MASTER SERVICES AGREEMENT
This Master Services Agreement (this "Agreement") is entered into
effective as of January 6, 2000 ("Effective Date"), among Enron Energy
Services, LLC, a Delaware limited liability company ("EES"), Enron Corp., an
Oregon corporation ("Enron"), and EMW Energy Services Corp., a Delaware
corporation (the "Company").
WITNESSETH:
WHEREAS, EES, the Company and certain other persons have entered
into that certain Contribution and Subscription Agreement, dated as of
December 23, 1999; and
WHEREAS, in order to permit the Company an opportunity to develop
internally its own services capability, EES and Enron (collectively the
"Service Providers") have agreed to provide certain services to the Company
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, EES, Enron and the Company agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. The following capitalized terms shall be used in
this Agreement with the meanings set forth in this Section 1.1:
"ADMINISTRATIVE SERVICES" means those administrative services
performed by the Dedicated Personnel in support of the Company's business.
"BASELINE REPORTING SERVICES" means those services that EGA, in its
normal course of business, provides in support of Enron's market
liberalization agenda, including monitoring and reporting on state-by-state
restructuring within the natural gas and electricity markets in the United
States, and providing EGA's "Question and Answer Service" to provide feedback
on the regulatory and political framework governing the natural gas and
electric markets within such states.
"CORE ADVOCACY SERVICES" means those services that EGA, in its
normal course of business, provides in support of Enron's market
liberalization agenda, including: (a) state legislative restructuring
activity (electricity and natural gas); (b) generic public utility or public
service commission ("PUC") activities (e.g., licensing); (c) federal
legislative activities; (d) federal regulatory activities (e.g., Federal
Energy Regulatory Commission); (e) environmental (e.g., disclosure
requirements); (f) utility interface issues (e.g., Uniform Business Rules);
(g) state and local tax issues; (h) non-PUC administrative agency activity
(e.g., environmental and consumer protection); (i) utility specific PUC
processes (e.g., restructuring proceedings and general rate cases); and (j)
market specific federal regulatory activities (e.g., NEPOOL and DesertStar).
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"CUSTOMER CARE SERVICES" means those services consisting of (a)
switching the Company customers from their existing utilities or service
provider to the Company and account set-up; and (b) meter, xxxx, collect and
response functions, including applicable Internet services when available.
"DEDICATED PERSONNEL" means those individuals listed on EXHIBIT C
who are employees of one of the Service Providers and who will be assigned on
a full time basis to provide Administrative Services to the Company.
"EFFECTIVE DATE" has the meaning set forth in the introduction to
this Agreement.
"EGA" means Enron's Government Affairs department.
"GENERAL CORPORATE SERVICES" means those corporate staff and support
services referred to on EXHIBIT A; PROVIDED, HOWEVER, in no event shall the
General Corporate Services include any legal services.
"INCREMENTAL COMPANY SUPPORT SERVICES" means those services that EGA
may agree to support with respect to a specific request from the Company for
governmental or regulatory services on matters that EGA is not currently
pursuing as part of EGA's Baseline Reporting Services or Core Advocacy
Services.
"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"; PROVIDED that if no such
rate is published on that day the interest rate published on the preceding
day shall apply.
"RISK MANAGEMENT CONSULTING SERVICES" means risk management
consulting and hedging services, including quantifying price risks associated
with the Company's portfolio of natural gas and electricity and the analysis
of financial and derivative products with respect to such portfolio; the
administration of hedging and position management programs to facilitate
management and integration of physical and financial positions; and upon
request of the Company, the proposal by EES for and, upon mutually agreed
terms set forth in a written instrument, the provision of, financial products
to manage the price risks to the Company. The foregoing Services are separate
and distinct from the other risk management services being provided to the
Company pursuant to the Master Firm Purchase & Sales Agreements for gas and
electricity, respectively entered into as of the date hereof.
"SERVICES" means the Risk Management Consulting Services, the
Baseline Reporting Services, the Core Advocacy Services, the Incremental
Company Support Services, the General Corporate Services, the Customer Care
Services, and the Administrative Services.
"TERM" shall have the meaning set forth in Section 3.1.
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ARTICLE II
CONSULTING SERVICES
2.1 SERVICES. Subject to the terms and conditions of this Agreement,
the Company hereby engages Service Providers as set forth below, on a
non-exclusive basis, to provide the following services:
(a) RISK MANAGEMENT CONSULTING SERVICES.
(i) For a period of twelve (12) months from the
Effective Date and without any charge therefor (other than
with respect to the provision to the Company of any
financial products, such as swaps, xxxxxx, etc.), EES shall
provide to the Company the Risk Management Consulting
Services. In the event that an initial firm commitment
underwritten public offering of shares of common stock of
the Company registered under the Securities Act of 1933, as
amended (an "IPO"), has not been consummated on or prior to
twelve (12) months following the Effective Date, EES shall,
at the option of the Company (as described below), continue
to provide to the Company the Risk Management Consulting
Services for an additional six (6) month period at EES'
actual cost of providing such Services (including, but not
limited to, an allocation of general and administrative
costs and expenses, employee and employee benefit costs and
expenses, and any out-of-pocket cost and expenses). The
Company shall have a one-time option, but not the
obligation, by providing written notice to EES at least
thirty (30) days prior to the end of the initial twelve
(12) month or eighteen (18) month period, as provided
above, to extend the Risk Management Consulting Services
provided by EES to the Company for up to an additional
three (3) year term on such terms and for such fees payable
to EES as shall be mutually agreed in writing between the
parties.
(ii) All Risk Management Consulting Services
provided by EES to the Company shall be provided on a
consulting basis only, and EES shall have no obligation for
the underlying position taken by the Company with respect
to the Services or otherwise, or from consequences from the
Company's implementation of any recommendations by EES.
(iii) EES 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.
(b) BASELINE REPORTING SERVICES AND CORE ADVOCACY SERVICES.
