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EXHIBIT 10.4
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TRANSITION SERVICES AGREEMENT
by and between
XXXXXXXX PETROLEUM COMPANY
and
DUKE ENERGY FIELD SERVICES, LLC
Dated as of March 17, 2000
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TRANSITION SERVICES AGREEMENT
THIS AGREEMENT is executed this 17th day of March, 2000, but shall have
an effective date ("Effective Date") as of the Closing Date of the Contribution
Agreement, as defined below, by and between Duke Energy Field Services, LLC, a
Delaware limited liability company ("Company"), and XXXXXXXX PETROLEUM COMPANY,
a Delaware corporation ("Xxxxxxxx") (each, a "Party" and collectively, the
"Parties".)
WITNESSETH:
WHEREAS, Xxxxxxxx, the Company and Duke Energy Corporation, a North
Carolina corporation, have entered into that certain Contribution Agreement,
dated as of December 16, 1999 ("Contribution Agreement"), pursuant to which Duke
and Xxxxxxxx have agreed to cause certain of their midstream natural gas
gathering, processing and marketing operations in the United States and Canada
to be transferred to the Company;
WHEREAS, Xxxxxxxx has, or can make available to Company, the personnel,
technology, and other resources necessary to provide services to Company during
the term of this Agreement while Company procures or otherwise obtains and makes
available the personnel, technology and resources necessary to conduct
operations of its facilities and assets; and
WHEREAS, Company desires that Xxxxxxxx furnish to Company and its
subsidiaries the services described in Exhibit B to this Agreement ("Transition
Services"), and Xxxxxxxx desires to provide such Transition Services pursuant to
the terms hereof.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, and intending to be legally bound hereby, the
Parties agree as follows:
ARTICLE I
SCOPE OF SERVICES
1.1 Transition Services. Xxxxxxxx agrees to provide to Company and its
subsidiaries the Transition Services described in Exhibit B for the term
described in Section 8.1. Xxxxxxxx will provide, in its sole discretion, the
personnel, equipment, tools, technology, and other resources necessary to
perform the Transition Services hereunder with the same degree of care, skill
and prudence customarily exercised by it for its own operations, consistent with
industry practices, in compliance with statutory and regulatory requirements,
and in the same manner as such services have been provided, or were available,
to Xxxxxxxx Gas Company and its subsidiaries prior to the Effective Date. The
services to be provided under this Agreement shall not be increased or enlarged
to cover any operating assets, offices, and assets of the Company other than
those previously used by Xxxxxxxx Gas Company and its subsidiaries, unless
Company and Xxxxxxxx shall have agreed in writing on the scope of such increased
or enlarged services and the amount and method of compensation to be applied to
such increased or enlarged services.
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1.2 Budget Approvals; Emergency Action. Xxxxxxxx' performance hereunder
shall generally observe the budgetary limitations and standards agreed to by
Xxxxxxxx and Company in Exhibit B; provided, however, Xxxxxxxx may take such
actions and make such expenditures as may be reasonably necessary, under laws,
regulations or good industry practices, in order to cure an emergency. Xxxxxxxx
shall advise Company of such emergencies as soon as practicable and advise it of
the circumstances of such emergencies, the actions taken or proposed, and the
expenditures made, incurred, committed or proposed.
1.3 Reasonable Availability of Personnel. Except for those Designated
Persons (defined in Exhibit B hereto), Company acknowledges that Xxxxxxxx'
employees are involved in the conduct of business for Xxxxxxxx and may not be
required to dedicate the entirety of their business days to the performance of
the Transition Services; provided, however, that Xxxxxxxx agrees to use all
reasonable efforts to have its employees made available at the reasonable
request of Company throughout the term of this Agreement, and the Parties agree
to make all reasonable efforts to cooperate mutually with each other so as to
achieve the intents and purposes of this Agreement.
1.4 Scope of Xxxxxxxx' Authority. Without the prior written consent of
Company, Xxxxxxxx, in performing the Transition Services, shall not borrow or
lend money; create any lien or encumbrance; participate in any futures or
hedging activities in the name of Company or its subsidiaries; execute,
terminate, or amend any contract in the name of or on behalf of Company or its
subsidiaries; purchase or sell any asset of Company or its subsidiaries; execute
any indemnification for the benefit of any party; or take any other action not
in the ordinary course of business of Xxxxxxxx or Company.
1.5 Telecommunications, Radio and Wireless Communications. Where
necessary to allow continuous use of certain telecommunications, radio and
wireless services or facilities that were previously shared by Xxxxxxxx and
certain facilities or operations of Company or its affiliates (hereinafter
"Shared Communication Facilities"), Xxxxxxxx and Company shall enter into such
agreements, having terms and conditions and having the same cost sharing basis
as the arrangements that were previously used by Xxxxxxxx and Company or its
affiliates with regard to the Shared Communications Facilities.
1.6 Use of Subcontractors. If Xxxxxxxx is unable to perform the
Transition Services in accordance with Section 1.1, then Xxxxxxxx shall hire the
personnel required to perform such Transition Services. Xxxxxxxx is authorized
to provide any part of the Transition Services under this Agreement either from
its own resources and employees, or, upon written consent of Company, by a
subcontractor or subcontractors. Other contractors and subcontractors shall be
made subject to no less stringent performance requirements than Xxxxxxxx is
required to comply with under this Agreement, including confidentiality and
compliance with statutory and regulatory requirements.
1.7 Relationship of Parties. Xxxxxxxx shall control the manner and
method of carrying out the Transition Services. The Parties shall act as
independent contractors, and nothing herein shall at any time be construed to
create the relationship of employer and employee, partnership, principal and
agent, broker or finder or joint venturers as between Xxxxxxxx and Company.
