Exhibit K-3
Form of Transition Services Agreement
MASTER TRANSITION SERVICES AGREEMENT
This Transition Services Agreement (the "Agreement") dated as of ___________,
2000, is made between AGL Resources Inc. ("AGLR"), a Georgia corporation and AGL
Services Company ("AGSC"), a Georgia corporation.
RECITALS
A. In connection with the acquisition of Virginia Natural Gas, Inc.
("VNG"), a Virginia corporation, by AGLR and AGLR's subsequent registration as a
public utility holding company, AGLR will establish a system service company to
provide services to AGLR subsidiaries.
B. To facilitate the transition to AGSC of the services currently performed
by AGLR, the parties desire to enter into this transition services agreement to
provide for temporary services between AGLR and AGSC.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereto agree as follows:
1. Definitions.
Terms used herein and not otherwise defined herein shall have the meanings
ascribed to them in the Purchase Agreement. In addition, the following terms, as
used herein, have the following meanings:
"Cost" means for any Transition Service rendered hereunder, the allocable
portions of the wages, employee benefits, incentives and other payments to AGLR
employees, including occupancy costs related to such AGLR employees, and the
allocable portions of any direct variable costs and fixed operating costs
(including, without limitation, fees, taxes, charges, depreciation, overheads,
service fees, and expenses)incurred by AGLR in supplying such Transition
Service, all determined in a manner consistent with AGLR's cost accounting
practices.
"Effective Date" means the Closing Date of the VNG Acquisition.
"Transition Services" means those services more particularly described on
Schedule A attached hereto.
2. Term of Agreement.
This Agreement shall be effective beginning on the Effective Date and shall
continue for a period of up to three months following the Effective Date (the
period during which this Agreement remains effective being referred to herein as
the "Term"). This Agreement shall be terminable: (a) by either party immediately
upon written notice to the other party if the other party shall file or have
filed against it any petition under the bankruptcy laws of the United States; or
(b) according to the terms set forth in Paragraph 4. In addition, this Agreement
shall be terminable with respect to any particular Transition Service upon two
weeks' notice by AGSC to AGLR. Notwithstanding anything to the contrary set
forth herein, so long as either party hereto has any executory obligations
incurred during the Term, this Agreement shall remain in effect to govern such
obligations.
3. Transition Services.
During the Term of this Agreement, AGLR or its Affiliates shall provide
Transition Services to AGSC according to the terms set forth hereunder and on
Schedule A attached hereto. The quality and level of such Transition Services
shall be substantially the same as such services provided by AGLR or such
affiliates prior to the date hereof; provided, however, the quality or level of
such services shall at a minimum be commercially reasonable. AGLR will invoice
AGSC for those Transition Services provided by AGLR and listed on Schedule A
attached hereto, and such invoice shall be payable in cash within 15 days after
AGSC receives such invoice. Each such invoice shall: (i) identify the applicable
Transition Service to which the invoice relates, (ii) provide summary details of
the fees and expenses payable for each Transition Service invoiced, and (iii)
specify the total amount payable by AGSC to AGLR.
4. Termination for Cause.
Either party may terminate this Agreement immediately by written notice to
the other party if the other party breaches a material provision of this
Agreement and the breach continues for more than five (5) business days after
delivery of notice of such breach. Notwithstanding the foregoing, however, if
the breaching party is making a good faith effort to cure such breach it shall
be provided an additional reasonable amount of time to do so (not to exceed
thirty (30) days) without triggering immediate termination.
5. Effect of Termination or Expiration.
If this Agreement shall terminate as set forth in Paragraph 2 or Paragraph
4, it shall terminate in its entirety, and no further obligation shall exist on
the part of either party under this Agreement, except that AGSC shall be
obligated to pay all outstanding amounts due under this Agreement.
Notwithstanding anything else contained in this Agreement, termination or
expiration of this Agreement shall not act as a waiver by either party of any
breach of this Agreement by the other party hereto through the date of such
termination or expiration of this Agreement.
6. Force Majeure.
(a) AGLR may suspend or reduce, in whole or in part, the supply of any
or all of the Transition Services or the performance of any of its
obligations hereunder to the extent AGLR is impeded in its ability to
provide such Transition Service as a result of a Force Majeure Event.
Notwithstanding the foregoing, AGLR agrees to use commercially reasonable
efforts to comply with the terms and conditions of this Agreement to the
extent that it is able to do so. For purposes of this Agreement, the term
"Force Majeure Event" includes, but is not limited to: (i) fire, explosion,
storm damage, flood, or other casualty; (ii) labor troubles including
strikes, lockouts or slowdowns; (iii) government intervention (not
including fines for violations of permits), government regulation or
statute; (iv) war, sabotage, riot, or other civil disturbance; or (v) other
cause or conditions beyond AGLR's reasonable control. AGLR shall take
reasonable steps to mitigate any damages accruing to AGSC as a result of
AGLR's inability to comply with the terms and conditions of this Agreement
as a result of a Force Majeure Event and to perform its obligations as
promptly as reasonably practicable after the elimination of the Force
Majeure Event.
