Exhibit 99.10
ENFOLIO(R) MASTER FIRM PURCHASE/SALE AGREEMENT
Enron North America Corp. a Delaware corporation ("COMPANY"), and Columbia
Energy Services Corporation, a Kentucky corporation ("Customer"), referred to
collectively as the "PARTIES," enter into this Master Firm Purchase/Sale
Agreement (together with all Transactions, collectively, this "AGREEMENT")
effective as the 1st Day of January, 2000 (the "EFFECTIVE DATE"). The ENFOLIO
General Provisions set forth in APPENDIX "1" shall apply to this Agreement.
ARTICLE 1. TERM This Agreement shall govern all transactions and be in effect
for a term of one year from the Effective Date. It shall then continue in effect
from Month to Month, unless terminated by either party upon 30 Days prior
written notice of the other Party; provided, this Agreement shall continue to
apply to all Transactions then in effect until all Transactions are completed.
Transactions of this Agreement in all instances shall be subject to SECTION 8.4.
ARTICLE 2. SCOPE OF AGREEMENT 2.1. SCOPE OF AGREEMENT. Company and Customer from
time to time during the term hereof may, but are not obligated to, enter into
Transactions for the firm purchase and sale of Gas to which this Agreement shall
apply. Each Transaction shall be effectuated and evidenced as set forth in this
ARTICLE 2 and shall constitute a part of this Agreement and all Transactions,
together with this Agreement, shall constitute a single integrated agreement. It
is acknowledged that the Parties are relying upon the fact that all
Transactions, together with this Agreement, will form a single integrated
agreement and that the Parties would not otherwise enter into any Transactions.
Each Transaction shall be construed as one with this Agreement and any
discrepancy between this Agreement and a Transaction shall be resolved in favor
of the Transaction. Each Transaction shall provide whether the Transaction is
based upon DCQ quantity obligations or MinMQ or MinDQ and MaxDQ quantity
obligations, in which case the applicable alternative definitions and provisions
set forth in this Agreement shall apply.
2. TRANSACTION PROCEDURES. It is the intent of the Parties to facilitate
Transactions in accordance with the agreed procedures in this ARTICLE 2 and
assure that such Transactions are valid and enforceable as a result of the use
of these procedures for the mutual benefit of the Parties. Any Transaction may
be formed and effectuated (i) by a written paper-based Transaction Agreement
executed by the Parties (including by facsimile and/or counterparts) or (ii) in
a recorded telephone conversation between the Parties occurring on any Business
Day during the Pricing Hours whereby an offer and acceptance shall constitute
the agreement of the Parties to a Transaction as evidenced by the Transaction
Tape; provided, each Party may stipulate by prior notice to the other Party that
any particular contemplated Transaction may be effectuated and formed only by
means of procedure (i) above. The Parties shall be legally bound by each
Transaction from the time they agree to its terms in accordance with this
ARTICLE 2 and acknowledge that each Party will rely thereon in doing business
related to the Transaction. The Transaction Tape is adopted by the Parties as a
means by which a Transaction is reduced to tangible form, and the Parties to a
Transaction are identified and authenticate a Transaction. Any Transaction
formed and effectuated pursuant to the foregoing shall be considered to be a
"writing" or "in writing" and to have been "signed" and any Transaction Tape
shall be considered to constitute an "original" document evidencing the
Transaction. Each Party consents to the recording of its employees telephone
conversations without any further notice with respect to matters pertaining to
this Agreement
2.3. EQUIPMENT AND TRANSACTION TAPE. Company shall at its expense maintain
equipment necessary to regularly record Transactions on Transaction Tapes and
retain Transaction Tapes in such manner as to protect its business records from
improper access; provided, Company shall not be liable for any malfunction of
equipment or the operation thereof in respect of any Transaction WITHOUT REGARD
TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING, WITHOUT LIMITATION, THE
NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT,
OR ACTIVE OR PASSIVE. No Transaction shall be vitiated should a malfunction
occur in equipment regularly utilized for recording Transactions or retaining
Transaction Tapes or the operation thereof, and in such event, the Transaction
shall be evidenced by the written and computer records of the Parties concerning
the Transaction made contemporaneously with the telephone conversation.
2.4 CONFIRMATIONS. In addition to, but not in lieu of, the foregoing, the
Parties agree that Company may confirm a recorded telephonic Transaction by
forwarding to Customer a facsimile Confirmation and that a reasonable time for
the receipt by Customer of a Confirmation is within 24 hours of the Transaction
formation. Company does hereby adopt its letterhead, including its address, as
its signature on any Confirmation as the identification of Company and
authentication by Company of the Confirmation, and such letterhead shall be
sufficient to verify that Company originated the Confirmation. The Parties agree
that any objections to the contents of the Confirmation shall be made in writing
on or before the Confirm Deadline for all purposes hereunder and at law. Upon
issuance of a Confirmation and the passage of the Confirm Deadline, if no
objection to the Confirmation has been then received, the Confirmation shall be
conclusive evidence of the Transaction made the subject matter thereof and the
final expression of all of its terms.
2.5 ENFORCEMENT OF TRANSACTIONS. The Parties agree not to contest or assert a
defense to the validity or enforceability of telephonic Transactions entered
into in accordance with this Agreement under laws relating to (i) whether
certain agreements are to be in writing or signed by the Party to be thereby
bound or (ii) the authority of any employee of the Party if the employee name is
stated in the Transaction Tape.
ARTICLE 3. QUANTITY OBLIGATIONS. 3.1 SELLER'S SALES OBLIGATION. Seller shall
schedule, or cause to be Scheduled, at the Delivery Point(s) on a firm basis
each Gas Day a quantity of Gas equal to the quantity properly requested by Buyer
up to the DCQ or MaxDQ, if applicable ("BUYER'S REQUESTED QUANTITY"). Unless
otherwise agreed nothing in this Agreement, and in particular this ARTICLE 3,
shall require or permit either Party to Schedule Gas at a point other than a
Delivery Point or in excess of the DCQ Maximum Daily Delivery Point Quantity or
MaxDQ, as applicable.
3.2 SELLER'S FAILURE TO SCHEDULE. If on any Gas Day Seller fails to Schedule
Buyer's Requested Quantity, then such occurrence shall constitute a "SELLER'S
DEFICIENCY DEFAULT" and "SELLER'S DEFICIENCY QUANTITY" shall be the numerical
difference between Buyer's Requested Quantity and the amount of Gas Scheduled
for such Gas Day. In the event of a Seller's Deficiency Default, Seller shall
pay Buyer the sum of the following: (1) an amount equal to the product of the
Seller's Deficiency Quantity multiplied by the Replacement Price Differential,
PLUS (ii) liquidated damages equal to $0.15 multiplied by Seller's Deficiency
Quantity to cover Buyer's administrative and operational costs. During any Month
in which Seller's nonperformance continues for a period of five consecutive Gas
Days Buyer may elect upon notice to Seller, without liability, not to recommence
Scheduling Gas hereunder for the remainder of such Month, but for no longer
period. Subject to offset pursuant to SECTION 3.5, payment to Buyer shall be
made on the 25th Day of the Month in which Seller receives Buyer's statement for
same.
3.3. BUYER'S PURCHASE OBLIGATION. Buyer shall Schedule, or cause to be
Scheduled, at the Delivery Point(s) on a firm basis each Gas Day a quantity of
Gas equal to the DCQ; provided, (i) if the MinMQ is applicable to a Transaction,
Buyer shall Schedule, or cause to be Scheduled, at the Delivery Point(s) on a
firm basis each Month a minimum quantity of Gas equal to the MinMQ and (ii) if
the MinDQ is applicable to a Transaction, Buyer shall Schedule, or cause to be
Scheduled, at the Delivery Point(s) on a firm basis each Day a minimum quantity
of Gas equal to the MinDQ.
3.4. BUYER'S FAILURE TO SCHEDULE. If on any Gas Day Buyer fails to Schedule the
DCQ or MinDQ, if applicable, then such occurrence shall constitute a "BUYER'S
DEFICIENCY DEFAULT" and "BUYER'S DEFICIENCY QUANTITY" shall be the
numerical difference between the DCQ or MinDQ, if applicable, and the quantity
of Gas Scheduled for such Gas Day; provided, if the MinMC is applicable to a
Transaction, (i) the Buyer's Deficiency Default shall occur if Buyer fails to
Schedule the MinMQ for any Month and (ii) the Buyer's Deficiency Ouantity shall
be the numerical difference between the MinMQ and the quantity of Gas Scheduled
for such month. In the event of a Buyers Deficiency Default, Buyer shall pay
Seller the sum of the following: (i) an amount equal to the product of Buyer's
Deficiency Quantity multiplied by the Replacement Price Differential, PLUS (ii)
liquidated damages equal to $.15 multiplied by Buyer's Deficiency Quantity to
cover Seller's administrative and operational costs. With respect to DCQ and
MinDQ obligations, during any Month in which Buyer's nonperfomance continues for
a period of five consecutive Gas Days Seller may elect upon notice to Buyer,
without liability, not to recommence Scheduling Gas for the remainder of such
Month, but for no longer period. Subject to offset pursuant to SECTION 3.5,
payment to Seller shall be made in accordance with the Financial Matters
provisions set forth in APPENDIX "1."
