Exhibit B-4
Exhibit F to the Master Separation and Distribution
Agreement
TRANSITIONAL SERVICES AGREEMENT
TRANSITIONAL SERVICES AGREEMENT
BETWEEN
ALLEGHENY ENERGY, INC.
AND
[SUPPLY HOLDCO]
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
ARTICLE 2
TRANSITION SERVICE SCHEDULES
ARTICLE 3
SERVICES
SECTION 3.1 SERVICES GENERALLY 3
SECTION 3.2 SERVICE PARAMETERS 3
SECTION 3.3 IMPRACTICABILITY 3
SECTION 3.4 ADDITIONAL RESOURCES 3
SECTION 3.5 ADDITIONAL SERVICES 3
SECTION 3.6 FURTHER OBLIGATIONS AS TO SERVICES 3
SECTION 3.7 SERVICE REPRESENTATIVES 4
ARTICLE 4
TERM
ARTICLE 5
COMPENSATION
SECTION 5.1 CHARGES FOR SERVICES 5
SECTION 5.2 PAYMENT TERMS 5
SECTION 5.3 PERFORMANCE UNDER ANCILLARY AGREEMENTS 5
SECTION 5.4 ERROR CORRECTION; TRUE-UPS; ACCOUNTING 5
SECTION 5.5 PRICING ADJUSTMENTS 5
ARTICLE 6
GENERAL OBLIGATIONS; STANDARD OF CARE
SECTION 6.1 PERFORMANCE METRICS: SERVICE PROVIDER 6
SECTION 6.2 DISCLAIMER OF WARRANTIES 6
SECTION 6.3 PERFORMANCE METRICS: SERVICE RECIPIENT 6
SECTION 6.4 TRANSITIONAL NATURE OF SERVICES; CHANGES 6
SECTION 6.5 RESPONSIBILITY FOR ERRORS; DELAYS 6
SECTION 6.6 GOOD FAITH COOPERATION; CONSENTS 7
ARTICLE 7
EARLY TERMINATION
SECTION 7.1 EARLY TERMINATION 7
SECTION 7.2 SURVIVAL 7
ARTICLE 8
RELATIONSHIP BETWEEN THE PARTIES
ARTICLE 9
SUBCONTRACTORS
ARTICLE 10
INTELLECTUAL PROPERTY
ARTICLE 11
ENGINEERING AND TECHNICAL SERVICES
SECTION 11.1 ENGINEERING AND TECHNICAL SERVICES 8
SECTION 11.2 PROFESSIONAL RESPONSIBILITY REGARDING ENGINEERING
AND TECHNICAL SERVICES 9
SECTION 11.3 APPLICABLE LAWS AND REGULATIONS 9
SECTION 11.4 INSURANCE 9
SECTION 11.5 REUSE OF DOCUMENTS 10
SECTION 11.6 NON-RESTRICTIVE RELATIONSHIP 10
ARTICLE 12
CONFIDENTIALITY
ARTICLE 13
LIMITATION OF LIABILITY
ARTICLE 14
FORCE MAJEURE
ARTICLE 15
DISPUTE RESOLUTION
ARTICLE 16
MISCELLANEOUS
SECTION 16.1 ENTIRE AGREEMENT 11
SECTION 16.2 EXISTING SERVICES AGREEMENT 11
SECTION 16.3 GOVERNING LAW 11
SECTION 16.4 DESCRIPTIVE HEADINGS 12
SECTION 16.5 NOTICES 12
SECTION 16.6 NONASSIGNABILITY; THIRD-PARTY BENEFICIARIES 12
SECTION 16.7 SEVERABILITY 13
SECTION 16.8 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE 13
SECTION 16.9 AMENDMENT 13
TRANSITIONAL SERVICES AGREEMENT
TRANSITIONAL SERVICES AGREEMENT (the "Agreement") dated
as of ________, 2001, between Allegheny Energy, Inc., a
Maryland corporation ("Allegheny"), and [_____________], a
Maryland corporation ("Supply Holdco"; Allegheny and Supply
Holdco each being referred to herein individually as a
"Party," and collectively as the "Parties").
RECITALS
WHEREAS, the Board of Directors of Allegheny has
determined that it is in the best interest of Allegheny and
its stockholders to separate Allegheny's existing businesses
into two independent businesses;
WHEREAS, pursuant to such determination, Allegheny and
Supply Holdco have entered into a Master Separation
Agreement (as defined below), which provides, among other
things, for the separation of Allegheny and Supply Holdco,
the transfer between Allegheny and Supply Holdco of certain
assets and liabilities, the initial public offering of
Supply Holdco common stock, the distribution of such common
stock and the execution and delivery of certain other
agreements in order to facilitate the foregoing; and
WHEREAS, in connection with the foregoing, the parties
desire to enter into this Agreement to provide for the
continuation of certain services currently provided by each
party to the other.
