EXHIBIT - 2.2
EXECUTION COPY
TRANSITION SERVICES
AGREEMENT
BY AND BETWEEN
AMERICAN COMMUNICATIONS NETWORK, INC.
A MICHIGAN CORPORATION
AND
COMMONWEALTH ENERGY CORPORATION
A CALIFORNIA CORPORATION
TABLE OF CONTENTS
Section 1. Definitions:....................................................................................1
Section 2. Services to be Provided:........................................................................3
Section 3. Reserved........................................................................................8
Section 4. Term and Termination............................................................................8
Section 5. Billing and Payment of Costs of Services; Invoices for Services.................................8
Section 6. Administration of Agreement.....................................................................9
Section 7. Relationships Among the Parties.................................................................9
Section 8. Other Agreements...............................................................................10
Section 9. Indemnification; Release; Limit on Liability...................................................10
Section 10. Headings.......................................................................................11
Section 11. Schedules......................................................................................11
Section 12. Required Insurance.............................................................................11
Section 13. Force Majeure..................................................................................11
Section 14. Notices........................................................................................11
Section 15. Successors and Assigns.........................................................................13
Section 16. Signatures Counterparts........................................................................13
Section 17. Amendments.....................................................................................13
Section 18. Governing Law..................................................................................13
Section 19. Entire Agreement...............................................................................14
Section 20. Negotiated Agreement...........................................................................14
Section 21. Waiver.........................................................................................14
Section 22. Severability...................................................................................14
Section 23. Interpretation.................................................................................14
Section 24. No Third Party Beneficiaries...................................................................14
Section 25. Specific Performance and Other Equitable Rights................................................14
Section 26. Press Release..................................................................................15
Section 27. Further Assurance..............................................................................15
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TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT (this "Agreement"), dated as of
February 9, 2005, is by and between American Communications Network, Inc., a
Michigan corporation ("ACN") and COMMONWEALTH ENERGY CORPORATION, a California
corporation ("Buyer").
Recitals
WHEREAS, ACN and Buyer have entered into an Asset Purchase Agreement,
dated as of February 9, 2005 (the "Purchase Agreement"), under which ACN has
agreed to sell the assets of ACN Energy, Inc, ACN Power, Inc. and ACN Utility
Services, Inc. (the "Energy Companies") identified in the Purchase Agreement
("Energy Assets" or "Assets") and Buyer has agreed to purchase from ACN the
Energy Assets identified in the Purchase Agreement; and
WHEREAS, the parties are entering into this Agreement to provide for
certain transition services following the Closing under the Purchase Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions:
Capitalized terms used, but not otherwise defined, herein shall have
the meanings given to them in the Purchase Agreement or as follows:
"AAA" is defined in Section 18.
"ACN Indemnified Party" is defined in Section 9(a).
"ACN Representatives" means, collectively, the officers, employees,
counsel, accountants, financial advisors, consultants and authorized
representatives of ACN or its Affiliates.
"ACN Service Providers" shall mean any Affiliate of ACN that on or
prior to the Closing Date was providing or had provided to the Energy Companies
any services that fall within the definition of Transition Services set out in
Section 2(a) below, whether pursuant to a written or oral arrangement or
otherwise.
"ACN System" means the systems and equipment owned or leased by the
Energy Companies and used by the Energy Companies from December 1, 2004 through
the Closing Date in the conduct of the Business.
"Business" means the business of owning, managing and operating the
Energy Assets.
"Buyer Indemnified Party" is defined in Section 9(a).
"Buyer-Related Transition Services" is defined in Section 2(c).
"Buyer Representatives" means, collectively, the officers, employees,
counsel, accountants, financial advisors, consultants and authorized
representatives of the Buyer.
"Call Center Services" means those customer care services provided by
ACN for the Energy Companies during the period December 1, 2004 through the
Closing Date.
"Contract Administration Officers" is defined in Section 6.
"FERC" means the Federal Energy Regulatory Commission and any
Governmental Authority that succeeds to the jurisdiction now or hereafter vested
in the FERC by applicable Laws.
