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EXHIBIT 10.13
[CONTINENTAL NATURAL GAS, INC. LETTERHEAD]
January 1, 1997
▇▇. ▇▇▇ ▇▇▇▇▇▇
CONTINENTAL NATURAL GAS MARKETING, LLC
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Contract No.: CNG-1149L(S)
Dear ▇▇. ▇▇▇▇▇▇:
CONTINENTAL NATURAL GAS, INC. (CNG) hereby proposes to sell natural gas to
CONTINENTAL NATURAL GAS MARKETING, L.L.C. (BUYER) in accordance with the
following terms and conditions of this letter agreement (the "Letter
Agreement"):
1. TERM: This Letter Agreement shall be effective as of January 1, 1997 and
shall extend through December 31, 1997, and month-to-month thereafter
until terminated by either party upon giving ten (10) days written notice.
2. DELIVERY POINT: Gas purchased hereunder shall be delivered by CNG and
received by BUYER at mutually accessible point(s) on the Transporter(s)
pipeline system (metering facilities), as agreed between the parties, from
time to time. Title to all gas shall pass to BUYER at said nominated
receipt point(s).
3. QUANTITY: CNG shall sell and deliver to BUYER, on a best reasonable
efforts basis, and BUYER shall purchase and receive a mutually agreeable
volume of Gas as agreed between the parties. In no event shall this
Agreement be interpreted to require BUYER to purchase a minimum quantity
of gas or to pay for natural gas not actually delivered to BUYER.
4. PRICE: The price to be paid for Gas delivered to BUYER hereunder at the
Delivery Point shall be stated in MMBtu, (saturated or dry), inclusive of
taxes and all other additives. CNG and BUYER further agree that the price
shall equal CNG'S actual cost of the gas sold hereunder per MMBtu, plus
two cents per Mmbtu ($0.02/MMBtu).
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Contract No.: CNG-1449L(S)
Page 2
5. NOTICES: Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and shall be deemed to have
been given if personally delivered or if deposited in the United States
mail, by certified mail, with proper postage prepaid thereon, by
Facsimile, Panafax, or other electronic means, and addressed as follows:
If to CNG: CONTINENTAL NATURAL GAS, INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax #: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
If to BUYER: CONTINENTAL NATURAL GAS MARKETING, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax #: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
or to such other address as either party may hereinafter advise the other
by notice given in accordance with the provisions hereof.
6. OTHER TERMS AND CONDITIONS: The provisions contained in Appendix I
hereto, entitled "STATEMENT OF GENERAL TERMS AND CONDITIONS", are hereby
incorporated by reference. In case of any conflict or inconsistency
between this Letter Agreement and Appendix I, the provisions of this
Letter Agreement shall control. For purposes of the provisions of
Appendix I, the term "Buyer", as used therein, shall refer to CONTINENTAL
NATURAL GAS MARKETING, LLC and the term "Seller" shall refer to
CONTINENTAL NATURAL GAS, INC.
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Contract No.: CNG-1449L(S)
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If this Letter Agreement correctly reflects the agreement and understanding
between CNG and BUYER, please so signify by executing both copies in the space
provided below, and returning one copy to our office.
Sincerely,
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President, Marketing
AGREED TO AND ACCEPTED THIS AGREED TO AND ACCEPTED THIS
1st day of January, 1997 1st day of January, 1997
CONTINENTAL NATURAL GAS, INC. CONTINENTAL NATURAL GAS
MARKETING, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇ ▇▇▇▇▇▇
----------------------------- ------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Vice President, Marketing President
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SALES APPENDIX I
STATEMENT OF GENERAL TERMS AND CONDITIONS
I. DEFINITIONS
Except as otherwise provided herein, the following terms and expressions are
defined as follows:
A. "Btu" shall mean British thermal unit, which is the quantity of heat
required to raise the temperature of one (1) pound avoirdupois of pure
water from fifty-eight and five-tenths degrees Fahrenheit (58.5 degrees F)
to fifty-nine and five-tenths degrees Fahrenheit (59.5 degrees F).
B. "Day" shall mean a twenty-four (24) consecutive hour period commencing at
8:00 a.m., local time.