NOW, THEREFORE, in consideration of the mutual promises
of the parties, and of good and valuable consideration, it
is agreed by and between the parties as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following
capitalized terms shall have the meanings specified herein.
Capitalized terms used in this Agreement and not otherwise
defined shall have the meanings for such terms set forth in
the Master Separation Agreement:
"Additional Services" shall have the meaning set forth
in Section 3.5.
"AE Supply" means Allegheny Energy Supply Company, LLC,
a Delaware limited liability company that was merged into
Supply Holdco with Supply Holdco as the surviving entity.
"Confidential Disclosure Agreement" shall mean the
Confidential Disclosure Agreement between Allegheny and
Supply Holdco.
"Engineering and Technical Services" shall have the
meaning set forth in Section 11.1.
"Existing Authority" shall have the meaning set forth
in Section 16.2.
"Existing Services Agreement" shall have the meaning
set forth in Section 16.2.
"Expiration Date" shall have the meaning set forth in
Article 4.
"Force Majeure" shall have the meaning set forth in
Article 14.
"Impracticable" shall have the meaning set forth in
Section 3.3.
"Intellectual Property Ownership Agreement" means the
Intellectual Property Ownership Agreement between Allegheny
and Supply Holdco.
"Master Separation Agreement" means the Master
Separation and Distribution Agreement between Allegheny and
Supply Holdco.
"Senior Representative" shall have the meaning set
forth in Section 3.7.
"Service(s)" shall have the meaning set forth in
Section 3.1.
"Service Representative" shall have the meaning set
forth in Section 3.7.
"Subcontractor" shall have the meaning set forth in
Article 9.
"Subsidiary" means with respect to any specified
Person, any corporation, any limited liability company, any
partnership or other legal entity of which such Person or
its Subsidiaries owns, directly or indirectly, 50% or more
of the stock or other equity interest entitled to vote on
the election of the members of the board of directors or
similar governing body. For purposes of this Agreement,
Supply Holdco shall be deemed not to be a subsidiary of
Allegheny.
"Transition Service Schedule" shall have the meaning
set forth in Article 2.
"Warranty" shall have the meaning set forth in
Section 11.2(a).
ARTICLE 2
TRANSITION SERVICE SCHEDULES
This Agreement will govern individual transitional
services as requested by Supply Holdco and its Subsidiaries
and provided by Allegheny and its Subsidiaries, or as
requested by Allegheny and its Subsidiaries and provided by
Supply Holdco and its Subsidiaries, the details of which
shall be set forth in the Transition Service Schedules
attached to this Agreement. Each Service shall be covered by
this Agreement upon execution of a transition service
schedule in the form attached hereto as Annex A (each such
executed schedule, a "Transition Service Schedule").
The Parties shall set forth the terms for each Service
on the applicable Transition Service Schedule, which may
include, but are not limited to, the time period during
which the Service will be provided (if different from the
term of this Agreement determined pursuant to Article 4
hereof); a description of the Service to be provided; and
the estimated charge(s), if applicable, for the Service and
any other terms applicable thereto. Obligations under each
Transition Service Schedule shall be effective upon the
later of the execution of this Agreement or the execution of
the respective Transition Service Schedule. Transition
Service Schedules may be revised by the Parties by mutual
consent. Any reference to this Agreement shall be deemed to
include all the Transition Service Schedules.
ARTICLE 3
SERVICES
3.1 Services Generally. Except as otherwise provided
herein, for the term determined pursuant to Article 4
hereof, the Parties shall provide or cause to be provided
the service(s) described in the Transition Service
Schedule(s) attached hereto, beginning on the Separation
Date. The service(s) described on a single Transition
Service Schedule shall be referred to herein as a "Service."
Collectively, the services described on all the Transition
Service Schedules (including Additional Services and
Engineering and Technical Services) shall be referred to
herein as "Services."
3.2 Service Parameters. (i) The Parties shall provide the
Services only to the extent and under the personnel
availability conditions such Services are being provided
immediately prior to the Separation Date unless otherwise
agreed and set forth in a Transition Service Schedule; and
(ii) the Services will be available only for purposes of
conducting the businesses of the Parties substantially in
the manner they were conducted prior to the Separation Date.