For a period of three (3) years from the Effective Date and without
any charge therefor, Enron shall provide to the Company the Baseline
Reporting Services and the Core Advocacy Services; PROVIDED,
HOWEVER, that in no event shall Enron or any affiliate thereof be
required to register or to become licensed as a lobbyist in order to
provide such Services, and such Services may be limited or
restricted in that regard; and, PROVIDED FURTHER, that with respect
to Core Advocacy Services, Enron, after consultation with the
Company, (i) will only be required to provide the Core Advocacy
Services of the type and in the jurisdictions that it is also
providing for
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Enron, (ii) will not be required to take any position on behalf of
the Company that Enron believes may conflict with Enron's interests,
and (iii) reserves the right to determine the positions Enron will
take with respect to each of those Services.
(c) INCREMENTAL COMPANY SUPPORT SERVICES. For a period of
three (3) years from the Effective Date, the Company may request
that Enron provide to the Company any Incremental Company Support
Services, whereupon Enron and the Company shall seek to agree in
writing on the terms and conditions of any such Services (including
the payment to Enron therefor); PROVIDED, HOWEVER, that Enron shall
have no obligation to provide any such Services if the provision of
such Services would create a conflict of interest between or among
Enron (or any of its affiliates) and the Company, or otherwise be
commercially impractical (as between Enron and the Company) for
Enron to provide such Services.
(d) GENERAL CORPORATE SERVICES. For a period of nine (9)
months following the Effective Date and without any charge therefor,
Service Providers shall provide or cause to be provided to the
Company the General Corporate Services. In the event that an IPO has
not been consummated on or prior to nine (9) months following the
Effective Date, Service Providers shall, at the option of the
Company (as described below), continue to provide to the Company the
General Corporate Services for an additional six (6) month period at
Service Providers' actual cost of providing such Services including,
but not limited to, an allocation of general and administrative
costs and expenses, employee and employee benefit costs and
expenses, and any out-of-pocket cost and expenses (representative
rates for specific General Corporate Services are set forth in
EXHIBIT A). The Company shall have the option, by providing at least
thirty (30) days' prior written notice to Service Providers, from
time to time during the term the General Corporate Services are
provided, to reduce the types of General Corporate Services provided
by or on behalf of Service Providers, with a corresponding reduction
to the allocated costs paid by the Company for such Services;
PROVIDED that the effective date for any such reduction in General
Corporate Services shall be on the first day of the calendar month
in the month following the expiration of such thirty (30) day notice
period.
(e) CUSTOMER CARE SERVICES.
(i) From and after the Effective Date, EES shall
cause to be provided to the Company the Customer Care
Services by subcontracting such Services to Computer
Sciences Corporation ("CSC"). The Company shall pay EES for
all Customer Care Services at EES' cost of providing such
Services, which would be charged to the Company based on a
pass-through basis.
(ii) Following the Effective Date, the Company
shall use commercially reasonable efforts to contract
directly with CSC or any other person for the provision of
Customer Care Services in lieu of the provision of such
Services by or through EES.
(iii) The Company shall have the option, by
providing at least thirty (30) days' prior written notice
to EES, to terminate the Customer Care Services provided
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by or on behalf of EES; and in any event EES' obligation to
provide Customer Care Services shall terminate when the
Company begins to receive comparable services from the
provider selected pursuant to Section 2.1(e)(ii).
(f) ADMINISTRATIVE SERVICE. For a period of up to six (6)
months following the Effective Date, Service Providers shall assign
the Dedicated Personnel to provide Administrative Services to the
Company, at Service Providers' actual cost of providing such
Services including, but not limited to, an allocation of general and
administrative costs and expenses, employee and employee benefit
costs and expenses, and any out-of-pocket cost and expenses. If the
Company hires any of the Dedicated Personnel, the Service Providers
shall have no further obligation to provide the Administrative
Services that were being performed by such Dedicated Personnel. The
Company shall have the option, by providing at least thirty (30)
days' prior written notice to Service Providers, to cease receiving
Administrative Services from any Dedicated Personnel.
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 Contribution and Subscription Agreement or the Company's current business
plan) which significantly increases or decreases the size and/or nature of
the operations of the Company in a manner that affects the scope, manner,
nature or quantity of the Services, or (b) any change in any local, state and
federal laws, rules or regulations that affects the scope, manner, nature or
quantity of the Services, shall be considered a change in the scope of
services, and Service Providers and the Company 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, Service Providers
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 either clause (a) or (b) of this Section 2.2.
2.3 ACCESS TO INFORMATION. The Company shall provide Service
Providers with access to any information pertaining to the Company's business
which is necessary or appropriate to Service Providers' performance of its
obligations under this Agreement. The Company hereby grants to Service
Providers a non-transferable, royalty-free license to use the intellectual
property of the Company solely for the limited purposes of providing the
Services and the performance of Service Providers' obligations under this
Agreement; provided that such license shall terminate upon the termination of
all of the Services to be provided under this Agreement.
2.4 SEPARATE BOOKS. Service Providers and the Company each agree to
maintain separate books and records with respect to the Risk Management
Consulting Services, Incremental Company Support Services, General Corporate
Services, and Customer Care Services provided by Service Providers to the
Company. Service Providers and the Company 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 and allocation of costs billed to or paid by the Company for such
Services.
2.5 DISCONTINUANCE OF SERVICES. Except as otherwise provided
pursuant to the proviso of Section 2.1(d) hereof, any Service to be provided
hereunder may be discontinued upon at least
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thirty (30) days' prior written notice from the Company to Service Providers
prior to the expiration of the applicable Term; PROVIDED, HOWEVER, that the
Company shall remain liable (a) for any out-of-pocket expenses incurred by
Service Providers or their affiliates in respect of such Services through the
last day of the calendar month for which the termination of Services is
effective, and (b) under any other written agreements entered into by the
Company or any of its affiliates as contemplated herein.
2.6 SERVICES LIMITED TO THE COMPANY. The Company shall not
subcontract, sublicense or resell any Service provided hereunder to any other
person other than subsidiaries or affiliates controlled by the Company.
Except as provided in Non-competition Agreement of even date herewith among
Enron, EES and the Company, Enron and EES shall not be restricted in any
manner whatsoever from providing any services to other person's or entities
which are the same as, similar to or different from the Services provided to
the Company pursuant to this Agreement.
