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EXHIBIT 10
NATURAL GAS INVENTORY FORWARD SALE CONTRACT
DATED
JUNE 6, 1997
BETWEEN
CRYSTAL GAS L.L.C.
AND
THE CHASE MANHATTAN BANK
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NATURAL GAS INVENTORY FORWARD SALE CONTRACT
This NATURAL GAS INVENTORY FORWARD SALE CONTRACT (this "Agreement") is
entered into as of June 6, 1997 between CRYSTAL GAS L.L.C., a limited liability
company organized under the laws of the State of Louisiana (the "Seller"), and
The Chase Manhattan Bank, a New York state banking corporation (the
"Purchaser").
WHEREAS, Seller has recently purchased certain oil and gas properties
located in DeSoto Parish, Louisiana and, together with its affiliates, is
engaged in the acquisition, storage and sale of natural gas, and desires to
sell to Purchaser certain quantities of natural gas currently owned or to be
produced or acquired by Seller on the terms and conditions set forth herein to
refinance the acquisition and fund the future development of those properties;
and
WHEREAS, Seller desires to sell and Purchaser desires to purchase
certain quantities of Natural Gas on the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the respective covenants and
agreements of the parties hereinafter set forth and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each of the parties, the parties hereby agree as follows:
ARTICLE I - INTERPRETATION
Section 1.01 Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated:
"Accelerated Termination Date" shall have the meaning ascribed thereto
in Section 6.02(b).
"Applicable Instruments" of any Person shall mean the Certificate or
Articles of Incorporation or the Certificate and Memorandum of Association,
by-laws and other organizational documents of such Person and all contracts,
indentures, agreements, instruments and documents to which such Person is a
party or by which such Person or any assets of such Person may be bound or
affected.
"Btu" means the amount of energy required to raise the temperature of
one pound of pure water one degree Fahrenheit from 59 degrees Fahrenheit to 60
degrees Fahrenheit.
"Business Day" means a day, other than a Saturday or a Sunday, on
which commercial banks are not authorized or required to be closed in New York,
New York.
"Confirmation Letter" have the meaning ascribed thereto in Section
2.01.
"Deficiency Quantity" means, in respect of a particular Delivery
Month, the amount by which the Required Delivery Quantity of Natural Gas for
that Delivery Month exceeds the quantity of Natural Gas actually delivered and
received hereunder in respect of such Delivery Month.
"Delivery Month" means each calendar month commencing with the month
of September, 1997 through and including the month of December, 2002.
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"Delivery Point" means a delivery point at the Texas Eastern Pipeline,
East Texas - Pool, or if the terms of Section 2.05(b) are satisfied, any of the
following locations: (i) Tennessee Gas Transmission, ▇▇▇▇ ▇, (▇▇) Transco
Pipeline (Upstream of Station 65) Zone 4, or (iii) ▇▇▇▇▇ Hub.
"Early Termination Date" shall have the meaning ascribed thereto in
Section 5.02.
"Event of Change" shall have the meaning ascribed thereto in Section
6.01.
"Event of Default" shall have the meaning ascribed thereto in Section
5.01.
"Federal Funds Rate" means, for any day, a fluctuating interest rate
per annum equal for such day to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for such day on such
transactions received by Purchaser from three Federal funds brokers of
recognized standing selected by Purchaser.
"Force Majeure" shall mean a failure by either party to perform
obligations hereunder, except for the obligation to make payment due hereunder,
to the extent that such failure is caused by war, riots, insurrections, fires,
explosions, sabotage, strikes and other labor or industrial disturbances, acts
of God or the elements, government laws, regulations or requests, disruption or
breakdown of production or transportation facilities, failures of transporters
in receiving and delivering natural gas tendered, compliance with OFO's or
other similar notice from a transporter, or by any other cause reasonably
beyond the control of such party, but does not include the failure to perform
obligations solely as a result of the fact that to do so will result in
economic loss or hardship to such party.
"Governmental Requirement" shall mean all judgments, orders, writs,
injunctions, decrees, awards, laws, ordinances, statutes, regulations, rules,
franchises, permits, certificates, licenses, authorizations and the like of any
government or any commission, board, court, agency, instrumentality or
political subdivision thereof.
"Guarantor" shall mean Crystal Oil Company, a Louisiana corporation.
"Guaranty Agreement" shall mean that certain Guaranty Agreement dated
of even date herewith by Guarantor, in favor of Purchaser.
"▇▇▇▇▇ Hub" means the Sabine Pipe Line Company pipeline facilities at
Texaco Inc.'s ▇▇▇▇▇ Gas Processing Plant near Erath, Louisiana.
"Margin Agreement" means the Margin Agreement of even date herewith
between Seller and Purchaser, as the same may be modified or amended from time
to time.
"MMBtu" means one million Btus.
"Natural Gas" means a mixture of gaseous hydrocarbons consisting
primarily of methane and meeting the quality standards and specifications
required pursuant to Section 2.02.
"NYMEX" means the New York Mercantile Exchange, Inc. and any successor
thereto by merger, consolidation, or sale of assets.
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"OFO" shall have the meaning given such term in Section 2.06(c).
"Payment Date" shall mean the 20th day of each month commencing on
October 20, 1997.
"Person" shall mean any individual, corporation, company, partnership,
joint venture, trust, unincorporated association, government or any commission,
board, court, agency, instrumentality or political subdivision thereof, any
other entity or any trustee, receiver, custodian or similar official.
"Prepaid Price" shall be the amount set forth in the Confirmation
Letter.
"Reference Dealer" means a leading company in the natural gas
marketing business selected by Purchaser in good faith from among companies
whose credit standings satisfy all the criteria that Purchaser applies
generally with respect to transactions similar to those contemplated by this
Agreement.
"Replacement Value" means (i) if Seller is the party which has failed
to perform, the price which Purchaser, acting in good faith and at arm's
length, actually pays, or has contracted to pay, for Natural Gas to replace the
Deficiency Quantity at the agreed Delivery Point plus any additional
transportation and other costs and expenses incurred by Purchaser in connection
with the purchase of such Natural Gas, and (ii) if Purchaser is the party which
has failed to perform, the price which Seller, acting in good faith and at
arm's length, actually receives, or has contracted to receive, for the sale of
the Deficiency Quantity at the agreed Delivery Point less any additional
transportation and other costs and expenses incurred by Seller in connection
with the sale of such Natural Gas.