3.5. NETTING. In the event that Buyer and Seller are each required to pay an
amount in the same Month hereunder, then such amounts with respect to each Party
may be aggregated and the Parties may discharge their obligations to pay through
netting, in which case the Party, if any, owing the greater aggregate amount may
pay to the other Party the difference between the amounts owed.
ARTICLE 4. DEFAULTS AND REMEDIES 4.1. EARLY TERMINATION. If a Triggering Event
(defined in SECTION 4.2) occurs with respect to either Party at any time during
the term of this Agreement, the other Party (the "NOTIFYING PARTY") may (i) upon
two Business Days written notice to the first Party, which notice shall be given
no later than 60 Days after the discovery of the occurance of the Triggering
Event, establish a date on which any or all Transactions selected by it and this
Agreement in respect thereof will terminate ("EARLY TERMINATION DATE") except as
provided in SECTION 8.4, and (ii) withhold any payments due in respect of such
Transactions; provided, upon the occurence of any Triggering Event listed in
item (iv) of SECTION 4.2 as it may apply to any party, all Transactions and
this Agreement in respect thereof shall automatically terminate, without notice,
as if an Early Termination Date had been immediately declared except as provided
in SECTION 8.4. If an Early Termination Date occurs, the Notifying Party shall
in good faith calculate its damages, including its associated costs and
attorneys' fees, resulting from the termination of the terminated Transactions
(the "TERMINATION PAYMENT"). The Termination Payment will be determined by (i)
comparing the value of (a) the remaining term, quantities and prices under each
such Transaction had it not been terminated to (b) the equivalent quantities and
relevant market prices for the remaining term either quoted by a bone fide third
party offer or which are reasonably expected to am available in the market under
a replacement contract for each such Transactions and (ii) ascertaining the
associated cons and attorneys' fees. To ascertain the market prices of a
replacement contract the Notifying Party may consider, among other valuations,
any or all of tile settlement prices of NYMEX Gas futures contracts, quotations
from leading dealers in Gas swap contracts and other bona fide third party
offers, all adjusted for the length of the remaining term and the basis
differential. All terminated Transactions shall be netted against each other.
The Notifying Party shall give the Affected Party (defined in SECTION 4.2)
written notice of the amount of the Termination Payment, inclusive of a
statement showing its determination. If a Termination Payment, is owed to the
Notifying Party, the Affected Party shall pay the Termination Payment to the
Notifying Party within 10 days of receipt of such notice. If a Termination
Payment is owed to the Affected Party, the Notifying Party shall pay the
Termination Payment to the Affected Party within 10 Days of the receipt of such
notice. At the time for payment, of any amount due under this ARTICLE 4, each
Party shall pay to the other Party all additional amounts payable by it pursuant
to this Agreement, and all shall such amounts shall be netted and aggregated
with any Termination Payment payable hereunder. If the Affected Party disagrees
with the calculation of the Termination Payment, the issue shall be submitted to
arbitration pursuant to this Agreement and the resulting Termination Payment
shall be due and payable within three Days after the award. If a Triggering
Event occurs, the Notifying Party may (at its election) set off any or all
amounts which the Affected Party owes to the Notifying Party or its Affiliates
(under this Agreement or otherwise) against any or all amounts which the
Notifying Party owes to the Affected (under this Agreement or otherwise).
4.2 TRIGGERING EVENT shall mean with respect to a Party (the "AFFECTED PARTY"):
(i) the failure by the Affected Party to make, when due, any payment required
under this Agreement if such failure is not remedied within five Business Days
after written notice of such failure is given to the Affected Party provided;
the payment is not the subject of a good faith dispute as described in the
Billing and Payment provisions or (ii) any representation or warranty made by
the Affected Party in this Agreement shall prove to have been false or
misleading in any material respect when made or deemed to be repeated or (iii)
the failure of the Affected Party to perform any convenant set forth in this
Agreement (other than its obligations to make any payment or obligations which
are otherwise specifically covered in this SECTION 4.2 as a separate Triggering
Event), and such failure is not excused by FORCE MAJEURE or cured within five
Business Days after written notice thereof to the Affected Party or (iv) the
Affected Party shall (a) make an assignment or any general arrangement for the
benefit of creditors, (b) file a petition or otherwise commence, authorize or
acquiesce in the commencement of a proceeding or cause under any bankruptcy or
similar law for the protection of creditors, or have such petition filed against
it and such proceeding remains undismissed for 30 days, (c) otherwise become
bankrupt or insolvent (however evidenced) or (d) be unable to pay its debts as
they fall due or (v) Seller's unexecused failure to Schedule the Buyer's
Requested Quantity requested by Buyer for a cumulative period of 30 or more Gas
Days in a 12 Month period in any one Transaction or (vi) Buyer's unexcused
failure to Schedule the DCQ or MinDQ for a cumulative period of 30 or more Gas
Days in a 12 Month period in any one Transaction, or, if applicable, the MinMQ
for a cumulative period of three Months in a 12 Month period in any one
Transaction, or (vii) the occurrence of a Material Adverse Change of the
Affected Party; provided, such Material Adverse Change shall not be considered
if the Affected Party establishes, and maintains throughout the term hereof, a
Letter of Credit (naming the Notifying Party as the beneficiary) in an amount to
the SUM of (in each case rounding upwards for ANY fractional amount to the next
$250,000.00) (a) the Notifying Party's Termination Payment PLUS (b) if the
Notifying Party is Seller, the aggregate of the amounts Seller is entitled to
receive under each Transaction for Gas Scheduled during the 60 Day period
preceding the Material Adverse Change (the amount of said Letter of Credit to be
adjusted quarterly to reflect amounts owing at that point in time) or (viii) the
Affected Party fails to establish, maintain, extend or increase a Letter of
Credit when required pursuant to this Agreement, or after reasonable notice
fails to replace the issuing bank with another bank acceptable to the
beneficiary or (ix) with respect to Company, at any time, Company or Company's
Guarantor shall have defaulted on its indebtedness to third parties resulting in
an acceleration of obligations of Company or Company's Guarantor in excess of
$100,000,000, or with respect to Customer, at any time, Customer or Customer's
ultimate parent, Columbia Energy Group shall have defaulted on its indebtedness
to third parties, resulting in an accerleration of obligations of Customer or
Customer's Guarantor in excess of $50,000,000 or (x) the Guarantor of the
Affected Party fails to perform any covenant set forth in the guaranty agreement
if delivered in respect of this Agreement, any representation or warranty made
by such Guarantor in said guaranty agreement shall prove to have been false or
misleading in any material respect when made or when deemed to be repeated or
such Guarantor shall take or suffer any actions set forth in item (iv) above as
applied to it.
4.3 OTHER EVENTS. In the event Buyer under a Transaction is regulated by a
federal, state or local regulatory body, and such body shall disallow all or any
portion of any costs incurred or yet to be incurred by Buyer under any provision
of this Agreement, such action shall not operate to excuse Buyer from
performance of any obligation nor shall such action give rise to any right of
Buyer to any refund or retroactive adjustment of the Contract Price provided in
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any Transaction. Notwithstanding the foregoing, if the Affected Party's
activities hereunder become subject to regulation of any kind whatsoever under
any law (other than with respect to New Taxes) to a greater or different extent
than that existing on the Effective Date and such regulation either (i) renders
this Agreement illegal or unenforceable or (ii) materially adversely affects the
business of the Affected Party, with respect to its financial position or
otherwise, then in the case of (i) above, either Party, and in the case of (ii)
above, only the Affected Party, shall at such time have the right to declare an
Early Termination Date in accordance with the provisions hereof; provided,
notwithstanding the rights of the Parties to declare an Early Termination Date
as above stated, the Affected Party shall be liable for payment of the
Termination Payment calculated by the non-Affected Party as provided in SECTION
4.1
4.4. OFFSET. Each Party reserves to itself all rights, set-offs conterclaims and
other remedies and defenses consistent with SECTION 8.3 (to the extent not
expressly herein waived or denied) which such Party has or may be entitled. All
outstanding Transactions and the obligations to make payment in connection
therewith or under this Agreement may be offset against each other, set off or
recouped therefrom.