C. "Force Majeure" shall mean acts of God; strikes, lockouts or other
industrial disturbances (including those affecting the parties
transporting Gas for Buyer or Seller); acts of the public enemy, wars,
blockages, insurrections, riots, epidemics, landslides, earthquakes,
fires, explosions, storms, floods, washouts, or other casualty; arrests
and restraints of government (federal, state, civil or military) and of
people; civil disturbances; the breakage, freezing, rupture, blockage, or
unavailability of machinery, equipment, or lines of pipe; freezing of
▇▇▇▇▇, equipment or lines of pipe; outages or shutdowns of power plant
machinery or other facilities for repairs, maintenance, or alterations;
failure of ▇▇▇▇▇, equipment, lines of pipe, or sources of supply of Gas;
interruption of necessary third-party transportation arrangements; 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; in addition, such term shall likewise
include (i) in those instances where either party hereto is required to
obtain servitudes, right-of-way grants, permits or licenses to enable such
party to fulfill its obligations hereunder, the inability of such party to
acquire or the delay on the part of such party in acquiring, at reasonable
costs and after the exercise of reasonable diligence, such servitudes,
rights-of-way grants, permits or licenses, and (ii) in those instances
where either party hereto is required to furnish materials and supplies
for the purpose of construction or maintaining facilities or is required
to secure permits or permission from any governmental agency to enable
such party to fulfill its obligations hereunder, the inability of such
party to acquire or the delay on the part of such party in acquiring, at
reasonable cost and after the exercise of reasonable diligence, such
materials, supplies, permits or permission; provided, however, in no event
shall the term "Force Majeure" mean or include any cause which by the
exercise of reasonable diligence the party claiming suspension could
overcome or should have prevented.
D. "Gas" shall mean and include all vapor phase hydrocarbons and gaseous
substances.
E. "Letter Agreement" shall mean that certain agreement made between Buyer
and Seller as reflected by the letter from Seller to Buyer, to which this
Appendix I applies.
F. "Mcf" shall mean one thousand (1,000) cubic feet.
G. "MMBtu" shall mean one million British thermal units (1,000,000 Btu's).
H. "Month" shall mean the period commencing on the first day of each
calendar month at 8:00 a.m., local time and ending on the first day of the
next succeeding calendar month at 8:00 a.m., local time.
I. "Psia" shall mean pounds per square inch, absolute.
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J. "Tax" shall mean any tax (other than ad valorem, income, payroll,
franchise, gross receipts, or other similar taxes) now lawfully levied or
assessed.
K. "Transporter(s)" shall mean that pipeline (or pipelines) heretofore or
hereafter engaged by Seller for the purpose of enabling Seller to deliver
the Gas to be sold hereunder at the Point of Delivery.
II. DELIVERY OF GAS
A. Facilities: Seller shall be responsible for all arrangements necessary
to deliver all Gas sold hereunder to the Delivery Point. Notwithstanding
any provision to the contrary, Seller shall not be liable to Buyer, in any
way, for Seller's inability to provide service to Buyer hereunder if such
inability results either from the failure of any Transporter to render
service to Seller or the inability of Seller to enter into any necessary
arrangements with any party which Seller seeks to engage as a Transporter
hereunder.
B. Title: Title and Ownership of the Gas sold hereunder shall pass from
Seller to Buyer at the Delivery Point. Seller shall be deemed to be in
exclusive control and possession of the Gas delivered hereunder and
responsible for any injury or damage caused thereby until said Gas has
been delivered to Buyer at the Delivery Point, after which delivery Buyer
shall be deemed to be in exclusive control and possession of the Gas and
responsible for any injury or damages caused thereby. ▇▇▇▇▇ shall
indemnify, defend, and hold Seller harmless from and against all loss,
cost and expense, including court costs and attorney fees, for any claims,
suits judgments, demands, actions, or liabilities growing out of the
operations conducted hereunder by ▇▇▇▇▇ or arising while the Gas is in
▇▇▇▇▇'s exclusive control and possession. Likewise, Seller shall
indemnify, defend and hold Buyer harmless from and against any loss, cost,
and expense, including court costs and attorney fees, for any claims,
suits, judgments, demands, actions, or liabilities arising while the Gas
is in Seller's exclusive control and possession. Each party's liability
to the other, whether based upon the provisions hereof, negligence, strict
liability, breach of contract, breach of warranty, or otherwise, shall be
limited to actual direct damages, and shall in no event include any
liability for punitive, consequential, special, incidental or indirect
damages.
C. Delivery Rate: Buyer, from time to time or upon Seller's request, shall
advise Seller of the required delivery rates within the limits as herein
provided. Buyer shall give Seller as much advance notice as reasonably
possible of any change in delivery rates and in the absence of such
notice, Seller may rely upon the last rate in effect. Seller, from time
to time and upon ▇▇▇▇▇'s request, shall advise Buyer of the rates at which
Gas will be available for delivery. Seller shall have no liability for,
and ▇▇▇▇▇ shall indemnify and hold Seller harmless from, any and all costs
and/or penalties of any kind arising by reason of any imbalances occurring
for Gas delivered pursuant to Buyer's request. Buyer shall have no
liability for, and Seller shall indemnify and hold Buyer harmless from,
any and all costs, and/or penalties of any kind arising by reason of any
imbalances occurring for Gas delivered pursuant to Seller's request.