"Required Delivery Quantity" means the amount of MMBtus of Natural Gas
to be delivered and received during a given Delivery Month pursuant to this
Agreement as agreed upon in the Confirmation Letter.
"Taxes" means all ad valorem, property, occupation, severance,
production, gathering, pipeline, utility, gross production, sales, use, excise,
transaction and any other governmental charges and assessments, other than
taxes based on net income or net worth.
"Termination Date" means either the Accelerated Termination Date or
the Early Termination Date, as the case may be.
"Termination Payment" shall have the meaning given such term in
Section 5.03.
"United States Dollars", "U.S. Dollars", or "U.S. $" means the lawful
currency of the United States of America in immediately available funds.
"Unpaid Amounts" means, with respect to any Termination Date, the
aggregate of all amounts that became payable (whether or not due) to Purchaser
hereunder prior to the occurrence of such Termination Date and that remain
payable (whether or not due) as at such Termination Date, together with
interest thereon from (and including) the date such amounts became due and
payable to (but excluding) such Termination Date at the U.S. Base Rate.
"U.S. Base Rate" means, at any time, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall at
all times be equal to the highest of: (a) the rate of interest announced
publicly by The Chase Manhattan Bank in New York, New York, from time to time,
as its prime commercial lending rate; or (b) one percent per annum above the
Federal Funds Rate in
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effect from time to time. In the event there is any Unpaid Amount, Purchaser
will use reasonable efforts to inform Seller of changes in the U.S. Base Rate
promptly upon the occurrence of such changes.
Section 1.02 Headings. The division of this Agreement into Articles and
Sections and the insertion of an index and headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement. The terms "this Agreement", "hereof", "hereunder" and similar
expressions refer to this Agreement and not to any particular Article, Section,
paragraph, Schedule or other portion hereof and include any agreement
supplemental hereto. Unless something in the subject matter or context is
inconsistent therewith, references herein to Articles, Sections and paragraphs
are to Articles, Sections and paragraphs of this Agreement.
Section 1.03 Number. Words importing the singular number shall include the
plural and vice versa, and words importing the masculine gender shall include
the feminine and neuter genders and vice versa.
Section 1.04 Non-Business Days. Whenever any action to be taken hereunder
shall be stated to be required to be taken or any payment to be made hereunder
shall be stated to be due on a day other than a Business Day, unless otherwise
specifically provided for herein, such payment shall be made or such action
shall be taken on the next succeeding Business Day if the due date was a Sunday
or a NYMEX or New York bank holiday which occurs on a Monday or on the last
preceding Business Day if the due date was a Saturday or a NYMEX or New York
bank holiday other than a Monday, and in the case of the payment of any
monetary amount, the extension or curtailment of time shall be taken into
account for the purposes of computation of interest or fees thereon.
ARTICLE II - SALE AND PURCHASE OF NATURAL GAS
Section 2.01 Sale and Purchase of Natural Gas.
(a) On or before June 6, 1997, Purchaser and Seller shall agree
upon and execute a letter described in this Section 2.01 (such letter being the
"Confirmation Letter"). The Confirmation Letter shall specify a mutually
acceptable Prepaid Price (which shall be approximately U.S. $30,000,000), the
date or dates on which the Prepaid Price shall be paid, and for each Delivery
Month, the Delivery Point, the Required Delivery Quantity, and the proportion
thereof to be delivered and received at the Delivery Point, each as mutually
agreed by Purchaser and Seller. On the date or dates specified for such
purpose in the Confirmation Letter, Purchaser shall pay to Seller the Prepaid
Price by wire transfer of immediately available funds to such account or
accounts as Seller may designated in writing, provided that the conditions
precedent set out in Annex 1 have been satisfied by Seller and no Event of
Default or Event of Change shall have occurred.
(b) In consideration of the payment to Seller of the Prepaid
Price, Seller hereby agrees to sell and deliver, or cause to be delivered, to
Purchaser or to its account in each Delivery Month, at the Delivery Point, the
Required Delivery Quantity of Natural Gas on the terms and conditions set forth
in this Agreement; and Purchaser hereby agrees to accept delivery of such
Natural Gas. Payment of the Prepaid Price on the date or dates set forth in
the Confirmation Letter shall constitute payment in full of the purchase price
of all quantities of Natural Gas to be delivered hereunder.
Section 2.02 Measurement and Quality. Natural Gas delivered to a specific
Delivery Point hereunder shall be measured by the operator of the Delivery
Point in accordance with its standard practices. All such Natural Gas shall
meet or exceed the requirements of Purchaser's transporter receiving gas at the
Delivery Point, including, without limitation, requirements of quality,
composition, temperature and pressure.
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Section 2.03 Delivery and Receipt of Natural Gas.
(a) Seller agrees to deliver to Purchaser, and Purchaser agrees to
accept delivery from Seller in each Delivery Month at the Delivery Point
determined pursuant to this Agreement, the Required Delivery Quantity of
Natural Gas required to be delivered under the Confirmation Letter in such
Delivery Month.
(b) Seller and Purchaser shall take such action as shall be
necessary to properly schedule the delivery and receipt of such Natural Gas at
the Delivery Point in each Delivery Month in compliance with all rules,
regulations and procedures applicable at the Delivery Point.
(c) Each Delivery Month, Seller shall arrange for delivery, and
Purchaser shall arrange for receipt, of Natural Gas to begin at the Delivery
Point no later than the first day of the Delivery Month and to be completed no
later than the last calendar day of the Delivery Month. All deliveries and
receipts shall be at hourly and daily rates that are as uniform as possible
over the course of the Delivery Month in accordance with generally accepted
pipeline scheduling practices.
Section 2.04 Payment of Fees. Seller shall obtain and pay all costs in
connection with transportation of the Natural Gas to the Delivery Point and
Purchaser shall obtain and pay all costs in connection with transportation of
the Natural Gas from the Delivery Point. Seller shall be responsible for the
payment of all hub fees (whether charged to Seller or Purchaser) payable in
connection with delivery of Natural Gas hereunder at the Delivery Point.
