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SERVICES AGREEMENT
This Services Agreement (this "Agreement") is entered into effective
as of July 31, 2000 ("Effective Date"), among The New Power Company, a
Delaware corporation ("New Power"), Columbia Energy Services Corporation, a
Kentucky corporation ("CES"), Columbia Energy Retail Corporation, a Delaware
corporation ("CERC"), and Columbia Energy Power Marketing Corporation, a
Delaware corporation ("CPMC") (each of CES, CERC and CPMC, a "Seller," and
collectively the "Sellers").
WITNESSETH:
WHEREAS, New Power, TNPC, Inc. and the Sellers have entered into
that certain Asset Purchase Agreement dated as of June 29, 2000 ("Purchase
Agreement"); and
WHEREAS, in order to permit New Power to effect an efficient
transition of the control of the Second Closing Assets (as defined in the
Purchase Agreement) and to ensure a smooth transition of customers covered by
the Second Closing, New Power has agreed to provide certain services to the
Sellers on the terms and conditions set forth herein;
NOW, THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, and in consideration of the premises and mutual
covenants contained herein, New Power and the Sellers agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. All capitalized terms not defined herein shall have
the meanings given such terms in the Purchase Agreement. The following
capitalized terms shall be used in this Agreement with the meanings set forth
in this Section 1.1:
"DISPUTED CLAIMS" has the meaning set forth in Article 10 of this
Agreement.
"DISPUTE DEADLINE DATE" has the meaning set forth in Section 2.6(c)
of this Agreement.
"EFFECTIVE DATE" has the meaning set forth in the introduction to
this Agreement.
"FORWARD TRANSACTIONS" shall mean all forward term physical supply,
transportation capacity and storage transactions of at least 30 days in
nature entered into by New Power after the Closing Date, in connection with
its provision of Risk Management Consulting Services pursuant to SCHEDULE I
and in anticipation of becoming the Service Provider for the Second Closing
Customers.
"NEW POWER REPRESENTATIVE" has the meaning set forth in Section 4.3
of this Agreement.
"PRIME RATE" shall mean, as of any date of determination, the
interest rate published by The Wall Street Journal, Eastern Edition, on such
day in its Money Rates section as the "Prime Rate";
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PROVIDED that if no such rate is published on that day the interest rate
published on the preceding day shall apply.
"REGULATORY CONSULTING SERVICES" are those services listed on
Schedule I relating to assets over which FERC or a PUC has jurisdiction
pursuant to Applicable Law or assets over which utility tariff provisions
apply.
"REIMBURSEMENT AMOUNT" has the meaning set forth in Section 2.6(a)
of this Agreement.
"REIMBURSEMENT AMOUNT STATEMENT" has the meaning set forth in
Section 2.6(c) to this Agreement.
"RISK MANAGEMENT CONSULTING SERVICES" means the services listed on
Schedule I as Risk Management Consulting Services.
"SECOND CLOSING CUSTOMERS" means those Mass Markets Customers
included in the Second Closing Assets.
"SECOND CLOSING DATE" means the date on which the Second Closing
occurs.
"SECOND CLOSING DROP-DEAD DATE" means January 31, 2001.
"SELLERS REPRESENTATIVE" has the meaning set forth in Section 4.3 of
this Agreement.
"SERVICES" means the services described on the attached SCHEDULE I
provided by New Power to the Sellers in accordance with the terms of this
Agreement.
"SERVICES HEDGES" shall mean all non-physical and financial
transactions with third parties to hedge or fix natural gas or electricity
supply costs entered into by New Power after the Closing Date, in connection
with its supply of natural gas and electricity pursuant to SCHEDULE I and in
anticipation of becoming the Service Provider for the Second Closing
Customers.
"TAXES" any transactional tax imposed on the Sellers with respect to
a customer transaction whether separately stated on the invoice or included
as part of the commodity or transportation charge as currently imposed or
which become effective during the term of this Agreement. Taxes does not
include taxes based on or measured by the net income of the Sellers, but does
include sales and use tax, gross receipts tax, utility excise taxes, energy
taxes and other similar levies.
"TERM" shall have the meaning set forth in Section 3.1.
ARTICLE 2
SERVICES
2.1 SERVICES. Subject to the terms and conditions of this Agreement,
the Sellers hereby engage New Power as set forth below, on an exclusive
basis, to provide the Services with respect to the Second Closing Assets;
provided that (i) New Power shall not have control or decision making
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authority over any of the Sellers' facilities that are subject to the
jurisdiction of FERC or any PUC; (ii) all Services and all transactions and
agreements that New Power enters into in providing the Services (whether in
its own name or in the Sellers' names) shall be performed on behalf of the
Sellers; (iii) in providing the Services, New Power shall not act for its own
account (notwithstanding that New Power may enter into transactions in its
own name on behalf of the Sellers) but shall be acting for the account of the
Sellers; and (iv) notwithstanding anything in this Agreement to the contrary,
New Power shall not be required to provide any Service or take any action
that would violate any Applicable Law or that is not directly related to
servicing of the Second Closing Assets. Nothing in this Agreement shall
prohibit New Power from entering into and consummating transactions for its
own account or for the account of third parties and not related to the
provision of the Services.
2.2 CHANGE IN THE SCOPE OF SERVICES. The occurrence of (a) any event
or transaction (other than events or transactions that are contemplated under
the Purchase Agreement, including the addition of customers in the current
Jurisdiction), or (b) any change in any Applicable Laws that in either case
(i) expands the scope of the Services beyond those related to the Second
Closing Assets or (ii) prohibits or materially impairs New Power from
providing the Services shall be considered a change in the scope of services,
and upon such changes in the scope of services, New Power and the Sellers
shall promptly meet to negotiate and execute an equitable adjustment to the
terms of this Agreement. Until the adjustment of the terms (including
possibly payments) in connection with such change is agreed upon by the
parties in writing, New Power shall have no obligation to provide any
Services beyond the scope of services that was in effect under this Agreement
prior to any change of the type described in the first sentence of this
Section 2.2, except to the extent that the failure of New Power to provide
any such Services would result in a violation or breach of Applicable Laws by
either New Power or the Sellers.