2.7 PAYMENT FOR SERVICES. Commencing as of the month in which the
Services commence and continuing with each calendar month thereafter during
the Term (each, a "Billing Period"), with respect to those Services for which
payment or reimbursement by the Company is due under the terms of this
Agreement, Service Providers shall send to the Company an invoice for
Services rendered or expenses incurred during such Billing Period. The
Company shall pay the applicable Service Provider any amount payable not
later than thirty (30) days after the end of the Billing Period for which
such amount is due. Payments to be made to Service Providers under this
Agreement shall be made by electronic funds transfer. Payments to Service
Provider shall be made to the account designated by Service Provider or to
such other account as to which Service Provider may notify the Company. Any
amount payable under this Agreement which is not paid on or before the date
due shall bear interest from the date due until paid at the Prime Rate. If
the Company fails to pay the amount payable within the thirty (30) day
period, and Service Provider provides written notice of such failure to pay,
then if such failure to pay is not remedied within fifteen (15) days
following such written notice, Service Provider shall have the right to
discontinue providing such Services to the Company and shall be relieved of
any further obligation to provide such Services until such failure to pay is
cured; provided that if within such 15 day period, the Company (i) gives
Service Provider written notice of a good faith dispute with respect to any
amount due, (ii) describes the dispute in reasonable detail, and (iii) pays
all undisputed amounts then due, the Company will not be considered in
default of such disputed amount, but upon the resolution of such dispute the
Company shall pay the amount due plus interest on that amount from the
original due date until paid at the Prime Rate.
ARTICLE III
TERM
3.1 TERM. The terms of the respective Services to be provided under
this Agreement ("Term") shall commence on the Effective Date and shall
automatically terminate without further action by any party (unless extended
or sooner terminated in writing) in accordance with the provisions of
Sections 2.1 and 2.5 of this Agreement.
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ARTICLE IV
PERSONNEL
4.1 SERVICE PROVIDER PERSONNEL. Service Providers shall provide all
personnel required and appropriate to render the Services in accordance with
the provisions of this Agreement. All personnel provided by Service Providers
pursuant to this Agreement shall be Service Providers' employees, contractors
or agents, and in no event shall such personnel be deemed employees of the
Company. Service Providers may provide Services using Service Providers'
permanent employees, contract employees or vendor employees as Service
Providers shall deem appropriate for the work being performed.
4.2 POLICIES AND PROCEDURES REGARDING SERVICE PROVIDERS PERSONNEL.
Service Providers shall maintain such personnel policies, procedures and
other administrative functions for personnel required to render the Services
as are generally utilized by Service Providers in their respective
businesses. Service Providers shall have full control over and responsibility
for the assignment and performance of employees providing the Services to the
Company 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. Service Providers shall comply with, and shall
cause their respective employees to comply with, the Company's policies and
procedures applicable to such personnel in connection with the performance of
the Services.
4.3 STAFFING. Service Providers shall make all staffing decisions
necessary to perform the Services under this Agreement. Service Providers
reserve the right to assign all Service Providers' personnel to perform the
Services, and to replace or reassign such Service Providers personnel at any
time with reasonable prior notice to the Company; provided, however, a
Service Provider will not unilaterally reassign any of its personnel if such
reassignment would significantly impair its ability to perform the Services.
Service Providers' personnel may rotate between this engagement and other
engagements of Service Providers. The Company may request that a Service
Providers' employee assigned to perform under this Agreement be reassigned.
Such request shall be made confidentially in writing to Service Providers and
shall specify the reasons for the requested reassignment. Service Providers
will use commercially reasonable efforts to reassign such employee, if, in
Service Providers' reasonable discretion, such reassignment would not
materially hinder Service Providers' ability to provide the Services under
the terms of this Agreement.
4.4 COMPANY AND SERVICE PROVIDERS REPRESENTATIVEs. The Company will,
at all times when Service Providers are providing the Services, designate a
representative or representatives of the Company available either by
telephone, pager or in person to receive communications from Service
Providers regarding the Services, as well as any other information. The
initial Company representative (the "Company Representative") is named in
EXHIBIT B. The Company will vest the Company Representative with sufficient
responsibility and authority for necessary decisions or expenditures to
facilitate the timely, responsible and effective rendering of the Services by
Service Providers in accordance with the provisions of this Agreement, and
Service Providers will rely on the Company Representative having such
responsibility and authority. Similarly, Service Providers will, at all times
when Service Providers are providing the Services, designate a representative
or representatives of Service Providers available either by telephone, pager
or in person to receive
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communications from the Company regarding the Services, as well as any other
information. The initial Service Providers representatives (the "Service
Providers Representatives") are named in EXHIBIT B. Service Providers will
vest the Service Providers Representatives with sufficient responsibility and
authority for necessary decisions or expenditures to facilitate the timely,
responsible and effective rendering of the Services by Service Providers in
accordance with the provisions of this Agreement, and the Company will rely
on the Service Providers Representatives having such responsibility and
authority.
4.5 RECRUITMENT OF SERVICE PROVIDERS PERSONNEL. Each of the Company
and the Service Providers acknowledge and agree that the Service Providers'
employees have been acquired and trained by Service Providers at considerable
expense to Service Providers and that the Service Providers employees are
highly skilled in the Services provided. During the term for which any
Services are provided under this Agreement and for a period of six (6) months
following the termination of the last Services provided under this Agreement,
the Company agrees that it shall not, without the advance written consent of
the relevant Service Provider (which consent may be withheld for any reason),
either directly or indirectly, or alone or in conjunction with any other
person or entity, solicit, induce, recruit, aid or suggest to any Service
Providers' employee to leave the employ of Service Providers, or terminate or
violate any contractual or fiduciary duty owing to Service Providers. The
foregoing restrictions shall not apply to (i) Dedicated Personnel, (ii) any
general solicitation of employment that is not targeted solely to the Service
Providers' employees, or (iii) any solicitation of a person who is no longer
employed by a Service Provider.