Seller shall not be responsible for any insurance, storage, transportation or
other costs in respect of the period after title to any Natural Gas delivered
hereunder has passed to Purchaser in accordance with Section 2.08 of this
Agreement. Purchaser shall not be responsible for any insurance, storage,
transportation or other costs in respect of the period prior to the time title
to any Natural Gas delivered hereunder has passed to Purchaser in accordance
with Section 2.08 of this Agreement.
Section 2.05 Delivery Points upon Force Majeure; Alternate Delivery Points.
(a) Seller is obligated to deliver to Purchaser and Purchaser is
obligated to receive from Seller, at the Delivery Point, the Required Delivery
Quantity of Natural Gas in accordance with the terms and conditions of this
Agreement. If as the result of a Force Majeure, either (i) Seller is unable,
after using all reasonable business efforts, to deliver the Required Delivery
Quantity of Natural Gas to Purchaser at the Delivery Point in the proportions
agreed upon pursuant to this Agreement or (ii) Purchaser is unable, after using
all reasonable business efforts, to receive the Required Delivery Quantity of
Natural Gas from Seller at the Delivery Point in the proportions agreed upon
pursuant to this Agreement, then Seller shall be obligated to deliver and
Purchaser shall be obligated to receive, the relevant Required Delivery
Quantity of Natural Gas at a mutually acceptable comparable delivery point or
points with mutually acceptable adjustments for quality and location.
(b) Seller may elect to deliver Natural Gas at an alternate
delivery point other than the Texas Eastern Pipeline, East Texas - Pool which
alternate delivery point may be any of the following locations: (i) Tennessee
Gas Transmission, ▇▇▇▇ ▇, (▇▇) Transco Pipeline (Upstream of Station 65) Zone 4
or (iii) ▇▇▇▇▇ Hub; provided that Seller has given Purchaser written notice of
its election no later than five (5) Business Days before the end the calendar
month preceding the Delivery Month in which it proposes to make delivery at
such alternate delivery point. If there is transportation cost differential
associated with delivery of such Natural Gas at such alternate delivery point
(as measured against delivery at the Texas Eastern Pipeline, East Texas -
Pool), Purchaser shall prepare and deliver to Seller, within five (5) Business
Days after the end of the applicable Delivery Month a certificate setting out
the calculation of
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the transportation cost differential accompanied by reasonably available
back-up documentation therefor. Any such certificate shall, absent manifest
error, be conclusive evidence of the amount of such transportation cost
differential. If Seller owes Purchaser compensation pursuant to this Section
2.05(b), Seller shall pay Purchaser such amount within five (5) Business Days
following its receipt of Purchaser's certificate. If Purchaser owes Seller
compensation pursuant to this Section 2.05(b), Purchaser shall pay Seller
amount on the next succeeding Payment Date.
(c) During any Delivery Month, Seller may elect to deliver Natural
Gas in excess of the Required Delivery Quantity for such Delivery Month by
giving Purchaser not less than two (2) Business Day's prior written notice;
provided that Purchaser may decline to accept such excess volumes if it
determines, in its sole discretion, that no readily available market exists for
such excess volumes, that such volumes are too small to be readily marketed or
that it is uneconomical for it to accept such excess volumes. If Purchaser
wishes to decline Seller's election, it shall give Seller written notice within
one (1) Business Day of its receipt of Seller's notice. If Purchaser accepts
Seller's election, the excess volume so delivered shall be allocated on a pro
rata basis to reduce the Required Delivery Quantity for each of the remaining
Delivery Months, commencing on the next succeeding Delivery Month. Purchaser
shall promptly furnish to Seller an amendment to the Confirmation Letter
evidencing such new Required Delivery Quantities.
Section 2.06 Failure of Delivery or Receipt; Transportation and Balancing.
(a) (i) Without prejudice to Articles V and VI, if as a result of
an event of Force Majeure, Seller is unable to meet its delivery obligation in
respect of a Delivery Month at the Delivery Point or at a mutually satisfactory
comparable delivery point or points (in which case Seller shall be deemed the
"Responsible Party"), then Seller shall pay to Purchaser, as liquidated
damages, the Replacement Value of the Deficiency Quantity of Natural Gas in
respect of that Delivery Month. The Replacement Value shall be paid to
Purchaser no later than the Payment Date next following such Delivery Month,
and Purchaser will accept such payment in lieu of Natural Gas not delivered in
such Delivery Month. Where Seller is unable to meet its acceptance obligation
as aforesaid, Purchaser shall use all reasonable efforts to minimize the
Replacement Value of any Deficiency Quantity. If the Replacement Value is
based on the price Purchaser pays to replace the Deficiency Quantity, Purchaser
shall prepare and deliver to Seller, within 5 Business Days after the end of
the applicable Delivery Month, a certificate setting out the calculation of the
Replacement Value accompanied by reasonably available back-up documentation
therefor. Any such certificate shall, absent manifest error, be conclusive
evidence of the amount due in respect of the Replacement Value. Purchaser
shall notify Seller as soon as possible of any anticipated inability to perform
all or any portion of its obligations hereunder.
(ii) Without prejudice to Article VI, if as a result of an
event of Force Majeure, Purchaser is unable to meet its obligation to accept
delivery in respect of a Delivery Month at the Delivery Point or at a mutually
satisfactory comparable delivery point or points (in which case Purchaser shall
be deemed the "Responsible Party"), then Seller shall pay to Purchaser, in lieu
of delivery of the Required Delivery Quantity, the Replacement Value of the
Deficiency Quantity of Natural Gas in respect of that Delivery Month. The
Replacement Value shall be paid to Purchaser no later than the Payment Date
next following such Delivery Month, and Purchaser will be required to accept
such payment in lieu of Natural Gas not delivered in such Delivery Month.
Where Purchaser is unable to meet its acceptance obligation as aforesaid,
Seller shall use all reasonable efforts to maximize the Replacement Value of
any Deficiency Quantity. If the Replacement Value is based on the price Seller
receives for the Deficiency Quantity, Seller shall prepare and deliver to
Purchaser, within 5 Business Days after the end of the applicable Delivery
Month, a certificate setting out the calculation of the Replacement Value
accompanied by reasonably available back-up documentation therefor. Any such
certificate shall, absent
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manifest error, be conclusive evidence of the amount due in respect of the
Replacement Value. Purchaser shall notify Seller as soon as possible of any
anticipated inability to perform all or any portion of its obligations
hereunder.