2.3 ACCESS TO INFORMATION. The Sellers shall provide New Power with
access to any information pertaining to the Sellers business that is
necessary or appropriate to New Power's performance of its obligations under
this Agreement. The Sellers hereby grants to New Power a non-transferable,
royalty-free license to use the intellectual property of the Sellers solely
for the limited purposes of providing the Services and the performance of New
Power's obligations under this Agreement; provided that such license shall
terminate upon the termination of all of the Services to be provided under
this Agreement. New Power shall protect and shall cause its representatives
to protect any information it receives pursuant to this Section 2.3 from
disclosure to others, using the same degree of care used to protect its own
confidential or proprietary information of like importance but in any case
using no less than a reasonable degree of care.
2.4 SEPARATE BOOKS. New Power and the Sellers each agree to maintain
such books and records with respect to the Services provided by New Power to
the Sellers as are necessary or appropriate to fulfill their respective
responsibilities under this Agreement and to comply with Applicable Law. The
Sellers and New Power shall each have the right, during normal business
hours, to inspect any and all such books and records of the other party to
the extent necessary to substantiate the provision of such Services; provided
that in no event shall the Sellers have the right to inspect or review (a)
New Power's valuation of the Sellers' commodity positions; (b) New Power's
analysis of forward pricing curves; or (c) any other proprietary information
used to prepare commodity or customer pricing.
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2.5 SERVICES LIMITED TO THE SELLERS. The Sellers shall not
subcontract, sublicense or resell any Service provided hereunder to any other
Person. New Power shall not be restricted in any manner whatsoever from
providing any services to other Persons which are the same as, similar to or
different from the Services provided to the Sellers pursuant to this
Agreement; PROVIDED, HOWEVER, that New Power shall protect and shall cause
its representatives to protect any information from disclosure to others,
using the same degree of care used to protect its own confidential or
proprietary information of like importance but in any case using no less than
a reasonable degree of care.
2.6 REIMBURSEMENT AMOUNT.
(a) In accordance with Section 2.6(b) below, the Sellers shall
pay to New Power as sole consideration for the provision of services
(except as provided in Schedule I, Section VI) the amount
("Reimbursement Amount") equal to (i) the gross amounts received by the
Sellers in payment of amounts billed Second Closing Customers under
Specified Contracts less (ii) any Taxes payable by the Sellers with
respect to such receipts.
(b) The Reimbursement Amount shall be paid by the Sellers to
New Power on or before the 15th day and last day of each calendar month
during the Term. All such payments shall be made by wire transfer to
the bank account (and in accordance with the wire transfer
instructions) set forth on Schedule 2.6 hereto or to such other account
designated by New Power pursuant to Article 9 hereof.
(c) As promptly as practicable after the termination of the
Term pursuant to clause (ii) or clause (iii) of Section 3.1 (after
giving effect to the extension of the Term, if any provided in Section
3.1) and in any event not later than 15 days after such termination,
the Sellers shall deliver to New Power (i) a statement of the
Reimbursement Amount ("Reimbursement Amount Statement") showing in
reasonable detail the calculation of the Reimbursement Amount. The
Reimbursement Amount Statement shall become final and binding on the
Sellers and New Power as to the Reimbursement Amount on the 30th day
following the date the Reimbursement Amount Statement is received by
New Power (the "Dispute Deadline Date"), unless prior to the Dispute
Deadline Date New Power delivers notice to the Sellers of its
disagreement. All undisputed amounts shall be due and payable on the
Dispute Deadline Date. New Power's notice shall set forth all of New
Power's disputed items together with New Power's proposed changes
thereto, including an explanation in reasonable detail of the basis on
which New Power proposes such changes. If New Power has delivered a
timely notice of the disputed amount, then New Power and the Sellers
shall use their good faith efforts to reach written agreement on the
disputed items to determine the disputed Reimbursement Amount. If New
Power and the Sellers are unable to reach such an agreement, then the
matter shall be resolved in accordance with the terms of Article 10.
Upon resolution of any dispute, the Sellers shall pay any amount due
plus interest on such amount from the original due date until the date
paid at the Prime Rate.
2.7 RISK MANAGEMENT CONSULTING SERVICES. All Risk Management Consulting
Services shall be provided on a consulting basis only, and New Power shall have
no obligation for the underlying position, if any, taken by the Sellers with
respect to the Risk Management Consulting Services or otherwise, or from
consequences from the Sellers' implementation of any recommendations by New
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Power. New Power shall not be required to register as a commodities trading
advisor or obtain any other registrations or qualifications in order to
provide any Risk Management Consulting Services, and such Services may be
limited in that regard.
2.8 FORWARD TRANSACTIONS. In the event the Term terminates pursuant
to clause (ii) or (iii) of Section 3.1 hereof or this Agreement is terminated
pursuant to Article 7 hereof, New Power shall promptly elect by written
notice for the parties to undertake one of the following: (i)(A) New Power
shall assign and the Sellers shall assume New Power's position under all
Forward Transactions (or, if the Closing shall occur but not the Second
Closing, the Forward Transactions relating to any Delay Closing Assets and
Delay Closing Liabilities not transferred to and assumed by New Power as of
the effective date of termination of this Agreement and the Second Closing
Assets and Second Closing Liabilities), and (B) the Sellers shall pay to New
Power, New Power's costs under all Forward Transactions (or, if the Closing
shall occur but not the Second Closing, the Forward Transactions relating to
any Delay Closing Assets and Delay Closing Liabilities not transferred to and
assumed by the New Power as of the effective date of termination of this
Agreement and the Second Closing Assets and Second Closing Liabilities) or
(ii) the Sellers shall pay to New Power or New Power shall pay to the
Sellers, as applicable, an amount which would have had the same economic
consequences to the Sellers had the transactions contemplated by the
preceding clause (i)(A) been consummated; PROVIDED, HOWEVER, in any event
that the Forward Transactions entered into by New Power after the Closing
Date shall be entered into in good faith and shall be entered into on
commercially reasonable terms and conditions.