4.5. SECURITY. In order to secure all payment obligations of Company to Customer
hereunder, Company shall cause its Guaranty to execute and deliver to Customer
the guaranty agreement substantially in the form attached as EXHIBIT "C". In
order to secure all payment obligations of Customer to Company, Customer shall
cause its Guarantor to execute and deliver to Company the guaranty agreement
substantially in the form attached as EXHIBIT "D".
ARTICLE 5. FORCE MAJEURE. This ARTICLE 5 is the sole and exclusive excuse of
performance permitted under this Agreement and all other excuses at law or in
equity are WAIVED to the extent permitted by law. Except with respect to payment
obligations in the event either Party is rendered unable, wholly or in part, by
FORCE MAJEURE to carry out its obligations hereunder, it is agreed that upon
such Party's giving notice end full particulars of such FORCE MAJEURE to the
other Party as soon as reasonably possible (such notice to be confirmed in
writing) the obligations of the Party giving such notice, to the extent they are
affected by such event, shall be suspended from the inception and during the
continuance of the FORCE MAJEURE for a period of up 60 Days in the aggregate
during any 12 Month period, but for no longer period. The Party receiving notice
of FORCE MAJEURE may immediately take such action as it deems necessary at its
expense for the entire 60 Day period or any part thereof. The Parties expressly
agree that upon the expiration of the 60 Day period FORCE MAJEURE shall no
longer apply to the obligations hereunder and both Buyer and Seller shall be
obligated to performed. The cause of the FORCE MAJEURE shall be remedied with
all reasonable diligence and dispatch; provided, unless otherwise agreed no
provision herein shall require or permit Seller or Buyer to Schedule quantities
of Gas (i) in excess of the DCQ, Maximum Daily Delivery Point Quantity or MaxDQ,
as applicable, or (ii) at points other than the Delivery Point(s).
ARTICLE 6. TAXES 6.1. ALLOCATION OF AND INDEMNITY FOR TAXES. The Contract Price
includes full reimbursement for, and Seller is liable for and shall pay, or
cause to be paid, or reimburse Buyer if Buyer has paid, all Taxes applicable to
the Gas sold upstream of the Delivery Points(s). In the event Buyer is required
to remit such Tax, the amount hereof shall be deducted from any sums becoming
due to Seller hereunder. Seller shall indemnify, defend and hold harmless Buyer
from any Claims for such Taxes. The Contract Price does not include
reimbursement for and Buyer is liable for and shall pay, cause to be paid, or
reimburse Seller if Seller has paid, all Taxes applicable to the Gas sold
downstream of or at the Delivery Point(s), including any taxes imposed or
enacted by a taxing authority with jurisdiction over Buyer. Buyer shall
indemnify, defend and hold harmless Seller from any Claims for such Taxes.
6.2. NEW TAXES. A If (i) a New Tax occurs AND (ii) Buyer or Seller would be
responsible for such New Tax if it were a Tax under SECTION 6.1 AND (iii) such
New Tax is, due to and on the basis of laws, regulations and applicable
contracts of Buyer in effect as of the effective date of the New Tax of the type
which Buyer can pass directly through to, or be reimbursed by, another person or
entity in the chain of Gas Supply, such Buyer shall pay or cause to be paid, or
reimburse Seller if Seller has paid, all such New Taxes and Buyer shall
indemnify, defend and hold harmless Seller from any Claims for such Taxes,
provided, if Buyer does not identify its contracts for long-term fixed sourcing
in the ordinary course of its business and cannot identify applicable contracts,
this PARAGRAPH A shall not apply. B If (i) a New Tax occurs AND (ii) either
Buyer or Seller would be responsible for such New Tax if were a Tax under
SECTION 6.1 AND (iii) Paragraph A does not apply, such responsible Buyer or
Seller (the "TAXED PARTY") shall be entitled to declare an Early Termination
Date in accordance with the provisions of this Agreement subject to the
following conditions; provided, prior to and including the initial Agreement
Period (below defined) invoked under this SECTION 6.2. New Taxes shall be
allocated as if they were Taxes as provided in SECTION 6.1: (a) the Taxed Party
must give the non-Taxed Party at least 30 Days prior written notice (the
"AGREEMENT PERIOD") of its intent to declare an Early Termination Date (and
which notice shall be given no later than 90 Days after the later of the
enactment of effective date of the relevant New Tax), and prior to the proposed
Early Termination Date Buyer and Seller shall attempt to reach a mutual
agreement as to the sharing of the New Tax, (b) if a mutual sharing agreement is
not reached, the non-Taxed party shall have the right, but not the obligation,
upon written notice to the Taxed Party within the Agreement Period, to pay the
New Tax for any continuous period it so elects on a Month to Month basis, and in
such case the Taxed Party shall not have the right during such continuous period
to declare the Early Termination Date on the basis of the New Taxes, (c) should
the non-Taxed Party at its election agree to pay the New Tax on a Month to Month
basis, then upon 30 Days prior written notice to the Taxed Party of its election
to cease payment of such New Tax, the Taxed Party shall then be liable for the
payment of the New Tax and the Parties shall again be subject to this SECTION
6.2 as if the New Tax had an effective date as of the date the non-Taxed party
ceases payment of such New Tax, (d) if a mutual sharing agreement is not reached
and the non-taxed Party does not elect to pay the New Tax for any period of time
within the Agreement Period, the Early Termination Date shall take effect and
all Transactions must be terminated and be subject to the same Early Termination
Date, (e) the Early Termination Date shall be effected as if a Triggering Event
had occurred and the Termination Payment calculated as set forth in SECTION 4.1
shall be payable; provided, both Seller and Buyer pursuant to SECTION 4.1 shall
calculate their respective Termination Payments resulting from the termination
of all Transactions as if they each were a Notifying Party; provided further, if
the calculations of the Termination Payments results in either the non-Taxed
Party's or the Taxed Party's having either a gain or loss (after netting its
gains against its losses), the Parties shall share equally such net gain due, or
be responsible to pay to the Party having the net loss, one-half of the
Termination Payment and (f) such termination Payment shall be payable as
provided in SECTION 4.1 and its calculation shall be subject to arbitration as
provided in the ENFOLIO General Provisions.
6.3. COOPERATION. Upon request a Party shall provide a certificate of exemption
or other evidence of exemption from any Tax and each Party agrees to cooperate
with the other in obtaining an exemption and minimizing Taxes payable in respect
of all Transactions.
ARTICLE 7. TITLE, RISK OF LOSS, INDEMNITY AND BALANCING 7.1. TITLE, RISK OF LOSS
AND INDEMNITY. As between the Parties, Seller shall be deemed to be in exclusive
control and possession of Gas Scheduled hereunder and responsible for any damage
or injury caused thereby prior to the time the same shall have been delivered to
Buyer. After delivery of Gas to Buyer at the Delivery Points(s), Buyer shall be
deemed to be in exclusive control and possession thereof and responsible for any
injury or damage caused thereby. Title to Gas Scheduled hereunder shall pass
from Seller to Buyer at the Delivery Point(s). Seller and Buyer each assumes all
liability for and shall
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indemnify, defend and hold harmless the other Party from any Claims, including
injury to and death of persons, arising from any act or incident occurring when
title to the Gas is vested in the Indemnifying Party. IT IS THE INTENT OF THE
PARTIES THAT THIS INDEMNITY AND THE LIABILITY ASSUMED UNDER IT BE WITHOUT REGARD
TO THE CAUSE OR CAUSES THEREOF, INCLUDING, WITHOUT LIMITATION, THE NEGLIGENCE OF
ANY INDEMNIFIED PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR
ACTIVE OR PASSIVE, PROVIDED; NEITHER PARTY SHALL BE LIABLE IN RESPECT OF ANY
CLAIM TO THE EXTENT SAME RESULTED FROM THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT
OR BAD FAITH OF THE INDEMNIFIED PARTY.
7.2. CORRECTION OF IMBALANCES, CASHOUTS AND PENALTIES. Differences between
Scheduled quantities and actual quantities delivered and aid received hereunder
("IMBALANCES") will be corrected or settled in cash or Gas or by offset as the
Parties agree. Additionally in the event of (i) an Imbalance on Buyer's
Transporter's system caused by Seller or Seller's Transporter's delivery of less
or more than the Scheduled quantity for any Gas Day (in which case Seller shall
be the "RESPONSIBLE PARTY") or (ii) an Imbalance on Seller's Transporter's
system caused by Buyer or Buyer's Transporter's receipt of more or less than the
Scheduled quantity for any Gas Day (in which case Buyer shall be the
"RESPONSIBLE PARTY"), the Responsible Party shall be liable for and reimburse to
the other Party any associated Transporter penalties or cashout costs and losses
incurred by such other Party. In the event the tariff of either Buyer's or
Seller's Transporter provides for cashouts on the best of the aggregation of all
overdeliveries and underdeliveries between such Transporter and Buyer or Seller,
respectively (the "AGGREGATE TRANSPORTER IMBALANCE"), and the nature of the
Imbalance (overdelivery or underdelivery) attributable to the Responsible Party
is the same as the Aggregate Transporter Imbalance (overdelivery or
underdelivery), the Responsible Party shall participate in the other Party's
cashout settlement of the Aggregate Transporter Imbalance on the basis of only
the Responsible Party's pro-rata share thereof.