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1.8 Non-Exclusivity. Company reserves the right to enter into other
contracts with third parties in connection with services of the type described
in this Agreement.
ARTICLE II
CHARGES AND SETTLEMENT
2.1 Rates for Transition Services. Xxxxxxxx shall charge Company for the
Transition Services provided under this Agreement in accordance with Xxxxxxxx'
fully-burdened actual costs as provided for in Exhibit B. Such rates shall not
include any provision of Transition Services away from Xxxxxxxx' employees' home
offices; consequently, all reasonable travel and related costs incurred in the
performance of the Transition Services away from Xxxxxxxx' employees home
offices shall be reimbursed according to Section 2.2 below.
2.2 Cost Reimbursement Basis for Xxxxxxxx' Transition Services. All
actual and reasonably incurred out-of-pocket costs and expenses incurred by
Xxxxxxxx under this Agreement in the performance of Transition Services away
from Xxxxxxxx' employees' home offices, and any expenses that are not included
in the rates agreed-upon as set forth above, shall be reimbursed by Company
monthly in accordance with the procedures set forth below in Sections 2.3 and
2.4.
2.3 Additional Equipment, Technology or Third Party Services. If
additional equipment, software, technology or third party services are required
in order for Xxxxxxxx to perform the Transition Services, and written approval
is given by Company, Company shall pay the cost of such additional equipment,
software, technology or third party services. To the greatest extent feasible,
charges for equipment, software, technology and third party services will be
billed directly to Company. In the case of any emergency, prior written approval
of such expenses shall not be required; provided however, that Xxxxxxxx shall
obtain Company's consent to such emergency services as soon as reasonably
practicable.
2.4 Invoicing and Payment. Within thirty (30) calendar days after the
end of each calendar month, Xxxxxxxx shall submit to Company an invoice covering
the Transition Services performed and expenses incurred during the previous
calendar month, which invoice shall describe in reasonable detail the Transition
Services performed, charges therefor, out-of-pocket costs and expenses incurred
and any other charges or fees provided for hereunder. Company shall make payment
within twenty-five (25) days after receipt of the invoice. Payments shall be
made by electronic fund transfer or equivalent transfer or other means
satisfactory to Xxxxxxxx in immediately available funds to Xxxxxxxx' account at
such bank or depository as is designated by Xxxxxxxx in writing on such
invoices.
2.5 Late Payments. In the event any payment hereunder is not made when
due, the payment shall accrue interest (beginning on the date the payment is
due) calculated at the prime rate as published in the Wall Street Journal,
between the date said payment is due and the date the payment is made. Such
payment, when made, shall be accompanied by all interest so accrued.
2.6 Bases for Rates. The rates for Transition Services shall be
calculated to equal the amounts necessary to reimburse Xxxxxxxx for its
fully-burdened actual costs of providing the Transition Services relating
thereto. Xxxxxxxx agrees to provide Company with documentation and
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other information with respect to each invoice as may be reasonably requested by
Company to verify that Xxxxxxxx' charges to Company are accurate, correct and
valid in accordance with the provisions of this Agreement. If at the close of
any calendar quarter during the term of this Agreement either Party believes
that the amount which is being charged for a particular category of Transition
Services does not equal the fully-burdened costs therefor, the objecting Party
may notify the other Party that it desires to renegotiate the rates being
charged for the Transition Services. The Parties shall promptly thereafter make
reasonable efforts to renegotiate the particular disputed rates prior to the
beginning of the calendar quarter for which the renegotiated rates are to apply.
Such renegotiation shall not, however, relieve the objecting Party of the
obligation for the timely payment or crediting of all invoiced charges pending
renegotiation, or its obligation to perform Transition Services hereunder, as
the case may be.
2.7 Fees for Additional Transition Services. From time to time the
Company may desire additional services from Xxxxxxxx not specifically related to
the Transition Services addressed herein. No fees shall be billable for these
additional services unless such services are requested and agreed to in writing
in an addendum to this Agreement prior to performance; thereafter in this
Agreement, all references to "Transition Services" shall also include any such
additional new services. Additional new services will then be provided on either
a fixed-fee or hourly rate, as agreed to at the time, in order to reimburse
Xxxxxxxx for its fully burdened actual costs of providing such additional new
services.
2.8 Taxes. Company shall pay all taxes, fees or similar levies imposed
on the Transition Services provided hereunder (other than taxes imposed on
Xxxxxxxx' net income, including alternative minimum taxable income, gain, excess
profits or franchise taxes imposed on the capital or net income of Xxxxxxxx, and
other than employment taxes imposed with respect to Xxxxxxxx' employees, except
to the extent such taxes are included in Xxxxxxxx' fully-burdened actual costs
as provided in Section 2.6) and, in the event that Xxxxxxxx is required by law
to pay any of said taxes, fees or other similar levies, Company shall reimburse
Xxxxxxxx for such payments.
2.9 Exemption Certificate. Company shall provide Xxxxxxxx with an
exemption certificate(s), if requested by Xxxxxxxx, in a form acceptable to the
appropriate taxing authority for Transition Services provided under this
Agreement, and Company shall be responsible for the payment of any taxes, fees
or similar levies imposed on Transition Services provided hereunder if it fails
to do so, or if such taxes are otherwise assessed on such Transition Services.