3.3 Impracticability. A Party shall not be required to
provide any Service to the extent the performance of such
Service becomes "Impracticable" as a result of a cause or
causes outside the reasonable control of that Party, or to
the extent the performance of such Services would require
the Party to violate any applicable laws, rules or
regulations or would result in the breach of any agreement
or other applicable contract.
3.4 Additional Resources. In providing the Services,
neither of the Parties shall be obligated to: (i) hire any
additional employees; (ii) maintain the employment of any
specific employee; (iii) purchase, lease or license any
additional equipment or materials; or (iv) pay any costs
related to the transfer or conversion of the other Party's
data to that Party or any alternate supplier of Services.
3.5 Additional Services. From time to time after the
Separation Date, the Parties may agree to identify
additional Services to be provided in accordance with the
terms of this Agreement (the "Additional Services"). In such
event, the Parties shall execute additional Transition
Service Schedules for such Additional Services pursuant to
Article 2.
3.6 Further Obligations As To Services. Subject to the
provisions of Sections 3.2, 3.3 and 3.4 and otherwise except
as set forth in the next sentence, a Party shall perform, at
a charge determined using the principles for determining
charges under Section 5.1, any Service that: (a) was
provided by such Party immediately prior to the Separation
Date and which was inadvertently or unintentionally omitted
from the list of Services included in Transition Service
Schedules executed at the time of execution of this
Agreement, or (b) is essential to effectuate an orderly
transition under the Master Separation Agreement, unless in
either such case such performance would significantly
disrupt such Party's operations or materially increase the
scope of its responsibility under this Agreement. If a Party
reasonably believes the performance of Services requested
under subparagraphs (a) or (b) would significantly disrupt
its operations or materially increase the scope of its
responsibility under this Agreement, the Parties shall
negotiate in good faith to establish terms under which such
Services can be provided, but a Party shall not be obligated
to provide such Services if, following good faith
negotiation, it is unable to reach agreement on such terms.
3.7 Service Representatives. The Parties shall each
appoint a representative with respect to each Service (each
a "Service Representative"), which Service Representative
shall coordinate the requesting, scheduling and delivery of
such Service. Unless otherwise indicated on the Transition
Service Schedule for a Service, the Party's respective
Service Representatives for such Service shall be the
persons set forth on Schedule 3.7 as being responsible for
such Service (each such person being a "Senior
Representative"). Each Senior Representative shall
additionally be responsible for the replacement or
substitution, as necessary, of any Service Representatives
for such Senior Representative's assigned Services, and
shall coordinate any requests for changes in the scope of
such Services, or for the provision of any additional
related Services, with such Senior Representative's
counterpart with the other Party. Either Party may nominate
a substitute Service Representative for itself with respect
to a Service at any time upon reasonable notice to the other
Party. Any request for a Service made by Supply Holdco
through any person other than Supply Holdco's Senior
Representative or Service Representative with respect to
such Service shall not be binding upon Allegheny.
ARTICLE 4
TERM
The term of this Agreement shall commence on the
Separation Date and shall remain in effect until two (2)
years after the Separation Date (the "Expiration Date"),
unless earlier terminated under Article 7. This Agreement
may be amended by the Parties in writing, either in whole or
with respect to one or more of the Services. At least six
(6) months prior to the Expiration Date, the Parties shall
give each other written notice, in accordance with the
provisions of Section 16.5, of a request to extend the term
of the Agreement in respect of any Services. In addition,
the Parties shall be deemed to have extended this Agreement
with respect to a specific Service if the Transition Service
Schedule for such Service specifies a completion or
termination date beyond the Expiration Date. The Parties may
agree on an earlier expiration date with respect to a
specific Service by specifying such date on the Transition
Service Schedule for that Service. Services shall be
provided up to and including the date set forth in the
applicable Transition Service Schedule, subject to earlier
termination as provided herein.
ARTICLE 5
COMPENSATION
5.1 Charges For Services. Prior to the Distribution Date,
charges for Services shall be based upon the full cost of
providing the Services, including direct costs and indirect
costs. On and after the Distribution Date, charges for
Services shall be based upon the greater of (a) the full
cost of providing the Services, including direct costs and
indirect costs, and (b) the market value of such Services.
The Parties shall pay each other the charges, if any, set
forth on the Transition Service Schedules for each of the
Services listed therein as adjusted, from time to time, in
accordance with the processes and procedures established
under Section 5.4 and Section 5.5 hereof. The Parties shall
use good faith efforts to discuss any situation in which the
actual charge for a Service is reasonably expected to exceed
the estimated charge, if any, set forth on a Transition
Service Schedule for such Service; provided, however, that
the incurrence of charges in excess of any such estimate on
such Transition Service Schedule shall not justify stopping
the provision of, or payment for, Services under this
Agreement.