(b) During any period in which any Transition Services are reduced or
suspended pursuant to Section 6(a), AGSC shall not be obligated to pay for
any Costs with respect to the reduced, suspended or terminated portion of
such Transition Services.
(c) AGLR covenants that it will maintain it's present or comparable
replacement disaster recovery program and in the event that a Force Majeure
Event occurs which is included in the current AGLR disaster plan, AGLR will
make the benefits of its disaster recovery program available to AGSC in
accordance with the other terms of this Agreement.
7. Limitation of Liability.
(a) Neither AGLR, nor its Affiliates, employees or agents shall be
liable to AGSC for, and AGSC releases and discharges AGLR, its Affiliates,
employees and agents from, any and all claims, liabilities, actions, suits,
judgments, losses, injuries, damages (including, without limitation,
incidental or consequential damages), costs and expenses arising out of or
connected with any act or omission, of AGLR, its Affiliates, employees or
agents, with respect to the Transition Services, or any failure to provide
the Transition Services to AGSC, other than a refusal by AGLR in breach of
this Agreement, or gross negligence or willful misconduct of AGLR, its
Affiliates, employees or agents.
(b) AGSC shall not use the Transition Services for any purpose other
than in connection with the operation of its business. AGSC will indemnify
AGLR against any loss, damage or expense incurred by AGLR as a result of
AGSC's willful, improper use or employment of any of the Transition
Services in contravention of the provisions of this Agreement.
8. Warranties.
AGLR warrants that it will make commercially reasonable efforts to provide
for the maintenance of all software in a normal operating state. Except as
provided in the foregoing sentence, the parties expressly agree that no warranty
shall be implied under this Agreement, whether warranties of utility, fitness
for any particular purpose, merchantability, or any other type and, further,
that no warranties of any sort are made herein.
9. Cooperation.
If, after the date hereof, the parties determine that additional services
and functions need to be provided by AGLR to AGSC during the Term of this
Agreement, each of AGLR and AGSC agrees to use commercially reasonable efforts
to:
(a) cause AGLR to provide to AGSC such services or functions, as
applicable, and
(b) agree on fair pricing for such services or functions.
10. Notices.
All notices and other communications required or permitted hereunder shall
be in writing (including telex, telefax or similar writing) and shall be given:
If to AGLR to:
AGL Resources Inc.
000 Xxxx Xxxxxxxxx Xx. X.X. 00xx Xxxxx
Xxxxxxx, Xx. 30308
Attention: Xxxxxx X. Xxxxxxxxx, Senior Vice President
& Chief Financial Officer
Facsimile: (000) 000-0000
If to AGSC to:
AGL Services Company.
000 Xxxx Xxxxxxxxx Xx. X.X. 00xx Xxxxx
Xxxxxxx, Xx. 30308
Attention: Xxxx X. Xxxxxxx, President
Facsimile: (000) 000-0000
or to such other person or to such other address or telefax number as the party
to whom such notice is to be given may have furnished the other parties in
writing by like notice. If mailed, any such communication shall be deemed to
have been given on the third business day following the day on which the
communication is posted by registered or certified mail (return receipt
requested). If given by any other means it shall be deemed to have been given
when received.
11. Interpretation.
The headings contained in this Agreement are for reference purposes only
and shall not affect the meaning or interpretation of this Agreement.
12. Miscellaneous.
This Agreement (a) constitutes the entire agreement and supersedes all
other prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof; (b) is an independent
agreement, the rights and obligations of the parties to which shall not be
affected by any provision of, or remedy arising under or with respect to any
other agreement between the parties, except to the extent expressly provided in
any such agreement; (c) is not intended to and shall not confer upon any other
person or business entity, other than the parties hereto or any permitted
assignees, any rights or remedies with respect to the subject matter hereof; (d)
shall not be assigned by operation of law or otherwise by either party without
the express written prior approval of the other party, which approval shall not
be unreasonably withheld, except that AGLR may assign all or any portion of its
rights hereunder or obligations to one or more Affiliates;(e) shall be governed
by and construed in accordance with the laws of the State of Georgia without
regard to its conflicts of law or choice of law rules; and (f) is not intended
to and shall not be deemed to create an employment relationship between AGSC and
the employees, agents, or both, of AGLR or any Affiliate or Subsidiary of AGLR
who perform Transition Services pursuant to the terms and conditions of this
Agreement.
13. Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed by
their duly authorized officers.
AGL Resources Inc.
By:___________________________
Name:
Title:
AGL Services Company
By:___________________________
Name:
Title:
SCHEDULE A
Transition and Support Services Schedule
Services Offered to AGSC:
Information Systems Support
Legal Services and Risk Management
Internal Audit
Rates and Regulatory
Strategic Planning
External relations
Gas Supply and Capacity Management
Marketing
Financial Services
Executive Services
Investor Relations
Customer Services
Employee Services
Engineering
Facilities Management
Fleet Services
Purchasing
Other Business Support