2.9 HEDGES. In the event the Term terminates pursuant to clause (ii)
or (iii) of Section 3.1 hereof or this Agreement is terminated pursuant to
Article 7 hereof, New Power shall promptly elect by written notice for the
parties to undertake one of the following: (i)(A) New Power shall assign and
the Sellers shall assume New Power's position under all Service Hedges (or,
if the Closing shall occur but not the Second Closing, the Service Hedges
relating to any Delay Closing Assets and Delay Closing Liabilities not
transferred to and assumed by New Power as of the effective date of
termination of this Agreement and the Second Closing Assets and Second
Closing Liabilities), and (B) the Sellers shall pay to New Power, New Power's
costs under all Service Hedges (or, if the Closing shall occur but not the
Second Closing, the Service Hedges relating to any Delay Closing Assets and
Delay Closing Liabilities not transferred to and assumed by the New Power as
of the effective date of termination of this Agreement and the Second Closing
Assets and Second Closing Liabilities) or (ii) the Sellers shall pay to New
Power or New Power shall pay to the Sellers, as applicable, an amount which
would have had the same economic consequences to the Sellers had the
transactions contemplated by the preceding clause (i)(A) been consummated;
PROVIDED, HOWEVER, in any event that the Service Hedges entered into by New
Power after the Closing Date shall be entered into in good faith and shall be
entered into on commercially reasonable terms and conditions.
2.10 CONFIDENTIALITY. In addition to any non-disclosure requirements
set forth in Section 2.3 above, each party hereby agrees that all non-public,
confidential or proprietary information communicated to it by the other
party, whether before or after the date of this Agreement, shall be and was
received in strict confidence, shall be used only for purposes of this
Agreement, and, for a period of two (2) years following the termination of
this Agreement, shall not be disclosed by such party, its agents or employees
without the prior written consent of the other party, except as may be
necessary by reason of legal, accounting or regulatory requirements beyond
the reasonable control of the disclosing party. The obligations set forth in
this Section shall survive termination of this
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Agreement. Each party agrees that this restriction shall not apply to any
information which is (1) independently developed by the receiving party or
(2) otherwise in such party's possession through no breach of this
restriction by the receiving party or (3) otherwise in the public domain.
ARTICLE 3
TERM
3.1 TERM. The respective Services to be provided under this
Agreement shall commence on the Closing Date and shall automatically
terminate without further action by any party (unless extended or sooner
terminated in writing) upon the earlier of (i) the Second Closing Date, (ii)
the termination of the Purchase Agreement or (iii) the Second Closing
Drop-Dead Date (the "Term").
3.2 TRANSITION SERVICES. If the Term shall terminate pursuant to
clause (ii) of Section 3.1, New Power shall continue to provide the Services
through the date 60 days after the effective date of termination. If the Term
shall terminate pursuant to clause (iii) of Section 3.1, New Power shall
continue to provide the Services through the date 60 days after the Second
Closing Drop-Dead Date.
ARTICLE 4
PERSONNEL
4.1 NEW POWER PERSONNEL. New Power shall provide all personnel
required and appropriate to render the Services in accordance with the
provisions of this Agreement. All personnel provided by New Power pursuant to
this Agreement shall be New Power's employees, contractors or agents, and in
no event shall such personnel be deemed employees of the Sellers. New Power
may provide Services using New Power's permanent employees, contract
employees or vendor employees as New Power shall deem appropriate for the
work being performed. New Power shall make all staffing decisions necessary
to perform the Services under this Agreement. Subject to the last two
sentences of Section 4.2, New Power reserves the right to assign all New
Power's personnel to perform the Services, and to replace or reassign such
New Power personnel at any time.
4.2 POLICIES AND PROCEDURES REGARDING NEW POWER PERSONNEL. New Power
shall have full control over and responsibility for the assignment and
performance of employees providing the Services to the Sellers and for the
terms and conditions of employment of such employees including hiring,
transferring, salary, wages, benefits, work, shift scheduling, disciplining
and all other matters related to terms and conditions of employment. New
Power shall comply with, and shall cause their respective employees to comply
with, the Sellers' policies and procedures applicable to such personnel in
connection with the performance of the Services. In the event any of New
Power's personnel fails or refuses to comply with any of the Sellers'
applicable policies or procedures and the Sellers determine in their
commercially reasonable judgment that such failure or refusal could have an
adverse effect on any Seller's business, the Sellers shall notify New Power
promptly of such determination. Thereafter, New Power and the Sellers agree
to consult regarding the reassignment or replacement of such New Power
personnel in order to assure compliance with the Sellers' applicable policies
and procedures in connection with the performance of the Services.
4.3 SELLERS AND NEW POWER REPRESENTATIVES. The Sellers will, at all
times when New Power is providing the Services, designate a representative or
representatives of the Sellers available either by telephone, pager or in
person to receive communications from New Power regarding the Services,
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as well as any other information. The initial representative of the Sellers
(the "Sellers Representative") is named in EXHIBIT A. The Sellers will vest
the Sellers Representative with sufficient responsibility and authority for
necessary decisions or expenditures to facilitate the timely, responsible and
effective rendering of the Services by New Power in accordance with the
provisions of this Agreement (including the primary responsibility and
authority to transact and interface on the Sellers' behalf with LDCs, PECO
and PUCs), and New Power will rely on the Sellers Representative having such
responsibility and authority. Similarly, New Power will, at all times when
New Power is providing the Services, designate a representative or
representatives of New Power available either by telephone, pager or in
person to receive communications from the Sellers regarding the Services, as
well as any other information. The initial New Power representative (the "New
Power Representative") is named in EXHIBIT A. New Power will vest the New
Power Representative with sufficient responsibility and authority for
necessary decisions or expenditures to facilitate the timely, responsible and
effective rendering of the Services by New Power in accordance with the
provisions of this Agreement, and the Sellers will rely on the New Power
Representative having such responsibility and authority.