ARTICLE 8. MISCELLANEOUS 8.1. NOTICES. All notices, including, without
limitation, consents, and communications made pursuant to this Agreement shall
be made as specified in EXHIBIT "A." Notices required to be in writing shall be
delivered in written form by letter, facsimile or other documentary form. Notice
by facsimile or hand delivery shall be deemed to have been received by the close
of the Business Day on which it was transmitted by hand delivered (unless
transmitted or hand delivered after close in which case it shall be deemed
received at the close of the next Business Day) or such earlier time confirmed
by the receiving Party. Notice by overnight mail or courier shall be deemed to
have been received two Business Days after it was sent or such earlier time
confirmed by the receiving Party. Any notices given hereunder in respect of the
declaration of an Early Termination Date shall be also sent to the address or
facsimile number so specified in EXHIBIT "A." Any Party may change its addresses
by providing notice of same in accordance herewith.
8.2. TRANSFER. This Agreement, including, without limitation, each
indemnification, shall inure to and bind the permitted successors and assigns of
the Parties; provided, neither Party shall transfer this Agreement without the
prior written approval of the other Party which may be withheld entirely at the
option of such Party; provided further, either Party may, without the consent of
the other Party (and without relieving itself from liability hereunder), (i)
transfer, sell, pledge, encumber or assign this Agreement or the accounts,
revenues or proceeds hereof in connection with any financing or other financial
arrangements, (ii) transfer or assign this Agreement to any Affiliate by
assignment, merger or otherwise, or (iii) transfer or assign this Agreement to
any person or entity succeeding to all or substantially all of the assets of
such Party. Any Party's transfer in violation of this SECTION 8.2 shall be void.
8.3 LIMITATION OF REMEDIES, LIABILITY AND DAMAGES AND MITIGATION. THE PARTIES DO
HEREBY CONFIRM THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN
THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY
PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS HEREIN PROVIDED,
SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY
HEREUNDER. THE OBLIGOR'S LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH
PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IF
NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY HEREIN PROVIDED, THE OBLIGOR'S
LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY. SUCH DIRECT ACTUAL
DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY HEREUNDER AND ALL OTHER REMEDIES
OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED
NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY
OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, IN
TORT, CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE, NOTWITHSTANDING ANY
OTHER PROVISION IN THIS AGREEMENT. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
ANY PENALTIES OR CHARGES ASSESSED BY ANY TRANSPORTER OR OTHER ENTITY FOR THE
UNAUTHORIZED RECEIPT OF GAS BY THE OTHER PARTY. IT IS THE INTENT OF THE PARTIES
THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE
WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING, WITHOUT
LIMITATION, THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT
OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO BE
PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE
DIFFICULT OR IMPOSSIBLE TO DETERMINE, OTHERWISE OBTAINING AN ADEQUATE REMEDY IS
INCONVENIENT AND THE LIQUIDATED DAMAGES CONSTITUTE A REASONABLE APPROXIMATION OF
THE HARM OR LOSS. BUYER ACKNOWLEDGES THAT IT HAS ENTERED INTO THIS AGREEMENT AND
IS CONTRACTING FOR THE GOODS TO BE SUPPLIED BY SELLER BASED SOLELY UPON THE
EXPRESS REPRESENTATIONS AND WARRANTIES HEREIN SET FORTH AND SUBJECT TO SUCH
REPRESENTATIONS AND WARRANTIES, ACCEPTS SUCH GOODS "AS-IS" AND "WITH ALL
FAULTS." SELLER EXPRESSLY NEGATES ANY OTHER REPRESENTATION OR WARRANTY, WRITTEN
OR ORAL, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION
OR WARRANTY WITH RESPECT TO CONFORMITY TO MODELS OR SAMPLES, MERCHANTABILITY, OR
FITNESS FOR ANY PARTICULAR PURPOSE. EACH PARTY HEREBY WAIVES ALL RIGHTS UNDER,
ARISING OUT OF OR ASSOCIATED WITH TEXAS & BUSINESS COMMERCE CODE SECTIONS 17.41
THROUGH 17.63 KNOWN AS THE DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT TO
THE EXTENT ALLOWED BY LAW. The Parties acknowledge the duty to mitigate damages
hereunder. In this connection, the Parties recognize that the ability to
effectuate arrangements for the sale or purchase of Gas is conditioned upon the
volatility of Gas markets, the creditworthiness and reliability of potential
customers, the complexity and size of the portfolios of contracts managed by
each Party and the need to conduct market business in an orderly manner.
Therefore, the Parties agree that (i) three Business Days is a commercially
reasonable period to purchase or sell Gas in respect of a Seller's or Buyer's
Deficiency Default and (ii) three Business Days after the end of the Month in
which the Early Termination Date occurs is a commercially reasonable period
after the establishment of an Early Termination Date to determine the
Termination Payment; provided, notwithstanding the foregoing, if Gas volumes
made the basis of a Seller's or Buyer's Deficiency Default or a Party's
determination of the Termination Payment are in excess of 20,000 MMBtu/Gas Day,
the Parties recognize that a longer period may ordinarily be required to
effectuate cover or determine the Termination Payment in an orderly manner so as
not to adversely affect the Gas market. Each Party may utilize its discretion,
with commercially reasonable foresight, to adjust the timing and staggering of
the purchases or sales of Gas volumes in its efforts to mitigate damages. No
claim that a Party failed to mitigate damages shall be grounded solely on the
basis of counter Gas market movement.
4
8.4 WINDING UP ARRANGEMENTS. Upon the expiration of the Parties sale and
purchase obligations under this Agreement, any monies, penalties or other
charges due and owing Seller shall be paid, any corrections or adjustments to
payments previously made shall be determined, and any refunds due Buyer made,
within 60 Days. Any imbalances in receipts or deliveries shall be corrected to
zero balance within 60 Days. All indemnity and confidentiality obligations and
audit rights shall survive the termination of this Agreement. The Parties
obligations provided in this Agreement shall remain in effect for the purpose of
complying herewith.
8.5 APPLICABLE LAW. THIS AGREEMENT AND EACH TRANSACTION AND THE RIGHTS AND
DUTIES OF THE PARTIES ARISING OUT OF THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE PARTIES AGREE THAT
THIS AGREEMENT AND ALL TRANSACTIONS SHALL BE ACCEPTED AND FORMED IN THE STATE OF
TEXAS ACCORDING TO THE PROCEDURES HEREIN SET FORTH.
8.6. DOCUMENT, RECORD RETENTION AND EVIDENCE. This Agreement, the Exhibits and
Appendices hereto, if any, and each Transaction, constitute the entire agreement
between the Parties relating to the subject matter contemplated by this
Agreement. There are no prior or contemporaneous agreements or representations
(whether oral or written) affecting the subject matter other than those herein
expressed. Other than with respect to Transactions entered into in accordance
with the procedures set forth in this Agreement and as otherwise herein
expressly stated (the "TRANSACTION PROCEDURES"), no amendment or modification to
this Agreement shall be enforceable, unless reduced to writing and executed by
both Parties. The conduct of the Parties in accordance with the Transaction
Procedures shall evidence a course of dealing and a course of performance
accepted by the Parties in furtherance of this Agreement and all Transactions
entered into by the Parties. The provisions of this Agreement shall not impart
rights enforceable by any person, firm or organization not a Party or not bound
as a Party, or not a permitted successor or assignee of a Party bound to this
Agreement. Except as otherwise herein stated, any provision, article or section
declared or rendered unlawful by a court of law or regulatory agency with
jurisdiction over the Parties or deemed unlawful because of a statutory change
will not otherwise affect the lawful obligations that arise under this
Agreement. The headings used for the Articles herein are for convenience and
reference purposes only. All Exhibits and Appendices referenced in this
Agreement, if any, are incorporated. Any original executed Agreement or
Transaction Agreement may be photocopied and stored on computer tapes and disks
(the "IMAGED AGREEMENT"). The Imaged Agreement, if introduced as evidence on
paper, the Confirmation, if introduced as evidence in automated facsimile form,
and the Transaction Tape, if introduced as evidence in its original form and as
transcribed onto paper, and all computer records of the foregoing, if introduced
as evidence in printed format, in any judicial arbitration, mediation or
administrative proceedings, will be admissible as between the Parties to the
same extent and under the same conditions as other business records originated
and maintained in documentary form. Neither Party shall object to the
admissibility of the Transaction Tape, the Confirmation or the Imaged Agreement
(or photocopies of the transcription of the Transaction Tape, the Confirmation
or the Imaged Agreement) on the basis that such were not originated or
maintained in documentary form under either the hearsay rule, the best evidence
rule or other rule of evidence.