(b) In the event that (i) Seller or Seller's transporter
inadvertently delivers more or less than the Required Delivery Quantity for any
Delivery Month, or (ii) Purchaser or Purchaser's transporter inadvertently
receives more or less than the Required Delivery Quantity for any Delivery
Month, such overages or underages shall be corrected or adjusted in cash or
Natural Gas as the parties may agree or in accordance with applicable tariff
provisions; and the Responsible Party will be liable to the other party for any
associated pipeline penalties or cashouts. Each party shall notify the other
as promptly as possible of any changes in its rate of delivery or receipt of
Natural Gas at the Delivery Point and take all reasonable actions necessary to
avoid the incurrence of pipeline penalties and imbalances.
(c) Should either party receive an operational flow order ("OFO")
or other order or notice from a transporter requiring action to be taken in
connection with this Agreement or Natural Gas flowing under this Agreement,
such party shall immediately notify the other party of the OFO and promptly
provide the other party a copy of same by facsimile. The parties shall take
all actions required by the OFO within the time prescribed therein. Each party
shall indemnify, defend and hold harmless the other party from any damages or
liability, including, without limitation, all non-compliance penalties and
attorneys' fees, associated with an OFO (i) of which the indemnifying party
failed to give the indemnified party the notice required hereunder or (ii)
under which the indemnifying party failed to take the action required by the
OFO within the time prescribed therein.
(d) If a party is unable to perform any of its obligations to
deliver or receive gas hereunder as a result of an event of Force Majeure, such
party shall give notice and full particulars of such event of Force Majeure to
the other party as soon as reasonably possible and shall take all reasonable
actions necessary to remedy the event of Force Majeure.
Section 2.07 Exclusive Remedy. It is expressly agreed, except as provided
in Sections 5.02, 5.03, 6.02 and 6.03, that payments made in accordance with
Section 2.06 hereof shall constitute the exclusive remedies available to Seller
and Purchaser for nondelivery, nonacceptance, over-delivery or over-acceptance
of Natural Gas. To the fullest extent permitted by applicable law, neither
party shall be liable for any punitive, exemplary, incidental, consequential,
indirect or direct (other than as set forth in Section 2.06) or other damages,
in tort, contract or otherwise in respect thereof.
Section 2.08 Possession, Title and Risk. Possession of and title to
Natural Gas delivered pursuant hereto shall pass from Seller to Purchaser at
the Delivery Points when the Natural Gas is accepted by the pipeline for
transport for Purchaser's account and is recorded by the proper metering
device. Until such time, Seller shall be deemed to be in control and possession
of, have title to and be responsible for such Natural Gas and, after such time,
Purchaser shall be deemed to be in control and possession of, have title to and
be responsible for such Natural Gas.
Section 2.09 Royalties. Seller shall at all times have the obligation to
make settlements for all royalties and payments to mineral and royalty owners
and all other Persons having an ownership interest in the Natural Gas delivered
by Seller to Purchaser hereunder. Seller hereby agrees to indemnify Purchaser
and save it harmless from all suits, actions, debts, accounts, damages, costs,
losses and expenses arising from or out of adverse claims of any and all
Persons in respect of royalties, taxes, license fees or charges thereon which
are applicable before the title passes to Purchaser or which may be levied and
assessed upon Seller in respect of a sale of the Natural Gas to Purchaser.
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Section 2.10 Taxes. Seller is liable for and shall pay, cause to be paid
or reimburse Purchaser if Purchaser shall have paid, all Taxes applicable to
the Natural Gas sold hereunder prior to the time title to the Natural Gas has
passed to Purchaser, unless allocated to Purchaser as hereinafter provided.
Purchaser is liable for and shall pay, cause to be paid or reimburse Seller if
Seller shall have paid, all Taxes applicable to the Natural Gas sold hereunder
at or after the time title to the Natural Gas has passed to Purchaser,
applicable to the sale hereunder as a result of any subsequent sale or use of
the Natural Gas by Purchaser, or imposed on or collected from Purchaser by law.
Both parties shall use reasonable efforts to administer this Agreement and
implement the provisions in accordance with their intent to minimize Taxes.
Purchaser represents that it is engaged in the business of reselling the
Natural Gas delivered under this Agreement and Purchaser is purchasing the
Natural Gas for resale to third parties, and accordingly Purchaser is entitled
to purchase the Natural Gas hereunder free of any Taxes. Purchaser shall
provide Seller with a certificate of exemption or other reasonably satisfactory
evidence of exemption promptly after execution of this Agreement. For each
Delivery Month during the term of this Agreement, Purchaser shall provide
Seller appropriate evidence that the Required Delivery Quantity of Natural Gas
was resold to a third party in accordance with the sale for resale exemption
under applicable state law. Each party agrees to cooperate with obtaining any
exemption from or reduction of Tax upon request by the other party.
Section 2.11 No Warranty. PURCHASER ACKNOWLEDGES THAT IT HAS ENTERED INTO
THIS AGREEMENT AND IS CONTRACTING FOR THE NATURAL GAS TO BE SUPPLIED BY SELLER
BASED SOLELY UPON THE EXPRESS COVENANTS, REPRESENTATIONS AND WARRANTIES HEREIN
SET FORTH (including Section 2.02) AND, SUBJECT TO SUCH COVENANTS,
REPRESENTATIONS AND WARRANTIES (including Section 2.02), ACCEPTS SUCH NATURAL
GAS "AS IS, WHERE IS" AND "WITH ALL FAULTS."
ARTICLE III - REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of Seller. Seller represents
and warrants to Purchaser as follows:
(a) Status and Authority. Seller is a limited liability company
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its formation and has all requisite power and authority to own
its properties, to conduct its business as conducted at present and to execute,
deliver and perform this Agreement.
(b) Power and Authority. The execution, delivery and performance
by Seller of this Agreement and the consummation of the transactions
contemplated by this Agreement are within Seller's power and authority and have
been duly authorized by all necessary action.