ARTICLE III
AUDIT
Company and its representatives shall have the right to audit the
pertinent time records and expense and cost records of Xxxxxxxx relating to
charges and performance under this Agreement for a period of at least two (2)
years from the date of the origination of such records as follows. Upon written
request by Company and at Company's expense, Company may audit the
above-referenced records of Xxxxxxxx upon reasonable notice and during business
hours during the term of this Agreement and for two (2) years thereafter for the
purpose of confirming the accuracy of such records and the manner in which such
records have been used in the administration of this Agreement; provided,
however, that any such accountants undertaking the audit shall promptly
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report to both Parties the results of the audit and whether same shows
compliance with the terms of this Agreement, or as the case may be, a report
setting forth the facts detailing the failure to comply with the terms of this
Agreement. Unless required by legal or administrative process, a Party, as well
as its agents, representatives, employees, auditors, independent contractors,
officers, and directors who obtain actual or constructive knowledge of any
information obtained relative to any audit, shall treat as confidential and not
disclose, divulge, reveal, or report, directly or indirectly, to any third
party, any information obtained during any audit without the other Party's prior
written consent. If any legal or administrative process requires disclosure of
any information obtained during any audit, that Party shall provide prompt
written notice of such process to the other Party, thereby permitting the other
Party to seek a protective order or other appropriate remedy as it deems
necessary in its sole discretion.
ARTICLE IV
RELEASES OF LIABILITY; INDEMNITY
4.1 Release of Claims for Consequential and Other Damages. Subject to
Section 4.2 below, Company hereby releases Xxxxxxxx and its officers, directors,
employees and agents from and covenants not to xxx any of them for, (a) any and
all claims, causes of action, damages, and liabilities of whatsoever nature
(including, but not limited to, property damage, personal injury, death,
liabilities arising out of an employment relationship, workmen's compensation
claims, attorneys' fees, travel costs, interest expense and amounts paid in
settlement) which Company may now or hereafter have (including, but not limited
to, any consequential, incidental, indirect or special damages and losses of
whatsoever nature) which arise out of or relate directly or indirectly to
Xxxxxxxx' obligations under this Agreement; and (b) expenses and losses
(including, but not limited to, attorneys' fees, travel costs, and interest
expense) relating to such matters.
4.2 THE RELEASES AND COVENANTS NOT TO XXX STATED ABOVE SHALL NOT APPLY
TO ANY CLAIMS, CAUSES OF ACTION, LIABILITIES, DAMAGES, EXPENSES AND LOSSES WHICH
RESULT PROXIMATELY AND DIRECTLY FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF XXXXXXXX WHICH WOULD OTHERWISE BE RELEASED OR INDEMNIFIED. THE RELEASES AND
COVENANTS NOT TO XXX STATED ABOVE SHALL APPLY TO ALL BREACHES BY XXXXXXXX, IF
ANY, OF ALL LESSER STANDARDS OF CONDUCT OR CULPABILITY. IT IS A CONSIDERATION
FOR XXXXXXXX' PROVISION OF SERVICES HEREUNDER AND THE INTENT OF THE PARTIES THAT
BY THIS RELEASE, COMPANY WILL RELEASE AND PROTECT XXXXXXXX FROM THE CONSEQUENCES
OF XXXXXXXX' OWN NEGLIGENCE WHERE THAT NEGLIGENCE IS THE SOLE, CONCURRING OR
CONTRIBUTING CAUSE OF THE INJURY, DEATH OR DAMAGE.
4.3 XXXXXXXX SHALL INDEMNIFY AND HOLD COMPANY AND ITS SUCCESSORS,
ASSIGNS, AFFILIATES, AND ALL OF COMPANY'S OFFICERS, DIRECTORS, EMPLOYEES,
REPRESENTATIVES AND AGENTS HARMLESS FROM ANY CLAIMS, CAUSES OF ACTION,
LIABILITIES, DAMAGES, EXPENSES (INCLUDING REASONABLE ATTORNEY'S FEES) AND LOSSES
WHICH RESULT PROXIMATELY AND DIRECTLY FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF XXXXXXXX, WHICH ARE NOW OR HEREAFTER ASSERTED BY THIRD PARTIES
AGAINST COMPANY ARISING DIRECTLY OR INDIRECTLY FROM SERVICES PROVIDED BY
XXXXXXXX UNDER THIS AGREEMENT.
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4.4 Survival of Releases and Indemnification. Nothing contained in this
Agreement shall modify, alter or amend any obligation of Xxxxxxxx or any
affiliate of Xxxxxxxx under the Contribution Agreement. Subject to applicable
statutes of limitation, the Parties' obligations under Section 4.1 and 4.3 shall
survive any termination of the Contribution Agreement, the Governance Agreement
by and among Xxxxxxxx, Xxxx and the Company, dated December 16, 1999, those
agreements executed as the closing of the transaction contemplated by the
Contribution Agreement, and this Agreement, and shall continue thereafter in
full force and effect.
ARTICLE V
CONFIDENTIALITY
5.1 Confidentiality Obligation. Both Xxxxxxxx and Company (and each
Party shall ensure that its employees, contractors, subcontractors, agents and
affiliates who perform or receive Transition Services under this Agreement)
shall treat as strictly confidential (and shall not disclose) all information
received or obtained as a result of this Agreement that relates to the other
Party or any aspect of its business or operations.
5.2 Disclosure of Information. A Party may disclose information that
would otherwise be confidential if and only to the extent: (a) required by
applicable law, provided that the disclosing Party has notified the other in
writing prior to disclosure and taken all practicable legal steps to prevent
such disclosure; (b) required by any securities exchange or agency to which the
Party is subject, wherever situated, whether or not the requirement has the
force of law, provided that the disclosing Party has taken all practicable legal
steps to prevent such disclosure and notified the other Party in writing prior
to disclosure; (c) disclosed on a confidential basis to the professional
advisers or auditors of the Party or to any actual or potential bankers or
financiers of that Party; (d) that the information has come into the public
domain through no fault of that Party or its employees, affiliates, officers,
directors, representatives, agents, or assigns; (e) that the other Party has
given prior written approval to such disclosure; (f) necessary to enforce,
comply with or perform any of the terms of this Agreement or the other
agreements listed in Section 4.4 or any other agreements contemplated hereby or
thereby; or (g) received from a third party, unless, to the knowledge of the
Party that would otherwise be subject to this Article V or its employees,
affiliates, officers, directors, representatives, agents, or assigns, such third
party is subject to an independent obligation to keep such information
confidential.