ARTICLE 5
SELLERS' RESPONSIBILITIES
5.1 COOPERATION. The Sellers shall reasonably cooperate with New
Power by executing any documents, providing information and taking any
actions reasonably necessary to assist New Power with respect to the
provision of Services by New Power.
5.2 RESPONSIBILITIES OF THE SELLERS. The responsibilities and
obligations of the Sellers under and pursuant to this Agreement shall be the
following:
(a) LEGALITY AND LIABILITY OF TRANSACTIONS. The legality of
all transactions with third parties will remain the responsibility of
the Sellers, except for transactions entered into as a direct result of
decisions made solely by New Power without the knowledge of the Sellers
Representative. New Power and its Affiliates assume no responsibility
under this Agreement for performance either by third party suppliers of
goods and services to the Sellers or by the Sellers under contracts or
agreements, formal or informal, between the Sellers and third parties.
New Power and its Affiliates assume no liability under this Agreement
for the performance or quality of any product or service purchased on
behalf of the Sellers and the Sellers shall have no recourse under this
Agreement against New Power or its Affiliates with regard to such
products or services. The Sellers shall retain all legal or equitable
rights and remedies available to them as against any such third party.
(b) MANAGEMENT ACTION. Upon reasonable request, the Sellers
shall promptly make available to New Power copies of all management
decisions, instructions, approvals, acceptances and such other
information and assistance desired or required by New Power to perform
its obligations under this Agreement.
(c) TAXES AND INTEREST. The Sellers shall pay all taxes and
interest and file all necessary documentation and returns related to or
arising from the Sellers' transactions for which the Services are
performed. In addition, the Sellers shall be solely responsible for the
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payment of any taxes and duties, other than taxes due by New Power on
net income, based upon the facilities, assets, Services and/or products
provided by New Power or its Affiliates arising from this Agreement,
and the Sellers shall be solely responsible for preparing and filing
all documentation and returns related thereto.
(d) INTERNAL CONTROLS AND POLICIES. The Sellers shall be
solely responsible for establishing and maintaining effective internal
control, accounting systems and policies with regard to all the
Sellers' transactions executed in connection with or in performance of
the Services. The Sellers shall timely communicate such internal
controls and policies to New Power prior to performance of the Services
by New Power.
5.3 ACCESS. Consistent with the provisions contained in Section 7.10
of the Purchase Agreement and beginning on the Effective Date, (i) the
Sellers shall provide New Power with the use of, and with reasonable access
to, the Sellers' facilities as may be required by New Power to perform or to
prepare to perform the Services and (ii) the Sellers shall provide to New
Power the Data Center Services described in Schedule 7.10 of the Purchase
Agreement at the Sellers' facilities.
5.4 RISK OF LOSS. The Sellers shall bear all risk of loss arising
out of or resulting from (i) any transactions entered into by New Power on
behalf of the Sellers at the Sellers' written instruction that were
specifically opposed in writing by New Power; and (ii) any services, goods,
or products unrelated to the Services that are provided by the Sellers or any
third party.
ARTICLE 6
STANDARD OF CARE AND LIMITATION OF LIABILITY
6.1 STANDARD OF CARE AND DISCLAIMERS AS TO SERVICES. WITH RESPECT TO
ANY SERVICE PROVIDED HEREUNDER, EACH PARTY HERETO AGREES TO USE THE SAME DEGREE
OF CARE AS IT WOULD IN CONDUCTING SUCH SERVICES FOR ITS OWN ACCOUNT. OTHER THAN
AS EXPRESSLY SET FORTH IN THIS SECTION 6.1, EACH PARTY HERETO DISCLAIMS AND
NEGATES ANY GUARANTY OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED
TO, ANY WARRANTIES COVERING FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT,
OR OTHERWISE.
6.2 LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING CONTAINED TO THE
CONTRARY IN ANY PROVISION OF THIS AGREEMENT, THE PARTIES AGREE THAT THE RECOVERY
BY ANY PARTY HERETO OF ANY DAMAGES SUFFERED OR INCURRED BY IT AS A RESULT OF ANY
BREACH BY THE OTHER PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS
OR OBLIGATIONS OR ANY OTHER MATTER OR CLAIM UNDER THIS AGREEMENT SHALL BE
LIMITED TO THE ACTUAL DAMAGES SUFFERED OR INCURRED BY SUCH PARTY, AND IN NO
EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT,
CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES EXCEPT TO THE EXTENT SUCH
EXCLUDED DAMAGES CONSTITUTE PART OF A THIRD PARTY CLAIM SUFFERED OR INCURRED BY
A PARTY FOR WHICH SUCH PARTY IS ENTITLED TO INDEMNIFICATION HEREUNDER.
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ARTICLE 7
DEFAULT
7.1 DEFAULT BY SELLERS. The failure of the Sellers to perform or
observe any of their material obligations contained herein within 10 days
after written notice from New Power of such failure shall constitute an event
of default by Sellers hereunder. Upon receiving written notice of any
default, the Sellers will promptly use commercially reasonable efforts to
cure such default as soon as practicable if it is capable of being cured.
