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Enron Mail |
Lets schedule a time to review his changes. We also need to focus on the set
off languange which was left as an open issue at the time in your comments. ---------------------- Forwarded by Peter Keohane/CAL/ECT on 05/22/2001 08:40 AM --------------------------- "Anderson, David W (Law)" <DWA3@pge.com< on 05/21/2001 12:09:35 PM To: "'Mark.Powell@enron.com'" <Mark.Powell@enron.com<, "'Peter.Keohane@enron.com'" <Peter.Keohane@enron.com< cc: "Welch, Ray" <RXWc@pge.com<, "Clare, David" <DWC3@pge.com<, "Baxter, Charlotte" <CRB0@pge.com< Subject: Enron Canada Corp. Comments on the PG&E Form of Master Mark -- Attached is PG&E Core's response to Enron Canada's comments (sent in March) on the Core Gas Supply Contract. We have been able to incorporate many of your suggestions. In addition to Enron's suggestions, I have made some additional revisions, some stylistic, some substantive, which I believe improves the draft. I have highlighted the revisions in Word's "Track Changes" (Word 2000), based on the original draft sent to Enron Canada earlier this year. In addition, we recieved Enron Canada's modification suggestions for a pre-pay arrangement. We have incorporated many of EC's suggestions there as well. Please don't hesitate to give me a call, at 415-973-6659, to discuss and to move this to conclusion. Thank you, Dave Anderson, PG&E Law Dept -----Original Message----- From: Welch, Ray Sent: Wednesday, March 28, 2001 8:27 AM To: Anderson, David W (Law) Subject: FW: Enron Canada Corp. Comments on the PG&E Form of Master -----Original Message----- From: Mark.Powell@enron.com [mailto:Mark.Powell@enron.com] Sent: Thursday, March 22, 2001 2:23 PM To: Welch, Ray Subject: Enron Canada Corp. Comments on the PG&E Form of Master ---------------------- Forwarded by Mark Powell/CAL/ECT on 03/22/2001 04:18 PM --------------------------- (Embedded image moved to file: From: Mark Powell pic19353.pcx) 03/22/2001 04:19 PM To: RXWc@pg&e.com cc: Peter Keohane/CAL/ECT@ECT Subject: Enron Canada Corp. Comments on the PG&E Form of Master Pursuant to your meeting at our office yesterday, Peter Keohane asked me to provide you with a brief list of key issues/amendments relating to the Pacific Gas and Electric Company form of Master Gas Purchase and Sales Agreement (the "Master"). In this regard, we have tried to restrict our comments to those of our concerns which are most important to us. Please be aware that these comments are subject to Enron Canada Corp. ("Enron Canada") being satisfied with all other matters which were discussed during the meeting (i.e. set-off issues, credit issues, issues relating to the Confirmation and Amendment to Gas Supply Agreement, the security and inter-creditor agreement and the side letter agreement currently being negotiated with Travis McCullough of Enron North America Corp., etc.). Our concerns, in the order of the Master, are as follows: 1.Verbal Agreements. We need to ensure that the agreement contemplates the fact that agreements (whether they be for Baseload Gas, Multi-month Gas or Swing Gas) will be binding upon the parties agreeing to the terms of the transaction (i.e. determination of the buyer/seller, the DCQ, the period of delivery, the delivery point, etc.) regardless of whether the transaction has been reduced to writing. This should be a relatively easy fix to: a. s.2.1 of the Transaction Procedures, b. modifying a number of definitions in Article 1 so that they do not refer to "as agreed upon in Exhibit A" or "as set forth in Exhibit A" but refer to "as agreed upon by the Parties"; c. modifying the definitions of "Baseload Gas", "Multi-month Gas" and "Swing Gas"; d. modifying sections such s.4.1, s.5.1, s.6.1, etc. accordingly. 2. Confirmation by Seller. In connection with the issue above, the confirmation procedure should be amended such that "Enron Canada" (as opposed to "Buyer" in s.1.1 and 1.17 and as opposed to "PG&E Core" in s.2.3) "may" confirm the transactions. This change is in line with issue number 1 above and allows for the potential for Enron Online transactions. Please note, the Exhibit A will need to be slightly modified to account for this change. 