ARTICLE V
CONFIDENTIAL INFORMATION AND CONFIDENTIALITY
5.1 CONFIDENTIAL INFORMATION. As used in this Agreement, the term
"Confidential Information" shall mean the terms of this Agreement and all
trade secrets or confidential or proprietary information designated as such
in writing by either EES, Enron, or the Company (a "Disclosing Party") to the
other (the "Recipient"), whether by letter or by the use of an appropriate
proprietary stamp or legend, prior to or at the time any such trade secret or
confidential or proprietary information is disclosed by the Disclosing Party
to the Recipient. Notwithstanding the foregoing, information which is orally
or visually disclosed or is disclosed in writing without an appropriate
letter, proprietary stamp or legend shall constitute Confidential Information
if the Disclosing Party (i) so indicates at the time of disclosure and (ii)
within thirty (30) days after such disclosure, delivers to the Recipient a
written document or documents describing such Confidential information and
referencing the place and date of such oral, visual or written disclosure and
the names of the employees or officers of the Recipient to whom such
disclosure was made. The provisions of this Section 5.1 notwithstanding,
Confidential Information shall not include any information to the extent it:
(a) is in the Recipient's possession at the time of
disclosure otherwise than as a result of the Recipient's breach of
any legal obligation;
(b) becomes known to the Recipient through disclosure
by sources other than the Disclosing Party who are not legally
prohibited from disclosing such Confidential Information;
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(c) is independently developed by the Recipient without
reference to or reliance upon the Disclosing Party's Confidential
Information; or
(d) is required to be disclosed by the Recipient in the
opinion of its legal counsel to comply with applicable laws, rules or
regulations (including the rules of any stock exchange on which the
Recipient's or its affiliates' securities are listed), PROVIDED that
the Recipient provides prior written notice of such disclosure to the
Disclosing Party and takes reasonable and lawful actions, as specified
by and at the expense of the Disclosing Party, to avoid and/or minimize
the extent of such disclosure.
5.2 CONFIDENTIALITY. Each of EES, Enron and the Company shall hold the
other party's Confidential Information in confidence and shall not disclose the
other party's Confidential Information to any person except such of the
Recipient's employees and agents who have a need to know such Confidential
Information in the course of the performance of their duties for the Recipient
and who are bound to preserve the confidentiality of the Confidential
Information. The Recipient shall use Confidential Information only for the
purpose for which it was disclosed and shall not otherwise use or exploit the
Confidential Information for its own benefit or the benefit of another person
without the prior written consent of the Disclosing Party. Each of EES, Enron
and the Company shall take appropriate action by instruction or agreement with
its employees and agents to satisfy its obligations under this Section 5.2.
5.3 PUBLICITY. Neither EES, Enron nor the Company shall make or issue,
or cause to be made or issued, any announcement or written statement concerning
this Agreement or the terms hereof for dissemination to the general public
without the prior written consent of the other parties. This provision shall not
apply, however, to any announcement or written statement required to be made by
law or the regulations of any federal, state or local governmental authority or
any stock exchange, except that the party who is required to make such
announcement shall, whenever practicable, consult with the other parties
concerning the content and timing of such announcement before such announcement
is made.
ARTICLE VI
COMPANY RESPONSIBILITIES
6.1 DECISIONS OF THE COMPANY. The Company will be responsible to make
all decisions regarding any recommendations made by Service Providers in
providing the Services. In the event that the Company instructs Service
Providers that the Company desires to follow any recommendation made by Service
Providers, then Service Providers will use commercially reasonable efforts to
implement such decision in accordance with Service Providers' recommendation and
the Company's instruction.
6.2 RESPONSIBILITIES OF THE COMPANY. The responsibilities and
obligations of the Company under and pursuant to this Agreement include, but are
not limited to, the following:
(a) LEGALITY AND LIABILITY OF TRANSACTIONS. The legality of
all transactions with third parties will remain the responsibility of
the Company, except for transactions entered
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into as a direct result of decisions made solely by Service Providers
without the Company's knowledge. Service Providers and their
affiliates assume no responsibility for performance either by third
party suppliers of goods and services to the Company or by the Company
under contracts or agreements, formal or informal, between the Company
and third parties. Service Providers and their affiliates assume no
liability for the performance or quality of any product or service
purchased on behalf of the Company and the Company shall have no
recourse against Service Providers or their affiliates with regard to
such products or services. The Company shall retain all legal or
equitable rights and remedies available to it as against any such
third party.
(b) EQUIPMENT, HARDWARE AND SOFTWARE. To the extent that the
Company requires Service Providers to provide the Services at the
Company's facilities, the Company shall be responsible for obtaining,
installing and maintaining all necessary equipment, hardware and
software at the Company's facilities as reasonably notified and
required by Service Providers to implement and execute the Services.
(c) MANAGEMENT ACTION. Upon reasonable request, the Company
shall promptly make available to Service Providers copies of all
management decisions, instructions, approvals, acceptances and such
other information and assistance desired or required by Service
Providers to perform their obligations under this Agreement.
(d) TAXES AND INTERESTS. The Company shall pay all taxes and
interest related to or arising from Company transactions for which the
Services are performed. In addition, the Company shall be solely
responsible for the payment of any taxes and duties based upon the
facilities, assets, Services and/or products provided by Service
Providers or their affiliates arising from this Agreement.
(e) ACCOUNTING. The Company shall perform and control all
accounting entries arising from Company transactions for which the
Services are performed. Service Providers shall provide to the Company
such reporting as reasonably necessary to create such accounting
entries.
(f) INTERNAL CONTROLS AND POLICIES. The Company shall be
solely responsible for establishing and maintaining effective internal
control, accounting systems and policies with regard to all Company
transactions executed in connection with or in performance of the
Services. The Company shall timely communicate such internal controls
and policies to Service Providers prior to performance of the Services
by Service Providers.
6.3 ACCESS. While the Services will be provided primarily from Service
Providers' place of business, from time to time Service Providers may require
access to and use of the Company's facilities, property and services in order to
provide the Services. Beginning on the Effective Date, the Company shall, at the
Company's sole expense, provide Service Providers with the use of, and with
reasonable access to, the Company's facilities as may be required by Service
Providers to perform the Services. The Company shall also provide to Service
Providers, at the Company's expense, all utilities and the use of sufficient
telephones, faxes, computers, copiers, office support services, and such other
comparable services and resources as may be reasonably necessary to render
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the Services at the Company's facilities. Similarly, to the extent that the
Company needs access to any facilities of the Service Providers in order to
receive the Services, the Service Providers will provide the Company with
reasonable access to its facilities for such purpose.