ARTICLE VI
NOTICES
All notices and other communications to be given to either Party
hereunder shall be sufficiently given for all purposes hereunder if in writing
and delivered by hand, courier or overnight delivery service or three days after
being mailed by certified or registered mail, return receipt requested, with
appropriate postage prepaid, or when received in the form of a telegram or
facsimile and shall be directed, if to a Party hereunder, to the address or
facsimile number set forth below (or at such other address or facsimile number
as such Party shall designate by like notice):
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(a) If to Xxxxxxxx:
Xxxxxxxx Petroleum Company
0000 Xxxxx Xxxxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxx
Fax No.: (000) 000-0000
(b) If to Company:
Duke Energy Field Services, LLC
000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax No.: (000) 000-0000
ARTICLE VII
GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELEWARE, WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES
THEREOF.
ARTICLE VIII
TERM; TERMINATION
8.1 Term; Termination. This Agreement shall commence on the Effective
Date and shall remain in effect until (a) December 31, 2000, or (b) such earlier
date on which Company shall deliver to Xxxxxxxx a written release executed by
Company for the benefit of Xxxxxxxx, releasing Xxxxxxxx from any further
obligation to provide Transition Services pursuant to this Agreement. Upon
written agreement by both Parties, and subject to renegotiation of applicable
charges necessitated by any changes in internal or external costs of providing
Transition Services, this Agreement may be continued after December 31, 2000 on
a month to month basis.
8.2 Specific Transition Services Rights. Company may terminate any
specific Transition Service during the term of this Agreement by giving at least
thirty (30) days prior written notice to Xxxxxxxx, and if such Transition
Service is terminated during a month, any rate agreed upon for the provision of
such Transition Service shall be prorated, with the exception of IT Services
charges which shall not be prorated but shall be reimbursed for the entire month
of such termination.
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ARTICLE IX
ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
Parties hereto and their respective successors and permitted assigns; provided,
however, that (a) no Party hereto will assign its rights or delegate any or all
of its obligations under this Agreement, except to an affiliate or a successor
to all or a substantial portion of the assets or the business of such Party,
without the express prior written consent of either Party hereto, and (b) any
assignment of the obligations of either Party hereto shall not relieve that
Party of its obligations under any and all of the provisions of this Agreement.
ARTICLE X
CONFLICT OF INTEREST
Neither Party shall, and each shall require that its subcontractors
shall not, pay any commissions, fees, or grant any rebates to any employee,
officer or agent of the other Party; nor favor employees, officers or agents of
the other Party with gifts or entertainment of significant cost or value; nor
enter into any business arrangement with employees, officers or agents of the
other Party, other than as a representative of the other Party, without written
approval of such other Party.
ARTICLE XI
FORCE MAJEURE
11.1 Force Majeure. No failure or omission to carry out or to observe
any of the terms, provisions or conditions of this Agreement, except the failure
to make payment for sums due hereunder, shall give rise to any claim by one
Party against the other, or be deemed a breach of this Agreement, if the same
shall have been or shall be caused by or arise out of any event of Force
Majeure, which term as used herein shall include (but only to the extent that
the affected Party is unable to perform due to causes and events that are beyond
the reasonable control of the affected Party), but not be limited to, war,
hostilities, acts of the public enemy or of belligerents, sabotage, blockage,
revolution, insurrection, riot or disorder, requisitions or rationing, whether
imposed by law, decree or regulations or by voluntary cooperation of industry at
the insistence or request of any governmental authority or person purporting to
act therefore; compliance with allocation programs, voluntary or mandatory,
including reduction or cessation of production by reason of imposition by any
governmental authority or person purporting to act with government authority,
acts of God, fire, frost, earthquake, storm, or lightning, epidemic, quarantine,
strikes or combination of workmen lockouts or other labor disturbances,
explosion, accidents by fire or otherwise to pipe, storage facilities,
installations, machinery, unanticipated plant outages, delays in acquiring or
inability to acquire permits or licenses necessary to enable the Parties hereto
to perform, lack of adequate fuel, power, raw materials, labor, containers or
transportation facilities, delays or shortages caused by breakdowns, failures or
unavailability of materials or equipment, breakage, mechanical breakdowns or
accident to machinery; delay, breakdown, or destruction of a plant, terminal, or
equipment; provided, however, that the Party so affected thereby will exercise
reasonable efforts pursuant to prudent industry practice to prevent the
occurrence of the Force Majeure event and to cure the event of Force Majeure as
quickly as possible so that the Party so affected will be able to carry out and
observe all of the terms, provisions, and conditions
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of this Agreement, but such Party shall not be required to settle any labor
disputes giving rise to an event of Force Majeure hereunder.
11.2 Notification of Force Majeure. If a Party hereunder is prevented
from or delayed in performing any of its obligations under this Agreement by a
Force Majeure event, the Party affected shall promptly notify the other in
writing of the circumstances constituting the Force Majeure event, indicating
the performance obligations which are thereby delayed or prevented and the
length of the resulting delay expected. The Party claiming Force Majeure shall
use its best efforts to reduce the losses of the other Party resulting from the
Force Majeure event. The other Party may thereafter grant an extension to the
time required to complete performance of the obligation hereunder.
11.3 Substitution. In the event that Xxxxxxxx is excused from supplying
a Transition Service in accordance with the terms of this Section, then Company
shall be free to acquire the Transition Services from any substitute source, for
such period as Company deems necessary or expedient, and if so acquired, Company
shall not be obligated to pay Xxxxxxxx for such Transition Services during such
period.