7.2 NEW POWER REMEDIES. Subject to the terms of this Agreement, New
Power shall have the right, immediately after the occurrence of an event of
default by the Sellers, to take the following actions, which are not
exclusive but are cumulative: (a) seek monetary damages; (b) invoke any
remedy allowed at law or in equity or otherwise; or (c) terminate this
Agreement. New Power hereby waives any and all claims against the officers,
directors, stockholders, employees, agents and representatives of the Sellers
for all claims arising from a default by the Sellers under this Agreement.
7.3 DEFAULT BY NEW POWER. The failure of New Power to perform or
observe any of its material obligations contained herein within 10 days after
written notice from Sellers of such failure shall constitute an event of
default hereunder. Upon receiving written notice of any default, New Power
will promptly use commercially reasonable efforts to cure such default as
soon as practicable if it is capable of being cured.
7.4 SELLERS' REMEDIES. Subject to the terms of this Agreement, the
Sellers shall have the right, immediately after the occurrence of an event of
default by New Power, to take the following actions, which are not exclusive
but are cumulative: (a) seek monetary damages; (b) invoke any remedy allowed
at law or in equity or otherwise; or (c) terminate this Agreement. The
Sellers hereby waives any and all claims against the officers, directors,
stockholders, employees, agents and representatives of New Power for all
claims arising from a default by New Power under this Agreement.
7.5 SURVIVAL. The provisions of Sections 2.10, 5.2(a) and (c),
Section 5.4 and Articles 6, 7, 8, and 10 hereof shall survive the termination
of this Agreement for any reason.
ARTICLE 8
INDEMNIFICATION
8.1 NEW POWER'S AGREEMENT TO INDEMNIFY. New Power shall defend,
indemnify and hold harmless the Sellers and the Sellers' Affiliates, and
their respective officers, directors, shareholders, employees, agents,
successors and permitted assigns ("Seller Indemnified Parties") from and
against any and all Claims that relate to or result from: (a) the negligence,
gross negligence, or willful misconduct of New Power or (b) New Power's
breach of or default under any provision of this Agreement except, in each
case, to the extent such Losses arise from or relate to any Seller's
negligence, gross negligence or willful misconduct. New Power shall reimburse
the Seller Indemnified Parties for any legal or other expenses reasonably
incurred by the Seller Indemnified Parties in connection with investigating
or defending any such claim as such expenses are incurred.
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8.2 SELLERS' AGREEMENT TO INDEMNIFY. The Sellers jointly and
severally shall defend, indemnify and hold harmless New Power, New Power's
Affiliates, and their respective officers, directors, shareholders,
employees, agents, successors and permitted assigns ("New Power Indemnified
Parties") from and against any and all Claims that relate to or result from:
(a) the negligence, gross negligence, or willful misconduct of any Seller or
(b) any Seller's breach of or default under any provision of this Agreement
except, in each case, to the extent such Losses arise from or relate to New
Power's negligence, gross negligence or willful misconduct. The Sellers shall
reimburse the New Power Indemnified Parties for any legal or other expenses
reasonably incurred by the New Power Indemnified parties in connection with
investigating or defending any such claim as such expenses are incurred.
8.3 Claim Notice.
(a) INDEMNIFIED PARTIES. As used in this Article, the term
"Indemnified Party" shall mean any Seller Indemnified Party or any New
Power Indemnified Party, as the case may be, which is asserting a claim
for indemnity hereunder. Any party against whom a claim for
indemnification is asserted by an Indemnified Party pursuant to this
Article is referred to herein as an "Indemnifying Party." In the event
that any Claims are asserted against or sought to be collected from an
Indemnified Party by a person who is not a Buyer Indemnified Party or a
Seller Indemnified Party (a "Third Party"), such Indemnified Party
shall give prompt notice to the Indemnifying Party of such event
("Claim Notice"). A Claim Notice shall specify, to the extent known by
the Indemnified Party, the nature of and specific basis for any Claims
or the nature of and specific basis of any suit, action, investigation
or proceeding set forth therein and the amount or the estimated amount
thereof to the extent then practicable. Any failure on the part of any
Indemnified Party promptly to provide a Claim Notice to the
Indemnifying Party shall relieve the Indemnifying Party of such party's
obligation under this Article only to the extent that the Indemnifying
Party shall have been prejudiced by the lack of timely and adequate
notice to the Indemnifying Party.
(b) NOTICE REQUIRED. The Indemnifying Party shall have 30 days
from the delivery or receipt of a Claim Notice ("Notice Period") to
notify the Indemnified Party (i) whether or not it disputes the
liability of the Indemnifying Party to the Indemnified Party hereunder
with respect to the Claims identified in the Claim Notice, and (ii)
whether or not it desires to assume the defense of the Third Party
Claim identified in the Claim Notice; provided, however, that any
Indemnified Party is hereby authorized during the Notice Period to file
any motion, answer or other pleading that shall be necessary or
appropriate to protect its interest or those of the Indemnifying Party.
In the event that the Indemnifying Party notifies the Indemnified Party
within the Notice Period that it desires to defend the Indemnified
Party against the Claims identified in the Claims Notice, the
Indemnifying Party shall have the right and obligation, at its sole
cost and expense, to defend with counsel of its own choosing by all
appropriate proceedings, which proceedings shall be properly and
diligently settled or prosecuted to a final non-appealable order of a
court of competent jurisdiction; provided, however, that (a) the
Indemnified Party shall at all times have the right, at its sole option
and expense, to employ separate counsel and to participate fully in the
defense, compromise or settlement thereof, and (b) if the Indemnifying
Party does not proceed diligently to defend the Claim within 30 days
after personal delivery or receipt of a Claim Notice, the Indem-
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nified Party shall have the right, but not the obligation, to undertake
the defense of any such Claim and the Indemnifying Party shall be bound
by any defense or settlement that the Indemnified Party may make as to
such Claim. Upon its assumption of the defense of any such Claim, the
Indemnifying Party shall have full control of such defense and
proceedings including any compromise or settlement thereof. If there is
more than one Indemnifying Party, then all Indemnifying Parties must
coordinate the defense of the Indemnified Party against any Claims so
as not adversely to affect the Indemnified Party's right to a proper
defense.