8.7 FORWARD CONTRACT. This Agreement and all Transactions under this Agreement
constitute a "forward contract" under and in all proceedings related to the
United States Bankruptcy Code, as the same may be amended, restated, replaced or
re-enacted from time-to-time, and will be treated similarly under and in all
proceedings related to any bankruptcy, insolvency or similar law (regardless of
the jurisdiction of application or competence of such law) or any ruling order,
directive or pronouncement made pursuant thereto.
8.8 CONFIDENTIALITY. Each Party shall not disclose the terms of any Transaction
to a third party (other than the Party's and its affiliates' employees, lenders,
counsel, accountants or prospective purchasers of any rights under any
Transactions who have agreed to keep such terms confidential, except in order to
comply with any applicable law, order regulation or exchange rule, provided,
each Party shall notify the other Party of any proceeding or which it is aware
which may result in disclosure and use reasonable efforts to prevent or limit
the disclosure. The provisions of the Agreement other than the terms of any
Transaction are not subject to this confidentiality obligation. The Parties
shall be entitled to all remedies available at law or in equity to enforce, or
seek relief in connection with, this confidentiality obligation provided, all
monetary damages shall be limited in accordance with SECTION 8.3.
The Parties have executed this Agreement in multiple counterparts to be
construed as one effective as of the Effective Date.
ENRON NORTH AMERICA CORP.
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------------------------------
Title: Managing Director
------------------------------------------------------
COLUMBIA ENERGY SERVICES CORPORATION
By: /s/ Xxxxx X. Xxxx
---------------------------------------------------------
Title: President & CEO
------------------------------------------------------
5
APPENDIX "1"
ENFOLIO GENERAL PROVISIONS
o USAGE AND DEFINITIONS. All references to Articles and Sections are to those
set forth in this Agreement. Reference to any document means such document as
amended from time to time and reference to any Party includes any permitted
successor or assignee thereof. The following definitions and any terms defined
internally in this Agreement shall apply to this Agreement and all notices and
communications made pursuant to this Agreement.
"AFFILIATE" means, with respect to any person, any other person (other
than an individual) that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control
with such person. For this purpose, "control" means the direct or indirect
ownership of fifty percent (50%) or more of the outstanding capital stock
or other equity interests having ordinary voting power.
"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. The term "MMBTU" means one million Blus.
"BUYER" means the Party to a Transaction who is obligated to purchase Gas
during a Period of Delivery.
"C.T." means Central Time.
"CLAIMS" means all claims or actions, threatened or filed and whether
groundless, false or fraudulent, that directly or indirectly relate to the
subject matters of the indemnity, and the resulting losses, damages,
expenses, attorney's fees and court costs, whether incurred by settlement
or otherwise, and whether such claims or actions are threatened or filed
prior to or alter the termination of this Agreement.
"CONFIRMATION" means a written notice confirming the specific terms of a
Transaction which may be any form adequate at law; an example of a
Confirmation which may be utilized hereunder is shown in "EXHIBIT B."
"CONFIRM DEADLINE" means 24 hours after a Party receives a Confirmation;
provided, if the Confirmation is not received during a Business Day it
shall be deemed received at the open of the next Business Day.
"CONTRACT PRICE" means the price for the purchase or sale of Gas pursuant
to a Transaction.
"DAILY CONTRACT QUANTITY" ("DCQ") means the quantity of Gas to be
Scheduled each Gas Day pursuant to a Transaction.
"DAY" means a period of 24 consecutive hours, beginning at midnight C.T.
on any calendar Day. "BUSINESS DAY" means a Day on which Federal Reserve
member banks in New York City are open for business and a Business Day
shall open at 8:00 a.m. and close at 5:00 p.m. local time.
"GAS DAY" means a period of 24 consecutive hours beginning at the time of
the applicable Transporter's gas day.
"DELIVERY POINT(S)" means the agreed point(s) of delivery pursuant to a
Transaction.
"FORCE MAJEURE" means an event not anticipated as of the Effective Date,
which is not within the reasonable control of the Party, or in the case of
third party obligations or facilities, the third party, claiming
suspension, and which by the exercise of due diligence such Party, or
third party, is unable to overcome or obtain or cause to be obtained a
commercially reasonable substitute performance therefore; provided,
neither (i) the loss of Buyer's markets nor Buyer's inability economically
to use or resell Gas purchased hereunder nor (ii) the loss or failure of
Seller's Gas supply, including, without limitation, depletion of reserves
or other failure of production, nor Seller's ability to sell Gas to a
market at a more advantageous price, shall constitute an event of FORCE
MAJEURE. "FORCE MAJEURE" shall include an event of FORCE MAJEURE occurring
with respect to the facilities or services of Buyer's or Seller's
Transporter.
"GAAP" means generally accepted accounting principles, consistently
applied.
"GAS" means methane and other gaseous hydrocarbons meeting the quality
standards and specifications of Buyer's Transporter.
"GUARANTOR" means, as to Company, Company's parent, Enron Corp., and as to
Customer, Customer's ultimate parent, Columbia Energy Group.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" mean the Party receiving and
providing an indemnity, respectively.
"INTEREST RATE" means, for any date, two percent over the per annum rate
of interest announced as the "Prime Rate" from time to time for commercial
loans by Citibank, N.A. as established by the administrative body of such
bank charged with the responsibility of establishing such rate, as same
may change from time to time; provided, the Interest Rate shall never
exceed the maximum lawful rate permitted by applicable law.
"LETTER OF CREDIT" means an irrevocable standby letter of credit
established by a Party (the "ACCOUNT PARTY" and issued or confirmed in a
form and by a commercial bank acceptable to the Party in whose favor if is
issued (the "BENEFICIARY PARTY").
"MATERIAL ADVERSE CHANGE" means (i) with respect to Company, Enron Corp.
shall have long-terms debt unsupported by third party credit enhancement
that is rated by Standard & Poor's Corporation below BBB- or (ii) with
respect to Customer, Customer shall have long-terms debt unsupported by
third party credit enhancement that is rated by Standard & Poor's
Corporation below BBB-.
"MAXDQ" means the maximum quantity of Gas that Seller is required to
Schedule per Gas Day pursuant to a Transaction, if applicable.
"MAXIMUM DAILY DELIVERY POINT QUANTITY" means the maximum quantity of Gas
which may be Scheduled per Gas Day at each Delivery Point where there are
multiple Delivery Points applicable to a Transaction.
"MINDQ" means the minimum quantity of Gas that Buyer is required to
Schedule per Gas Day pursuant to a Transaction, if applicable.
"MINMQ" means for any Month the minimum quantity of Gas per Gas Day that
Buyer is obligated to Schedule times the number of Days in the Month
pursuant to a Transaction, if applicable.
"MONTH" means a period of time beginning at midnight C.T. on the first Day
of any calendar Month and ending at midnight C.T. on the first Day of the
following calendar Month.
"NEW TAXES" means (i) any Taxes enacted and effective after the Effective
Date, including, without limitation, that portion of any TAxes or New
Taxes that constitutes and increase, or (ii) any law, order, rule or
regulation, or interpretation thereof, enacted and effective after the
Effective Date resulting in the application of any Taxes to a new or
different class of parties.
"PERIOD OF DELIVERY" means the period from the date Scheduling obligations
are to commence to the date same are to terminate under a Transaction.
"PIPELINE" means a company authorized to strip Gas on behalf of itself or
others on physical Gas transmission facilities.
"PRICING HOURS" means the hours C.T. from 8:00 a.m. to 5:00 p.m. of each
Business Day.
"REPLACEMENT PRICE DIFFERENTIAL" means (i) in the event of a Seller's
Deficiency Default, the positive difference, if any, obtained by
subtracting the Contract Price form the Spot Price for the Gas Day in
which Seller's Deficiency Default occurred, and (ii) in the event of a
Buyer's Deficiency Default, the positive difference, if any, obtained by
subtracting the Spot Price for the Gas Day in which Buyer's Deficiency
Default occurred (or if the Min MQ is applicable, the Spot Price for the
middle Gas Day of the month in which Buyer's Deficiency Default occurred)
from the Contract Price.