6.4 RISK OF LOSS. At all times during the Term of any Services, the
Company shall bear the risk of loss relating to the Services and the Company's
businesses, all parts thereof, all materials and other goods intended to be or
actually incorporated therein, and all other equipment, purchased for or in
connection with the Services and the Company's businesses.
ARTICLE VII
SERVICES WARRANTY AND LIMITATION OF LIABILITY
7.1 WARRANTIES AND DISCLAIMERS AS TO SERVICES. WITH RESPECT TO ANY
SERVICE PROVIDED HEREUNDER, SERVICE PROVIDERS EXPRESSLY DISCLAIM AND NEGATE ANY
GUARANTY OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY
WARRANTIES COVERING FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, OR
OTHERWISE.
7.2 LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING CONTAINED TO THE
CONTRARY IN ANY PROVISION OF THIS AGREEMENT OR ANY DOCUMENT EXECUTED IN
CONNECTION HEREWITH, 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 OR ANY DOCUMENT EXECUTED IN
CONNECTION HEREWITH 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.
ARTICLE VIII
DEFAULT
8.1 DEFAULT BY COMPANY. The following shall constitute an event of
default by the Company under this Agreement: (a) the Company continues to
default in the payment of any of its monetary obligations under this Agreement
for ten (10) business days after receiving written notice from Service Providers
of such default, or (b) the Company fails to perform or observe any of its
material non-monetary obligations contained herein within thirty (30) days after
written notice from Service Providers of such failure; PROVIDED, HOWEVER, that
if such performance or observance cannot reasonably be accomplished within such
thirty (30) day period, a default shall not be deemed to have occurred if the
Company begins to cure the breach within the thirty (30) day period and
thereafter diligently and in good faith continues to pursue the cure of such
breach until cured. Upon receiving written notice of any default, the Company
will promptly use its reasonable efforts to cure such default as soon as
practicable if it is capable of being cured.
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8.2 SERVICE PROVIDERS' REMEDIES. Subject to the terms of this Agreement
(including, but not limited to, Article XI), Service Providers shall have the
right, immediately after the occurrence of an event of default by the Company,
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. Service Providers hereby waive any
and all claims against the officers, directors, stockholders, employees, agents
and representatives of the Company for all claims arising from a default by the
Company under this Agreement.
8.3 DEFAULT BY SERVICE PROVIDERS. The following shall constitute an
event of default by Service Providers under this Agreement: (a) Service
Providers continue to default in the payment of any of their monetary
obligations under this Agreement for ten (10) business days after receiving
written notice from the Company of such default; or (b) Service Providers fail
to perform or observe any of their material non-monetary obligations within
thirty (30) days after written notice from the Company of such failure;
PROVIDED, HOWEVER, that if such performance or observance cannot reasonably be
accomplished within such thirty (30) day period, a default shall not be deemed
to have occurred if Service Providers begin to cure the breach within the thirty
(30) day period and diligently and in good faith continue to pursue the cure of
the breach until cured. Upon receiving written notice of any default, the
Service Providers will promptly use reasonable efforts to cure such default as
soon as practicable if it is capable of being cured.
8.4 COMPANY'S REMEDIES. Subject to the terms of this Agreement
(including, but not limited to, Article XI), the Company has the right,
immediately after the occurrence of an event of default by Service Providers, 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 Company hereby waives any and
all claims against the officers, directors, stockholders, employees, agents and
representatives of Service Providers for all claims arising from a default by
Service Providers under this Agreement.
8.5 SURVIVAL. The provisions of Section 2.7, Section 4.5, Sections
6.2(a) and (d), Section 6.4 and Articles V, VII, VIII, IX and XI hereof shall
survive the termination of this Agreement for any reason.
ARTICLE IX
INDEMNIFICATION
9.1 SERVICE PROVIDERS' AGREEMENT TO INDEMNIFY. EES and Enron shall
defend, indemnify and hold harmless the Company and the Company's subsidiaries,
affiliates, officers, directors, employees, agents, successors and assigns from
and against any and all suits, actions, claims, losses, demands, damages,
liabilities, costs, and expenses of every kind, including costs and reasonable
attorneys' fees that relate to or result from: (a) any personal injury, death,
or damages to any person or property arising out of or related to the failure of
EES or Enron to perform its obligations hereunder; (b) EES' or Enron's breach of
or default under any provision of this Agreement; or (c) any unlawful acts of
the employees of the Service Providers, or any acts or omissions of the
employees of the Service Providers that are inconsistent with the policies of
the Service Providers or constitute gross negligence, willful misconduct or bad
faith.
12
9.2 COMPANY'S AGREEMENT TO INDEMNIFY. The Company shall defend,
indemnify and hold harmless EES, Enron, and EES' and Enron's subsidiaries,
affiliates, officers, directors, employees, agents, successors and assigns from
and against any and all suits, actions, claims, losses, demands, damages,
liabilities, costs, and expenses of every kind, including costs and reasonable
attorneys' fees that relate to or result from: (a) any personal injury, death,
or damages to any person or property arising out of or related to the failure of
the Company to perform its obligations hereunder; or (b) the Company's breach of
or default under any provision of this Agreement; or (c) any unlawful acts of
the employees of the Company, or any acts or omissions of the employees of the
Company that are inconsistent with the policies of the Company or constitute
gross negligence, willful misconduct or bad faith.