(c) COOPERATION. The parties agree reasonably to cooperate
with one another and their respective counsel in contesting and
defending any Claim by a Third Party (including granting reasonable
access to the pertinent books, records and personnel in their
possession or control, or in the possession or control of the Sellers)
or, if appropriate and related to the Claim in question, in making (i)
any counterclaim against the Third Party asserting the Claims, or (ii)
any cross complaint against any Person.
(d) NO SETTLEMENT. Notwithstanding anything in this Section to
the contrary, the Indemnifying Party shall not, without the written
consent of the Indemnified Party (i) settle or compromise any Claim or
consent to the entry of any judgment with respect to such Claim that
does not include as an unconditional term thereof the delivery by the
claimant or plaintiff to the Indemnified Party of a written release
from all liability in respect to such Claim, (ii) settle or compromise
any Claim in any manner that may materially and adversely affect the
Indemnified Party, or (iii) settle or compromise any Claim in a manner
that will require the Indemnified Party to pay any money.
(e) RIGHTS OF INDEMNIFIED PARTY TO DEFEND. If the Indemnifying
Party fails to notify the Indemnified Party within the Notice Period
that the Indemnifying Party elects to defend the Indemnified Party
pursuant to Section 8.3(b), or if the Indemnifying Party elects to
defend the Indemnified Party pursuant to Section 8.3(b), but fails
diligently and promptly to prosecute, defend or settle any Claim by a
Third Party, then the Indemnified Party shall have the right to defend,
or compromise and settle at the sole cost and expense of the
Indemnifying Party, such Claim by a Third Party by all appropriate
proceedings, which proceedings may be prosecuted by the Indemnified
Party to a final non-appealable order of a court of competent
jurisdiction or settled without the consent of the Indemnifying Party.
The Indemnified Party shall have full control of such defense and
proceedings.
(f) DIRECT CLAIMS. In the event any Indemnified Party should
have a Claim against any Indemnifying Party hereunder that does not
involve damages being asserted against or sought to be collected from
it by a Third Party, the Indemnified Party shall send a Claim Notice
containing the same type of information required by Section 8.3(a) with
respect to such Claim to the Indemnifying Party. If the Indemnifying
Party does not notify the Indemnified Party within the Notice Period
that it disputes such Claim, the amount of such damages shall be
conclusively deemed a liability of the Indemnifying Party hereunder.
<PAGE>
ARTICLE 9
NOTICES
Any notice, request, instruction, correspondence or other documents
required or permitted hereunder shall be made in accordance with Section 15.1 of
the Purchase Agreement.
ARTICLE 10
GOVERNING LAW; ARBITRATION
THIS AGREEMENT (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND
ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF DELAWARE, OTHER THAN THE CONFLICT OF LAWS RULES
THEREOF.
Except as specified in Section 2.6, any and all claims, counterclaims,
demands, cause of action, disputes, controversies, and other matters in question
arising under this Agreement or the alleged breach of any provision hereof (all
of which are referred to herein as "Disputed Claims"), whether such Disputed
Claims arise at law or in equity, under state or federal law, for damages or any
other relief, shall be resolved by binding arbitration in the manner set forth
in Article XIV of the Purchase Agreement.
ARTICLE 11
ASSIGNMENT
11.1 ASSIGNMENT. This Agreement and all of its provisions, rights and
obligations shall be binding upon and shall inure to the benefit of the parties
hereto and their respective permitted successors and assigns. This Agreement may
not be assigned (including by operation of law) by any party (other than an
assignment by New Power to any Affiliate thereof) without the prior written
consent of the other party, and any purported assignment (other than an
assignment by New Power to any Affiliate thereof), unless so consented to, shall
be void and without effect. Nothing herein express or implied is intended or
shall be construed to confer upon or to give anyone other than the parties
hereto and their respective permitted successors and assigns of any rights or
benefits under or by reason of this Agreement, and no other party shall have any
right to enforce any of the provisions of this Agreement.
ARTICLE 12
GENERAL
12.1 ENTIRE AGREEMENT. This Agreement and the Purchase Agreement
constitute the entire agreement between New Power and the Sellers with respect
to the subject matter hereof and supersedes all prior agreements and
understandings, whether oral or written, among the parties with respect to the
subject matter hereof. New Power makes no representations to the Sellers except
as expressly set forth herein.
12.2 FORCE MAJEURE. No party shall be liable for a delay in the
performance of its obligations and responsibilities under this Agreement due to
causes beyond its reasonable control,
<PAGE>
including, but not limited to, failures or delays in transportation or
communication, failures or substitutions of equipment, labor disputes,
accidents, fuel, raw materials or equipment or technical failures. The delayed
party shall take reasonable measures to notify the other party in writing of the
delay. The time for completion of any obligation to which this provision applies
shall be extended for a period equivalent to the delay, provided, however, that
no such extension of performance shall require New Power to provide the Services
to the Sellers beyond the Term.
12.3 WAIVER. This Agreement may be amended, superseded, canceled,
renewed or extended only by a written instrument signed by the parties hereto.
The provisions hereof may only be waived in writing by the parties hereto. No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege. Except as
otherwise provided herein, the rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity.
12.4 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall continue in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term,
provision, covenant or restriction is invalid, void or unenforceable, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.
12.5 HEADINGS. Section headings are for reference purposes only and
shall not control or alter the meaning of this Agreement as set forth in the
text.
12.6 RELATIONSHIP OF PARTIES. In the performance of the Services
hereunder, New Power will at all times be an independent contractor, and nothing
in this Agreement shall constitute, nor be deemed to constitute, a joint
venture, partnership, agency, or employer/employee relationship between the
parties. The Sellers expressly acknowledge that New Power is not acting as a
fiduciary for the Sellers in respect of its performance under this Agreement or
in the activities or obligations contemplated hereunder.
12.7 NO THIRD PARTY BENEFICIARIES. The Agreement has been entered into
for the sole benefit of the Sellers and New Power, and in no event shall any
third party beneficiaries be created thereby.
(SIGNATURE PAGE FOLLOWS)
* * * * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Services
Agreement as of the day and year indicated above.
THE NEW POWER COMPANY COLUMBIA ENERGY SERVICES
CORPORATION
By: /s/ KATHLEEN E. MAGRUDER By: /s/ DENNIS A. PICK
--------------------------------- -------------------------------------
Name: Kathleen E. Magruder Name: Dennis A. Pick
------------------------------- -----------------------------------
Title: Vice President, Govt Affairs Title: SVP
------------------------------ ----------------------------------
COLUMBIA ENERGY RETAIL
CORPORATION
By: /s/ DENNIS A. PICK
-------------------------------------
Name: Dennis A. Pick
-----------------------------------
Title: SVP
----------------------------------
COLUMBIA ENERGY POWER
MARKETING CORPORATION
By: /s/ DENNIS A. PICK
-------------------------------------
Name: Dennis A. Pick
-----------------------------------
Title: SVP
----------------------------------
<PAGE>
EXHIBIT A
Representatives
The Initial Sellers Representative:
Name: Dennis A. Pick
Title: CFO
Phone: (703) 561-6465
Pager: (703) 919-2542
Initial New Power Representative:
Name: Timothy L. Ray
Title: Director, Risk Management
Phone: (713) 853-9475
Pager: (888) 620-2348
<PAGE>
SCHEDULE I
DESCRIPTION OF SERVICES
I. PERSONNEL SUPERVISION SERVICES
SERVICES: New Power will provide day-to-day instruction to the
Sellers' employees and will supervise the contractors
listed on APPENDIX A attached hereto with respect to
the operational functions listed on APPENDIX A.
SELLERS RESPONSIBILITIES - To the extent such
employees are still under employment with Sellers,
Sellers shall make available the employees listed on
Appendix A in accordance with Section 7.10(A) of the
Purchase Agreement while maintaining ultimate control
and supervision of such employees. Except for cause,
Sellers shall not terminate such employees any
earlier than thirty (30) days after the Closing.
II. REGULATORY CONSULTING SERVICES
SERVICES: New Power will prepare the following reports to the
extent such reports are applicable to the Second
Closing Assets:
1. Georgia Public Service Commission (GPSC)
New Power will prepare the monthly report to
be filed with the GPSC on or before the 20th
day of each month, providing the following
data for the proceeding month: composite
sales volume and average revenue data by
type of customer and delivery group; number
of residential customers; number of
commercial customers; total number of
customers; therms delivered to commercial
customers; total therms delivered in firm
service to customers; total therms purchased
from suppliers for firm customer demands.
New Power will prepare the monthly report to
be filed with the GPSC by the 5th of the
current month, providing the Sellers'
standard fixed offer and standard variable
offer for residential customers, which will
include the cost per therm for the commodity
and upstream capacity charges, and AGL's
base charge, Sellers' customer service
charge, and any other charges to be included
in the offers.
New Power will be responsible for notifying
customers each quarter of Sellers' complaint
procedures.
-1-
<PAGE>
2. Pennsylvania Public Utility Commission
(PPUC)
New Power will prepare the level of gross
receipts quarterly report to be filed with
the PPUC within 30 days following the end of
the quarter, and will prepare any other
periodic reporting requirements as may be
issued by the PPUC.
New Power will maintain the data to be
submitted in the annual report due on or
before April 30 each year
3. New Jersey Board of Public Utilities
New Power will maintain the summary records
related to energy contracts or transactions
entered into with New Jersey customers or
services provided by Sellers to New Jersey
customers. New Power will maintain a record
of customer complaints and resolution
thereof.
4. New Power will prepare any similar reports
requiring assimilation and accumulation of
customer and/or commodity data that may
become the subject of filing requirements
pursuant to regulatory determination in any
Jurisdiction in which Sellers retain
customers and/or pursuant to any federal
authority such as FERC.
SELLERS' RESPONSIBILITIES - Sellers will be
responsible for filing the foregoing reports with the
appropriate authorities and will make all such
filings on their own letterhead.
III. RISK MANAGEMENT CONSULTING SERVICES
SERVICES:
A. PRICING OF RETENTION CUSTOMERS: New Power will maintain the
existing Sellers models, or utilize new models at New Power's
sole discretion, in order to provide forward price
determination for customer retention. The pricing will include
the determination of margin adders pursuant to market
conditions and competitor pricing.
SELLERS' RESPONSIBILITIES - The Sellers will make available
all existing pricing models that they utilize in the
performance of customer retention pricing. In addition, to the
extent the Sellers' personnel are or become aware of or have
access to such information, the Sellers will provide input
related to any regulatory, tariff or competitive market
related information that may have a material impact on forward
market pricing. This information will be provided as it
becomes available.
B. SUPPLY, CAPACITY AND STORAGE TRANSACTION EXECUTION: - New
Power will complete, on behalf of the Sellers, all forward
term physical supply, transportation capacity and
<PAGE>
storage transactions that it deems necessary, in light of
market conditions and customer demand requirements, in order
to provide the required level of delivery service reliability,
manage the existing open position risk and operate within
utility tariff guidelines. New Power will take title in its
name for all completed transactions upstream of and at the
citygate, and New Power will make wholesale resales to the
Sellers at the applicable LDC citygate at no additional cost
to the Sellers above the Reimbursement Amount. The parties
acknowledge and agree that Sellers will have fully satisfied
any reimbursement requirements with respect to New Power for
all costs incurred by New Power in connection with this
Section III(B) upon payment of the Reimbursement Amount.
