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Drew, I wanted you to be aware of a potential dispute with regard to our consultant, Mark Baldwin of IGS. Our consulting agreement with IGS (which has now terminated) provided for a flat fee, plus an incentive fee calculated using the net present value of any contract "identified by IGS" and entered into during the term of the consulting agreement. During the term of the agreement, TW entered into its Gallup Expansion agreement with Southern. IGS is now claiming it brought in the deal and so is entitled to an incentive fee. While it is undisputed that Mark discussed the deal with Southern, Southern was also on Lorraine's list of shippers to contact for Gallup Expansion capacity. Also, the capacity was posted for all to see. So, while Mark can certainly claim he "identified" the deal, he was not alone in doing so. Steve is going to call Mark in response to his letter (after he talks to Lorraine to verify facts). Our thinking is that if we offer IGS some money they will be happy. We would really like to preserve what has been a good working relationship with this consultant. On the other hand, I think we could probably take the position that they are not entitled to any incentive fee. However, since the contract is silent as to whether IGS has to be the only party bringing in the deal in order to qualify for the incentive fee, this position is not as strong as I'd like it to be, and IGS might sue TW. The amount in dispute could be as much as $200,000, depending on what rate we use in calculating net present value. If you have any problem with our offering to pay part of the incentive fee to IGS, let me know. I think it will be very important for Steve not to admit that Mark helped in any way in getting the deal -- just in case they do

Subject Line:
contract issue