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EXHIBIT 10.5(a)
ADMINISTRATIVE AND GAS SERVICES SUPPORT AGREEMENT
BETWEEN
EL PASO MERCHANT ENERGY, L.P.
AND
EAST COAST POWER L.L.C.
EFFECTIVE AS OF APRIL 1, 2001
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ADMINISTRATIVE AND GAS SERVICES SUPPORT AGREEMENT
THIS ADMINISTRATIVE AND GAS SERVICES SUPPORT AGREEMENT (this "Agreement"),
dated August 3, 2001, is made effective as of April 1, 2001 (the "Effective
Date"), by and between El Paso Merchant Energy, L.P., a Texas Partnership
("EPME") and East Coast Power L.L.C., a Delaware limited liability company
("East Coast"). EPME and East Coast may be referred to herein individually as a
"Party" or, collectively, as the "Parties".
RECITALS
East Coast requires, and EPME desires to provide, the personnel necessary
to perform all of the services related to the management of gas procurement,
purchase and transportation requirements, accounting, tax, information systems
and asset management (such obligations, the "Administrative Services
Obligations").
NOW, THEREFORE, in consideration of the premises and the mutual covenants
made herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, EPME and East Coast, intending to
be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINITIONS. Unless the context otherwise requires, as used
herein, the following terms shall have the meanings indicated below:
"AAA" shall have the meaning provided in Section 8.2.
"AAA Rules" shall have the meaning provided in Section 8.2.
"Affiliate" shall mean, with respect to any corporation or other person or
entity, any corporation or other person or entity directly or indirectly
controlling, controlled by or under common control with such corporation, other
person or entity, and all of its shareholders, officers and directors, if any,
and employees, servants, and other agents.
"Agreement" shall have the meaning provided in the Preamble.
"Effective Date" shall have the meaning provided in the Preamble.
"EPME" shall have the meaning provided in the Preamble.
"Foreign Corrupt Practices Act" shall mean the Foreign Corrupt Practices
Act of the United States, 15 U.S.C. Sections 78a, 78m(b), 78dd-1, 78dd-2 and
78ff.
"Indemnitee" shall have the meaning provided in Section 6.2(b).
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"Indemnitor" shall have the meaning provided in Section 6.2(b).
"Inflation Adjuster" shall mean the CPI index for All Urban Consumers
("CPI-U"), as published by the U.S. Department of Labor
(xxx://xxx.xxx.xxx/xxx/xxxxxxx.xxxxxxxx/xxx/xxxxx.xxx.
"Liabilities" shall have the meaning provided in Section 6.2(a).
"Party" and "Parties" shall have the respective meanings provided in the
Preamble.
"Services" shall have the meaning provided in Section 2.2.
"Shared Personnel" shall have the meaning provided in Section 2.1.
"Term" shall have the meaning provided in section 4.1.
SECTION 1.2 INTERPRETATION. As used in this Agreement, the terms "herein",
"herewith", and "hereof" are references to this Agreement, taken as a whole, and
references to an "Article", "Section", "Subsection" or "Clause" shall mean an
Article, Section, Subsection, or Clause of this Agreement, as the case may be,
unless otherwise indicated. All references to a given agreement, instrument, or
other document shall be a reference to that agreement, instrument, or other
document as modified, amended, supplemented, and restated through the date as of
which such reference is made. A reference to an entity or person includes the
successors and permitted assigns of such entity or person. References to
"includes" or "including" shall mean "including, but not limited to".
ARTICLE 2
RESPONSIBILITIES OF EPME
SECTION 2.1 PROVISION OF PERSONNEL. Subject to the terms and conditions
set forth herein, EPME shall make available to East Coast the personnel
necessary or desirable for purposes of performing the services described in
Section 2.2 (the "Shared Personnel").
SECTION 2.2 SCOPE OF DUTIES. During the Term of this Agreement, the Shared
Personnel shall perform or arrange to have performed on behalf of East Coast the
services described in this Section 2.2, and such other services as East Coast
shall reasonably require (the "Services"):
(a) Such services to assist East Coast in performing all of its
Administrative Services Obligations;
(b) Such administrative services as East Coast shall require,
including (i) maintenance of the books and records of East Coast, (ii)
preparation of financial statements and reports, (iii) preparation and review of
annual U.S. tax returns, (iv) management of all revenues, costs, and expenses of
East Coast, and (v) supervision of legal matters on behalf of East Coast,
including prosecution of insurance and other claims;
(c) Preparation of periodic reports as to routine and non-routine
matters, with respect to the Administrative Services Obligations; and
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(d) Coordination of third party services, including technical
consultants, outside legal counsel, independent auditors, and independent
certified public accountants with respect to the Administrative Services
Obligations.
