Opinion
Case No. 01-16034 (AJG) Jointly Administered
April 7, 2003
Edward A. Smith and Evan R. Fleck and Mark C. Ellenberg, CADWALADER, WICKERSHAM TAFT LLP, Special Counsel to the Debtors.
Thomas Rice, COX SMITH INCORPORATED, Attorneys for Diamond Shamrock Refining Company, L.P.
STIPULATION AND ORDER REGARDING RIGHT OF DIAMOND SHAMROCK REFINING COMPANY, L.P. TO EXERCISE RIGHT OF OFFSET AGAINST ENRON RESERVE ACQUISITION CORP.
WHEREAS, prior to May 16, 2002 (the "Petition Date"), Diamond Shamrock Refining Company, L.P. ("Diamond") and Enron Reserve Acquisition Corp. ("ERAC", and collectively with Diamond, the "Parties") entered into the following transactions (the "Transactions") relating to the purchase and sale of domestic sweet crude oil:
November 2001
(1) ERAC Contract No. YE2996 (Diamond Contract No. 01-1236), Diamond purchased product from ERAC for a purchase price of $759,500 (Transaction No. C22512);
(2) ERAC Contract No. YC1852 (Diamond Contract No. 01-1202), Diamond sold product to ERAC for a purchase price of $7,507,500 (Transaction No. C22314);
(3) ERAC Contract No. YE3079 (Diamond Contract No. 01-1231), Diamond purchased product from ERAC for a purchase price of $7,616,000;December 2001
(4) ERAC Contract No. YE2996 (Diamond Contract No. 01-1236), Diamond sold product to ERAC for a purchase price of $766,850.00 (Transaction No. C22513);
(5) ERAC Contract No. YC1852 (Diamond Contract No. 01-1202), Diamond purchased product from ERAC for a purchase price of $7,612,500.00 (Transaction No. C22315);
(6) ERAC Contract No. YJ7236 (Diamond Contract No. 01-1290), Diamond sold product to ERAC for a purchase price of $5,701,500 (Transaction No. C22872);January 2002
(7) ERAC Contract No. YJ7236 (Diamond Contract No. 01-1290), Diamond purchased product from ERAC for a purchase price of $5,789,700 (Transaction No. C22873); and
(8) ERAC Contract No. YM0853 (Diamond Contract No. 02-0017), Diamond sold product to ERAC for a purchase price of $5,906,250 (Transaction No. C23198).
WHEREAS, ERAC issued invoices to Diamond with respect to certain amounts owing from Diamond to ERAC in connection with the Transactions;
WHEREAS, under ERAC Invoice No. ENN959, dated November 15, 2001, ERAC billed Diamond $868,000;
WHEREAS, under ERAC Invoice No. ENN1007, dated December 15, 2001, ERAC billed Diamond $1,144,150;
WHEREAS, the Parties have agreed that certain amounts due under the Transactions were not reflected on any invoice and that ERAC owes Diamond $116,550 for such amounts;
WHEREAS, Diamond has asserted the right to setoff the $116,550 owing from ERAC to Diamond against the $2,012,150 owed from Diamond to ERAC under Invoice No. ENN959 and Invoice No. ENN1007; and
WHEREAS, ERAC and Diamond wish to resolve the issues addressed in this Stipulation and Order without the cost and expense of litigation.
NOW THEREFORE, ERAC and Diamond hereby stipulate and agree that:
1. Diamond may offset the $116,550 owing from ERAC to Diamond against the $2,012,150 owed from Diamond to ERAC under Invoice No. ENN959 and Invoice No. ENN1007.
2. Within five (5) business days from the date the Court enters this Stipulation and Order on the docket, Diamond shall pay $1,895,600 to ERAC in full and complete satisfaction of all sums due from Diamond under Invoice No. ENN959 and Invoice No. ENN1007 and no further amounts shall be due and owing to either of the Parties under the Transactions.
3. To the extent Diamond has filed any proofs of claims related to the Transactions in the Bankruptcy Court, Diamond agrees that it shall (i) withdraw such proofs of claim (or portions thereof) within five (5) business days from the date the Court enters this Stipulation and (ii) furnish ERAC with appropriate documentation reflecting such withdrawal.
4. Except as expressly provided herein, the parties reserve all of their respective rights, claims and defenses.
5. To facilitate execution, this Stipulation and Order may be executed in as many counterparts as may be convenient or required. Facsimile signatures shall be binding to the same effect as originals.
6. Diamond shall make the payments required hereunder by wire transfer to:
Citibank N.A. — New York, N.Y. Account #30420778 ABA #021000089.
7. ERAC shall obtain the written consent of the Official Committee of Unsecured Creditors in these cases (the "Creditors' Committee") prior to the execution of any modification, alteration, amendment, waiver or supplement of this stipulation and order, which shall not be unreasonably withheld; provided, however, that any such modification, alteration, amendment, waiver or supplement is neither material nor changes the economic substance of the transactions contemplated in this stipulation and order.
8. Except to the extent required to repay the DIP Obligations pursuant to and in accordance with the Final Order and the Documents, all proceeds received by ERAC in connection with this stipulation and order shall be retained by and neither disbursed nor used until the earlier to occur of (i) agreement by and between the ERAC and the Creditors' Committee with respect to the release of such proceeds and (ii) further order of this Court.
Capitalized terms used in this paragraph and not defined herein or in the Motion shall have the meanings ascribed to them in the Final Order Authorizing Debtors to Obtain Post-Petition Financing Pursuant to 111 U.S.C. § 105, 361, 362, 364(c)(2), 364(c)(3) and 364(d)(1) dated July 2, 2002 (the "Final Order").
IT IS SO ORDERED: