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Marketing And Administrative Services Agreement

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Sectors: Utilities
Effective Date: January 01, 2008
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Exhibit 10.11


Form of


Marketing and Administrative Services Agreement


This Marketing and Administrative Services Agreement (" Agreement" ) is effective as of [ ], 2008 (" Effective Date" ) between OGE Energy Resources, Inc., an Oklahoma corporation (" OERI" ), and Enogex Inc., an Oklahoma corporation (" Enogex" ).


Whereas, prior to the Effective Date, OERI was a wholly-owned Subsidiary of Enogex, OERI provided certain marketing and other services to Enogex and its Subsidiaries, and OERI received certain administrative services from Enogex;


Whereas, on the Effective Date, Enogex distributed all of the capital stock of OERI to OGE Energy Corp., an Oklahoma corporation (" OGE" ), upon the occurrence of which OERI became a wholly-owned Subsidiary of OGE;


Whereas, during the term of this Agreement, OERI will provide certain marketing and other services to the Enogex Group (as defined in this Agreement), and OERI will receive certain administrative services from Enogex;


Now, therefore, OERI and Enogex agree as follows:


1. Definitions . As used in this Agreement, the following capitalized terms have the meanings set forth below:


" Administrative Services" is defined in Section 4.1 .


" Affected Party" is defined in Section 12 .


" Affiliate" means, with respect to any legal entity, (a) any other legal entity directly or indirectly controlling, controlled by, or under common control with such legal entity and (b) any other legal entity under the joint control, directly or indirectly, of such legal entity. " Control" means the direct or indirect ownership of more than fifty percent (50%) of the outstanding capital stock or other equity interest having ordinary voting power or the power to direct the management or policies of a legal entity.


" Agreement" is defined in the preamble.


" Back-to-Back Transactions" means a transaction between OERI and a third party that is executed concurrently with a similar transaction between OERI and any member of the Enogex Group in order to facilitate such transaction between OERI and the member of the Enogex Group.


" Business Day" means any day on which Federal Reserve member banks in Oklahoma City, Oklahoma are open for business.


" Confidential Information" means, with respect to any member of the Enogex Group, any information regarding a member of the Enogex Group' s natural gas positions, natural gas liquids positions, trading positions, trading strategies, hedging strategies, and counterparties; and with respect to OERI, any information regarding OERI' s natural gas positions, natural gas liquids positions, trading positions, trading strategies, hedging strategies, and counterparties.


" Damages" is defined in Section 10.1 .


" Effective Date" is defined in the preamble.


" Enogex" is defined in the preamble.


" Enogex Group" means OGE Enogex GP LLC, OGE Enogex Partners L.P., Enogex Inc., their respective Subsidiaries, whether now existing or hereafter created or acquired, and their respective successors and assigns.


" Extension" is defined in Section 6.1.


" Financial Transaction" is defined in Section 2.2(c) .


" Fixed-Price Transaction" is defined in Section 2.2(b) .


" Force Majeure" means an event or circumstance that prevents a Party from performing its obligations under this Agreement, but only if the event or circumstance: is not within the reasonable control of the affected Party; is not the result of the fault or negligence of the affected Party; and could not, by the exercise of due diligence, have been overcome or avoided. " Force Majeure" excludes: lack of a market; unfavorable market conditions; and economic hardship.


" Implementation Agreements" means: the ISDA Master Agreement between Enogex and OERI, dated as of December 1, 1998, as amended or succeeded; the NAESB Base Contract for Sale and Purchase of Natural Gas between Enogex and OERI, dated as of November 8, 2007, as amended or succeeded; and any other ISDA Master Agreement, NAESB Base Contract for Sale and Purchase of Natural Gas, or similar agreement between OERI and any Enogex Group member.


" Indemnified Party" is defined in Section 10.4 .


" Indemnifying Party" is defined in Section 10.4 .


" Index Transaction" is defined in Section 2.2(a) .


" Initial Term" is defined in Section 6.1 .


" Law" means any and all applicable federal, state, and local codes, constitutions, decrees, directives, laws, licenses, ordinances, injunctions, orders, permits, regulations, requirements, rules, and statutes.


" Marketing Services" is defined in Section 2.1 .


" Mid-Market Price" means a price equal to the midpoint of the bid and ask prices on the relevant pricing index.


" OERI" is defined in the preamble.


" OGE" is defined in the recitals.


" Party" means either OERI or Enogex, and " Parties" means both OERI and Enogex.


" Subsidiary" means with respect to a corporation, limited liability company, partnership (whether general or limited), or other legal entity: (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such legal entity, by one or more Subsidiaries of such legal entity, or a combination


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thereof, (b) a partnership (whether general or limited) in which such legal entity or a Subsidiary of such legal entity is, at the date of determination, a general or limited partner of such partnership, but only if more than 50% of the partnership interests of such partnership (considering all of the partnership interests of the partnership as a single class) is owned, directly or indirectly, at the date of determination, by such legal entity, by one or more Subsidiaries of such legal entity, or a combination thereof, or (c) any legal entity (other than a corporation or a partnership) in which such legal entity, one or more Subsidiaries of such legal entity, or a combination thereof, directly or indirectly, at the date of determination, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election of a majority of the directors or other governing body of such legal entity.