3. Canadian Delivery Points Enron Canada requires s.4.2 to be amended such that transactions with "at the border" delivery points will be deemed to occur on the Canadian side of the border. The section should state: "The Delivery Point for any Gas sold and purchased at Easport, Idaho or Sumas Washington by Seller or Seller's Transporter to Buyer or Buyer's Transporter shall be on the Canadian side of the international border at the interconnection of Kingsgate, British Columbia and Huntington, British Columbia, respectively, where Buyer will take title of the Gas, unless otherwise agreed." 4. Invoicing. Enron Canada requires that the clause ", subject to receiving a confirming statement from Buyer's Transporter for the quantity of gas actually delivered," be deleted from the second sentence of s.7.1. Further, the second to last sentence of s.7.1 should be replaced with the following: "If actual quantities are not available by the billing date, billing and payment will be prepared based upon the scheduled contract quantities." In this regard, s.7.4 should also be deleted. 5. Enron Canada Credit Support. In s.8.1, any guarantee provided by Enron Corp. must be construed and enforced under the laws of Texas. Secondly, Enron Canada requires the following clause to be inserted at the end of the first sentence of s.8.2: ", provided that Enron Canada shall only be required to provide assurances of payment in the event that PG&E Core's net exposure to Enron Canada under all Transactions under this Agreement exceeds US $ (to be determined upon completion of credit analysis)". 6. Force Majeure Enron Canada requires the removal of s.11.1, s.11.2 and s.11.3 relating to "Force Majeure". These sections are to be replaced with the following: 11.1 Suspension for Force Majeure. This Article 11 entitled Non-Performance is the sole and exclusive excuse for non-performance permitted under this Agreement, and all other excuses at law or in equity are waived. Except with regard to payment obligations, in the event either Party is rendered unable, wholly or in part, by Force Majeure to carry out its obligations under this Agreement, it is agreed that upon such Party's giving notice and full particulars of such Force Majeure to the other Party as soon as reasonably possible, such notice to be confirmed in writing, then the obligations of the Party giving such notice, to the extent that they are affected by such Force Majeure, shall be suspended, from its inception during the continuance of the Force Majeure for a period of sixty (60) Days, in the aggregate, during any twelve-Month period, but for no longer period. After the sixtieth Day, the Parties shall be obligated to perform. 11.2 Force Majeure for Transactions with a Delivery Point at NOVA Inventory Transfer ("NIT"). If the Delivery Point is NIT, this Article 11.2 shall apply. "Force Majeure" means only an interruption, curtailment or prorationing by NOVA of NIT service, which affects all NOVA shippers who had nominated for deliveries or receipts to take place by NIT on that Gas day. On any Gas day or any portion of a Gas day that there is a Force Majeure and either Party provides notice of the Force Majeure to the other, Seller shall deliver to Buyer, and Buyer shall receive from Seller, that percentage of the DCQ which is equal to the percentage amount of Gas which according to NOVA had been nominated by all NOVA shippers for NIT and which NOVA is not interrupting, curtailing or prorationing on that Gas day or that portion of a Gas day. 11.3 Force Majeure for Transactions with a Delivery Point other than NIT. If the Delivery Point is other than NIT, this Article 11.3 shall apply. "Force Majeure" means only interruptions or curtailments of firm service at the Delivery Point(s) by Seller's Transporter or Buyer's Transporter, regardless of whether Buyer's Transporter or Seller's Transporter is declaring any event of force majeure. On any Gas day that Force Majeure applies, both Parties' obligations to deliver and receive Gas shall be reduced by the same percentage that Buyer's Transporter or Seller's Transporter interrupts or curtails firm service at the Delivery Point(s) on such Gas day." Please note, the reference to Article 11.2 in s.11.4 should be amended to a reference to Article 11.1 once the changes indicated above are made. 7. Liquidated Damages Calculation The calculation of liquidated damages in s.11.4 uses the highest daily price and lowest daily price "in the index below". However, I could locate no reference to an index below to make the calculation. As are result, we need to specify an index. We should probably insert a provision to deal with circumstances in which the index ceases to be reported or there is a material change in the formula for or method of calculation is changed (as per the recent CPGR AECO "C" Daily Index changes). 