(c) Consents, Approvals, Etc.. No authorization, consent or
approval of, or other action by, or notice to or filing with, any governmental
authority, regulatory body or any other Person is required for the due
authorization, execution, delivery or performance by Seller of this Agreement,
or the consummation of the transactions contemplated by this Agreement, except
those approvals which have been obtained, and those notices and filings which
have been made, copies of all of which have been delivered to Purchaser.
(d) Execution and Delivery. This Agreement has been duly executed
and delivered to Purchaser by Seller and is the legal, valid and binding
obligation of Seller enforceable against Seller in accordance with its terms
except as the enforceability thereof may be limited by the effect of any
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applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by general principles of equity.
(e) Compliance with Laws. Neither the execution, delivery and
performance by Seller of this Agreement nor the consummation of the
transactions contemplated by this Agreement (1) does or will violate any
provision of any Applicable Instrument of Seller or any Governmental
Requirement or (2) does or will result in or require the creation or imposition
of any lien on any properties, assets or revenues of Seller. Seller is in
compliance in all material respects with the Applicable Instruments of Seller
and all Governmental Requirements applicable to Seller.
(f) Investment Company. Seller is not an "investment company"
subject to regulation under the Investment Company Act of 1940, as amended.
(g) Public Utility Holding Company. Seller is not, or is not
subject to regulation as, a "holding company," a "subsidiary company" of a
"holding company," an "affiliate" of a "holding company," or an affiliate" of a
"subsidiary company" of a "holding company," in each case as such term is
defined in the Public Utility Holding Company Act of 1935, as amended.
(h) Ownership of Natural Gas. The Natural Gas to be delivered by
Seller to Purchaser hereunder shall be delivered to Purchaser with good and
marketable title thereto, free and clear of all liens, encumbrances or any
other adverse claims whatsoever, including royalties and Taxes for which Seller
is responsible under Sections 2.09 and 2.10.
(i) Commercial Purpose. Seller has entered into this transaction
for commercial purposes related to its business as a producer, processor, or
merchandiser of Natural Gas or natural gas liquids. Seller has the capability,
and intends, to make delivery of the Natural Gas to be delivered hereunder.
Seller is selling the Natural Gas in the ordinary course of business. Seller
is also acting as a principal and not as an agent, understands and acknowledges
that the Purchaser has been and will be acting only on an arm's length basis
and not as its agent, broker, advisor or fiduciary in any respect, is relying
solely upon its own evaluation of this Agreement and the transactions
contemplated hereby (including the present and future results, consequences,
risks and benefits thereof, whether financial, accounting, tax, legal or
otherwise) and upon advice from its own professional advisors, understands this
Agreement and the transactions contemplated hereby and the risks associated
therewith, has determined that those risks are appropriate for it, and is
willing to assume those risks, and has not relied and will not be relying upon
any evaluation or advice (including any recommendation, opinion or
representation) from Purchaser or its affiliates or the representatives or
advisors of Purchaser or its affiliates.
Section 3.02 Representations and Warranties of Purchaser. Purchaser
represents and warrants to Seller as follows:
(a) Corporate Status and Authority. Purchaser is a company
incorporated under the laws of the State of New York and has all necessary
corporate power and authority to carry on its business as now being conducted
by it. Purchaser has full power and authority to enter into this Agreement and
to do all acts and things and execute and deliver all other documents as are
required hereunder to be done, observed or performed by it in accordance with
the terms hereof.
(b) Valid Authority. Purchaser has taken all necessary corporate
action to authorize the creation, execution, delivery and performance by it of
this Agreement and for it to observe and perform the provisions of this
Agreement in accordance with its terms.
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(c) Validity of Documents and Enforceability. This Agreement
constitutes a valid and legally binding obligation of Purchaser enforceable
against it in accordance with its terms, except as the enforceability thereof
may be limited by the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and by general principles of equity. Neither the execution and
delivery of this Agreement nor compliance with the terms and conditions hereof
by Purchaser (i) will result in a violation of the terms of any Applicable
Instrument of Purchaser or (ii) requires any approval or consent of any
governmental authority or agency having jurisdiction except such as has already
been obtained.
(d) Commercial Purpose. Purchaser has entered into this
transaction for commercial purposes related to its business as conjunction with
its line of business and not for speculative purposes. Purchaser has the
capacity, and intends, to take delivery of the Natural Gas to be delivered
hereunder. Purchaser is acquiring the Natural Gas in the ordinary course of
business.
ARTICLE IV - COVENANTS
Section 4.01 Affirmative Covenants of Seller. Seller covenants and agrees
with Purchaser that so long as any obligation of Seller to deliver Natural Gas
or to make any payment is outstanding hereunder:
(a) Compliance with Laws, etc.. Seller will comply with all
Governmental Requirements applicable to the performance of Seller's obligations
hereunder, except where noncompliance therewith would not have a material
adverse effect on Seller. Seller will comply in all material respects with the
Applicable Instruments of Seller.
(b) Notice of Event of Default. Seller shall notify Purchaser of
the occurrence of any event which with the passage of time or the giving of
notice, or both, would be an Event of Default or an Event of Change promptly
after becoming aware of the same.
(c) Qualification. Seller will be duly qualified to do business
as a foreign corporation and will be in good standing under the laws of all
jurisdictions in which the failure to be so qualified could have a material
adverse effect on Seller by or before the first Delivery Month.