SECTION 2.3 OTHER OBLIGATIONS. It is understood and agreed that all of the
Shared Personnel are solely and exclusively employees of EPME and that the
Shared Personnel will routinely be required to perform services for EPME.
SECTION 2.4 EAST COAST-SUPPLIED FACILITIES. East Coast shall make
available to EPME, to the extent necessary or desirable for performance of
EPME's obligations hereunder and at no cost to EPME, any office space,
equipment, or materials which East Coast has available in connection with the
performance of the Administrative Services Obligations.
ARTICLE 3
COMPENSATION OF EPME
SECTION 3.1 FIXED FEE. In consideration of the provision of the Shared
Personnel, East Coast shall pay an all-inclusive fee (as adjusted pursuant to
the terms hereof, the "Fixed Fee") equal to $3,600,000 per year. The Fixed Fee
shall be adjusted on January 1 of each year by the Inflation Adjuster commencing
January 1, 2002. The Fixed Fee shall be paid quarterly each March 31, June 30,
September 30 and December 31 in four equal installments of $900,000 which
payments shall be adjusted by the Inflation Adjuster and pro-rated for shorter
periods. Each Party is responsible for paying (i) its out-of-pocket expenses
that are incurred in connection with this Agreement and (ii) all taxes payable
by such Party under United States federal and state laws with respect to this
Agreement. East Coast shall make all Fixed Fee payments in full, without any
deduction or set-off whatsoever.
SECTION 3.2 DOCUMENTATION. The Shared Personnel shall keep records which
reflect the amount of time spent providing the Services for East Coast and the
amount of time spent providing services for EPME. All such records shall be kept
in EPME's offices and shall be made available to East Coast promptly upon
request.
SECTION 3.3 PAYMENTS. All payments to be made to EPME in connection with
this Agreement shall be made by wire transfer as specified by EPME, shall be in
immediately available funds, and shall be denominated in United States Dollars.
ARTICLE 4
TERM AND TERMINATION
SECTION 4.1 TERM. The term of this Agreement shall commence on the
Effective Date and shall automatically terminate with respect to East Coast on
the date of termination of its Administrative Services Obligations.
SECTION 4.2 NO COMPENSATION. If this Agreement is terminated for any
reason, neither Party shall be entitled to any compensation, damages, award, or
like payment from the other Party as a result of such termination, including any
payments for lost customers, lost
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business, loss of reputation or prestige or of investments made or expense
incurred to promote the business.
ARTICLE 5
EMPLOYMENT MATTERS
SECTION 5.1 LIABILITY FOR ACTS OR OMISSIONS OF SHARED PERSONNEL. Any and
all liability arising from or relating to any act or omission on the part of the
Shared Personnel in connection with performance of the Services shall be borne
exclusively by East Coast.
SECTION 5.2 NO JOINT EMPLOYMENT. East Coast shall not be considered an
employer or joint employer of the Shared Personnel.
SECTION 5.3 RELATIONSHIP OF THE PARTIES. Nothing contained herein shall be
construed as creating any partnership, agency, joint venture, or trust or to
authorize any Party to act as agent, servant, or employee for any other Party or
as constituting any relationship between EPME and East Coast other than that of
independent contractors.
ARTICLE 6
STANDARD OF CARE AND INDEMNIFICATION
SECTION 6.1 PERFORMANCE OF SERVICES. The Shared Personnel shall perform
the Services with the same degree of care, skill and diligence with which they
perform similar services for the account of EPME and its affiliates. If the
Shared Personnel fail to perform all or part of the Services in accordance with
such standards, the sole and exclusive obligation of EPME to East Coast in
connection with this Agreement shall be to have the Shared Personnel re-perform
the deficient Services in accordance with such standards.
SECTION 6.2 INDEMNIFICATION AND SUBROGATION.
(a) In addition to all other obligations of East Coast hereunder,
East Coast shall defend, indemnify, and hold harmless EPME and its Affiliates
and the Shared Personnel from and against any and all claims, actions, damages,
expenses (including reasonable attorneys' fees and expenses), losses,
settlements, or liabilities (collectively, "Liabilities") incurred or asserted
against EPME or its Affiliates or the Shared Personnel in connection with this
Agreement and performance of the Services pursuant hereto, including Liabilities
(i) resulting from any failure on the part of East Coast to perform its
obligations under this Agreement, (ii) arising as a result of, or in any way
connected with, the negligence, fraud, bad faith, or willful misconduct of East
Coast, (iii) arising as a result of, or in any way connected with, the use,
operation, possession, control, maintenance, or repair of the facilities with
respect to which the Services are being performed, or (iv) arising from East
Coast having taken any action, or omitted to take any action after due notice of
the necessity therefor, and of the likely consequences of such act or omission,
preventing the Shared Personnel from performing any of the Services, but
excluding Liabilities to the extent that they result from the bad faith, fraud,
or willful misconduct of the Shared Personnel.