"Force Majeure Event" means an act of God; fire, flood, earthquake,
storm, lightning or similar disaster; an act of Governmental Authority, or
necessity for compliance with any court order, law, statute, ordinance or
regulation promulgated by a Governmental Authority having jurisdiction with
respect to the applicable subject matter; a strike, lockout or other industrial
disturbance; an act of the public enemy, sabotage, war, act of terrorism,
insurrection or blockade; riot or other civil disturbance; epidemic; explosions;
or any other similar event that, in each such case, prevents, in whole or in
part, the performance of a party's obligations under this Agreement, is not
reasonably within the control of the affected party and which by the exercise of
commercially reasonable efforts the affected party is unable to overcome or
prevent, provided however that no party will be required to settle any labor
dispute.
"Governmental Approval" means any consent, authorization, certificate,
permit, grant or approval of any Governmental Authority that is necessary for
the operation of the Assets in accordance with applicable Laws.
"Governmental Authority" means any court or tribunal in any
jurisdiction or any federal, state, tribal, municipal or local government or
other governmental body, agency, authority, department, commission, board,
bureau, instrumentality, arbitrator or arbitral body or any quasi-governmental
or private body lawfully exercising any regulatory or taxing authority, and
shall include, without limitation, the FERC and state public utility commissions
(however such commissions are named).
"Interest Rate" shall mean the prime rate of interest as published in
the Wall Street Journal on the date of overpayment..
"IT Assets" means those applications, hardware and related systems
identified as the "Impacted Systems/Business Areas" to be set forth in the
Migration Plan.
"IT Services" means the information technology and data processing
services of the same nature and quality, using the same or comparable levels of
support, computer hardware, software and programs, as are being used and as are
being provided to the Energy Companies in connection with the Assets by ACN or
any ACN Service Provider from and after December 1, 2004 through the Closing
Date.
"Laws" means any applicable statute, common law, rule, regulation,
judgment, order, ordinance, writ, injunction or decree issued or promulgated by
any Governmental Authority.
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"Loss" is defined in Section 9(a).
"Migration Plan" means that detailed plan for migration of IT Assets to
the Buyer to be developed by the parties pursuant to Section 2(a)(iii).
"Reimbursable Costs" means, with respect to Call Center Services
provided by ACN and the ACN Service Providers, $[CONFIDENTIAL TREATMENT
REQUESTED] per full time equivalent employee performing Call Center Services per
month and the out of pocket cost of providing the T-1 phone line and 800
numbers, and with respect to the Buyer-Related Transition Services provided by
the Buyer, $0.00.
"Service Period" means the term beginning immediately following the
Closing on the Closing Date and ending at 12:00 midnight prevailing Eastern Time
on July 31, 2005, subject to early termination, in whole or in part, in
accordance with Section 4, provided that with respect to the Call Center
Services, the Service Period shall be for the lesser of one year from the
Closing Date or sixty days following notice from Buyer to Seller of Buyer's
intent to terminate Call Center Services hereunder.
"Service Provider" means, with respect to the Transition Services or
the IT Services, each of ACN and the ACN Service Providers, and, with respect to
the Buyer-Related Transition Services, the Buyer.
"Services" means, when used in this Agreement, the Transition Services
provided by ACN and the ACN Service Providers hereunder or the Buyer-Related
Transition Services provided by the Buyer hereunder, as the case may be.
"Transition Services" is defined in Section 2(a)(i).
SECTION 2. Services to be Provided:
(a) Transition Services.
(i) Definition. ACN hereby agrees to provide or to cause the ACN
Service Providers to provide to the Buyer the services (x) that ACN or
any ACN Service Provider has provided to the Energy Companies during
the period from December 1, 2004 through the Closing Date or are
otherwise necessary for the conduct of the Business in the ordinary
course and were being provided by ACN or any ACN Provider during such
period and, in each case, have not been previously performed by the
Transferred Employees of the Energy Companies and (y) consistent with
ACN practices, such other services, including prosecution of the
Migration Plan and employee training, as are reasonably required to
enable ACN and the Buyer to separate or Buyer to operate the Assets
(the "Transition Services"). Notwithstanding anything in this Agreement
to the contrary, Transition Services shall not include providing legal
or auditing services (without limiting Buyer's and the Energy
Companies' rights to access legal or auditing records and to request
assistance in transferring ongoing matters to new counsel) or
procurement or maintenance of insurance or surety bonds.