ARTICLE V - EVENTS OF DEFAULT AND EARLY TERMINATION
Section 5.01 Events of Default. Each of the following events shall
constitute an "Event of Default" by Seller under this Agreement:
(a) Seller shall (i) fail to deliver the Required Delivery
Quantity of Natural Gas to the Delivery Point in accordance with the terms of
this Agreement, and (ii) if such failure is the result of an event of Force
Majeure, fail to make a payment of the Replacement Value in respect thereof in
accordance with the provisions of Section 2.06(a) and such failure is not
remedied within one (1) Business Day; or
(b) Seller shall fail to pay any amounts due to Purchaser in
accordance with the terms of Section 2.05(b) of this Agreement and such failure
is not remedied within one (1) Business Day after the Business Day on which
such payment is due; or
(c) Seller shall fail to perform or observe any material term,
covenant or agreement herein contained on its part to be performed or observed
(other than any term, covenant or agreement whose
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breach or default in performance is specifically dealt with elsewhere in this
Section 5.01) and such failure shall remain unremedied for thirty (30) days
after notice thereof to Seller by Purchaser; or
(d) Seller shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against Seller seeking to adjudicate it as bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of its
property, and in the case of any such proceeding instituted against it (but not
yet instituted by it), shall remain undismissed or unstayed for a period of
sixty (60) days or Seller shall take any corporate action to authorize any of
the actions set forth above in this Section 5.01(d); or
(e) any representation or warranty made by Seller in this
Agreement shall prove to have been incorrect in any material respect when made
or when deemed made; or
(f) Seller shall fail to deliver Margin (as defined in the Margin
Agreement) in accordance with its obligations under the second sentence of
Section 2 of the Margin Agreement and such failure is not remedied within one
(1) Business Day after notice of such failure is given to Seller by Purchaser;
or
(g) Seller shall fail to perform or observe any term, covenant or
agreement (other than with respect to its obligations under the second sentence
of Section 2 thereof) contained in the Margin Agreement on its part to be
performed or observed and such failure is not remedied within thirty (30) days
notice thereof to Seller by Purchaser; or
(h) an Event of Default under the Guaranty Agreement shall occur
and be continuing.
Section 5.02 Early Termination by Purchaser. If at any time an Event of
Default has occurred and is continuing, Purchaser may, by not more than five
(5) Business Days notice to Seller specifying the relevant Event of Default,
designate a Business Day not earlier than the Business Day such notice is
effective as an early termination date ("Early Termination Date"); provided,
however, that if an Event of Default pursuant to Section 5.01(d) shall have
occurred, the Early Termination Date shall occur immediately on the occurrence
of such Event of Default without the need for Purchaser to give any prior
notice. Upon the designation or occurrence of an Early Termination Date, the
obligation of Seller to make any further deliveries of Natural Gas to Purchaser
under this Agreement shall terminate and Seller shall pay to Purchaser the
Termination Payment together with any Unpaid Amounts. All amounts payable
under this Section 5.02 shall become due on the Early Termination Date and
shall be payable on the Business Day immediately following delivery by
Purchaser of the statement required pursuant to Section 5.03(c). Such amount
will be paid, together with (to the extent permitted by applicable law)
interest thereon (before as well as after judgment) from (and including) the
Early Termination Date to (but excluding) the date such amount is paid, at the
rate specified in Section 7.02. The parties agree that the Termination Payment
is a reasonable pre-estimate of the damages which would be incurred by
Purchaser as a result of an Event of Default and not a penalty.
Section 5.03 Calculation of Termination Payment.
(a) "Termination Payment" shall be the lowest amount determined on
the basis of quotations from at least four Reference Dealers as the amount that
would have been payable on the Termination Date by Purchaser in consideration
of an agreement between Purchaser and the quoting Reference
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Dealer, and subject to such documentation evidencing agreement on price as they
may in good faith agree, with the relevant Termination Date as the date of
commencement of such agreement that would have the effect of preserving for
Purchaser the equivalent of the delivery obligations that, but for the
occurrence of the relevant Termination Date, Seller would have been obligated
to perform hereunder after such Termination Date. Purchaser will request each
Reference Dealer to provide its quotation to the extent practicable as of the
same time (without regard to different time zones) on the relevant Termination
Date (or, if a Termination Date is deemed to occur, as of a time as soon
thereafter as practicable). The time as of which such quotations are to be
provided will be selected in good faith by Purchaser.
(b) If the Termination Payment cannot be determined in accordance
with Section 5.03(a), "Termination Payment" shall be an amount equal to the
total amount required, as determined as of the relevant Early Termination Date
by Purchaser in good faith, to compensate it for its direct actual losses and
costs (including loss of bargain and reasonable legal fees and other
out-of-pocket expenses) that it may incur as a result of the early termination
of Seller's delivery obligations hereunder, including, without limitation, any
damages, losses, or expenses incurred in obtaining, terminating, liquidating,
reestablishing or employing ▇▇▇▇▇▇ or related trading positions against
Purchaser's position hereunder.
(c) On or as soon as reasonably practicable following the
occurrence of a Termination Date, Purchaser will calculate the Termination
Payment and will provide Seller with a statement (1) showing, in reasonable
detail, such calculations (including all relevant quotations) and (2) giving
details of the relevant account to which the Termination Payment is payable.
Any such statement shall, absent manifest error, be conclusive evidence of the
amount due in respect of the Termination Payment.
ARTICLE VI - EVENTS OF CHANGE AND ACCELERATED TERMINATION
Section 6.01 Events of Change. Each of the following events shall
constitute an "Event of Change" for the purposes of this Agreement:
(a) the enactment, promulgation, execution or ratification of, or
any change in or amendment to, any regulation or law (or the application or
interpretation of any regulation or law, as determined by a court or regulatory
authority of competent jurisdiction or as determined by the opinion of
independent counsel mutually acceptable to Seller and Purchaser) that occurs
after the date hereof which would result in the imposition of a Tax (other than
an increase in the rate of a general tax on overall income) or of state or
federal government royalties (in excess of those royalties currently in effect)
or of price controls in a material amount by any government or taxing authority
upon a party hereto with respect to delivery of, or acceptance of delivery of,
Natural Gas under this Agreement or with respect to any cash payment made
pursuant to Section 2.06 which in any case would materially and adversely
affect the net cost to Seller or Purchaser of performing its obligations
hereunder; or
(b) the enactment, promulgation, execution or ratification of, or
any change in or amendment to, any regulation or law (or the application or
interpretation of any regulation or law, as determined by a court or regulatory
authority of competent jurisdiction or as determined by the opinion of
independent counsel mutually acceptable to Seller and Purchaser) that occurs
after the date hereof which would result in the performance of any obligation
of Seller to deliver Natural Gas or Purchaser to accept delivery of Natural Gas
under this Agreement being unlawful; or
(c) any one or more events of Force Majeure that occur and
continue for a consecutive period of longer than ninety (90) days.
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Section 6.02 Accelerated Termination.