III. QUALITY
A. Quality Specifications: Buyer may, but shall not be obligated to,
receive or purchase gas Delivered at the Delivery Point hereunder if said
Gas fails to conform to the specifications required by the Transporter.
B. Failure to Meet Requirements: If at any time during the terms of this
Agreement either party ascertains that such Gas will fail to meet above
specifications, it shall immediately notify the other of the extent of the
deviations from the specifications. Seller shall determine the expected
duration thereof and give notification to Buyer of the efforts Seller is
undertaking to remedy the problem.
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IV. MEASUREMENT
Seller and ▇▇▇▇▇ agree that measurement of the Gas delivered hereunder shall be
performed by the Transporter in accordance with the Transporter's
specifications. Further, Buyer hereby appoints Seller as ▇▇▇▇▇'s
representative for purposes of witnessing tests and verifying the accuracy of
all measurement activities conducted by the Transporter.
V. BILLING AND PAYMENT
A. Invoice: Seller shall submit monthly to Buyer an invoice setting forth
Seller's deliveries of Gas to Buyer during the preceding Month and the
total price due to be paid therefor. Upon receipt of the invoice, Buyer
shall remit the total payment as due as stated therein so that such
payment shall be received by Seller within ten (10) days after Seller's
invoice date or by the twenty-fifth (25th) day of the month which is not a
Saturday, Sunday, or holiday, whichever is later.
B. Late Charges: Any payments due which are not received by Seller within
the times specified in this Article V shall bear interest until paid or
until the date which is thirty (30) days after the due date for such
payment, whichever is earlier, at the prime rate quoted by the Bank of
Oklahoma, N.A. from time to time, plus two percent (2%). Any payments due
which are not received by Seller on or before the date which is thirty
days after the due date for such payment shall thereafter bear interest at
the maximum rate allowed by law.
C. Accuracy Verification: Each party shall have the right during reasonable
business hours to examine the books and records of the other party to the
extent necessary to verify the accuracy of any statement, charge, credit,
computation, account, or payment made pursuant to any provision hereof.
If any such examination shall reveal or if either party shall discover any
error or inaccuracy in its own or the other party's statement, charge,
credit, computation account, or payments, then proper adjustment and
correction thereof shall be made as promptly as practicable thereafter.
D. Adjustment Claims: No adjustment or correction shall be required of any
error or inaccuracy occurring in any statement, payment, account,
calculation or determination following two (2) years from the making or
the rendering of same. Failure of the Parties to make a claim for
adjustment within such period shall establish the correctness and preclude
the filing of exceptions or making claims for adjustment.
E. Failure to Pay: Should Buyer fail to timely pay part or all of the
amount due for Gas purchased and if such failure to pay continues for ten
(10) days after payment is due, Seller in addition to any other remedy it
may have, may suspend further delivery of Gas until such amount is paid;
provided however, that if Buyer, in good faith, shall dispute the amount
of any such demand or part thereof, and shall pay or have paid to Seller
such amounts as it concedes to be correct and at any time thereafter
within ten (10) days of a demand made by Seller for the balance shall
furnish a good and sufficient surety bond in amount and with sureties
satisfactory to Seller conditioned upon the payment of any amounts
ultimately found due upon such demand after a final determination, which
may be reached either by agreement or judicial proceeding, as the case may
be, then Seller shall not be entitled to suspend further delivery of Gas
unless and until default be made in the conditions of such bond.
F. Attorney's Fees: In the event any action is brought to enforce, or for
the breach of, any provision of this Agreement, the prevailing party shall
be entitled to recover its costs and expenses, including attorney's fees,
associated with such action.
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VI. TAXES
In addition to the other provisions hereof, Buyer shall pay to Seller the
amount of any Tax levied upon Seller after the effective date hereof incident
to gathering, transportation, receipt, sale or delivery of Gas to Buyer
hereunder, but only to the extent such Tax has been imposed or increased after
the effective date hereof and is not included in the price otherwise payable
hereunder. Seller shall, upon request of ▇▇▇▇▇, furnish Buyer evidence of
Seller's obligation to pay any such Tax.
VII. WARRANTY OF TITLE
Seller warrants title to all Gas delivered hereunder, that it has the right to
sell and transfer title to the same, and that said Gas is free and clear of
liens, claims, encumbrances and specific limitations as to use. ▇▇▇▇▇▇ agrees
to indemnify, defend, and hold ▇▇▇▇▇ harmless from and against any and all
loss, cost, expense, and liability, including court costs and attorney fees,
arising out of any such adverse claims.