5.2 Payment Terms. The Parties shall xxxx monthly for all
charges pursuant to this Agreement. Such bills shall be
accompanied by reasonable documentation or other reasonable
explanation supporting such charges. Payment shall be made
for all Services provided hereunder within thirty (30) days
after receipt of an invoice therefor. Late payments shall
bear interest at the lesser of 18% per annum or the maximum
rate allowed by law.
5.3 Performance Under Ancillary Agreements.
Notwithstanding anything to the contrary contained herein, a
Party shall not be charged under this Agreement for any
obligations that are specifically required to be performed
under the Master Separation Agreement or any other Ancillary
Agreement and any such other obligations shall be performed
and charged for (if applicable) in accordance with the terms
of the Master Separation Agreement or such other Ancillary
Agreement.
5.4 Error Correction; True-Ups; Accounting. The Parties
shall reasonably agree on a process and procedure for
conducting internal audits and making adjustments to charges
as a result of the movement of employees and functions
between Parties, or the discovery of errors or omissions in
charges, as well as for a true-up of amounts owed. In no
event shall such processes and procedures extend beyond two
(2) years after completion of a Service.
5.5 Pricing Adjustments. In the event of a tax or
regulatory audit adjustment relating to the pricing of any
or all Services provided pursuant to this Agreement in which
it is determined by a taxing or regulatory authority that
any of the charges, individually or in combination, did not
result in an arm's-length payment, as determined under
internationally accepted arm's-length standards, then the
Parties, including any of the Parties' subcontractors
providing Services hereunder, may agree to make
corresponding adjustments to the charges in question for
such period to the extent necessary to achieve arm's-length
pricing. Any adjustment made pursuant to this Section 5.5 at
any time during the term of this Agreement or after
termination of this Agreement shall be reflected in the
Parties' legal books and records, and the resulting
underpayment or overpayment shall create, respectively, an
obligation to be paid in the manner specified in Section
5.2, or a credit against amounts owed under this Agreement.
ARTICLE 6
GENERAL OBLIGATIONS; STANDARD OF CARE
6.1 Performance Metrics: Service Provider. Subject to
Sections 3.2, 3.3, 3.4 and any other terms and conditions of
this Agreement, the Party providing a Service shall perform
its obligations hereunder in a commercially reasonable
manner. Specific performance metrics for such Party's
provision of a specific Service may be set forth in the
corresponding Transition Service Schedule. Where none is set
forth, the Party providing a Service shall use reasonable
efforts to provide such Service in accordance with its
policies, procedures and practices in effect before the
Separation Date and shall exercise the same care and skill
as it exercises in performing similar services for itself.
6.2 DISCLAIMER OF WARRANTIES. EXCEPT AS OTHERWISE
EXPRESSLY SET FORTH HEREIN, THE PARTIES MAKE NO WARRANTIES,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO
THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, WITH RESPECT TO THE SERVICES OR OTHER
DELIVERABLES PROVIDED BY IT HEREUNDER.
6.3 Performance Metrics: Service Recipient. Specific
performance metrics for the Party receiving a Service may be
set forth in the corresponding Transition Service Schedule.
Where none is set forth, the receiving Party shall use
reasonable efforts, in connection with receiving such
Services, to follow the policies, procedures and practices
in effect before the Separation Date, including providing
information and documentation sufficient for the performing
Party to perform such Service as it was performed before the
Separation Date and making available, as reasonably
requested, sufficient resources and timely decisions,
approvals and acceptances in order that the performing Party
may accomplish its obligations hereunder in a timely manner.
6.4 Transitional Nature Of Services; Changes. The Parties
acknowledge the transitional nature of the Services and
agree that a performing Party may make changes from time to
time in the manner of performing the Services if it is
making similar changes in performing similar services for
itself and its Subsidiaries and if the performing Party
furnishes to the receiving Party thirty (30) days written
notice regarding such changes.
6.5 Responsibility For Errors; Delays. A performing
Party's sole responsibility to a receiving Party:
(a) for errors or omissions in Services (except for
Engineering and Technical Services provided for in Article
11) shall be to furnish correct information, payment and/or
adjustment in the Services, at no additional cost or expense
to the receiving Party; provided, the receiving Party must
promptly advise the performing Party of any such error or
omission of which it becomes aware after having used
reasonable efforts to detect any such errors or omissions in
accordance with the standard of care set forth in Section
6.3; and
(b) for failure to deliver any Service because of
Impracticability, shall be to use reasonable efforts,
subject to Sections 3.2, 3.3 and 3.4, to make the Services
available and/or to resume performing the Services as
promptly as reasonably practicable.
