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Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable X-From: "Aria, Lora" <lora.aria@lgeenergy.com<@ENRON <IMCEANOTES-+22Aria+2C+20Lora+22+20+3Clora+2Earia+40lgeenergy+2Ecom+3E+40ENRON@ENRON.com< X-To: Perlingiere, Debra </O=ENRON/OU=NA/CN=RECIPIENTS/CN=DPERLIN< X-cc: X-bcc: X-Folder: \DPERLIN (Non-Privileged)\Deleted Items X-Origin: PERLINGIERE-D X-FileName: DPERLIN (Non-Privileged).pst ADDENDUM (Special Provisions - Exhibit "B") For the Base Contract for Short-Term Sale and Purchase of Natural Gas between Louisville Gas and Electric Company/Kentucky Utilities Company ("Company") and Enron North AmericaCorp. ("Counterparty") Dated ______________ =20 A. In Section 1.2 insert "a recorded" before the word telephone in the sec= ond line. Insert the word "recorded" before the word telephonic on the fif= th line. =20 =20 B. In order to clarify the intentions of both Parties in Section 1.3deleted= the third sentence in its entirety and replace it with the following: =20 "If there are any material differences between timely sent Transaction Conf= irmations governing the same transaction, then the oral agreement reached u= nder Section 1.2 shall be controlling and satisfy the statute of frauds." =20 C. Add the following sections as 1.4 and 1.5: =20 1.4 Each Party shall at its expense, maintain equipment necessary= to regularly record Transactions on Transaction Tapes and retain Transacti= on Tapes in such manner as to protect its business records from improper ac= cess; provided neither Party shall be liable for any malfunction of equipme= nt or the operation thereof in respect of any Transaction WITHOUT REGARD TO= THE CAUSE OR CAUSES RELATED THERETO, INCLUDING, WITHOUT LIMITATION, THE NE= GLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT, OR CONCURREN= T, OR ACTIVE OR PASSIVE. No Transaction shall be invalidated should a malf= unction occur in equipment regularly utilized for recording Transactions or= retaining Transaction Tapes or the operation thereof, and in such event, t= he Transaction shall be evidenced by the written and computer records of th= e parties concerning the Transaction made contemporaneously with the teleph= one conversation. =20 1.5.1 Each party consents to the recording of the telephone conve= rsations of their respective personnel in connection with this Contract. Ea= ch party waives on its own and its employees' behalf further notice of such= recording, and each party further commits to notify its employees of such = recording and to obtain any necessary consent of such employees. The partie= s agree not to contest or assert a defense to the validity or enforceabilit= y of telephonic Transactions entered into in accordance with this Contract = under laws relating to (a) whether certain agreements are to be in writing = or signed by the party to be thereby bound. or (b) the lack of authority of= any employee of the party if the employee name is stated in the Transactio= n Tape (provided, however, if a Party provides the other Party with a list = of those of its employees that are exclusively authorized by the Party to e= nter into a Transaction, then the Party shall be able to challenge the auth= ority of any of its employees other than such listed employees). =20 D. Replace Section 2.6 with the following: =20 2.6 "Contract" shall mean the legally binding relationship = established by (i) the Base Contract, (ii) this Addendum and (iii) any exec= uted (or deemed accepted) Transaction Confirmation. =20 E. Delete "or alternate fuels" from Section 2.9 "Cover Standard" =20 F. Add the following at the end of Section 2: =20 2.27 "Buyer" shall mean the party that agrees to purchase Gas as e= videnced by the Transaction=20 Confirmation. =20 2.28 "Contract Period" means the term of any particular Tran= saction agreed to by the parties as specified in the Transaction Confirmati= on. =20 2.29 "Credit Support Document" Shall mean, as to a party ("the Firs= t Party"), a guaranty, hypothecation agreement, margin or security agreemen= t or document, or any other document containing an obligation of a third pa= rty ("Credit Support Provider") or of the First Party in favor of the other= party supporting any obligations of the first party under this Contract. =20 2.30 "Eligible Collateral" shall mean (i) cash, (ii) a Letter of Cr= edit from a financial institution acceptable by the ("Beneficiary Party"), = or (iii) Guaranty from a guarantor acceptable to the secured party =20 2.31 "Futures Contract" shall mean the standardized contract for th= e purchase or sale of Gas that is traded for future delivery underthe appli= cable trading board's regulations. =20 2.32 "Letter of Credit" means one or more irrevocable, transferable= standby letters of credit from a major U.S. commercial bank or a foreign b= ank with a U.S. branch office, with such bank having a credit rating of at = least "A-" from S&P or "A3" from Moody's. =20 2.33 "Material Adverse Change" shall mean a Party's credit rating fa= lls below a Moody's rating of Baa=20 or an S&P rating of BBB. Moody's shall mean Moody's Investor Services, Inc.= or its successors.=20 S&P shall mean the Standard & Poor's Rating Group (a division of McGraw-Hil= l Inc.) or its=20 successors. =20 =20 2.34 "NYMEX" shall mean the New York Mercantile Exchange. =20 2.35 "Price" shall mean the amount or pricing mechanism agreed to b= y the parties as specified in the Transaction Confirmation. =20 2.36 Receipt/Delivery Obligation" shall mean one of EFP, Fir= m or Swing as set forth in the Transaction Confirmation for a particular Tr= ansaction. =20 2.37 "Seller" shall mean the party that agrees to sell Gas as evide= nced by the Transaction Confirmation. =20 2.38 "Tax" shall mean any tax levied, assessed or claimed to be due= by any Federal, State, County, Tribal, or Municipal Government or any othe= r governmental agency having jurisdiction to do so. =20 2.39 "Transaction" means a particular, specifically agreed-t= o purchase or sale of Gas for delivery or receipt to be performed under thi= s Contract, as evidenced by a Transaction Confirmation or by a recorded ora= l telephone conversation where an offer was made by a party and accepted by= the other party. =20 2.40 "Transaction Tape" shall be defined as electronic tape(s) of te= lephone recordings maintained by=20 Company and/or the Counterparty for verification and/or evi= dentiary purposes. =20 G. Delete "or alternate fuels" from line four (4) of Section 3.2. =20 H. The following paragraphs will be added to Section 5:=20 =20 5.2 All Gas delivered by Seller shall meet the quality and heat s= pecification of the pipeline system and/or facilities which shall receive t= he Gas at the Delivery Point(s) set forth in the Transaction Confirmation. = The unit of quantity measurements for purposes of this contract shall be o= ne MMBtu Dry. =20 5.3 BTU and volume measurements shall be made at the pressure and= temperature basis of the measuring pipeline in accordance with the provisi= ons of such pipeline's then effective FERC Gas Tariff, or in event such pip= eline is not subject to FERC regulation, the applicable Gas transportation = regulations or contract provisions of such pipeline. =20 I. Add the following language after the first sentence of Section 6, d= esignated as Buyer Pays At and After Delivery Point: =20 All such Taxes shall be paid by Seller directly to the taxing authority unl= ess Buyer is required by law to collect and remit such Taxes, in which even= t Buyer shall withhold from payments to Seller an amount required to be col= lected and remitted by Buyer and then remit such amounts to the taxing auth= ority. =20 J. Add the following language to the end of Section 6 as a new paragrap= h: =20 =20 In the event a federal energy, BTU, consumption, or use tax shall be impos= ed, both Buyer and=20 Seller shall work to reasonably apportion said Tax, taking into account the= ability of either party=20 to pass through all or a part of such tax . In the event that the parties a= re unable to reach an=20 agreement with respect to the apportionment of any such Tax and such Tax wo= uld have a=20 substantial adverse effect on any transaction with a forward delivery of si= x (6) months or greater=20 of the party liable for such Tax (the "Affected Party") the Affected Party = may declare an early=20 termination with respect to any transactions then outstanding between the p= arties which are=20 affected by such Tax ("the Affected Transactions"). The Affected Party sha= ll provide the other=20 party with thirty (30) days prior written notice of its intent to terminate= the Affected Transactions. =20 Such notification shall be made no later than thirty (30) days after the ef= fective date of the Tax. =20 Both parties shall calculate in a commercially reasonable manner their net = Gain or net Loss (as=20 defined below) resulting from the termination of the Affected Transactions = without taking into=20 effect the impact of the Tax. If both parties have a net Gain, the party w= ith the greater net Gain=20 shall pay to the other party fifty percent (50%) of the difference between = the two net Gains. If=20 both parties have a net Loss, the party with the lesser net Loss shall pay = to the other party fifty=20 percent (50%) of the difference between the two net Losses. If one party s= hall have a net Gain=20 and the other party shall have a net Loss, the party with the net Gain shal= l pay to the other party fifty percent (50%) of the sum of the absolute val= ue of the net Gain and the absolute value of the net Loss. Any such paymen= ts pursuant to this provision shall be made in accordance with Article 7. = For purposes of this provision "Gains" shall mean, with respect to either p= arty, an amount equal to the present value of the economic benefit to it, i= f any (exclusive of costs), resulting from the termination of the Affected = Transactions, calculated in a commercially reasonable manner and in accorda= nce with GAAP. "Losses" shall mean, with respect to either party, an amoun= t equal to the present value of the economic loss to it, if any (exclusive = of costs), resulting from the termination of the Affected Transactions, cal= culated in a commercially reasonable manner and in accordance with GAAP. =20 =20 K. Add the following to the end of Section 7: =20 7.5 The parties shall net all same currency amounts due and owi= ng (and/or past due from prior billing=20 periods, provided however, that any such past due amounts that are = the subject of a bona fide=20 dispute shall not be subject to this Section 7.5 until such dispute= is resolved) arising out of the=20 transactions under this Contract such that the party owing= the greater amount shall make a single=20 payment of the net amount in accordance with Article 7 of = this Contract, provided that, except as=20 expressly provided in this Contract or any such c= redit support agreement (if any), no payment=20 required to be made pursuant to the terms of any credit sup= port agreement shall be subject to=20 netting under this or any other provision of this Contract.= In the event that the parties have=20 executed a separate netting agreement, the terms and condit= ions therein shall prevail with respect=20 to this Section 7.5. =20 7.6 Upon either party's request, Buyer and/or Seller shall provi= de support documentation including=20 but not limited to copies of any and all pertinent portions of transporter = statements related to=20 completed transaction between the parties in order to dete= rmine the final settlement amount due=20 for each production Month. Each party shall exercise reasonable efforts to= provide support=20 documentation that is inclusive of volume and price [by location] data for = the applicable=20 production Month =20 L. Add to the end of Section 8.2:=20 =20 In the event of any claim or litigation, at any time, concerning Seller's t= itle to the leases, wells,=20 Gas produced or liquid hydrocarbons recovered from the Gas sold here under = or the proceed from=20 the sale thereof, Buyer shall, without limiting any other remedies availabl= e to it, be entitled to=20 suspend only those payments related to the subject of (or any product of th= e subject of) any=20 dispute, claim or controversy to Seller until such claims or litigation of = title is resolved to Buyer's=20 satisfaction. =20 M. Add the following language to the end of Section 9.1: =20 =20 Notices of interruption to Firm obligations may be provided verbally, effec= tive immediately and, then shall be confirmed in writing as soon as reasona= bly possible =20 N. Delete Section 10 in its entirety and replace with the following: =20 10.1 Events of Default. In the event (each a "Default") either par= ty (the "Defaulting Party") =20 (i)enters into Bankruptcy whether voluntary or involuntary;=20 =20 (ii)has a liquidator, administrator, receiver, trustee, conservator or simi= lar official appointed with respect to it or any substantial portion of its= property or assets; (iii)fails to make, when due, any payment required pursuant to this Contrac= t if such failure is not remedied within three (3) Business Days after writ= ten notice of such failure is given to the Defaulting Party by the other pa= rty ("Non-Defaulting Party") and provided the payment is not the subject of= a good faith dispute;=20 =20 (iv)fails to provide adequate assurance of its ability to perform all of it= s outstanding material obligations to the Non-Defaulting Party under the Co= ntract or otherwise within a period not to exceed forty-eight (48) hours (b= ut at least one (1) Business Day) of a demand therefore when the Non-Defaul= ting Party has reasonable grounds for insecurity;=20 =20 (v) fails to establish, maintain, extend or increase Eligible Col= lateral when required pursuant to this Contract; then the Non-Defaulting Pa= rty shall be entitled to exercise the remedies as set forth in this Section= 10.