ARTICLE XII
ALTERNATIVE DISPUTE RESOLUTION
12.1 Negotiations.
(a) Any dispute arising out of or relating to this Agreement
shall be resolved in accordance with the procedures specified in this Article.
(b) The Parties shall attempt in good faith to resolve any
dispute arising out of or relating to this Agreement promptly by negotiation
between executives who have authority to settle the controversy and who are at a
higher level of management than the persons with direct responsibility for
administration of this Agreement. Either Party may give the other Party written
notice of any dispute not resolved in the normal course of business. Within 15
days after delivery of the notice, the receiving Party shall submit to the other
a written response. The notice and the response shall include a statement of
each Party's position and a summary of arguments supporting that position, and
the name and title of the executive who will represent that Party and of any
other person who will accompany the executive. Within 30 days after delivery of
the initial notice, the executives of both Parties shall meet at a mutually
acceptable time and place, and thereafter as often as they reasonably deem
necessary, to attempt to resolve the dispute. All reasonable requests for
non-privileged and/or non-proprietary information made by one Party to the other
will be honored.
(c) All negotiations pursuant to this clause shall be considered
confidential and shall be treated as compromise and settlement negotiations for
purposes of applicable rules of evidence.
(d) Notwithstanding the foregoing, nothing contained in this
Agreement shall limit or restrict in any way the right or power of a Party at
any time (i) to commence and
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prosecute a proceeding for a preliminary or temporary injunction or other
temporary order pending mediation or arbitration under this Agreement (A) to
restrain a Party from breaching this Agreement or (B) for specific enforcement
of this Article, or (ii) to consult with the other Party in an attempt to
negotiate a resolution of the dispute. The Parties agree that any legal remedy
available to them with respect to a breach of this Article will not be adequate
and that, in addition to all legal remedies, each Party is entitled to an order
specifically enforcing this Article.
12.2 Mediation. If the dispute has not been resolved by negotiation
described in Section 12.1 within 45 days after the receipt of the initial notice
by the other Party, the Parties shall endeavor to settle the dispute by
mediation conducted in the English language under the then current Center For
Public Resources' CPR Model Mediation Procedure for Business Disputes. The
mediation will be conducted at a site agreed upon by the Parties. All mediation
costs are to be borne equally by the Parties. Each Party shall be responsible
for its own attorney's fees and costs.
12.3 Arbitration. If a dispute or controversy shall arise between the
Parties with respect to any matter covered by this Agreement that has not been
resolved pursuant to either Section 12.1 or 12.2 above, any Party involved in
such controversy shall have the option of submitting the matter to arbitration
in the English language pursuant to the guidelines set forth below. Demand and
submission to arbitration as provided in this Agreement must, unless otherwise
agreed, be made in writing by the requesting Party within the later of (i) ten
(10) days after negotiations and mediation held pursuant to Sections 12.1 and
12.2 above have failed, and such notifying Party intends to submit the matter
for arbitration and (ii) 60 days following the effective date of notice of the
dispute or controversy. The failure to timely submit the matter to arbitration
shall constitute a waiver of the Parties to submit their dispute to arbitration.
If submitted to arbitration, the arbitration shall be binding on the Parties and
the dispute shall be settled in accordance with the Commercial Arbitration Rules
of the American Arbitration Association ("AAA Rules"), and judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. If a dispute involves an amount in controversy of $100,000
or less, there shall be one arbitrator. If a dispute involves an amount in
controversy in excess of $100,000 or a request for preliminary injunction, there
shall be three arbitrators. All arbitration proceedings shall be conducted in
Houston, Texas.
ARTICLE XIII
TRANSITION SERVICES REPRESENTATIVES
The Parties shall each appoint one or more representatives (each, a
"Representative") to facilitate communications and performance under this
Agreement. Each Party may treat an act of the Representative of the other Party
as being authorized by such other Party without inquiring behind such act or
ascertaining whether such Representative had authority to so act. The initial
Representatives are named in Exhibit A hereto. Each Party shall have the right
at any time and from time to time to replace its Representative by giving notice
in writing to the other Party setting forth the name of (i) the Representative
to be replaced and (ii) the replacement, and certifying that the replacement
Representative is authorized to act for the Party giving notice in all matters
relating to this Agreement.
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ARTICLE XIV
MISCELLANEOUS
14.1 Entire Agreement. This Agreement, together with the exhibits
hereto, constitutes the entire agreement of the Parties with respect to the
services and arrangements described herein, and supercedes all prior contracts
or agreements between the Parties solely with respect to the subject matter
hereof, whether written or oral. This Agreement is not intended to confer upon
any person not a party hereto (or their successors and assigns) any rights or
remedies hereunder.
14.2 Amendments. This Agreement may not be modified or amended, in whole
or in part, except by a supplemental agreement signed by the Parties hereto.
14.3 Headings; Construction. The Article and Section headings of this
Agreement have been inserted only to facilitate reference and shall have no
bearing on the construction and interpretation of this Agreement. Unless the
context requires otherwise: (a) the gender (or lack of gender) of all words used
in this Agreement includes the masculine, feminine and neuter; (b) references to
Articles and Sections refer to Articles and Sections of this Agreement; (c)
references to Exhibits refer to the Exhibits attached to this Agreement; (d)
references to laws refer to such laws as they may be amended from time to time,
and references to particular provisions of a law include any corresponding
provisions of any succeeding law; (e) references to money refer to legal
currency of the United States of America; and (f) the word "including" means
"including, without limitation."
14.4 Counterparts. This Agreement and any amendment thereto may be
executed in one or more counterparts, each of which when so executed shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
14.5 Waiver. No waiver of any breach of this Agreement shall be held to
be a waiver of any other or subsequent breach. Except as otherwise expressly
provided herein, no failure to exercise, delay in exercising or single or
partial exercise of any right, power or remedy by any Party, and no course of
dealing between the Parties, shall constitute a waiver of any such right, power
or remedy.