6.6 Good Faith Cooperation; Consents. The Parties will use
good faith efforts to cooperate with each other in all
matters relating to the provision and receipt of Services.
Such cooperation shall include exchanging information,
performing true-ups and adjustments, and obtaining all third
party consents, licenses, sublicenses or approvals necessary
to permit each Party to perform its obligations hereunder
(including by way of example, not by way of limitation,
rights to use third party software needed for the
performance of Services). The costs of obtaining such third
party consents, licenses, sublicenses or approvals shall be
borne by the receiving Party. Each Party will maintain, in
accordance with its standard document retention procedures,
documentation supporting the information relevant to cost
calculations and cooperate with the other Party in making
such information available as needed in the event of a tax
audit, whether in the United States or any other country.
ARTICLE 7
EARLY TERMINATION
7.1 Early Termination. A performing Party may terminate
this Agreement, either with respect to all or with respect
to any one or more of the Services provided to the receiving
Party hereunder, for any reason or for no reason, at any
time upon one hundred eighty (180) days' prior written
notice to the receiving Party. A performing Party may
terminate this Agreement if the receiving Party fails to pay
any amount which is due and payable in respect of any
Service in accordance with the provisions of Section 5.2
hereof, and the receiving Party does not cure such breach
within ten (10) days after being given notice of such
breach; provided, however, that the receiving Party may
request that the Parties engage in a dispute resolution
negotiation as specified in Article 15 below prior to
termination for breach. In addition, subject to the
provisions of Article 15 below, either Party may terminate
this Agreement with respect to a specific Service if the
other Party materially breaches a material provision with
regard to that particular Service (other than for
nonpayment) and does not cure such breach (or does not take
reasonable steps required under the circumstances to cure
such breach going forward) within sixty (60) days after
being given notice of the breach; provided, however, that
the non-terminating Party may request that the Parties
engage in a dispute resolution negotiation as specified in
Article 15 below prior to termination for breach.
7.2 Survival. In the event of any termination with respect
to one or more, but less than all Services, this Agreement
shall continue in full force and effect with respect to any
Services that have not been terminated. Articles 5, 6, 12,
13, 14, 15 and 16 shall in any event survive any termination
of this Agreement in accordance with their terms.
ARTICLE 8
RELATIONSHIP BETWEEN THE PARTIES
The relationship between the Parties established under
this Agreement is that of independent contractors and
neither Party is an employee, agent, partner, or joint
venturer of or with the other. Each Party will be solely
responsible for the payment of any employment-related taxes,
insurance premiums or other employment benefits in respect
of the performance of Services by that Party's personnel
under this Agreement. A receiving Party shall grant the
performing Party's personnel access to sites, systems and
information (subject to the provisions of confidentiality in
the Confidential Disclosure Agreement) as necessary to
perform its obligations hereunder. A receiving Party shall
inform the performing Party's personnel of, and the
performing Party shall use reasonable efforts to cause its
personnel to obey, any and all security regulations and
other published policies of the receiving Party.
ARTICLE 9
SUBCONTRACTORS
A Party may engage a Subcontractor to perform all or
any portion of its duties under this Agreement, provided
that any such Subcontractor agrees in writing to be bound by
confidentiality obligations at least as protective as the
terms of the Confidential Disclosure Agreement, and provided
further that the performing Party remains responsible for
the performance of such Subcontractor. As used in this
Agreement, "Subcontractor" will mean any individual,
partnership, corporation, firm, association, unincorporated
organization, joint venture, trust or other entity engaged
to perform any Service hereunder, other than the Parties and
their Subsidiaries.
ARTICLE 10
INTELLECTUAL PROPERTY
Except as otherwise set forth herein, the terms of the
Intellectual Property Ownership Agreement between the
Parties shall govern the use and ownership of any Supply IP
(as defined therein) and any patents, trademarks, or other
intellectual property transferred, licensed used or created
in connection with the Services or otherwise under this
Agreement.
ARTICLE 11
ENGINEERING AND TECHNICAL SERVICES
11.1 Engineering and Technical Services. Pursuant to the
terms of this Agreement, the Parties may provide certain
engineering, technical and consulting Services to each other
from time to time in connection with the development,
construction, ownership, maintenance and operation of
electric generating, transmission and distribution
facilities, including, but not limited to, technical and
field services, engineering and generation technical
services, fuel procurement and related services and
environmental services (the "Engineering and Technical
Services"); provided, however, that a Party shall not be
required to provide any Engineering and Technical Service if
the provision of such Engineering and Technical Service, in
that Party's reasonable discretion, would be in violation of
its fiduciary duties to its shareholders or customers.