=20 =20 (vi) suffers the occurrence of a Material Adverse Change; provided= , such Material Adverse Change shall not be considered an Event of Default = if the Defaulting Party establishes and maintains for so long as the Materi= al Adverse Change is continuing, Eligible Collateral to the Non-Defaulting = Party in form and amount acceptable to the Non-Defaulting Party; =20 =20 (vii) or the guarantor (if any) of the Defaulting Party fails to pe= rform any covenant set forth in the Guaranty Agreement it delivered in resp= ect of this Contract; or if any representation or warranty made by such gua= rantor in said Guaranty Agreement shall prove to have been false or mislead= ing in any material respect when made or when deemed to be repeated; or if = the Guaranty Agreement expires or is terminated or in any way ceases to gua= rantee the obligations of the Defaulting Party under this Contract; or if s= uch guarantor enters into Bankruptcy whether voluntary or involuntary. =20 the Non-Defaulting Party shall have the right to (a) immediately suspend de= livery or payment and/or (b) liquidate and terminate all Transactions enter= ed into pursuant to this Contract and then outstanding between the parties,= in accordance with and subject to the provisions of Section 10.2 below. In= no event shall amounts actually recovered by a Non-Defaulting Party under = one subsection of this Article 10 be recovered under another subsection. =20 10.2 In the event a party terminates this Contract under Secti= on 10.1 ("Non-Defaulting Party"), the=20 Non-Defaulting Party shall designate an early termination date ("Early Term= ination Date"). Such=20 Early Termination Date shall be designated within three (3) Business Days a= fter the Non- Defaulting Party receives knowledge the occurrence of an event of default u= nder Section 10.1 and=20 the Non-Defaulting Party shall provide immediate notice of such date to the= other party=20 ("Defaulting Party"). Upon the Early Termination Date, the Non-Defaulting = Party shall have the=20 right to liquidate all Transaction(s) under this Contract (including any po= rtion of a Transaction not=20 yet fully delivered) then outstanding by: (i) Closing out each Transaction= being liquidated at its=20 Market Value (as defined below) so that each such Transaction is cancelled = and a settlement=20 payment in an amount equal to the difference between such Market Value and = the Contract Value=20 (as defined below) of such Transaction shall be due to the Buyer under the = Transaction if such=20 Market Value exceeds the Contract Value and to the Seller if the opposite i= s the case; (ii)=20 Discounting each amount then due under clause (i) above to net present valu= e in a commercially=20 reasonable manner at the time of liquidation (to take account of the period= between the date of=20 liquidation and the date on which such amount would have otherwise been due= pursuant to the=20 relevant Transaction); and (iii) Setting off or aggregating, as appropriate= , any or all settlement=20 payments (discounted as appropriate) and (at the election of the Non-Defaul= ting Party) any or all=20 other amounts owing between the parties under this Contract so that all suc= h amounts are=20 aggregated and/or netted to a single liquidated amount payable by one party= to the other. The net=20 amount due under any such liquidation shall be paid by the close of busines= s on the third Business=20 Day following the Early Termination Date. For purposes of this Section 10.