SERVICE AGREEMENT
This Service Agreement is executed this ___ day of _______, 199__, by and
between Support Conectiv, Inc., a Delaware corporation and a mutual service
company formed under the terms of the Public Utility Holding Company Act of 1935
("Service Company") and a corporation and an associate company of the Conectiv
system ("Client Company", and collectively with other associate companies that
have or may in the future execute this form of Service Agreement, the "Client
Companies").
WITNESSETH
WHEREAS, the Securities and Exchange Commission (hereinafter referred to as
the "SEC") has approved and authorized as meeting the requirements of Section
13(b) of the Public Utility Holding Company Act of 1935 (hereinafter referred to
as the "Act"), the organization and conduct of the business of the Service
Company in accordance herewith, as a wholly owned subsidiary service company of
Conectiv, Inc.; and
WHEREAS, the Service Company and certain Client Companies have entered into
this Service Agreement whereby the Service Company agrees to provide and the
Client Companies agree to accept and pay for various services as provided herein
determined in accordance with applicable rules and regulations under the Act,
which require the Service Company to fairly and equitably allocate costs among
all associate companies to which it renders services; and
WHEREAS, economies and efficiencies benefiting the Client Companies will
result from the performance by Service Company of the services as herein
provided:
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties to this Service Agreement covenant and agrees as
follows:
ARTICLE - SERVICES
Section 1.1 The Service Company shall furnish to a Client Company, as
requested by a Client Company, upon the terms and conditions hereinafter set
forth, such of the services described in Appendix A hereto (as such may be
amended from time to time) at such times, for such periods and in such manner as
the Client Company may from time to time request and which the Service Company
concludes it is equipped to perform. The Service Company shall also provide a
Client Company with such special services, in addition to those services
described in Appendix A hereto, as may be requested by a Client Company and
which the Service Company concludes it is equipped to perform. In supplying such
services, the Service Company may arrange, where it deems appropriate, for the
services of such experts, consultants, advisers and other persons with necessary
qualifications as are required for or pertinent to the rendition of such
services.
Section 1.2 Each Client Company shall take from the Service Company such of
the services described in Section 1.1 and such additional general or special
services, whether or not now contemplated, as are required from time to time by
such Client Company and which the Service Company concludes it equipped to
perform.
Section 1.3 The services described herein shall be directly assigned,
distributed or allocated by activity, project, program, work order or other
appropriate basis. A Client Company shall have the right from time to time to
amend, alter or rescind any activity, project program or work order provided
that (i) any such amendment or alteration which results in a material change in
the scope of the services be performed or equipment to be provided is agreed to
by the Service Company (ii) the cost for the services covered by the activity,
project program or work order shall include any expense incurred by the Service
Company as a direct result of such amendment, alteration or rescission of the
activity, project, program or work order, and (iii) no amendment, alteration or
rescission of an activity, project, program or work order shall release a Client
Company from liability for all costs already incurred by the contracted for by
the Service Company pursuant to the activity, project, program or work order,
regardless of whether the services associated with such costs have been
completed.
ARTICLE II - COMPENSATION
Section 2.1. As compensation for the services to be rendered hereunder,
each Client Company shall pay to the Service Company all costs which reasonably
can be identified and related to particular services performed by the Service
Company for or on Client's behalf, such cost to be determined in accordance with
rule 90 and other applicable rules and regulations under the Act. Where more
than one Client Company is involved in or has received benefits from a service
performed, costs will be directly assigned, distributed or allocated, as set
forth in Appendix A hereto, between or among such companies on a basis
reasonably related to the service performed.
Section 2.2. It is the intent of this Service Agreement that the payment
for services rendered by the Service Company to the Client Companies under this
Service Agreement shall cover all the costs of its doing business (less the cost
of services provided to affiliated companies not a party to this Service
Agreement and other non-affiliated companies), including but not limited to,
salaries and wages, office supplies and expenses, outside services employed,
insurance, injuries and damages, employee benefits, miscellaneous general
expenses, rents, maintenance of structures and equipment, depreciation and
amortization, profit and compensation for use of capital as permitted by RULE 91
under the Act.
Section 2.3. The method of assignment, distribution or allocation of costs
described in Appendix A shall be subject to review annually, or more frequently
if appropriate. Such method of assignment, distribution or allocation of costs
may be modified or changed by the Service Company without the necessity of an
amendment to this Service Agreement provided that in each instance, costs of all
services rendered hereunder shall be fairly and equitable assigned distributed
or allocated, all in accordance with the requirements of the Act and any orders
promulgated thereunder.
Section 2.4. The Service Company shall render a monthly statement to each
Client Company which shall reflect the billing information necessary to identify
the costs charged for that month. By the tenth (10th) calendar day following
billing, each Client Company shall remit to the Service Company all charges.
Monthly charges may be billed on an estimated basis, but adjustments will be
made within ninety (90) days to assure that xxxxxxxx are in accord with
paragraphs 2.1 and 2.2 above.
ARTICLE III-TERM
Section 3.1 This Service Agreement shall become effective as of the day of
above written, and shall continue in force until terminated by either party upon
no less than ninety (90) days' prior written notice to the other party. This
Service Agreement shall also be subject to termination or modification at any
time, without notice, if and to the extent performance under this Service
Agreement may conflict with the Act or with any rule, regulation or order of the
SEC adopted before or after the date of this Service Agreement or any other
regulatory body.
ARTICLE IV - MISCELLANEOUS
Service 4.1. All accounts and records of the Service Company shall be kept
in accordance with the General Rules and Regulations promulgated by the SEC
pursuant to the Act, in particular, the Uniform System of Accounts for Mutual
Service Companies and Subsidiary Service Companies effect from and after the
date hereof, except as specifically approved by the SEC.
Section 4.2. Other existing subsidiaries and new direct or indirect
subsidiaries of Conectiv, which may come into existence after the effective date
of this Service Agreement, may become additional client Companies (collectively,
the "New Client Companies") subject to this Service Agreement by execution of
this form of agreement, as it may be amended at that time. In addition, the
parties hereto shall make such changes in the scope and character of the
services to be rendered and the method of assignment, distributing or allocating
costs of such services among the Client Companies and the New Client Companies
under this Service Agreement as may become necessary.
Section 4.3 The Service Company shall permit a Client Company access to its
accounts and records, including the basis and computation of allocations.
Section 4.4. This Service Agreement and any amendments hereto shall not be
effective until any necessary regulatory approvals have been obtained.
IN WITNESS WHEREOF, the parties hereto have caused this Service
Agreement to be executed as of the date and year first above written.
SUPPORT CONECTIV, INC.
By: /s/ _____________________
[title]
[Client Company]
By:/s/ _______________________
[title]