8. Eligible Financial Contract Representation As a supplement to the provisions of s.12.6, Enron Canada requires the following provisions to be added to the Master: "12.7 Eligible Financial Contract. This Agreement, all Transactions under this Agreement, and any guarantee thereof as applicable, each and together constitute an "eligible financial contract" under and in all proceedings related to the Bankruptcy and Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada) or the Winding-up and Restructuring Act (Canada), 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." 9. Assignment Enron Canada requires the assignment provisions of s.14.1 be replaced with the following: "14.1 Transfer or Assignment. Neither Party shall transfer or assign this Agreement without the prior written approval of the other Party, which approval may be withheld or given entirely at the option of such Party; provided, however, either Party may transfer or assign its interest hereunder to an affiliate, subsidiary or to any person or entity succeeding to all or substantially all of the assets of such Party, all without the prior written approval of the other Party, but no such assignment will relieve the assigning Party of its obligations hereunder." Further, a new s.14.3 should be inserted stating: "14.3 Enurement. This Agreement shall enure to and be binding upon the successors and permitted assigns of the Parties hereto." 10. Canadian Law Issues Enron Canada requires the first two sentences of s.17.4 to be replaced with the following: "This Agreement shall be governed by and construed, enforced and performed in accordance with the laws in force in the Province of Alberta, without regard to principles of conflicts of law, and each Party hereby submits to the non-exclusive jurisdiction of the courts of the Province of Alberta." For the purposes of this Agreement and all Transactions hereunder, unless otherwise specified, "dollars" and the symbol "$" means dollars in the lawful currency of Canada. 11. Representations Enron Canada requires the following section to be inserted in Article 17 ? Miscellaneous: s.17.8 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 and on the date that each Transaction is entered into, as follows: (a) there are no suits, proceedings, judgments 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; (b) it is duly organized and validly existing, and it has the legal right, power, authority and qualifications, and has obtained all necessary consents and regulatory authorizations, for it to conduct its business, to execute and deliver this Agreement and to perform its obligations hereunder and under each Transaction; © (i) each Transaction shall constitute a "commodity contract" or an "OTC derivative" or such other similar term as defined pursuant to the securities legislation in force in Alberta and British Columbia and pursuant to the securities legislation of any other jurisdictions having application to the Transaction, and (ii) it is a "Qualified Party" within the meaning of paragraph 9.1 of Alberta Securities Commission Order Doc.#394043 and paragraph 1.1 of the British Columbia Securities Commission Blanket Order BOR 91-501, in any such case, as amended, restated, replaced or re-enacted from time to time, and pursuant to any equivalent order or other enactment made pursuant to the securities laws of Alberta, British Columbia and any other jurisdictions having application to the Transaction; (d) the making and performance of this Agreement are within its powers, have been duly authorized by all necessary action and do 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 any provision of its governing documents; and (e) this Agreement 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 creditors' rights generally, and with regard to any equitable remedies, to the discretion of the court before which proceedings to obtain such remedies may be pending. Please give me a call when you have the opportunity to discuss the above. You can reach me at (713) 345-2520 for the next few weeks and you can reach Peter Keohane directly at (403) 974-6923. Yours truly, Mark Powell - Prepay dwa May '01.doc - ENRON Canada 5-21-01 Draft.doc
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