9.3 CONDUCT OF CLAIMS. The party entitled to indemnification under this
Article IX (the "Indemnified Party") shall reasonably promptly, after the
receipt of notice of any legal action or claim against such Indemnified Party in
respect of which indemnification may be sought pursuant to this Article IX,
notify the other Party (the "Indemnifying Party") of such action or claim. The
Indemnifying Party shall not be obligated to indemnify the Indemnified Party
with respect to any such action or claim if the Indemnified Party knowingly
fails to notify the Indemnifying Party thereof in accordance with the provisions
of this Article IX in sufficient time to permit the Indemnifying Party to defend
against such matter and to make a timely response thereto, including, without
limitation, any responsive motion or answer to a complaint, petition, notice or
other legal, equitable or administrative process relating to the action or
claim, but only in so far as such knowing failure to notify the Indemnifying
Party has actually resulted in prejudice or damage to the Indemnifying Party. In
case any such action or claim shall be made or brought against the Indemnified
Party, the Indemnifying Party may, or if so requested by the Indemnified Party
shall, assume the defense thereof with counsel of its selection reasonably
acceptable to the Indemnified Party and which shall be reasonably competent and
experienced to defend the Indemnified Party. In such circumstances, the
Indemnified Party shall (a) at no cost or expense to the Indemnified Party
cooperate with the Indemnifying Party and provide the Indemnifying Party with
such information and assistance as the Indemnifying Party shall reasonably
request in connection with such action or claim and (b) at its own expense, have
the right to participate and be represented by counsel of its own choice in any
such action or with respect to any such claim. If the Indemnifying Party assumes
the defense of the relevant claim or action, (i) the Indemnifying Party shall
not be liable for any settlement thereof which is made without its consent and
(ii) the Indemnifying Party shall control the settlement of such claim or
action; PROVIDED, HOWEVER, that the Indemnifying Party shall not conclude any
settlement which requires any action or forbearance from action or payment or
admission by the Indemnified Party or any of its affiliates without the prior
written approval of the Indemnified Party. The obligations of an Indemnifying
Party shall not extend to any loss, damage or expense of whatever kind and
nature (including all related costs and expenses) to the extent the same results
from the taking by the Indemnified Party of any action (unless required by law
or applicable legal process) that prejudices the successful defense of the
action or claim without, in any such case, the prior written consent of the
Indemnifying Party (such consent not to be required in a case where the
Indemnifying Party has not assumed the defense of the action or claim). The
Indemnified Party agrees to afford the Indemnifying Party and its counsel the
opportunity to be present at, and to participate in, conferences with all
persons, including governmental authorities,
13
asserting any claim or action against the Indemnified Party covered by the
indemnity contained in this Article IX or conferences with representatives of
or counsel for such person.
ARTICLE X
NOTICES
10.1 Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally by hand or by recognized
overnight courier, telecopied or mailed (by registered or certified mail,
postage prepaid) as follows:
(i) If to the Company, then to:
EMW Energy Services Corp.
c/o Enron Energy Services, LLC
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
(ii) If to EES, then to:
Enron Energy Services, LLC
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
(iii) If to Enron, then to:
Enron Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
10.2 Each such notice or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the telecopier number
specified in Section 10.1 (with confirmation of transmission), or (ii) if given
by any other means, when delivered at the address specified in Section 10.1. Any
party by notice given in accordance with this Article X to the other parties may
designate another address (or telecopier number) or person for receipt of
notices hereunder. Notices by a party may be given by counsel to such party.
14
ARTICLE XI
GOVERNING LAW; ARBITRATION
11.1 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.
11.2 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 on EXHIBIT D
hereto.
ARTICLE XII
ASSIGNMENT
12.1 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 without the prior
written consent of the other parties, and any purported assignment, 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 XIII
GENERAL
13.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between EES, Enron and the Company 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. EES and Enron make
no representations to the Company except as expressly set forth herein.
13.2 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 control, including, but not limited to, failures or delays in
transportation or communication, failures or substitutions of equipment, labor
disputes, accidents, shortages of labor, fuel, raw materials or equipment or
technical failures, PROVIDED that the delayed party has taken 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 EES or Enron to provide the Services to the Company
beyond the respective Terms contemplated in Section 2.1 hereof.
15
13.3 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.
13.4 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.
13.5 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.
13.6 RELATIONSHIP OF PARTIES. In the performance of the Services
hereunder, EES and Enron will at all times be independent contractors, and this
Agreement shall not constitute, nor be deemed to constitute, any party as an
employee, agent, partner or joint venturer of any other party.
13.7 NO THIRD PARTY BENEFICIARIES. The Agreement has been entered into
for the sole benefit of the Company, EES, and Enron, and in no event shall any
third party beneficiaries be created thereby.
(SIGNATURE PAGE FOLLOWS)
* * * * *
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year indicated above.
ENRON ENERGY SERVICES, LLC EMW ENERGY SERVICES CORP.
By: /s/ XXXX X. XXXXXX By: /s/ XXXXXX X. XXXXXXXX
--------------------------- -----------------------------
Print: Xxxx X. Xxxxxx Print: Xxxxxx X. Xxxxxxxx
------------------------ --------------------------
Title: Sr. Vice President Title: Vice President
------------------------ --------------------------
ENRON CORP.
By: /s/ J. XXXX XXXXX
------------------------------------------------------
Print: J. Xxxx Xxxxx
---------------------------------------------------
Title: Executive Vice President--Corp. Development
---------------------------------------------------
17
EXHIBIT A
CORPORATE STAFF AND SERVICE GROUP
ANALYSIS
SUMMARY
2000 OPERATING BUDGETS
In thousands of dollars,
except headcount
ENRON RC# SAP COMPANY #901 ENRON CHARGE BASES 2000 PLAN TOTAL METRIC
PROPERTY CO. ABSOLUTE $ ENRON
PLAN
----------- ------------------------------- ---------------------- ------------------------------------------
581 Facility Maintenance Enron Building Space
629 Corporate Security Enron Building Space $2 sq. ft.
898 Building Services Enron Building Space
2234 Facilities Operations Enron Building Space
746 Office Services Enron Building Space
2455 Rent Enron Building Space $25 sq. ft.
75 EPCO Administration Actual Usage
566 Construction Actual Usage Capital
Expenditure
580 Facility Planning Actual Usage $25 per hour
692 Churn/Relocation Actual Usage $220 per person
703 Audio Visual & Locks Actual Usage $40. Audio/$162. Per LCD /$5 Locks
2334 Bus/Parking Subsidy Actual Usage $45.50 Bus/$36.81 Travel Agency
(TAP)/
$38.76 Xxxxxxx/Met parking/$
parking/$83.87 Clay parking
2441 ABS Utility Actual Usage $40. per hour
103 Shipping/Receiving Actual Usage $9.80 Fed Ex/reg incoming 1.25
per item
228 Copy Center Actual Usage $.04 per copy/$.07 color copies/4.20
per other jobs
Forms Management Actual Usage $.21 per business card/.08 per
notepads/
Graphic Services Actual Usage $52 per hour
000 Xxxx Xxxxxx Work place allocation $16.52 per person
2255 Convenience Copiers Work place allocation Copier leases, maintenance, paper charges
based on % of occupancy
586 Concierge Services Work place allocation $5.83 per person
Cafeteria Work place allocation $16.52 per
person
COMPANY #426 ENRON SHARED
SERVICES
-------------------------------
2320 Stock Option Plan Grant Elections 10.05%
451 Finance & Treasury % of Transactions ECM - Not in 2000 Plan
1411 Community Affairs Usage of Services Not in 2000 Plan
564 Tax Usage of Services 6.46%
0071 Drug & Alcohol Testing % of Headcount 7.86%
2242 Fair Employment Practice % of Headcount 8.48%
246 HR Support Services Usage of Services 8.48%
2411 Insurance Prop Val/Rev/HC ECM - Not in 2000 Plan
COMPANY #001 ENRON MANAGEMENT
CO.
-------------------------------
0208 Compensation/Benefits % of Benefits 8.48%
0647 Health Center % of DT HC 11.97%
2454 Bodyshop/Wellness % of Benefits 11.97%
2460 Employee Recreation % of Benefits 11.97%
18
COMPANY #011 ENRON CORP
-------------------------------
1140 Community Relations Program % of Direct HC 11.97%
1284 Community/Employee Events % of Direct HC 11.97%
658 Development & Training % of Headcount 9.22%
2397 Employee Communications % of Total Employees 3.96%
319 VP-Compensation/Benefits Corporate % of Headcount
Support Allocation
1133 Marketing Affairs Usage of
Services/Allocation
----------------------------------------------------------------------------------------------
Headcount Used for Allocations
Downtown 646 5,399
US 970 11,265
US & Expat 970 11,444
Total 1,080 27,300
Headcount Percentages
Downtown 11.97% 100.00%
US 8.61% 100.00%
US & Expat 8.48% 100.00%
Total 3.96% 100.00%
----------------------------------------------------------------------------------------------
----------------------------------------------------------
Additional allocations not in
original request
Imputed Percentages
----------------------------------------------------------
19
EXHIBIT B
Representatives
The Initial Company Representative:
Xxx Xxxxx
Title: Managing Director
Phone: 000-000-0000
Pager: 000-000-0000
Initial Service Providers Representatives
Xxxx Xxxxxxx (Government Affairs)
Title: Vice President
Phone: 000-000-0000
Pager: 000-000-0000
Xxxx Xxxxxx (Risk Management)
Title: Sr. Vice President & CFO
Phone: 000-000-0000
Pager: 000-000-0000
Xxx Xxxxxx (G&A)
Title: Vice President
Phone: 000-000-0000
Pager: 000-000-0000
20
EXHIBIT C
DEDICATED PERSONNEL
Name Position Representative Cost
---- -------- -------------------
Xx Xxxxx Marketing
Xxxxxxx Hand Marketing
Xxxxxx Xxxxxx Marketing
Xxxx Xxxxxxxxx Risk Management
Xxxxx Xxxxxx Regulatory
Xxxxxx Xxxx Technology / IT
Xxxxxxx Xxxxx Technology / IT
Xxx Xxxxxx Technology / IT
Xxx Xxxx Technology / IT
Xxxxxxx Xxxxxx Administration
Xxxxxx Xxxxxx Administration
Xxxxxx Xxxxxx Administration
Xxxxxxx Xxxxxx Administration
Xxxx Xxxxxxx Administration
21
EXHIBIT D
ARBITRATION PROCEDURES
(a) The parties to this Agreement agree that any dispute, controversy
or claim that may arise between or among them in connection with or otherwise
relating to this Agreement or the application, implementation, validity or
breach of this Agreement or any provision of this Agreement (including, without
limitation, claims based on contract, tort or statute), shall be finally,
conclusively and exclusively settled by binding arbitration in Wilmington,
Delaware in accordance with the commercial arbitration rules (the "Rules") of
the American Arbitration Association or any successor thereto ("AAA") then in
effect. The parties to this Agreement hereby expressly waive their right to
seek remedies in court, including the right to trial by jury, with respect to
any matter subject to arbitration pursuant to this Agreement. Any party to this
Agreement may bring an action, including, without limitation, a summary or
expedited proceeding in any court having jurisdiction, to compel arbitration of
any dispute, controversy or claim to which the provisions hereof apply. Except
with respect to the following provisions (the "Special Provisions") which shall
apply with respect to any arbitration pursuant hereto, the initiation and
conduct of arbitration shall be as set forth in the rules, which rules are
incorporated in this Agreement by reference with the same effect as if they
were set forth in this Agreement.
(b) In the event of any inconsistency between the Rules and the Special
Provisions, the Special Provisions shall control. Any references in the Rules
to a sole arbitrator shall be deemed to refer to the tribunal of arbitrators
provided for under paragraph (d) hereof.
(c) The arbitration shall be administered by the AAA. If the AAA is
unable or legally precluded from administering the arbitration, then the
parties shall agree upon an alternative arbitration organization, provided
that, if the parties cannot agree, such organization shall be selected by the
Chief Judge of the United States District Court for the District which includes
Wilmington, Delaware.