2. Marketing Services .


2.1 Scope of Marketing Services . OERI will provide, or will cause to be provided, to the members of the Enogex Group, certain marketing hedging, and risk management services, such as (a) entering into transactions for the purchase and sale of natural gas, (b) entering into transactions for the hedging of natural gas and natural gas liquids positions, (c) preparing reports on natural gas and natural gas liquids markets and pricing, (d) performing price discovery for natural gas, natural gas liquids, and natural gas storage, and (e) maintaining and providing the Enogex Group with access to documentation regarding the foregoing services, that are substantially identical in nature and quality to the services of such type previously provided by or on behalf of OERI to the Enogex Group during the twelve (12) month period immediately preceding the Effective Date (" Marketing Services" ).


2.2 Transactions . Without limiting the foregoing, at any Enogex Group member' s request, OERI will enter into the following types of transactions as part of the Marketing Services:


a. Index Transactions . OERI will enter into transactions to purchase natural gas from, or to sell natural gas to, any member of the Enogex Group at a Mid-Market Price (" Index Transactions" ). OERI will be obligated to enter into an Index Transaction at an Enogex Group member' s reasonable request when an applicable index price and an applicable basis differential for natural gas is being traded for the applicable month of the transaction. OERI and the relevant Enogex Group member will document each Index Transaction in accordance with the applicable Implementation Agreement.


b. Fixed-Price Transactions . OERI will enter into transactions to purchase natural gas from, or to sell natural gas to, any member of the Enogex Group at a fixed price to be determined mutually at the time of the transaction (" Fixed-Price Transactions" ). OERI will use commercially reasonable efforts to enter into a Fixed-Price Transaction at an Enogex Group member' s request. OERI may execute a Back-to-Back Transaction concurrently with a Fixed-Price Transaction, and, if so, the price and other material terms and conditions of the Fixed-Price Transaction will correspond to such terms and conditions in the Back-to-Back Transaction. OERI and the relevant Enogex Group member will document each Fixed-Price Transaction in accordance with the applicable Implementation Agreement.


c. Financial Transactions . OERI will enter into financial and derivative transactions with any member of the Enogex Group to protect the Enogex Group against fluctuations in the price of natural gas and natural gas liquids (" Financial Transactions" ). OERI will use commercially reasonable efforts to enter into a Financial Transaction at an Enogex Group member' s request. OERI may execute a Back-to-Back Transaction concurrently with a Financial Transaction, and, if so, the material terms and conditions of the Financial Transaction will correspond to such terms and conditions in the Back-to-Back Transaction. OERI and the relevant Enogex Group member


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will document each Financial Transaction in accordance with the applicable Implementation Agreement.


2.3 Reports . Without limiting the foregoing, OERI will prepare and provide the Enogex Group the following reports as part of the Marketing Services:


a. Marks . On a weekly basis, OERI will prepare and provide the Enogex Group a written report on index marks and basis mark substantially identical in nature and quality to the report of such type provided by or on behalf of OERI to the Enogex Group during the twelve (12) month period immediately preceding the Effective Date. OERI will, upon reasonable request, prepare and provide verbal updates to such report.


b. Market View . On a monthly basis, OERI will prepare and provide the Enogex Group a written report on market view substantially identical in nature and quality to the report of such type provided by or on behalf of OERI to the Enogex Group during the twelve (12) month period immediately preceding the Effective Date. OERI will, upon reasonable request, prepare and provide verbal updates to such report.


c. Price Forecast . On a quarterly basis, OERI will prepare and provide the Enogex Group a report on price forecast substantially identical in nature and quality to the report of such type provided by or on behalf of OERI to the Enogex Group during the twelve (12) month period immediately preceding the Effective Date. OERI will, upon reasonable request, prepare and provide written updates to such report each month.


2.4 Compensation for Marketing Services . OERI will receive the following compensation from Enogex for the Marketing Services:


a. Reimbursement for Marketing Services . Enogex will reimburse OERI for all direct and indirect expenses and expenditures that OERI incurs or payments it makes on behalf of Enogex for the Marketing Services. For clarity, the reimbursement obligation in this Section 2.4(a) excludes expenses and expenditures for the Credit Support Services provided pursuant to Section 3 but includes general and administrative expenses.


b. Mid-Point Price Risk . Enogex will pay OERI a fee of $0.02 per MMBtu of natural gas that OERI sells to or purchases from any member the Enogex Group at a Mid-Market Price.


2.5 Standards of Performance for Marketing Services . OE
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