"SCHEDULING" or "SCHEDULE" when used in reference to Seller, means to make
Gas available, or cause Gas to be made available, at the Delivery Point(s)
for delivery to or for the account of Buyer, including making all Pipeline
nominations, and when used in reference to Buyer, means to cause Buyer's
Transporter to make available at the Delivery Point(s) transportation
capacity sufficient to permit Buyer's Transporter to receive on a firm
basis the quantities Seller has available at such Delivery Point(s),
including making all Pipeline nominations. Gas shall be deemed to have
been Scheduled when confirmed by Transporter.
"SELLER" means the Party to a Transaction who is obligated to sell Gas
during a Period of Delivery.
"SPOT PRICE" means the "Daily Midpoint" price set forth in GAS DAILY(R)
(Financial Times Energy), or successor publication, in the column "Daily
Price Survey" under the listing applicable to the geographic location
closest in proximity to the Delivery Point(s) for the relevant gas day. If
there is no single "Daily Midpoint" price published for that particular
Gas
6
Day, but there is published a "Common" range of prices under the above
column and listing, then the Spot Price shall be the average of such
"Common" high and low prices. In the event that no "Daily Midpoint" price
or "Common" range of prices is published for that particular Gas Day, then
the Spot Price shall be the average of the following: the price
(determined as stated above) for each of the first Gas Day immediately
preceding and following the Gas Day in which the default occurred for
which a Spot Price can be determined.
"TAXES" means any or all ad valorem, property, occupation, severance,
production, extraction, first use, conservation, Blu and energy,
gathering, transport, Pipeline, utility, gross receipts, gas or oil
revenue, gas or oil import, privilege, sales, use consumption, excise,
lease, transaction, and other or new taxes, governmental charges,
licenses, fees, permits and assessments, or increases therein, other than
taxes based on net income or net worth.
"TRANSACTION" means an agreement and any amendment or modification thereof
made in accordance herewith for the purchase or sale of Gas to be
performed hereunder.
"TRANSACTION AGREEMENT" means a written paper-based agreement executed by
the Parties to form and effectuate a Transaction which may be
substantially in the form set forth in EXHIBIT "B-1".
"TRANSACTION TAPE" means the tape recording of a recorded Transaction
effectuated in accordance to ARTICLE 2.
"TRANSPORTER" means either the Pipeline delivering or receiving Gas at the
Delivery Point in a Transaction.
o REPRESENTATIONS AND WARRANTIES As a material inducement to entering into this
Agreement, including each Transaction, each Party, with respect to itself,
hereby represents and warrants to the other Party continuing throughout the term
of this Agreement as follows; (i) there are no suits, proceedings, judgments,
rulings or orders by or before any court or any governmental authority that
materially adversely affect its ability to perform this Agreement or the rights
of the other Party under this Agreement, (ii) it is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation, and it has the legal right, power and authority and is qualified to
conduct its business, and to execute and deliver this Agreement and perform
obligations under the same and each Transaction, and all regulatory
authorizations have been maintained as necessary for it to legally perform its
obligations hereunder, (iii) the making and performance by it of this Agreement
is within its powers, has been duly authorized by all necessary action on its
part, and does not and will not violate any provision of law or any rule,
regulation, order, writ, judgment, decree or other determination presently in
effect applicable to it or its governing documents, (iv) each of this Agreement
and each Transaction when entered into constitutes a legal, valid and binding
act and obligation of it, enforceable against it in accordance with its terms,
subject to bankruptcy, insolvency, reorganization and other laws affecting
creditor's rights generally, and with regard to equitable remedies, to the
discretion of the court before which proceedings to obtain same may be pending,
(v) there are no bankruptcy, insolvency, reorganization, receivership or other
arrangement proceedings pending or being contemplated by it, or to its knowledge
threatened against it, (vi) it has assets of $5,000,000 or more according to its
most recent financial statements prepared in accordance with GAAP and knowledge
and experience in financial matters that enable it to evaluate the merits and
risks of this Agreement, and (vii) it is not in a disparate bargaining position
with the other Party.
o OPERATIONS AND DELIVERY SCHEDULING REQUESTS. Not later than two Business Days
prior to the earlier of Buyer's and Seller's Transporter's nomination deadline
for the first Gas Day of each month during a Period of Delivery, Buyer agrees to
provide to Seller facsimile notice of the quantities Buyer requests Seller to
Schedule for each Gas Day of such Month. Should Buyer desire to change the
requested quantities Schedules, Buyer shall provide to Seller facsimile notice
thereof not later than one Business Day prior to the earlier of Buyer's or
Seller's Transporter's nomination deadline for the applicable Gas Day. In the
event the nomination or Scheduling deadline of a Transporter conflicts with
these notification dates, Buyer and Seller agree to modify the notification
dates accordingly. Scheduling requests to Seller will be accepted at the
telephone number and shall be confirmed by facsimile as set forth in EXHIBIT
"A".
TRANSPORTATION. Seller shall obtain, or cause to be obtained, transportation to
the Delivery Point, and Buyer shall obtain, or cause to be obtained,
transportation from the Delivery Point.
GAS SPECIFICATIONS. Seller represents all Gas delivered hereunder shall meet or
exceed the specifications of Buyers Transporter.
MULTIPLE DELIVERY POINT UTILIZATION. In the event a Transaction shall contain
more than one delivery Point, the Parties shall specify a Maximum Daily Delivery
Point Quantity for each Delivery Point. The Delivery Points which shall be
utilized for delivery of Gas and the quantities of Gas to be Scheduled for
delivery at such Delivery Points shall be determined by Seller in its sole
discretion within each applicable Maximum Daily Delivery Point Quantity. Seller
shall provide to Buyer a list of Delivery Points and quantities determined by it
within a period of time necessary to permit Buyer to make nominations.
OPERATIONAL FLOW ORDERS. Should either Party receive an operational flow order
or other order or notice from a Transporter requiring action to be taken in
connection with this Agreement or Gas flowing under this Agreement ("OFO"), such
Party shall immediately notify the other Party of the OFO and provide the other
Party a copy of same by facsimile. The Parties shall take all actions required
by the OFO within the time prescribed. Each Party shall indemnify, defend and
hold harmless the other Party from any Claims, 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.
o FINANCIAL MATTERS BILLING, INVOICE DATE, CHARGES AND PAYMENT. By the 10th Day
of each calendar Month following in which Gas was Scheduled under a Transaction,
Seller shall provide Buyer with a written statement setting forth Gas Scheduled
during the preceding Month, and other charges due Seller, including, without
limitation, deficiency charges under ARTICLE 3. Billing and payment will be
based on Scheduled quantities. Within five Business Days of the request of
either Party, the other Party shall provide, to the extent it has a legal right
of access thereto and/or such statement is then available, a copy of the
Transporter's allocation or imbalance statement applicable to Gas sold hereunder
for the requested period. The difference, if any, between Scheduled and actual
quantities delivered or accepted shall be treated as imbalances under ARTICLE 7.
Buyer shall remit any amounts due on the 25th Day of the Month in which Seller's
statement was received. If the due date for any payment to be made under this
Agreement is not a Business Day, the due date for such payment shall be the
following Business Day. Payment of all funds shall be made in U.S. currency and
as indicated in EXHIBIT "A" in such manner that funds are immediately available
to the payee on the applicable due date. Each Party shall take all actions
necessary to effect payments in accordance with the process stated in EXHIBIT
"A". If Buyer or Seller should fail to remit any amounts in full when due
hereunder, interest on the unpaid portion shall accrue from the date due at a
rate equal to the Interest Rate. Xxxxxxxx, payments and statements shall be made
to the accounts or the addresses/facsimiles specified in EXHIBIT "A".
SUSPENSION OF PERFORMANCE. If either Party fails to make a timely payment and
such failure is not remedied within two Business Days after such Party receives
written notice of default, the nondefaulting Party, in addition to other
remedies, may suspend the Scheduling of Gas until such amount, including
interest, is paid; provided, if the defaulting Party, in good faith shall
dispute the amount of any such billing or part thereof and shall pay such
amounts as it concedes to be correct, no suspension shall be permitted.
AUDIT RIGHTS. During the term of this Agreement and for a period of two years
from the date of termination of a Transaction, Buyer or Seller or any third
party representative thereof shall have the right, upon reasonable notice and at
reasonable times, to examine the books and records of the other to the extent
reasonably necessary to verify the accuracy of any billing statement, payment
demand, charge, payment or computation made under this Agreement. The records of
the Parties shall be retained in accordance with SECTION 8.6 for a like period
to facilitate the audit rights of the Parties.