11.2 Professional Responsibility Regarding Engineering and
Technical Services.
(a) Standard of Care/Warranty. In the performance of
Engineering and Technical Services under this Agreement, a
performing Party shall exercise due care to assure that the
Services are provided in a workmanlike manner, and that such
Services meet the standards and specifications set forth in
the applicable Transition Service Schedule. The Parties
hereby warrant that all Engineering and Technical Services
provided hereunder will comply with the foregoing standard
of care (the "Warranty").
(b) Warranty Cure. If a receiving Party discovers that any
part of the Engineering and Technical Services fail to meet
the Warranty, it will notify the performing Party of such
failure. The performing Party's sole obligation for failing
to meet the Warranty shall be to reperform or cause to be
reperformed the Engineering and Technical Services
thereunder at cost (direct cost plus indirect costs) such
that they fully comply with the Transitional Service
Schedule and applicable laws and regulations. The receiving
Party will bear all costs and expenses incurred by the
performing Party in association with curing any warranted
Engineering and Technical Services, except where the failure
to meet the Warranty with respect to any Engineering and
Technical Services is due to any willful misconduct on the
part of the performing Party or its employees, agents,
contractors or subcontractors, in which case such costs and
expenses shall be borne by the performing Party. The
performing Party makes no other warranties with respect to
its performance of the Services, and the receiving Party
agrees to accept such services without further warranties of
any nature.
11.3 Applicable Laws and Regulations. The performing Party
shall comply with applicable national, federal, provincial,
state and local laws, decrees, regulations and ordinances
(including without limitation those of any local
jurisdiction in which Engineering and Technical Services are
performed) including, without limitation, those pertaining
to the environment, health, safety, sanitary facilities,
waste disposal and other matters applicable to or affecting
the performance of Engineering and Technical Services that
are published and in effect at the time particular
Engineering and Technical Services are rendered. The
receiving Party shall inform the performing Party of, and
the performing Party shall ensure that its employees, agents
and subcontractors comply with, site rules and regulations
while on the premises of any property or project of the
receiving Party.
11.4 Insurance. During the course of performance of any
Engineering and Technical Services following the
Distribution Date, the performing Party will obtain and
maintain in full force and effect insurance substantially in
accordance with, and meeting the requirements set forth in,
Schedule 11.4 attached hereto. At or prior to commencement
of any Engineering and Technical Services, the performing
Party shall furnish the receiving Party with a written
certificate from its insurers, addressed to the receiving
Party, indicating the existence of the performing Party's
insurance coverage, the amount and nature of such coverage,
and the expiration date(s) of each policy. The certificate
also shall include a provision requiring the performing
Party's insurers to give the receiving Party at least thirty
(30) days' written notice prior to the cancellation,
nonrenewal or material alteration of any policy.
11.5 Reuse of Documents. All documents, including drawings
and specifications, prepared and furnished by a performing
Party to the receiving Party pursuant to this Agreement
shall be the property of the receiving Party; provided,
however, that such documents are not intended or represented
to be suitable for reuse by the receiving Party or others on
any other project. The receiving Party may not reuse or
adapt such documents on or for other projects without the
written consent of the performing Party; provided, further,
that any such reuse or adaptation by the receiving Party,
with the consent of the performing Party, will be at the
receiving Party's sole risk and without liability or legal
exposure to the performing Party.
11.6 Non-Restrictive Relationship. Nothing in this
Agreement will be construed to preclude a receiving Party
from independently developing, acquiring or obtaining
Engineering and Technical Services or related documents
which may perform the same or similar functions as the
Engineering and Technical Services or related documents
provided by the performing Party.
ARTICLE 12
CONFIDENTIALITY
The terms of the Confidential Disclosure Agreement
between the Parties shall apply to any Confidential
Information (as defined therein) which is the subject matter
of this Agreement.
ARTICLE 13
LIMITATION OF LIABILITY
NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR ANY LOST
PROFITS, LOSS OF DATA, LOSS OF USE, COST OF COVER, BUSINESS
INTERRUPTION OR OTHER SPECIAL, INCIDENTAL, INDIRECT,
PUNITIVE OR CONSEQUENTIAL DAMAGES, HOWEVER CAUSED, UNDER ANY
THEORY OF LIABILITY, ARISING FROM THE PERFORMANCE OF, OR
RELATING TO, THIS AGREEMENT.