SELLERS' RESPONSIBILITIES -To the extent the Sellers'
personnel have or gain such knowledge, the Sellers will
provide pipeline/utility systems and competitive market
knowledge, as requested by New Power, to incorporate into the
decision making process. THE SELLERS WILL PROVIDE, TO THE
EXTENT EXISTING AS OF THE EFFECTIVE DATE, SOFTWARE ACCESS TO
SYSTEM EBB'S IN ORDER TO EXECUTE TRANSACTIONS.
C. SUPPLY PLANNING, SPOT TRANSACTIONS, DAILY SCHEDULING AND
SETTLEMENT SERVICES: New Power will complete all daily spot
purchases and sales necessary in order to meet the balancing
requirements of the applicable utility systems. New Power will
take title in its name for all completed transactions upstream
of and at the citygate, and New Power will make wholesale
resales to the Company at the applicable LDC citygate at no
additional cost to the Sellers above the Reimbursement Amount.
The parties acknowledge and agree that Sellers will have fully
satisfied any reimbursement requirements with respect to New
Power for all costs incurred by New Power in connection with
this Section III(C) upon payment of the Reimbursement Amount.
Pursuant to the daily transaction execution, New Power will
complete all utility scheduling requirements inclusive of
storage and imbalance. New Power will coordinate pipeline
contract confirmation with upstream suppliers. New Power will
provide all GMS data entry and maintenance in support the
daily scheduling. In conjunction with daily scheduling
activity, New Power will complete all imbalance trading,
cash-outs and other imbalance settlements. Pursuant to the
above service, New Power will make monthly and daily
determinations on the amount and timing of supply purchases
and applicable wholesale sales, as necessary, in order to
maintain the lowest economic supply cost.
D. ENERGY ACCOUNTING - INVOICE PROCESSING, PAYMENTS, CONTRACT
CONFIRMATIONS AND ACTUALIZATIONS: New Power will complete the
processing and verification of all third party supply and
utility based invoicing. Utility based invoicing will include
all interstate pipeline and LDC invoices rendered for
commodity services. New Power will confirm the accuracy of all
invoices against third party imbalance and/or allocation
statements and generate payments to the vendor within the
prescribed time limits of the underlying contract(s) or
utility tariff(s). Where applicable, New Power will process
invoices to third parties for wholesale sales conducted in the
open market to comply with balancing requirements. Pursuant to
settlement payments and invoicing, New Power will verify,
process and execute all transactional
<PAGE>
confirmations received from third parties. Where applicable,
New Power will generate and send transactional confirmations
subject to contract requirements.
IV. CUSTOMER SERVICES
SERVICES: New Power shall provide (a) customer service
functions to the extent that they are legally
required or contractually required and are currently
being provided by Sellers and to the extent that new
customer service functions may become required
pursuant to regulatory directive and (b) to the
extent such services are provided by contractors
listed on APPENDIX A, supervise such contractors with
respect to customer service functions, except to the
extent that the failure of the Sellers to provide the
information described below prohibits New Power from
providing the Services described in clauses (a) and
(b) above. Customer service functions include, but
are not limited to, customer awareness and education,
customer enrollment, customer literature services,
general customer care services, customer data and
record maintenance, customer complaint resolution,
and customer cancellation and movement services.
SELLERS' RESPONSIBILITIES - Seller will provide New
Power with all relevant customer service-related
information furnished or made available to the
Sellers by LDCs, utilities and contractors or through
the Sellers' own activities.
V. REVENUE MANAGEMENT SERVICES
SERVICES:
A. CUSTOMER BILLING: - New Power will provide billing services
for Sellers customers as required within the applicable
utility and LDC territories as applicable, except to the
extent that the failure of the Sellers to provide the
information described below prohibits New Power from providing
the Services described herein. Billing models utilized will be
consistent with those previously utilized by the Sellers in
each specific territory (i.e., UDC/LDC consolidated, ESP
consolidated, dual billing etc.) This service will include:
1. Usage Management - New Power will collect
customer usage data from applicable utility
territories via EDI transaction processes
currently in place within the Sellers
operation.
2. Billing Calculation - Billing calculations
to derive applicable customer charges will
be performed by New Power consistent with
those processes previously in use within
Sellers operations. Bills will contain
utility charges (distribution and
transportation) and energy consumption
charges plus appropriate taxes.
<PAGE>
3. Bill Printing & Distribution - New Power
will provide services to manage the bill
print and distribution process including the
management of the bill print vendor
currently under contract (SFI Incorporated).
SELLERS RESPONSIBILITIES -Sellers will provide New
Power with all relevant customer billing-related
information furnished or made available to the
Sellers by LDCs, utilities and contractors or through
the Sellers' own activities.
B. Customer Remittance and Collections - New Power will manage
the customer remittance and collection processes, except to
the extent that the failure of the Sellers to provide the
information described below prohibits New Power from providing
the Services described herein. This will include, but not be
limited to, management of the lock box and automatic bank
draft (ACH) processes, manual payment processing, exception
processing, as appropriate to customer accounts and coordinate
with the customer care channel to accomplish collection
activities as necessary and consistent with New Power credit
and collection policies.
SELLERS RESPONSIBILITIES -Sellers will provide New
Power with all relevant customer remittance and
collection-related information furnished or made
available to the Sellers by LDCs, utilities and
contractors or through the Sellers' own activities.
VI. MISCELLANEOUS REPORTS
Unless otherwise provided for elsewhere in the Agreement, New Power agrees to
deliver specific reports reasonably required by Sellers, subject to the mutual
agreement of the parties regarding the costs to the Sellers for the development
and delivery of such reports. To the extent any report relates to the period
following the Closing, New Power shall bear the cost thereof; otherwise, the
cost of all reports shall be borne by the Sellers.
