesses
and
employees retained by it; the costs and expenses of the Expert shall
be
apportioned between the Seller and the Buyer in a manner proportionate
to
the determination made by the Expert. The Expert determination shall
address the proportions in which the Parties should bear the Expert's
costs.
|
37