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(b) Whenever an entity entitled to indemnification under Section
6.2(a) above (such party, an "Indemnitee") shall learn of a Liability which
might entitle such Indemnitee to indemnification under this Agreement, the
Indemnitee shall promptly send a notice in writing to East Coast (for these
purposes, "Indemnitor") of all material facts within the Indemnitee's knowledge
with respect to such Liability and the amount thereof; provided, however, that
the Indemnitee's right to indemnification shall be diminished by the failure to
give prompt notice only to the extent that the Indemnitee's failure to give such
notice was prejudicial to the rights of the Indemnitor. If, prior to the
expiration of fifteen (15) days from the provision of such notice, the
Indemnitor shall request, in writing, that such Liability not be paid, the
Indemnitee shall not pay the same, provided that the Indemnitor proceeds
promptly to negotiate, settle, or litigate, in good faith, such claim. The
Indemnitee shall have the right to participate in any such negotiation,
settlement, or litigation. The Indemnitee shall not be required to refrain from
paying any Liability which is represented by a court judgment or decree, unless
an appeal has been duly taken therefrom and execution thereof has been stayed.
SECTION 6.3 LIMITATION OF LIABILITY.
(a) Notwithstanding any provision in this Agreement to the contrary,
neither East Coast, EPME, nor any of their respective Affiliates or the Shared
Personnel, shall be liable in connection with this Agreement or the performance
of the Services for any consequential or direct loss or damage, including loss
or revenues, cost of capital, loss of goodwill, increased operating costs, or
any other special or incidental damages.
(b) EPME shall have no liability to East Coast for any loss or
damage arising out of or resulting from the activities of EPME or the Shared
Personnel. The parties agree that East Coast's only remedy for breach of this
Agreement by EPME or the Shared Personnel shall be for East Coast to terminate
this Agreement pursuant to Article 4, or to have the Shared Personnel re-perform
services as provided in Section 6.1.
(c) The Parties further agree that the waivers and disclaimers of
liability, indemnities, releases from liability, and limitations on liability
expressed in this Agreement shall survive termination or expiration of this
Agreement, and shall apply whether in contract, equity, tort, or otherwise, even
in the event of the fault, negligence (including sole negligence), strict
liability, or breach of the party indemnified or released, or whose liabilities
are limited, and shall extend to the Affiliates of the respective parties.
SECTION 6.4 DISCLAIMER OF WARRANTIES AND GUARANTIES. EXCEPT AS EXPRESSLY
PROVIDED IN SECTIONS 6.1 AND 7.2 HEREOF, EPME MAKES NO WARRANTIES OR GUARANTIES,
EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE PROVISION OF THE SHARED
PERSONNEL, PERFORMANCE OF THE SERVICES, OR ANY OTHER SUBJECT MATTER OF THIS
AGREEMENT, AND EPME EXPRESSLY DISCLAIMS, AND EAST COAST HEREBY WAIVES ANY
IMPLIED WARRANTIES OR WARRANTIES IMPOSED BY LAW.
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ARTICLE 7
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 7.1 REPRESENTATIONS AND WARRANTIES OF EAST COAST. East Coast
represents and warrants to EPME that:
(a) It is a limited liability company duly formed and validly
existing under the laws of Delaware; it has the power and authority to own its
assets and to transact the business in which it is now engaged or in which it
proposes to be engaged; and it is duly qualified to do business in each
jurisdiction in which the character of the properties owned by it therein or in
which the transaction of its business makes such qualification necessary.
(b) The execution, delivery, and performance by it of the Agreement
has been duly authorized by all necessary limited liability company action and
does not and will not (i) require any further consent or approval of its
members; (ii) contravene its certificate of formation and limited liability
company agreement (as amended); (iii) violate any provision of any law, rule,
regulation, order, writ, judgment, decree, determination, or award presently in
effect having applicability to it, (iv) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
lease, or instrument to which it is a party or by which it or its properties may
be bound or affected; (v) result in, or require, the creation or imposition of
any lien, upon or with respect to any of the properties now owned or hereafter
acquired by it; or (vi) cause it to be in default under any such law, rule,
regulation, order, writ, judgment, decree, determination, or award, or any such
indenture, agreement, lease or instrument.