VIII. FORCE MAJEURE
If either party is rendered unable, wholly or in part, by Force Majeure to
perform or comply with any obligation or conditions of this Contract, upon
giving written notice and reasonably full particulars to the other party, such
obligation or condition shall be suspended during the continuance of the
inability so caused, and such party shall be relieved of liability and shall
suffer no prejudice for failure to perform the same during such period;
provided, however, obligations to make payments then due for the purchase of
gas delivered shall not be suspended and the cause of suspension (other than
strikes or lockouts) shall be remedied so far as possible with reasonable
dispatch. It is understood and agreed that the settlement of strikes or
lockouts shall be entirely within the discretion of the party having the
difficulty and that the above requirement of the use of diligence in restoring
normal operating conditions shall not require the settlement of strikes or
lockouts by acceding to the terms of the opposing party when such course is
inadvisable in the discretion of the party having the difficulty.
IX. REGULATORY AUTHORITY
A. Contract Subject to Laws: This Contract and each provision hereof shall
be subject to all valid, applicable federal and state laws and to the
orders rules, and regulations of any duly constituted federal or state
regulatory body or authority having jurisdiction. Either party shall have
the right to contest the validity of any such law, order, rule, or
regulation, and neither acquiescence therein or compliance therewith for
any period of time, nor any other provision contained herein, shall be
construed as a waiver of such right.
B. Right to Terminate: Notwithstanding anything herein to the contrary, if,
because of any federal or state law, or any order, rule or regulation of
any governmental body or authority, Seller is or will be in any way
prohibited or prevented from receiving in full all amounts and monies
which ▇▇▇▇▇ has agreed to pay Seller hereunder, Seller may terminate this
Contract upon fifteen (15) days written notice to Buyer.
X. SUCCESSORS AND ASSIGNS
This contract shall be binding upon and inure to the benefit of the respective
heirs, representatives, successors, and assigns of the Parties hereto;
provided, however, that this Contract may not be transferred or assigned by
operation of law or otherwise, in whole or in part, by either party except to
successors-in-interest of all or part of the business of either party without
the prior written consent of the other party.
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XI. CREDIT REQUIREMENTS
Buyer and Seller agree that ▇▇▇▇▇'s compliance with Seller's credit policies
and requirements shall be a condition precedent to Seller's obligation to
deliver natural gas under this Agreement. Furthermore, if the financial
responsibility of Buyer becomes unsatisfactory for any reason to Seller,
satisfactory security shall be given by Buyer upon demand of Seller. Buyer's
failure to abide by the provisions of this Section shall be considered a breach
hereof and in such event payment for all natural gas delivered hereunder shall
be immediately due and owing and shall be paid immediately, and Seller, may,
without waiving any rights or remedies it may have, withhold further deliveries
until such payment of security is received.
XII. MISCELLANEOUS
A. Governing Law: This Agreement shall be construed in accordance with, and
the rights and duties of the parties hereto shall be governed by, the
internal laws of the State of Oklahoma. The parties hereto irrevocably
and unconditionally consent to and submit themselves to the exclusive
jurisdiction of the courts of the State of Oklahoma located in Tulsa
County, Oklahoma and the courts of the United States of America located in
the Northern District of Oklahoma (collectively, the "Agreed Courts") with
respect to any actions, suits or proceedings arising out of or in
connection with this Agreement and the transactions contemplated hereby
and the parties hereto agree not to commence any action, suit or
proceeding relating thereto except in such Agreed Courts. The parties
hereto further agree that service of any process, summons, notice or
document in accordance with the Notice provision of the Letter Agreement
between Buyer and Seller to which this Appendix I applies shall be
effective service of process for any action, suit or proceeding arising
out of this Agreement or the transactions contemplated hereby in the
Agreed Courts and hereby further irrevocably and unconditionally waive and
agree not to plead or claim that any such action, suit of proceeding
brought in any of the Agreed Courts has been brought in an inconvenient
forum.
B. Counterparts: This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together constitutes one and the same Agreement.
C. Entire Agreement: This instrument contains the entire Agreement of the
parties, superseding all other agreements, whether oral or written,
express or implied. It may not be changed orally but only by an agreement
in writing signed by the party against whom enforcement of any waiver,
change, modification, extension or discharge is sought.
D. Severability: The provisions of this Agreement shall be deemed
severable, and the invalidity or unenforceability of any one or more of
the provisions hereof shall not affect the validity and enforceability of
other provisions hereof.
E. Construction: Every covenant, term and provision of this Agreement shall
be construed simply according to its fair meaning and not strictly for or
against any party.
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