FINANCIAL INFORMATION. If requested by Customer, Company shall deliver (i)
within 120 Days following the end of each fiscal year, a copy of the annual
"1"-2
report of Enron Corp. containing consolidated financial statements for such
fiscal year certified by independent certified public accountants and (ii)
within 60 Days after the end of each of its first three fiscal quarters of each
fiscal year, a copy of the quarterly report of Enron Corp. containing unaudited
consolidated financial statements for such fiscal quarter. If requested by
Company, Customer (or its Guarantor) shall deliver (i) within 120 Days following
the end of each fiscal year, a copy of its annual report containing consolidated
financial statements for such fiscal year certified by independent certified
public accountants and (ii) within 60 Days after the end of each of its first
three fiscal quarters of each fiscal year, a copy of its quarterly report
containing unaudited consolidated financial statements for such fiscal quarter.
In all cases the statements shall be for the most recent accounting period and
prepared in accordance with GAAP; provided, should any such statements not be
timely due to a delay in preparation or certification, such delay shall not be
considered a default so long as such Party diligently pursues the preparation,
certification and delivery of the statements.
o WARRANTY OF TITLE TO GAS Seller in any Transaction warrants that title to Gas
to be Scheduled by Seller is free from all production burdens, liens and adverse
claims and warrants its right to sell the same. Seller agree to indemnify,
defend and hold harmless Buyer against all Claims to or against the title of
said Gas. In the event any Claims is asserted to said Gas, Buyer, in addition to
other remedies, may suspend its obligation to pay for said Gas up to the amount
of such Claim.
o ALTERNATE PRICE REDETERMINATION If any or all of the indices used to determine
the Spot Price or the Contract Price are not available in the future, the
Parties agree to promptly negotiate a mutually satisfactory alternate index for
the Spot Price or Contract Price (each an "ALTERNATE PRICE"). If the Parties
cannot agree by the end of the first Month for which the Spot Price or Contract
Price could not be determined, then Seller and Buyer shall each prepare a
prioritized list of up to five alternative published reference posting or prices
representatives of spot prices for Gas delivered in the same geographic area.
Each Party shall submit its list to the other within 10 Days after the end of
the first Month for which the price could not be determined. The first listed
index appearing in Seller's list that also appears in Buyer's list, shall
constitute the replacement index. If no common indices appear on the lists, each
Party shall submit a new list adding two indices within 10 Days. If either Party
fails to provide timely a list, such Party's list shall not be considered. From
and after the "RENEGOTIATION DATE," which shall be the date the Spot Price or
Contract Price is no longer available, until the Alternate Price is determined,
the Alternate Price shall be the average of the Spot Price(s) or Contract
Price(s) in effect during the 12 Months preceding the Month in which the
Renegotiation Date occurred, which price shall be effective until the Alternate
Price is determined. Upon determination of a new Alternate Price, the Spot Price
or Contract Price, as applicable, will be adjusted retroactively to the
Renegotiation Date.
o EFFECT OF WAIVER OR CONSENT No waiver or consent by either Party, express or
implied, of any one or more defaults by the other Party in the performance of
any provision of this Agreement shall operate or be construed as a waiver or
consent of any other default or defaults whether of a like or different nature.
Failure by a party to complain of any act of the other Party or to declare the
other Party in default with respect to this Agreement, regardless of how long
the failure continues, shall not constitute a waiver by that Party of its rights
with respect to that default until the applicable statute of limitations period
has run.
o INDEMNIFICATIONS With respect to each indemnification included in this
Agreement the indemnity is given to the extent authorized by law and the
following provisions shall be considered applicable. The Indemnified Party shall
promptly notify the Indemnifying Party in writing of any Claim and the
Indemnifying Party shall have the right to assume the investigation and defense
thereof, including the employment of counsel, and shall be obligated to pay the
related attorneys' fees; provided, the Indemnified Party shall have the right to
employ separate counsel and participate in the defense of any Claim, however,
the attorneys' fees of such counsel shall be paid by the Indemnified Party
unless the employment of such counsel has been consented to in writing by the
Indemnifying Party or the Indemnifying Party has failed to assume the defense or
employ counsel in a timely manner; provided further, if the named parties to any
Claim include both Parties, and the Indemnified Party shall have been advised by
counsel that there may be a legal defense available to it which is different
from those available to the Indemnifying Party, the Indemnified Party may elect
to employ separate counsel at the expense of the Indemnifying Party, in which
case the Indemnifying Party shall pay all attorneys' fees of such counsel and
shall not have the right to assume the defense of the Claim on behalf of the
Indemnified Party. The Parties shall use reasonable efforts to cooperate in the
defense of any Claim. The Indemnifying Party shall not be liable for any
settlement of a Claim without its express written consent thereto. The
Indemnified Party shall reimburse the Indemnifying Party for payments made or
costs incurred in respect of an indemnity with the proceeds of any judgment,
insurance, bond, surety or other recovery made with respect to an event covered
by the indemnity.
o ARBITRATION DISPUTES TO BE ARBITRATED. Any and all claims, demands, causes of
action, disputes, controversies, and other matters in question arising out of or
relating to this Agreement, any of its provisions, or the relationship between
the Parties created by this Agreement, whether sounding in contract, tort, or
otherwise, whether provided by statute or the common law, for damages or any
other relief, including, without limitation, all Claims (all of which are
referred to herein as "DISPUTES"), shall be resolved by binding arbitration
pursuant to the Federal Arbitration Act. The arbitration may be initiated by
either Party by providing to the other a written notice of arbitration
specifying the Disputes to be arbitrated. If a Party refuses to honor its
obligations to arbitrate, the other Party may seek to compel arbitration in
either federal or state court. The arbitration proceeding shall be conducted in
Houston, Texas, or other location mutually agreed upon by the Parties. Within 30
Days of the notice initiating the arbitration procedure, each Party shall
designate one arbitrator, who need not be impartial. If a Party fails to
designate an arbitrator, the other Party may have an arbitrator appointed by
applying to the senior active United States District Judge for the Southern
District of Texas. The two arbitrators shall select a third arbitrator. If the
two arbitrators chosen by the parties fails to agree upon the third arbitrator,
both or either of all Parties may apply to the senior active United States
District Judge for the Southern District of Texas for the appointment of a third
arbitrator. The third arbitrator shall take an oath of neutrality.
ARBITRATION PROCEDURES. The three arbitrators shall make all of their decisions
by majority vote. The enforcement of this Agreement to arbitrate, the validity,
construction, and interpretation of this Agreement to arbitrate and all
procedural aspects of the proceeding pursuant to this Agreement to arbitrate,
including, without limitation, the issues subject to arbitration, the scope of
the arbitrable issues, allegations of "fraud in the inducement" to enter into
this entire Agreement or to enter into this Agreement to arbitrate, allegations
of waiver, delay or defenses to arbitrability, and the rules governing the
conduct of the arbitration, shall be governed by and construed pursuant to the
Federal Arbitration Act. In deciding the substance of the parties' Disputes, the
arbitrators shall apply the substantive laws of the State of Texas (excluding
Texas choice-of-law principles that might call for the application of some other
State's law). The arbitration shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, except as
modified in this Agreement. It is contemplated that although the arbitration
shall be conducted in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, the arbitration proceeding will be
self-administered by the Parties; provided, if a Party believes the process will
be enhanced if it is administered by the American Arbitration Association, such
Party shall have the right to cause the process to become administered by the
American Arbitration Association by applying to the American Arbitration
Association and, thereafter, the arbitration shall be conducted pursuant to the
administration of the American Arbitration Association. In determining the
extent of discovery, the number and length of depositions, and all other
pre-hearing matters, the arbitrators shall endeavor to the extent possible to
streamline the proceedings and minimize the time and cost of the proceedings.
There shall be no transcript of the hearing. The final hearing shall be
conducted within 120 days of the selection of the third arbitrator. The final
hearing shall not exceed 10 Business Days, with each Party to be granted
one-half of the allocated time to present its case to the arbitrators. All
proceedings conducted hereunder and the decision of the arbitrators shall be
kept confidential by the Parties
"1"-3
ARBITRATION AWARD. Only damages allowed pursuant to this Agreement may be
awarded. It is expressly agreed that the arbitrators shall have no authority to
award treble, exemplary or punitive damages of any type under any circumstances
regardless of whether such damages may be available under Texas law, the Parties
hereby waiving their right, if any, to recover treble, exemplary or punitive
damages in connection with any Dispute, either in arbitration or in litigation.