(c) This Agreement is in full force and effect and is its legal,
valid and binding obligation, enforceable against it in accordance with its
terms, except to the extent that such enforcement may be limited by applicable
bankruptcy, moratorium, insolvency, or other similar laws affecting creditors'
rights generally and by general equitable principles (whether enforcement is
sought by proceedings in equity or at law).
SECTION 7.2 REPRESENTATIONS AND WARRANTIES OF EPME. EPME represents and
warrants to East Coast that:
(a) It is a limited partnership duly formed and validly existing
under the laws of Texas; it has the power and authority to own its assets and to
transact the business in which it is now engaged or in which it proposes to be
engaged; and it is duly qualified to do business in each jurisdiction in which
the character of the properties owned by it therein or in which the transaction
of its business makes such qualification necessary.
(b) The execution, delivery, and performance by it of the Agreement
has been duly authorized by all necessary partnership action and does not and
will not (i) require any further consent or approval of its general partner or
limited partners; (ii) contravene its certificate of limited partnership and
limited partnership agreement or any other governing documents of the limited
partnership; (iii) violate any provision of any law, rule, regulation, order,
writ, judgment, decree, determination, or award presently in effect having
applicability to it, (iv) result in a breach of or constitute a default under
any indenture or loan or credit agreement or any other agreement, lease, or
instrument to which it is a party or by which it or its properties may be
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bound or affected; (v) result in, or require, the creation or imposition of any
lien, upon or with respect to any of the properties now owned or hereafter
acquired by it; or (vi) cause it to be in default under any such law, rule,
regulation, order, writ, judgment, decree, determination, or award, or any such
indenture, agreement, lease or instrument.
(c) This Agreement is in full force and effect and is its legal,
valid and binding obligation, enforceable against it in accordance with its
terms, except to the extent that such enforcement may be limited by applicable
bankruptcy, moratorium, insolvency, or other similar laws affecting creditors'
rights generally and by general equitable principles (whether enforcement is
sought by proceedings in equity or at law).
ARTICLE 8
DISPUTE RESOLUTION
SECTION 8.1 EXECUTIVE RESOLUTION. If any dispute or disagreement shall
arise between EPME and East Coast in connection with or arising out of this
Agreement the parties shall attempt to settle such dispute by requesting, upon
written notice by one party to the other, that an officer or a senior management
official on behalf of each of EPME and East Coast meet and attempt to resolve
the dispute. In the event that such officers are unable to resolve such dispute
within thirty (30) days of such notice, upon the written request of either
party, such dispute shall be submitted to arbitration pursuant to Section 8.2
below. Except as otherwise provided in this Agreement, any disagreement,
dispute, controversy, or claim arising out of or relating to this Agreement
shall be settled exclusively and finally by commercial arbitration as provided
below.
SECTION 8.2 COMMERCIAL ARBITRATION. In the event that EPME and East Coast
fail to resolve a dispute pursuant to Section 8.1 above, the party initiating
arbitration proceedings may request arbitration, to be held before a tribunal of
three (3) neutral arbitrators. Within ten (10) days after receipt of such a
request, each party's authorized representative shall confer with the other and
indicate its appointment of an arbitrator. Within twenty (20) days after the
receipt of the request for arbitration, the two (2) arbitrators so appointed
shall attempt to agree on a third arbitrator. If one (1) or more parties have
not been appointed an arbitrator, or if two (2) appointed arbitrators cannot
agree on a third arbitrator, by twenty (20) days after the receipt of the
request for commercial arbitration, then either party may request the American
Arbitration Association ("AAA") to appoint the required remaining number of
arbitrators. The AAA shall choose arbitrators familiar with the industry
standards for international private power facilities in accordance with its
Construction Industry Arbitration Rules and Supplementary Procedures for Large
Complex Disputes ("AAA Rules"), which rules shall govern the conduct of the
arbitration in the absence of contrary agreement by all parties. The arbitration
shall be held in Houston, Texas. All proceedings shall be conducted in English
(by translation, if necessary). The arbitrators shall not have the power to add
to or amend this Agreement. The parties exclude any right of application or
appeal to any courts in connection with any question of law or other issues
arising in the course of arbitration or with respect to any award made. Subject
to such limitation, the decision of the arbitrators shall be final and binding,
and the arbitrators shall be entitled to grant equitable awards compelling
specific performance or restraining any actual or threatened breach of any
material obligations of the Agreement. The decision of the arbitrators shall
determine and specify how the expenses of the arbitration shall be allocated.