= 2 "Contract Value"=20 means the amount of the Gas remaining to be delivered or purchased pursuant= to a Transaction=20 multiplied by the price per unit of gas stated in the applicable Transactio= n, and "Market Value"=20 means the amount of Gas remaining to be delivered or purchased pursuant to = a Transaction=20 multiplied by the market price per unit determined by the Non-Defaulting Pa= rty in a commercially=20 reasonable manner for the delivery or production area, as applicable. The = rate of interest used in=20 calculating net present value pursuant to (ii) of this Section 10.2 shall b= e determined by the Non- Defaulting Party in a commercially reasonable manner. The parties agree th= at this Contract and=20 all Transaction under this Section 10.2 shall constitute a "forward contrac= t" within the meaning of=20 the U.S. Bankruptcy Code and any other applicable insolvency laws. The Non= -Defaulting Party's=20 rights under Section 10 and to those costs under Sections 3 and 4 accrued p= rior to the Early=20 Termination Date are the sole and exclusive remedy of the Non-Defaulting Pa= rty. The Non- Defaulting Party shall give notice that a liquidation pursuant to this Sect= ion 10.2 has occurred to=20 the Defaulting Party no later than the time specified above, provided that = failure to give such=20 notice shall not affect the validity or enforceability of liquidation nor g= ive rise to any claim by the=20 Defaulting Party against the Non-Defaulting Party. With respect to any Tra= nsaction, "the amount=20 of the Gas remaining to be delivered or purchased" shall mean only quantiti= es which the parties=20 are obligated as of the Early Termination Date to sell and purchase on a Fi= rm basis during the=20 remaining portion of the Delivery Period, which shall include only the peri= od of time to which the=20 parties are definitely committed as of the Early Termination Date and shall= not include any=20 possible but not certain extensions of the term ("evergreen" provisions, et= c.). =20 O. Section 11.1 is deleted in its entirety and the following new Section = 11.1 is inserted in its place: =20 "Except with regard to a party's obligation to make payment= due under Section 7. and Imbalance=20 Charges under Section 4, neither party shall be liable to the other for fai= lure to perform a Firmobligation, to the extent such failure was caused by = Force Majeure. The term "Force Majeure"as employed herein means an event n= ot anticipated as of the date hereof, which is not within the reasonable co= ntrol 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 di= ligence such Party, or third party, is unable to overcome or obtain or caus= e to be obtained a commercially reasonable substitute performance therefore= . Subject to the foregoing sentence, events of Force Majeure shall include= the events as further defined in Section 11.2 and shall include an event o= f Force Majeure occurring with respect to the facilities or services of Buy= er's or Seller's Transporter." =20 P. Section 11.3 is deleted in its entirety and the following new Section = 11.3 is inserted in its place: =20 "Neither party shall be entitled to the benefit of the provisions of For= ce Majeure to the extent =20 performance is affected by any or all of the following circumstances: (i) = the loss of Buyer's=20 markets or=20 Buyer's inability economically to use or resell Gas purchased hereunder, (i= i) the loss or=20 failure of=20 Seller's Gas supply, including, without limitation, depletion of reserves o= r other failure=20 of=20 production, (iii) Seller's ability to sell Gas to a market at a more advant= ageous price,(iv) the=20 =20 curtailment of interruptible or secondary firm transportation unless primar= y, in-path, firm=20 transportation=20 is also curtailed; (v) the party claiming excuse failed to remedy the condi= tion and to=20 resume the=20 performance of such covenants orobligations with reasonable dispatch; or=20 (vi) economic hardship. The=20 party claiming Force Majeure shall not be excused from its=20 responsibility for Imbalance Charges." =20 M. Add as Section 11.6: =20 11.6 Any party claiming Force Majeure (the "Claiming Party") as an e= xcuse for performance shall=20 provide the other party (the Non-claiming Party") a good faith estimate of = the duration of the Force Majeure. Sales or purchases to this Contract and = affected by a claim of Force Majeure may be terminated by the Non-claiming = Party if such event continues for a period of thirty (30) continuous days. =20 N. The following paragraph replaces Section 12:=20 =20 The term of this Contract shall be month-to-month until ter= minated on thirty (30) days advance written notice by either party; provide= d, however, that the provisions hereof shall survive termination of this Co= ntract and continue to apply to any Transactions entered into between Count= erparty and Company prior to the date of termination of this Contract until= such time as any and all such Transactions are completed or terminated. .