The arbitrators shall render their final decision within 20 Days of the
completion of the final hearing fully resolving all of the Disputes that are the
subject of the arbitration proceeding. The arbitrators' ultimate decision after
final hearing shall be in writing. The arbitrators shall certify in their
decision that no part of their award includes any amount for treble, exemplary
or punitive damages not allowed hereunder. The arbitrators' decision shall be
final and non-appealable to the maximum extent permitted by law. Any and all of
the arbitrators' orders and decisions may be enforceable in, and judgment upon
any award rendered in the arbitration proceeding may be confirmed and entered
by, any federal or state court having jurisdiction.
o AUTHORITY FOR TRANSACTIONS. Each Party represents to the other Party that each
of its employees has authority to enter into Transactions pursuant to this
Agreement on its behalf. Identification and authority of a Party's employee
engaging in a recorded telephonic Transaction shall be conclusively established
for all purposes by a statement on the Transaction Tape by the employee of the
employee's name; provided, failure to state the employee name shall not evidence
any lack of authority of the employee to effectuate and form a Transaction.
o FLEXIBLE PRICING. During the Period of Delivery for a Transaction expressly
providing for "FLEXIBLE PRICING" Customer may request a price other than the
original Contract Price, being a Fixed Price, Fixed Basis Price or Floating
Basis Price (each below defined) by contacting Company during Pricing Hours
requesting any such price for a specified quantity of Gas to be Scheduled during
selected Months within the Period of Delivery; provided, such request must be
made prior to 1:30 p.m. C.T. of the third trading Day prior to the last trading
Day of the NYMEX Gas futures contract for the selected Month. The terms of this
Agreement, including, without limitation, ARTICLE 2, shall apply to Flexible
Pricing in respect of any Transaction hereunder. A Confirmation may be sent by
Company to Customer confirming the Flexible Pricing agreement in accordance with
SECTION 2.4. "FIXED PRICE" means a fixed dollar amount agreed to by the Parties.
"FIXED BASIS PRICE" means a price agreed to by the Parties on the basis of NYMEX
Gas futures contracts then trading for the applicable Month, or if no such price
is agreed prior to the last three trading Days of the applicable Month, a price
equal to the sum of the average of the settlement prices of the NYMEX Gas
futures contract for the last three trading Days of the applicable Month (the
"AVERAGE SETTLEMENT PRICE") PLUS a fixed dollar amount basis adjustment agreed
to by the Parties. "FLOATING BASIS PRICE" means a price equal to the sum of a
fixed dollar amount agreed to by the Parties PLUS the difference between the
selected reference price for the Delivery Point(s) and the Average Settlement
Price for the applicable Month. The price for all Gas for which a Flexible Price
has not been agreed by the Parties shall be the original Contract Price
applicable to the Transaction.
"1"-4
EXHIBIT "A"
ENFOLIO MASTER FIRM PURCHASE/SALE AGREEMENT
NOTICE/COMMUNICATION/PAYMENT
COMPANY:
NOTICES/CORRESPONDENCE:
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: Documentation and Deal Clearing Desk
Facsimile No. (000) 000-0000
Termination Notice Facsimile No. (000) 000-0000
INVOICES:
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: Client Services
Facsimile No. (000) 000-0000
PAYMENTS:
Wire payment to the following account:
Enron North America Corp.
ABA Routing 000000000 Bank of America
Dallas, Texas
Account 3750494099
NOMINATIONS: 0(000) 000-0000/0(000) XXXXXXX
CONFIRMATIONS: ENRON NORTH AMERICA GAS TRADING 0(000) 000-0000
TO CUSTOMER:
NOTICES/CORRESPONDENCE:
COLUMBIA ENERGY SERVICES CORPORATION
00000 Xxxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Pager: (000) 000-0000
INVOICES:
Controller, Columbia Energy Retail Corporation
00000 Xxxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
PAYMENTS:
Columbia Energy Retail Corporation
ABA #000000000 PNC Bank, N.A.
Pittsburgh, PA
Acct.# 1006117239
NOMINATIONS: Xxxx XxXxxxxxxxx or Xxxxx Xxxx or Xxxxx Xxxxx at (000) 000-0000,
Fax (000) 000-0000
CONFIRMATIONS: Xxxx XxXxxxxxxxx or Xxxxx Xxxx or Xxxxx Xxxxx at (000) 000-0000,
Fax (000) 000-0000
EXHIBIT "B"
ENFOLIO MASTER FIRM PURCHASE/SALE AGREEMENT
EXAMPLE OF CONFIRMATION ON COMPANY LETTERHEAD (INCLUDING NAME AND ADDRESS) TO
CONFIRM TELEPHONIC TRANSACTIONS UNDER SECTION 2.4
This Confirmation shall confirm the Transaction agreed to on _________, ______
and binding between __________________ ("CUSTOMER") and ________________
("COMPANY") regarding the firm purchase and sale of Gas under
the following terms and conditions. ___________________ to purchase and receive
(Buyer) and _______________ to sell and deliver (Seller). Transaction number
___________________.
DAILY CONTRACT QUANTITY (DCQ): _____________________
MAXDQ (if applicable): _____________________
MINMQ (if applicable): _____________________
MINDQ (if applicable): _____________________
DELIVERY POINT(S): _____________________
CONTRACT PRICE (per MMBtu): _____________________
PERIOD OF DELIVERY: _____________________
SPOT PRICE LOCATION: _____________________
(If this Confirmation relates to a NYMEX Exchange of Futures for Physicals
Transaction the Confirmation may include the following with respect to Contract
Price: The Contract Price shall be equal to the EFP Posted Price [plus] [minus]
$_____ (the "ADJUSTMENT"). The "EFP POSTED PRICE" shall be in accordance with
Rule 220.17 of the rules and regulations of the NYMEX pertaining to Gas futures
contracts for the Period of Delivery as set forth below:
=> Buyer agrees to exchange its long position in [# OF CONTRACTS, MONTH, YEAR]
NYMEX contracts with Seller for Seller's short position in [# OF CONTRACTS,
MONTH, YEAR] NYMEX contracts at a price of $_____.
[REPEAT TEXT AFTER => FOR EACH DELIVERY MONTH OF THE PERIOD OF DELIVERY FOR
WHICH THE EFP POSTED PRICE IS AGREED AS OF THE PREPARATION OF THIS CONFIRMATION]
In each Delivery Month for which an EFP Posted Price is not herein set forth,
the EFP Posted Price shall be the price at which the exchange is posted with
NYMEX in accordance with Rule 220.17. Notwithstanding anything herein, if no
posting is timely made for any Delivery Month in accordance with Rule 220.17 by
Buyer and Seller, then there shall be no EFP Transaction hereunder for such
Delivery Month. The Transaction for that Delivery Month shall be considered a
Transaction for the firm purchase and sale of Gas otherwise in accordance with
the provisions hereof at a Contract Price equal to the average of the settlement
prices occurring the last three Trading Days of the NYMEX Gas contracts for the
applicable Delivery Month [plus] [minus] the Adjustment. For purposes hereof,
"TRADING DAY" means any Day for which a NYMEX Gas contract is determinable.]
This Confirmation is being provided pursuant to and in accordance with the
ENFOLIO Master Firm Purchase/Sale Agreement in effect between Customer and
Company (the "AGREEMENT") and constitutes part of and is subject to all of the
terms and provisions of such Agreement. All capitalized terms therein used, but
not defined, shall have the meanings set forth in the Agreement. Company does
hereby adopt its letterhead, including its address, as its signature in respect
of the identification of Company and the authentication by Company of this
Confirmation. Any objection of Customer to this Confirmation must be made by
written notice to Company prior to the Confirm Deadline, as agreed and defined
in the Agreement.
--------------------------------------------------------------------------------
EXHIBIT "B-1"
ENFOLIO MASTER FIRM PURCHASE/SALE AGREEMENT
SUGGESTED FORM OF TRANSACTION AGREEMENT FOR USE WITH TRANSACTIONS FORMED UNDER
SECTION 2.1(i)
This Transaction AGreement shall form and effectuate the current proposal
between ______________ ("CUSTOMER") and ___________ ("COMPANY") regarding the
firm purchase and sale of Gas under the following terms and conditions.
_______________ to purchase and receive (Buyer) and ____________ to sell and
deliver (Seller). Transaction number ________________.
DAILY CONTRACT QUANTITY (DCQ): _____________________
MAXDQ (if applicable): _____________________
MINMQ (if applicable): _____________________
MINDQ (if applicable): _____________________
DELIVERY POINT(S): _____________________
CONTRACT PRICE (per MMBtu): _____________________
PERIOD OF DELIVERY: _____________________
SPOT PRICE LOCATION: _____________________
This Transaction AGreement is being provided pursuant to and in accordance with
the ENFOLIO Master Firm Purchase/Sale Agreement in effect between Customer and
Company and constitutes part of and is subject to all of the terms and
provisions of such Agreement. Please execute this Transaction Agreement and
return an executed copy to Company. Your execution should reflect the
appropriate party in your organization who has the authority to cause Customer
to enter into this Transaction. In the event Customer alters the terms of this
Transaction Agreement in any manner there will be no Transaction pursuant to
this Transaction Agreement.
SIGNATURE LINES FOR CUSTOMER AND COMPANY