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IN WITNESS WHEREOF, the Parties have set their hands by their duly
authorized officials as of the date set forth above.
XXXXXXXX PETROLEUM COMPANY
By: /s/ XXXX X. XXXXXX
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Name: Xxxx X. Xxxxxx
Title: Vice President and Treasurer
DUKE ENERGY FIELD SERVICES, LLC
By: /s/ XXXXX X. XXXXXXXXX
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Name: Xxxxx X. Xxxxxxxxx
Title: Sr. Vice President and CFO
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EXHIBIT A: SERVICES REPRESENTATIVES
The Parties to this Transition Services Agreement each hereby appoint a
Representative (as defined in Article XIII thereof) to facilitate communications
and performance under this Agreement.
The initial Representatives of Xxxxxxxx and the Company shall be as
follows:
1. The initial Representative of Xxxxxxxx shall be Xxxx X. Xxxxxx, and
shall be contacted according to the procedures set forth in Article VI of this
Agreement at the following address or at the following facsimile number:
Xxxxxxxx Petroleum Company
3 A3 Xxxxxxxx Building
Bartlesville, Oklahoma 74004
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
2. The initial Representative of the Company shall be Xxxxx X.
Xxxxxxxxx, and shall be contacted according to the procedures set forth in
Article VI of this Agreement at the following address or at the following
facsimile number:
Duke Energy Field Services, LLC
000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
Telephone: 000-000-0000
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EXHIBIT B: THE SERVICES
ARTICLE I
RESOURCES
Xxxxxxxx will provide the personnel, equipment, tools, technology, and other
resources necessary to perform the Transition Services as set forth and
identified in Article III of this Exhibit. Xxxxxxxx shall in its sole discretion
hire and fire employees engaged in performing transition services hereunder,
determine their levels of compensation, and otherwise marshal those resources it
deems necessary or proper in order to perform services under this Agreement;
provided, however, that Xxxxxxxx shall not remove any particular Designated
Person (as defined below) from the performance of Transition Services without
prior consultation with Company.
Upon request of Company, Xxxxxxxx shall provide specific personnel (each
referred to as a "Designated Person") who were previously engaged in the
performance of services relating to the assets and facilities acquired by
Company from Xxxxxxxx. Company shall reimburse Xxxxxxxx for the services of each
such Designated Person as indicated hereinbelow. Xxxxxxxx will assign each such
Designated Person to perform services relating to Company (including services
that are not specifically provided for in Article III hereof) until the date
(the "Service Termination Date") specified in a written notice from Company to
Xxxxxxxx indicating that the services of such Designated Person are no longer
required by Company from and after such specified date. Xxxxxxxx will be
responsible for all severance benefits and other termination costs, if any,
associated with the termination of any Designated Person's employment with
Xxxxxxxx; provided, however, that if the Service Termination Date with respect
to a Designated Person occurs after the six-month period (or the nine-month
period in the case of a Designated Person who is an accountant) beginning on the
Closing Date (as defined in the Contribution Agreement), then Company shall
reimburse Xxxxxxxx for the cash severance benefits, if any, paid by Xxxxxxxx to
such Designated Person, but only if (1) such Designated Person receives a notice
of termination of employment from Xxxxxxxx within thirty (30) days after such
Designated Person's Service Termination Date and such Designated Person's
employment is actually terminated within sixty (60) days after receipt of such
notice, and (2) such Designated Person's employment is terminated under
circumstances that entitle such Designated Person to severance benefits pursuant
to the terms of the Xxxxxxxx Layoff Plan as in effect on December 16, 1999. The
amount of any such reimbursement shall not exceed the amount of the cash
severance benefit that would have been paid to such Designated Person under the
terms of the Xxxxxxxx Layoff Plan as in effect on December 16, 1999.
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ARTICLE II
DESCRIPTION OF SERVICES
The Transition Services to be provided to Company by Xxxxxxxx shall be
those described herein and any other service agreed to in writing by the Parties
from time to time, subject to modification and amendment by joint written
agreement of the Parties:
(a) IT SERVICES
Xxxxxxxx shall perform the computing system management,
information management, and communications services specified hereinbelow
(referred to collectively herein as "the Services").
Xxxxxxxx shall provide the Services as an independent contractor in
accordance with the standards of care and competence of the petroleum industry
and in compliance with the standards of data processing/computer industry,
particularly as to complying with software licenses and restricting access to
data.
(i) IT SERVICES CONTACTS
Xxxxxxxx Contact Person: Xxxxxx X. Xxxxxxx
Company Contact Person: Xxxx Xxxxxxxx
(ii) SERVICE DESCRIPTIONS
IT Services include the following service types:
O SYSTEM SUPPORT
O OPERATION
O BACKUP AND RECOVERY
O CHANGE MANAGEMENT
O CONFIGURATION MANAGEMENT
O DASD STORAGE MANAGEMENT
O TAPE MANAGEMENT
O FUNCTIONS TO BE PERFORMED BY COMPANY
O FUNCTIONS TO BE PERFORMED BY XXXXXXXX
(1) System Support
Xxxxxxxx will take responsibility for management and support of systems
software, including the following activities:
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o apply systems software maintenance
o install new program products
o provide version control and release management
o generate system
o provide performance tuning
o provide operational assistance and problem resolution
(2) Operation
x Xxxxxxxx will be responsible for normal operation of the Company systems.
o The Xxxxxxxx Response Center will be manned 24 hours a day, 7 days a week.
o Company will be responsible for production batch scheduling.
o If the Company usage, measured for twenty-four (24) hours daily, exceeds the
above resources by more than 10% for an extended period of time, defined to
be three (3) consecutive months, then the charges to Company will be
increased by the incremental cost to Xxxxxxxx of providing the additional
resources required by Company.