Within thirty (30) days following the conclusion of the hearing, unless such
time is extended by agreement, the
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arbitral tribunal shall render their award, stating separately findings of act
and determinations of law. The award rendered by the arbitrators shall be final
and judgment may be entered in accordance with applicable law in any court
having jurisdiction thereof.
SECTION 8.3 CONSOLIDATION. To the extent that either the parties agree, or
the arbitrators rule, that (i) any dispute subject to arbitration hereunder is
related to one or more other disputes that are pending with respect to this
Agreement or the Services being performed hereunder, with one or more common
parties being involved, (ii) such other disputes are being arbitrated, (iii)
judicial economy could be achieved and/or the possibility of conflicting
outcomes avoided if the arbitrations regarding the various disputes were to be
joined and the issues presented wholly or partly in one proceeding, then the
parties to the dispute hereunder and the appointed arbitrators shall take all
actions necessary or advisable to accomplish such joinder.
SECTION 8.4 CONTINUATION OF SERVICES AND PAYMENTS. Pending resolution of
any disputes hereunder, EPME will continue to follow East Coast's direction with
respect to the subject matter thereof, at East Coast's expense.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1 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.
SECTION 9.2 HEADINGS. Titles and headings of the Sections and Subsections
of this Agreement are for the convenience of reference only and do not form a
part of this Agreement, and shall not in any way affect the interpretation of
this Agreement.
SECTION 9.3 SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall insure to the benefit of and be binding upon the respective
successors and permitted assigns of the Parties hereto, provided that any
transferee agrees in writing to be bound by all of the terms and conditions
hereof to the same extent its transferor was bound with respect to the
transferred interest. However, EPME shall not assign its rights or obligations
hereunder (whether by operation of law or otherwise) without the prior written
consent of East Coast, unless the transfer is to an Affiliate of EPME and the
performance of such Affiliate has been guaranteed by EPME. Any assignment
contrary to the provisions of this Section 9.3 shall be void.
SECTION 9.4 FORCE MAJEURE. Neither party hereto shall be deemed to be in
breach or in violation of this Agreement if either is prevented from performing
any of its obligations hereunder (other than a payment default) by reason of the
occurrence of a Force Majeure Event.
SECTION 9.5 SUBCONTRACTING. EPME, in EPME's discretion with the prior
written approval of East Coast, may subcontract with Affiliates, and may
subcontract with third parties for the performance of professional services, but
may not otherwise subcontract for the performance of services to be performed by
EPME under this Agreement.
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SECTION 9.6 WAIVER. The waiver of any breach of any term or condition
hereof shall not be deemed a waiver of any other or any subsequent breach,
whether of like or different nature.
SECTION 9.7 SEVERABILITY. If any term or provision of this Agreement or
the performance thereof shall to any extent be invalid or unenforceable, such
invalidity or unenforceability shall not affect or render invalid or
unenforceable any other provision of this Agreement, and this Agreement shall be
valid and enforced to the fullest extent permitted by law.
SECTION 9.8 AMENDMENT. No modification or amendment of this Agreement
shall be valid unless in writing, executed by all of the parties hereto.
Notwithstanding the foregoing, EPME may, upon written notice to East Coast, add
additional managers to this Agreement, by means of written amendments hereto
executed by EPME and such additional managers.
SECTION 9.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas as applied to
contracts made and wholly performed within said State.
SECTION 9.10 NOTICE PROVISIONS. All notices and other communications
required or permitted by any agreement referencing these Notice Provisions shall
be in writing and shall become effective when delivered by hand or received by
telex, telecopier, telegram or such other method of telecommunication capable of
creating a writing, with receipt confirmed by answer back or otherwise, or when
received if sent by first-class mail, postage prepaid, at the addresses set
forth in Exhibit A attached hereto or at such other addresses as any Person set
forth below shall subsequently designate by written notice to each other in the
manner specified herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
EL PASO MERCHANT ENERGY, L.P.
By: /s/ XXXX X. XXXXXXXX
--------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Senior Vice President and Chief
Financial Officer
EAST COAST POWER L.L.C.
By: /s/ XXXX X. XXXXXXXX
--------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Senior Vice President and Chief
Financial Officer
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EXHIBIT A
NOTICE PROVISIONS
If to El Paso Merchant Energy, L.P.:
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: President
If to East Coast Power L.L.C.:
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Director of Power Asset Accounting
A-1