(d) The arbitration shall be conducted by a tribunal of three (3)
arbitrators. Within ten (10) days after arbitration is initiated pursuant to
the Rules, the initiating party or parties (the "Claimant") shall send written
notice to the other party or parties (the "Respondent"), with a copy to the
office of the AAA having responsibility for Wilmington, Delaware, designating
the first arbitrator (who shall not be a representative or agent of any party
(i.e., shall be impartial and independent) but may or may not be an AAA panel
member and, in any case, shall be reasonably believed by the Claimant to
possess the requisite experience, education and expertise in respect of the
matters to which the claim relates to enable such person to competently perform
arbitral duties). With ten (10) days after receipt of such notice, the
Respondent shall send written notice to the Claimant, with a copy to the office
of the AAA having responsibility for Wilmington, Delaware and to the first
arbitrator, designating the second arbitrator (who shall not be a
representative or agent of any party (i.e., shall be impartial and independent)
but may or may not be an AAA panel member and, in any case, shall be reasonably
believed by the Respondent to possess the requisite experience, education and
expertise in respect of the matters to which the claim relates to enable such
person to competently perform arbitral duties). Within ten (10) days after such
notice from the Respondent is received by the Claimant, the two designated
arbitrators shall select any mutually agreeable third
22
arbitrator. If the respective designated arbitrators of the Respondent and
the Claimant cannot so agree within said ten (10) day period, then the third
arbitrator will be determined pursuant to the Rules. Prior to commencement of
the arbitration proceeding, each arbitrator shall have provided the parties
with a resume outlining such arbitrator=s background and qualifications and
shall confirm that such arbitrator is not and has not been a representative
or agent of any of the parties. If any arbitrator shall die, fail to act,
resign, become disqualified or otherwise cease to act, then the arbitration
proceeding shall be delayed for fifteen (15) days and the party by or on
behalf of whom such arbitrator was appointed shall be entitled to appoint a
substitute arbitrator (meeting the qualifications set forth in this paragraph
(d) within such fifteen (15) day period; provided, however, that if the party
by or on behalf of whom such arbitrator was appointed shall fail to appoint a
substitute arbitrator within such fifteen (15) day period, the substitute
arbitrator shall be a neutral arbitrator appointed by the AAA arbitrator
within fifteen (15) days thereafter.
(e) All arbitration hearings shall be commenced within ninety (90) days
after arbitration is initiated pursuant to the Rules, unless, upon a showing of
good cause by a party to the arbitration, the tribunal of arbitrators permits
the extension of the commencement of such hearing; provided, however, that any
such extension shall not be longer than sixty (60) days.
(f) All claims presented for arbitration shall be particularly
identified and the parties to the arbitration shall each prepare a statement of
their position with recommended courses of action. These statements of position
and recommended courses of action shall be submitted to the tribunal of
arbitrators chosen as provided hereinabove for binding decision. The tribunal
of arbitrators shall not be empowered to make decisions beyond the scope of the
position papers.
(g) The arbitration proceeding will be governed by the substantive laws
of the State of Delaware and will be conducted in accordance with such
procedures as shall be fixed for such purpose by the tribunal of arbitrators,
except that (i) discovery in connection with any arbitration proceeding shall
be conducted in accordance with the Federal Rules of Civil Procedure and
applicable case law, (ii) the tribunal of arbitrators shall have the power to
compel discovery, and (iii) unless the parties otherwise agree and except as
may be provided herein, the arbitration shall be governed by the Federal
Arbitration Act, 9 U.S. Sections 1-16, to the exclusion of any provision of
state law or other applicable law or procedure inconsistent therewith or which
would produce a different result. The parties shall preserve their right to
assert and to avail themselves of the attorney-client and attorney-work product
privileges, and any other privileges to which they may be entitled pursuant to
applicable law. No party to the arbitration or any arbitrator may compel or
require mediation and/or settlement conferences without the prior written
consent of all such parties.
(h) The tribunal of arbitrators shall make an arbitration award as soon
as possible after the later of the close of evidence or the submission of final
briefs, and in all cases the award shall be made not later than thirty (30)
days following submission of the matter. The finding and decision of a majority
of the arbitrators shall be final and shall be binding upon the parties.
Judgment upon the arbitration award or decision may be entered in any court
having jurisdiction thereof or application may be made to any such court for a
judicial acceptance of the award and an order of enforcement, as the case may
be. The tribunal of arbitrators shall have the authority to assess liability
for pre-award and post-award interest on the claims, attorneys= fees, expert
witness fees and all other expenses of arbitration as such arbitrators shall
deem appropriate. Unless
23
otherwise agreed by the parties, the arbitration award shall include findings
of fact and conclusions of law. IT IS EXPRESSLY AGREED THAT NOTWITHSTANDING
ANY OTHER PROVISION HEREIN TO THE CONTRARY, THE ARBITRATORS SHALL HAVE
ABSOLUTELY NO AUTHORITY TO AWARD CONSEQUENTIAL DAMAGES (SUCH AS LOSS OF
PROFIT), TREBLE, EXEMPLARY OR PUNITIVE DAMAGES OF ANY TYPE UNDER ANY
CIRCUMSTANCES REGARDLESS OF WHETHER SUCH DAMAGES MAY BE AVAILABLE UNDER
DELAWARE LAW, THE LAW OF ANY OTHER STATE, OR FEDERAL LAW OR UNDER ANY RULES
OF ARBITRATION.
(i) Notwithstanding any provision herein to the contrary, nothing
herein shall be construed to require arbitration of a claim or dispute brought
by a person who is not a party to this Agreement, or affect the ability of any
party to interplead or otherwise join another party in a proceeding brought by
a person who is not a party to this Agreement.
(j) EACH PARTY UNDERSTANDS THAT THIS AGREEMENT CONTAINS AN AGREEMENT TO
ARBITRATE WITH RESPECT TO ANY DISPUTE OR NEED OF INTERPRETATION OF THIS
AGREEMENT. AFTER SIGNING THIS AGREEMENT, EACH PARTY UNDERSTANDS THAT IT WILL
NOT BE ABLE TO BRING A LAWSUIT GOVERNING ANY DISPUTE THAT MAY ARISE WHICH IS
COVERED BY THE ARBITRATION PROVISION, EXCEPT TO COMPEL ARBITRATION OR SEEK
INJUNCTIVE RELIEF. INSTEAD, EACH PARTY AGREES TO SUBMIT ANY SUCH DISPUTE TO
ARBITRATION.
24