(3) Backup and Recovery
Xxxxxxxx will generally maintain responsibility for backup and recovery
services, including the following:
o Vault services will be provided by Xxxxxxxx.
o In the event of disaster, Xxxxxxxx will have responsibility for providing
Company production environments, which can be restored at the fallback site
within 72 hours of a disaster declaration.
x Xxxxxxxx will perform disaster recovery exercises, with participation of
Company personnel, on the schedule determined by Xxxxxxxx Business Recovery
Services.
o Full volume disk backups will be generated weekly. o Incremental backups and
database image copies will be generated daily. o Tapes of latest full disk
backup, daily increment, and image copies will be kept in a vault located
offsite.
(4) Change Management
o Change management will be handled by Xxxxxxxx.
o Changes initiated by Xxxxxxxx will be executed during the specified
maintenance window, and Company will be informed accordingly.
o Changes initiated by Company may be executed at a time requested by Company,
if this does not impact other Xxxxxxxx production.
x Xxxxxxxx will notify the Company contact person of all major changes that
will impact the system availability at least one week prior to execution.
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(5) Configuration Management
x Xxxxxxxx will have responsibility for the management of central processing
center hardware and will maintain configuration diagrams of equipment.
(6) DASD Storage Management
Xxxxxxxx will have responsibility for management of DASD hardware, including:
o allocation of volumes
o monitoring and media failure intervention
o DASD consolidations
Company will have responsibility for:
o backup job processing at the application level
o recovery of files at the application level
(7) Tape Management
Xxxxxxxx will have responsibility for management, operation, and support of
tapes, including maintenance:
o vaulting service
o monitoring and media failure intervention
o tape mounts
o physical tape library maintenance
o tape measurement system daily housekeeping
o scratch tape management
(8) Functions to be Performed by Company
o Company applications will be run under the Xxxxxxxx production systems and
will be isolated by use of the appropriate security system.
o Company will handle security administration of data files only for their
applications.
o All production migration/change control of Company's specific application
portfolio will be performed by Company.
(9) Functions to be Performed by Xxxxxxxx
o Daily, weekly, monthly, and annual scheduled batch production jobs will
continue to be managed by Xxxxxxxx.
o Database administration, including physical database design, logical
database design, restore and recovery, database performance tuning, etc.,
will continue to be performed by Xxxxxxxx.
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(iii) SERVICE HOURS AND PROBLEM MANAGEMENT
(1) Maintenance Hours
In general, the system and its applications will be available unless a planned
or emergency maintenance period is in effect.
Planned maintenance will take place once a week according to the table below:
------------------------------------------------------------------------------------------
Start CST End CST Comments
------------------------------------------------------------------------------------------
Monthly, after
Saturday 21:00 03:00 12th workday
------------------------------------------------------------------------------------------
Weekly, except
after 12th workday
Saturday 21:00 00:00
------------------------------------------------------------------------------------------
The times above are indicating worst case. Generally, services will be
available during the planned maintenance period, or the period of the services
unavailability will be shorter than what is specified above.
Information about system impact will be communicated to Company's
contact person before noon CST the previous Friday. Notification to Company
needs to be given one week in advance for changes to the normal maintenance
period.
(2) Problem Management
During Company manned service hours, all Company user problems should be
reported to the Company Help Desk, which will perform first level problem
determination and consult with internal resources before escalation to Xxxxxxxx
Help Desk.
Xxxxxxxx Help Desk will maintain a log of all problems reported.
If the problem cannot be solved immediately over the telephone, Xxxxxxxx will
continue to work on the problem according to the problem codes and target times
in the Problem Severity Table shown below.
(3) Systems and Operations Problems
Problem Resolution
Service restoration will generally be provided according to the target times
shown in the problem severity table below.
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PROBLEM SEVERITY TABLE
------------------------------------------------------------------------------------------
Xxxxxxxx
Code Description Impact Target Time Activity
------------------------------------------------------------------------------------------
Xxxxxxxx
will work
continuously
Critical 1 Hour until normal
1 Critical services situation is
unavailable restored.
------------------------------------------------------------------------------------------
Xxxxxxxx
will work to
restore service
Important during normal
functions are working hours.
unavailable or Work will only
response times be interrupted
2 Serious are 3 Hours by a Code 1
unacceptable. problem.
------------------------------------------------------------------------------------------
Xxxxxxxx
Application, will work to
network, or restore the
hardware service within
3 Minor impacted. 1 working normal working
day hours.
------------------------------------------------------------------------------------------
Small
deficiencies
where
improvements
4 Insignificant are wanted Not As agreed.
specified
------------------------------------------------------------------------------------------
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(b) TREASURY SERVICES
Xxxxxxxx, as agent for Company, will provide the Treasury Management
services stated below in managing the funds of Company, subject to such
restrictions, conditions and limitations as may be deemed appropriate or
desirable by Company, and notice of which has been given by Company to Xxxxxxxx
in writing signed by the Treasurer or Assistant Treasurer of Company. Xxxxxxxx
will:
o Maintain and operate bank accounts in the name of Company, deposit and
disburse funds therefrom and reconcile such accounts;
o Make, supervise and confirm transmission of funds to Company's accounts and
the disbursement of funds from such accounts to others by wire or otherwise,
in such manner as to provide for the efficient and effective use of
Company's cash;
o Maintain lock boxes in Company's name, and collect therefrom, as may be
needed or requested;
o Purchase and/or sell and enter into agreements to purchase and/or sell
foreign currencies as required or requested by Company;
o Pay for and administer existing foreign and domestic letters of credit,
charging the cost thereof to Company's account(s), and submit drafts and
documents and collect amounts owing Company under foreign and domestic
letters of credit;
o Endorse checks, drafts and other instruments made payable to Company, and
deposit the same in one or more of Company's account(s) or when that is
unfeasible, one or more of Xxxxxxxx' general bank accounts, commingling such
funds with Xxxxxxxx', only as may be necessary;
o Approve such of Company's invoices which are received by and sent to
Xxxxxxxx and issue either Company's check or electronic payment thereof, or
when that is unfeasible, issue Xxxxxxxx' check or electronic payment
instruction in payment thereof and invoice Company for same; and
o Maintain and administer procurement and travel card programs utilized by
Company.