(a) During the continuation of an Event of Change contemplated by
Section 6.01(a), both parties shall make reasonable efforts to make
arrangements to avoid the imposition of any Tax contemplated by Section
6.01(a); provided that this Section 6.02 shall not impose on either party any
obligation other than to negotiate in good faith to make such arrangements as
will not adversely affect the parties.
(b) During the continuation of any Event of Change, and if any
arrangement is not, or is not capable of being, made pursuant to Section
6.02(a), then either party may designate an accelerated termination date
("Accelerated Termination Date") upon not less than two (2) and not more than
ten (10) Business Days' notice to the other party. Upon the Accelerated
Termination Date, the parties' obligations hereunder shall terminate, except
for the obligations contained in Section 6.03 and Section 7.02.
Section 6.03 Payments on Accelerated Termination. Upon the designation of
an Accelerated Termination Date, Seller, at the option of Purchaser, shall
either (i) deliver any Natural Gas otherwise deliverable hereunder to
Purchaser, provided that such delivery of Natural Gas by Seller would not then
be unlawful and Seller has the ability to make such delivery or (ii) Seller
shall pay to Purchaser an amount equal to the Termination Payment plus any
Unpaid Amounts. All amounts payable under this Section 6.03 shall become due
on the Accelerated Termination Date and shall be payable on the fifth (5th)
Business Day following delivery by Purchaser of the certificate of calculation
of the Termination Payment contemplated by Section 5.03. Upon the occurrence
of an Accelerated Termination Date, Purchaser may, in its sole discretion,
elect either remedy set forth in this Section 6.03. Such remedies shall be
Purchaser's sole remedy; provided that nothing herein shall affect a party's
obligation to make payments of amounts which were due and owing (whether or not
payable) on or prior to the occurrence of such Accelerated Termination Date.
ARTICLE VII - MISCELLANEOUS
Section 7.01 Notice. Any demand, notice or communication to be made or
given hereunder shall be in writing and may be made or given by personal
delivery or by transmittal by telecopy, rapifax or other electronic means of
communication addressed to the respective party as follows:
To Seller:
Crystal Gas L.L.C.
c/o Crystal Oil Company
229 ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copy to:
Fulbright & ▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Telcopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
To Purchaser:
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copy to:
Chase Securities Inc.
▇▇▇ ▇▇▇▇▇▇ -▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
or to such other address or telecopy number or rapifax number as any party may
from time to time notify the others in accordance with this Section 7.01. Any
demand, notice or certification made or given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof,
or, if made or given by electronic means of communication, on the date of such
transmittal or if such date is not a Business Day, on the first Business Day
following the transmittal thereof.
Section 7.02 Interest on Overdue Amounts. If any monetary amounts payable
under this Agreement are not paid when due, then such overdue amount shall bear
interest for each day until paid in full, payable on demand, both before and
after default, judgment, the Early Termination Date and the Accelerated
Termination Date, at the U.S. Base Rate plus one and one-half percent per annum
on the basis of the actual number of days elapsed and on the basis of a year of
360 days, as the case may be. Such interest shall be determined daily and
compounded monthly in arrears on the last day of each calendar month.
Section 7.03 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the principles of conflicts of laws that would result in the
application of the laws of a another jurisdiction.
Section 7.04 Severability. In the event that one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect under any applicable law the validity, legality or enforceability of
the remaining provisions hereof shall not be affected or impaired thereby.
Each of the Sections of this Agreement is hereby declared to be separate and
distinct.
Section 7.05 Currency. All amounts expressed herein or therein in terms of
money refer to the United States Dollar and all payments to be made hereunder
shall be made in such currency.
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Section 7.06 Purchaser Not an Agent. Purchaser acknowledges and confirms
that all purchases of Natural Gas hereunder are being made by it as a principal
and that it is not acting as agent for any other Person in connection with
purchases of Natural Gas hereunder.
Section 7.07 Benefit of the Agreement. This Agreement shall inure to the
benefit of and be binding upon Seller, Purchaser and their respective
successors and assigns.
Section 7.08 Assignment and Transfer. Except as expressly provided in this
Section 7.08, neither party may assign any rights or delegate any obligations
hereunder without the prior written consent of the other party. Without the
consent of Seller, Purchaser may assign this Agreement to any of its direct or
indirect wholly owned subsidiaries, whether now existing or hereafter created.
Upon notice to Seller of any such assignment, Seller agrees to substitute such
assignee or successor corporation for Purchaser hereunder. Without the consent
of Purchaser, Seller may (i) assign this Agreement to any direct or indirect
wholly owned subsidiary of Guarantor or (ii) merge with any direct or indirect
wholly owned subsidiary of Guarantor; provided, however, that (A) such
subsidiary agrees to assume all obligations under this Agreement and the Margin
Agreement, (B) such subsidiary is a corporation, limited liability company or
limited partnership incorporated under the laws of a state in the United
States, (C) no Event of Default would occur as the result thereof, and (D) the
Guaranty Agreement remains in effect. Upon notice to Purchaser of any such
assignment or merger, Purchaser agrees to substitute such assignee or successor
for Seller hereunder.
Section 7.09 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes any prior agreement,
undertaking, declarations, commitments or representations, written or oral, in
respect thereof. There are no unwritten oral agreements among the parties.
Section 7.10 Amendments. This Agreement may not be modified or amended
except by an instrument in writing signed by Purchaser and Seller or by their
respective successors or permitted assigns.
Section 7.11 No Waivers, Remedies. No failure to exercise and no delay in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law
except as otherwise expressly provided herein.
Section 7.12 Time of the Essence. Time shall be of the essence of this
Agreement.
Section 7.13 Counterparts. This Agreement may be executed in counterparts,
each of which so executed shall be deemed to be an original and such
counterparts together shall constitute one and the same instrument.
Section 7.14 Margin Agreement. Seller's payment obligations under this
Agreement are secured by the Margin Agreement, which Margin Agreement is hereby
incorporated herein for all purposes.
Section 7.15 Intent. The parties intend that this Agreement shall
constitute a purchase and sale of inventoriable goods and a forward contract
within the meaning of ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code of 1978,
as amended from time to time.