ARTICLE 14
FORCE MAJEURE
Each Party will be excused for any failure or delay in
performing any of its obligations under this Agreement,
other than the obligations of the receiving Party to make
payments to the performing Party pursuant to Article 5
hereof for services rendered, if such failure or delay is
caused solely by Force Majeure. "Force Majeure" includes,
without limitation, any act of God or the public enemy; any
accident, explosion, fire, ice, earthquake, lightning,
tornado, hurricane, or other severe weather condition or
calamity; any civil disturbance, labor dispute, or labor or
material shortage; any sabotage or acts of terrorism; any
acts of a public enemy, uprising, insurrection, civil
unrest, war or rebellion; any action or restraint by court
order or public or governmental authority or lawfully
established civilian authorities, or any other circumstance
or event beyond the reasonable control of the Party relying
upon such circumstance or event.
ARTICLE 15
DISPUTE RESOLUTION
Any dispute or claim arising out of or related to this
Agreement shall be resolved in accordance with the dispute
resolutions procedures set forth in Section 6.7 of the
Master Separation Agreement.
ARTICLE 16
MISCELLANEOUS
16.1 Entire Agreement. This Agreement, the Master
Separation Agreement and the other Ancillary Agreements and
the Exhibits and Schedules referenced or attached hereto and
thereto constitute the entire agreement between the Parties
with respect to the subject matter hereof and thereof and
shall supersede all prior written and oral and all
contemporaneous oral agreements and understandings with
respect to the subject matter hereof and thereof.
16.2 Existing Services Agreement. The Parties acknowledge
that Subsidiaries of Allegheny are currently authorized to
provide the services contracted for herein to AE Supply and
its Subsidiaries and, more specifically, that Allegheny
Energy Service Company, a Subsidiary of Allegheny, is
authorized to provide the services identified herein,
directly and indirectly, to AE Supply pursuant to an
Agreement dated November 12, 1999 (the "Existing Service
Agreement"), all subject to certain conditions established
by applicable government regulations, orders, and approvals
("Existing Authority"). The Parties intend to implement this
Agreement consistent with and to the extent permitted by
Existing Authority and to cooperate toward obtaining and
maintaining in effect such governmental agency consents,
orders or approvals as may be required in order to implement
this Agreement as fully as possible in accordance with its
terms for the stated term. After the Separation Date and
upon receipt of and applicable regulatory approvals and
consents, the Existing Services Agreement shall be
superseded by this Agreement to the extent permitted under
the Existing Authority.
16.3 Governing Law. This Agreement shall be construed in
accordance with, and all Disputes hereunder shall be
governed by, the laws of the State of Maryland. Any state
court sitting in _______ County, Maryland and/or the United
States District Court for the _______District of Maryland
shall have jurisdiction and venue over all Disputes between
the Parties that are permitted to be brought in a court of
law pursuant to Article 15 above.
16.4 Descriptive Headings. The headings contained in this
Agreement, in any Exhibit or Schedule hereto and in the
table of contents to this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used
in any Exhibit or Schedule but not otherwise defined
therein, shall have the meaning assigned to such term in
this Agreement. When a reference is made in this Agreement
to an Article or a Section, Exhibit or Schedule, such
reference shall be to an Article or Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise
indicated.
16.5 Notices. Notices, offers, requests, or other
communications required or permitted to be given by either
Party pursuant to the terms of this Agreement shall be given
in writing to the respective Parties to the following
addresses:
if to Allegheny, to:
Allegheny Energy, Inc.
000 Xxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
if to Supply Holdco, to:
[ ]
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
or to such other address as the Party to whom notice is
given may have previously furnished to the other in writing
as provided herein. Any notice involving non-performance,
termination, or renewal shall be sent by hand delivery,
recognized overnight courier or, within the United States,
may also be sent via certified mail, return receipt
requested. All other notices may also be sent by fax,
confirmed by first class mail. All notices shall be deemed
to have been given and received on the earlier of actual
delivery or three (3) days from the date of postmark.
16.6 Nonassignability; Third-Party Beneficiaries. Except as
specifically permitted under Article 9 above, neither Party
may, directly or indirectly, in whole or in part, whether by
operation of law or otherwise, assign or transfer this
Agreement without the other Party's prior written consent,
and any attempted assignment, transfer or delegation without
such prior written consent shall be voidable at the sole
option of such other Party. Without limiting the foregoing,
this Agreement will be binding upon and inure to the benefit
of the Parties and their permitted successors and assigns.