To assist in the management of its cash and to maximize the amount that
may be invested, Company authorizes Xxxxxxxx to maintain a "zero balance" in any
of Company's bank accounts.
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(c) PROPERTY TAX, REAL ESTATE AND CLAIMS
Services Provided:
(1) Right of Way Activities
o Research surface title, negotiate and purchase right of way
grants/easements, and secure tenant agreements for all pipeline construction
projects.
o Apply for and secure permits/licenses/easements for city street, county
road, state and federal highways, railroads, Oklahoma Public School Lands,
Bureau of Indian Affairs, Bureau of Land Management, University of Texas,
U.S. Forestry Department, U.S. Corps of Engineers, Texas Parks and Wildlife
Department and any local, state or federal agency having jurisdiction over
the land.
o Maintain and manage record system for lease/term easement
expiration/renewal/payments to insure rights do not lapse.
o Record documents with appropriate county.
o Prepare payments of right of way and damages for pipeline construction
projects and maintenance claim settlements.
o Intercede with landowner attempting to stop pipeline construction and
coordinate the securing of temporary restraining orders if required.
o Review, negotiate and prepare all documents for release of right of way
requested by landowners and developers.
o Coordinate with legal all condemnation proceedings involving fee property,
leases and easements.
o Review, negotiate and prepare all documents for the reimbursement of
expenses for pipeline adjustment due to landowner/developer activities,
local/state/federal road improvement projects, and U.S. Corps of Engineer
projects. Intercede to halt all development project activities that threaten
the safety of the pipeline.
o Coordinate obtaining of environmental assessments/impact
statements/archaeological surveys for pipeline projects.
o Maintain and manage right of way/geographic file system to insure
utilization of extensive multiple line rights and existing rights for
project planning.
o Respond to landowner inquiries concerning pipeline locations and agreements.
o Review right of way agreements, prepare assignment exhibits, and negotiate
title cure cost issues involved in asset sales.
o Prepare staking and construction release letters to field operations for
the construction of pipelines.
o Assist in route selection/landowner issues/cost estimations for pipeline
project planning.
o Negotiate easements/leases/fee acquisition for boosters and plant locations,
including title review.
o Provide status reports on pipeline projects.
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(2) Real Estate Activities
o Maintain and manage fee property/lease file system and administer lease
payment/expiration/renewal system.
o Appraise/negotiate/coordinate environmental assessment/review title for
acquisition and sale of fee property.
o Secure appropriate zoning for facilities and review zoning applications that
may impact existing facilities.
(3) Claims Activities
o Investigate, negotiate, settle, prepare releases and drafts relating to line
leaks, maintenance operations, livestock, environmental, noise, and personal
injury claims.
o Investigate, negotiate, settle and secure collection of settlements due to
damage to pipeline and company facilities.
o Handle property damage based small claims actions resulting from operations.
(4) Tax Activities
o Collect data, prepare renditions, negotiate values, review tax statements,
make payments, secure receipts and maintain tax files for personal property
and real estate.
o File valuation protests with Assessor and appear before County Board of
Equalization to appeal tax valuations.
o Participate in any tax appeal filed in District Court in the capacity of
record custodian and expert witness. Assist in the preparation of trial
exhibits, deposition/trial preparation of witnesses, settlement conferences
and trial. Assist in the preparation of appeals briefs.
o Provide tax estimates and participate in tax reduction study teams.
o Review legislation and provide expert testimony before legislative
committees on proposed Ad Valorem based legislation that impacts operations.
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ARTICLE III
CHARGES AND RATES
Xxxxxxxx shall charge Company for the Transition Services provided under this
Agreement in accordance with the rates set forth hereinbelow, which represents a
reasonable estimate, as determined by Xxxxxxxx and accepted by Company, of the
amount necessary to reimburse Xxxxxxxx for its fully-burdened actual costs of
providing the Transition Services relating hereto ("Transition Service
Charges"), incorporating that portion of the following:
(i) the labor and benefit expense, including all wages,
salaries, compensation, and remuneration paid by Xxxxxxxx to employees of
Xxxxxxxx engaged in the provision of Transition Services hereunder together with
the expense of Xxxxxxxx for xxxxxxx'x compensation, disability benefit
insurance, payroll taxes, employees' pension, welfare and fringe benefits
(including various benefit plans),
(ii) the overhead costs of the facilities of Xxxxxxxx that are
engaged in the provision of the Transition Services by Xxxxxxxx to Company; and
(iii) all other reasonable and necessary general and
administrative and operating costs and expenses of Xxxxxxxx.
Out of pocket expenses
In addition to paying the Transition Service Charges, Company shall reimburse
Xxxxxxxx for any out of pocket expenses and travel expenditures associated with
those Transition Services charged on an hourly basis and any additional amounts
reasonably expended or incurred by Xxxxxxxx to satisfy any obligation under this
Agreement which has been previously approved in writing by Company. In no event
shall Company pay directly any salaries, wages, withholding, benefits, severance
payments or any other compensation or payments to employees of Xxxxxxxx.
Rates for specific Transition Services are set forth in the Attached Addendum.
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