Section 7.16 Disclosure of Information. In the event that Seller provides
to Purchaser written confidential information belonging to Seller or its
affiliates which has been denominated in writing as "confidential", Purchaser
agrees to thereafter maintain such information in confidence in accordance with
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the standards of care and diligence that each utilizes in maintaining its own
confidential information. This obligation of confidence shall not apply to
such portions of the information which (i) are in the public domain, (ii)
hereafter become part of the public domain without Purchaser breaching its
obligation of confidence to Seller, (iii) are previously known by Purchaser
from some source other than Seller, (iv) are hereafter developed by Purchaser
without using Seller's information, (v) are hereafter obtained by or available
to Purchaser from a third party who owes no obligation of confidence to Seller
with respect to such information or through any other means other than through
disclosure by Seller, (vi) are disclosed with Seller's consent, (vii) must be
disclosed either pursuant to any Governmental Requirement or to Persons
regulating the activities of Purchaser, or (viii) as may be required by law or
regulation or order of any governmental authority in any judicial, arbitration
or governmental proceeding. Further, Purchaser may disclose any such
information to any independent petroleum engineers or consultants, any
independent certified public accountants, any legal counsel employed by it in
connection with this Agreement, including without limitation, the enforcement
or exercise of all rights and remedies thereunder; provided, however, that it
imposes on such Person to whom such information is disclosed the same
obligation to maintain the confidentiality of such information as is imposed
upon it hereunder. Notwithstanding anything to the contrary provided herein,
this obligation of confidence shall cease three (3) years from the date the
information was furnished, unless Seller requests in writing at least 30 days
prior to the expiration of such three year period, that Purchaser maintain the
confidentiality of such information for an additional three year period.
Seller waives any and all other rights it may have to confidentiality as
against Purchaser arising by contract, agreement, statute or law except as
expressly stated in this Section.
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IN WITNESS WHEREOF the Parties hereto have executed this Agreement as
of the date first written above.
CRYSTAL GAS L.L.C.
By: CRYSTAL OIL COMPANY, member
By:______________________________
▇.▇. ▇▇▇▇▇▇
Senior Vice President
By: CRYSTAL PROGRAM LIMITED, INC.,
member
By:______________________________
▇.▇. ▇▇▇▇▇▇
Vice President
THE CHASE MANHATTAN BANK
By:____________________________________
Name:
Title:
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TABLE OF CONTENTS
ARTICLE I - INTERPRETATION
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.03 Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.04 Non-Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II - SALE AND PURCHASE OF NATURAL GAS
Section 2.01 Sale and Purchase of Natural Gas . . . . . . . . . . . . . . . . . . . 4
Section 2.02 Measurement and Quality . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.03 Delivery and Receipt of Natural Gas. . . . . . . . . . . . . . . . . 5
Section 2.04 Payment of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.05 Delivery Points upon Force Majeure; Alternate Delivery Points . . . . . 5
Section 2.06 Failure of Delivery or Receipt; Transportation and Balancing . . . . . 6
Section 2.07 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.08 Possession, Title and Risk . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.09 Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.11 No Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III - REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of Seller . . . . . . . . . . . . . . . 8
Section 3.02 Representations and Warranties of Purchaser . . . . . . . . . . . . . . 10
ARTICLE IV - COVENANTS
Section 4.01 Affirmative Covenants of Seller . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V - EVENTS OF DEFAULT AND EARLY TERMINATION
Section 5.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.02 Early Termination by Purchaser . . . . . . . . . . . . . . . . . . . . 11
Section 5.03 Calculation of Termination Payment . . . . . . . . . . . . . . . . . . 12
ARTICLE VI - EVENTS OF CHANGE AND ACCELERATED TERMINATION
Section 6.01 Events of Change . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.02 Accelerated Termination . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.03 Payments on Accelerated Termination . . . . . . . . . . . . . . . . . . 13
ARTICLE VII - MISCELLANEOUS
Section 7.01 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 7.02 Interest on Overdue Amounts . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.03 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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Section 7.04 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.05 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.06 Purchaser Not an Agent . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.07 Benefit of the Agreement . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.08 Assignment and Transfer . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.09 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.10 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.11 No Waivers, Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.12 Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.14 Margin Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.15 Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.16 Disclosure of Information . . . . . . . . . . . . . . . . . . . . . . . 16
Annex 1 Seller's Conditions Precedent
Exhibit A - Form of Opinion of Counsel of Guarantor
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ANNEX 1
TO NATURAL GAS INVENTORY FORWARD SALE CONTRACT
CONDITIONS PRECEDENT
1. The executed Margin Agreement.
2. The executed Guaranty Agreement.
3. An opinion of Fulbright and ▇▇▇▇▇▇▇▇, L.L.P., special counsel to
Seller and Guarantor, in substantially the form set out in Exhibit A.
4. A certificate of the Secretary or an Assistant Secretary of Seller
setting forth (i) resolutions of its members with respect to the
authorization of Seller to execute and deliver the Agreement and the
Margin Agreement and to enter into the transactions contemplated in
those documents, (ii) the managing member or officers of such Person
(y) who are authorized to sign such agreements and (z) who will, until
replaced by another officer or officers duly authorized for that
purpose, act as its representative for the purposes of signing
documents and giving notices and other communications in connection
with such agreements and the transactions contemplated hereby, (iii)
specimen signatures of the authorized officers, and (iv) the
organization documents of Seller, certified as being true and
complete. Purchaser may conclusively rely on such certificate until
it receives notice in writing from Seller to the contrary.
5. A certificate of the Secretary or an Assistant Secretary of Guarantor
setting forth (i) resolutions of its board of directors with respect
to the authorization of Guarantor to execute and deliver the Guaranty
Agreement and to enter into the transactions contemplated in those
documents, (ii) the officers of the Guarantor (y) who are authorized
to sign such agreement and (z) who will, until replaced by another
officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving
notices and other communications in connection with such agreement and
the transactions contemplated hereby, (iii) specimen signatures of the
authorized officers, and (iv) the articles or certificate of
incorporation and bylaws of Guarantor, certified as being true and
complete. Purchaser may conclusively rely on such certificate until
it receives notice in writing from Seller to the contrary.
6. An executed security agreement and financing statement granting to the
Purchaser a lien on the agreements evidencing the Hedged Volumes (as
defined in the Margin Agreement).
7. Copy of the agreements evidencing the Hedged Volumes.
Annex 1-i