This Agreement, including the Transition Service Schedules
and the other documents referred to herein, shall be binding
upon and inure solely to the benefit of each party hereto
and their legal representatives and successors, and nothing
in this Agreement, express or implied, is intended to confer
upon any other Person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
16.7 Severability. If any term or other provision of this
Agreement is determined by a court, administrative agency or
arbitrator to be invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement will
nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated
is not affected in any manner materially adverse to any
Party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being
enforced, the Parties 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 transactions contemplated hereby are
fulfilled to the fullest extent possible.
16.8 Failure Or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of either Party hereto in
the exercise of any right hereunder shall impair such right
or be construed to be a waiver of, or acquiescence in, any
breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other
right. All rights and remedies existing under this Agreement
are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
16.9 Amendment. No change or amendment will be made to this
Agreement except by an instrument in writing signed on
behalf of each of the Parties to such agreement.
IN WITNESS WHEREOF, each of the Parties has caused this
Transitional Services Agreement to be executed in duplicate
originals by its duly authorized representatives.
ALLEGHENY ENERGY, INC. [_____________________]
By: By:
_____________________________ _____________________________
Name: Name:
Title: Title:
ANNEX A
TRANSITION SERVICES SCHEDULE
1. Transition Services Schedule #: ___
2. Functional Area: __ (From list on following pages) ________________
3. Start/End Date: The Services start on the Distribution
Date and end on the date set forth in the Transitional
Services Agreement unless other start date is indicated
below.
Alternative start date (if applicable): ______________________
4. Summary of Services (Describe the service to be
provided.)
Service Description of Service
(Note: One schedule per service. Below is the master list
of the services that may be requested)
Accounting Services
Tax Services
Auditing Services
Energy Procurement Services
Engineering and Technical Services
Construction
Chem Lab
R&D Services
Environmental Services
Operations
Intellectual Property
Information Technology
Legal Services
Treasury Services
Human Resources Services
Security
Payroll
Recruiting
IT
Communications Services
Purchasing/Procurement
Risk Management
Customer Services
Facilities
Management
Maintenance
Operation Services
Generating Facilities
Non-Generating Facilities
Telecommunications Services
Vehicle Maintenance
Other Services
5. Service Locations. List services to be provided per
location and site: (List all the services to be provided at
each site. Start Date and End Date may differ from Section 3.)
Location Site Service(s) Start Date End Date
6. Compensation for Services. (Note: For Allegheny the
minimum charge to Supply Holdco should be cost plus return
on investment / maximum as agreed to by the parties. For
supply Holdco it is unlikely the SEC will permit charges to
Allegheny in excess of the cost of Allegheny performing the
service internally).
7. Contract Administrator / Senior Service Representative.
For: For:
Allegheny Energy, Inc. Supply Holdco:
___________________________ ___________________________
Upon execution of this Transition Service Schedule by both
Parties, this Transition Service Schedule is hereby deemed
incorporated into and made part of that certain Transitional
Services Agreement.
For: For:
ALLEGHENY ENERGY, INC. SUPPLY HOLDCO, INC.
By:__________________________ By:__________________________
(Authorized Signature) (Authorized Signature)
Date: _____________________ Date: _______________________
Name: _______________________ Name: _______________________
Title: ______________________ Title: ______________________
Schedule 3.7
Senior Service Representatives
Allegheny Energy, Inc. Senior Service Representative
Accounting Services _____________________________
Tax Services _____________________________
Auditing Services _____________________________
Energy Procurement Services _____________________________
Engineering and Technical _____________________________
Services
Intellectual Property _____________________________
Information Technology _____________________________
Legal Services _____________________________
Treasury Services _____________________________
Human Resources Services _____________________________
Communications Services _____________________________
Facilities Management, Maintenance and Operation Services
Generating Facilities _____________________________
Non-Generating Facilities_____________________________
Telecommunications Services _____________________________
Vehicle Maintenance _____________________________
Other Services _____________________________
Supply Holdco, Inc. Senior Service Representative
Accounting Services _____________________________
Tax Services _____________________________
Auditing Services _____________________________
Energy Procurement Services _____________________________
Engineering and Technical _____________________________
Services
Intellectual Property _____________________________
Information Technology _____________________________
Legal Services _____________________________
Treasury Services _____________________________
Human Resources Services _____________________________
Communications Services _____________________________
Facilities Management, Maintenance and Operation Services
Generating Facilities _____________________________
Non-Generating Facilities_____________________________
Telecommunications Services _____________________________
Vehicle Maintenance _____________________________
Other Services _____________________________
Schedule 11.4
Insurance Requirements
Schedule 16.2
Existing Engineering Services Agreements
(To be determined)