= Notwithstanding any termination, the obligation to make payment and provis= ions of Sections 1.5, 8.1, 8.2, 8.3, 8.4, 13.9, 13.10, 13.11, 13.12, 13.14,= and 13.5 shall continue to apply. =20 O. The following paragraphs will be added to Section 13: =20 13.9 Any dispute relating to this Agreement shall may, by the = mutual agreement of both parties, be resolved by binding, self-administered= arbitration pursuant to the Commercial Arbitration Rules of the American A= rbitration Association ("AAA") and all such proceedings shall be subject to= the Federal Arbitration Act. There shall be three arbitrators. Each part= y shall designate an arbitrator, who need not be neutral, within 30 days of= receiving notification of the filing with the AAA of a demand for arbitrat= ion. The two arbitrators so designated shall elect a third arbitrator. If= either party fails to designate an arbitrator within the time specified or= the two parties' arbitrators fail to designate a third arbitrator within 3= 0 days of their appointment, the third arbitrator shall be appointed by the= AAA. Only damages allowed pursuant to this Agreement may be awarded and t= he arbitrators shall have no authority to award treble, exemplary or puniti= ve damages of any type under any circumstances regardless of whether such d= amages may be available under Texas New York law =20 13.10 DISCLAIMER OF WARRANTIES. EXCEPT FOR WARRANTIES MADE = BY SELLER PURSUANT TO SECTIONS 5 AND 8, NEITHER PARTY MAKES ANY OTHER WARRA= NTIES, EXPRESS OR IMPLIED, AND EACH PARTY HEREBY EXPRESSLY DISCLAIMS ALL OT= HER WARRANTIES, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF MERCHANTABIL= ITY AND FITNESS FOR A PARTICULAR PURPOSE. =20 13.11Neither party shall disclose the terms of this Contract, any Transacti= on Confirmation, and/or any=20 information disclosed pursuant to Section 7.6 hereof to any third party abs= ent written consent of the=20 other party except where (i) disclosure is made to employees of the party o= r its affiliates,(ii)=20 necessary to comply with any applicable law, order, regulation or exchange = rule; provided, however,=20 that each party shall notify the other party promptly upon receipt of any r= equest to it in any=20 proceeding that could result in an order requiring such disclosure and the = party subject to such=20 request shall use reasonable efforts to prevent or limit such disclosure; o= r (iii) necessary to effectuate=20 transportation of Gas pursuant to this Contract. As a condition to conducti= ng any audit and/or being=20 provided with any support documentation pursuant to Sections 7.4 and 7.6 re= spectively, each party=20 acknowledges that the documents and records provided might contain propriet= ary or competitively=20 sensitive information, which the reviewing party shall treat as confidentia= l. Each party acknowledges=20 that any breach of any of its obligations with respect to confidentiality o= r use of the disclosing party's=20 confidential information hereunder is likely to cause or threaten irreparab= le harm to the disclosing=20 party, and accordingly the reviewing party agrees that in the event of suc= h breach the disclosing=20 party shall be entitled to seek equitable relief to protect its interest th= erein, including but not limited=20 to preliminary and permanent injunctive relief. =20 13.12UCC- Except as otherwise provided for herein, the provisions of the Un= iform Commercial Code=20 ("UCC") of the state whose laws shall govern this Contract shall be deemed = to apply to all=20 Transactions =20 13.13 NOTWITHSTANDING ANY OTHER PROVISIONS HEREIN, THE PARTIES HERETO=20 WAIVE ANY AND ALL RIGHTS, CLAIMS OR CAUSES OF ACTION ARISING UNDER=20 THIS AGREEMENT FOR INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR=20 FOR LOST PROFITS. THIS PROVISION SHALL SURVIVE ANY TERMINATION OF THIS=20 AGREEMENT. =20 13.14No claim under this Contract shall be enforceable by either party unle= ss it is the subject of a filed=20 lawsuit or arbitration within two (2) years of the date that the cause of a= ction occurred. =20 - header.htm
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