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(ii) Scope of Transition Services. During the Service Period, ACN
and the Buyer agree to consult with each other at regular intervals and
at such times as may be reasonably requested by the other party with
respect to the performance by ACN and the ACN Service Providers of the
Transition Services, the continued desirability of ACN and the ACN
Service Providers providing specific Transition Services, the timing of
the early termination of, or desirability for an extension of the
Service Period with respect to any specific Transition Services, the
occurrence of any events or circumstances negatively affecting ACN and
the ACN Service Providers' continued ability to provide any specific
Transition Service and other matters specifically relating to, or
impacting, the provision of the Transition Services.
(iii) Migration Plan. ACN shall, and shall cause the ACN Service
Providers to, and Buyer shall, and shall cause the Buyer to, perform
their respective obligations set forth in the Migration Plan. The
parties shall cooperate with each other to develop a mutually
acceptable Migration Plan by February 28, 2005.
(b) ACN's Covenants.
(i) ACN's Ability to Provide Transition Services. ACN shall
maintain, and shall use its commercially reasonable efforts to cause
the ACN Service Providers to maintain, sufficient personnel and
facilities to provide the Transition Services at all times in
accordance with this Agreement.
(ii) Standards for the Provision of Transition Services. The
Transition Services will be performed in a commercially reasonable
manner and with at least the same standard of care and timeliness that
the Transition Services were provided to the Energy Companies during
the period between December 1, 2004 and the Closing Date. EXCEPT AS SET
FORTH IN THIS SECTION 2(b)(ii), ACN AND THE ACN SERVICE PROVIDERS MAKE
NO REPRESENTATION, WARRANTY OR GUARANTY, EXPRESS OR IMPLIED, OF ANY
KIND CONCERNING THE TRANSITION SERVICES AND ANY RESULTS OR WORK PRODUCT
AND SPECIFICALLY MAKE NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, AND NONE SHALL BE IMPLIED. ALL OTHER
REPRESENTATIONS, WARRANTIES OR GUARANTEES, WRITTEN OR ORAL, EXPRESS OR
IMPLIED IN FACT OR IN LAW, AND WHETHER OR NOT BASED ON STATUTE ARE
EXCLUDED.
(iii) Other.
A. General. Systems, personnel, infrastructure and applications used
by ACN or any ACN Service Provider to perform the Transition
Services, including the IT Services and Call Center Services, shall
be managed by ACN or any ACN Service Provider using substantially
the same management practices as are currently in use by ACN or any
ACN Service Provider. ACN shall use commercially reasonable efforts
to ensure that any code written by ACN or any ACN Service Provider
to be provided pursuant to this Agreement does not contain any
disabling devices, or time bombs.
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B. Technology Changes. Changes that add or revise services,
functions or features affecting the Transition Services or the
Business (a "Technology Change") shall be made only if such
Technology Change will have no adverse affect on the Business or the
cost of Transition Services. ACN and Buyer agree to the following
general procedures and practices for managing and controlling
Technology Changes: (I) before using new software or equipment in a
production environment in order to provide the Transition Services,
ACN shall use commercially reasonably efforts to verify that the
item had been properly installed and tested, and is operating in
accordance with its specifications, and (II) ACN shall use
commercially reasonable efforts to document movement of programs
from development and test environments to production environments.
Notwithstanding the foregoing to the contrary, ACN shall have the
right to move the Energy Companies' data and processing, if
necessary, within functionally equivalent equipment owned by ACN or
an ACN Service Provider so long as such movement does not adversely
impact the Business or the performance of the Transition Services.
Such movements shall not constitute Technology Changes. All
Technology Changes which relate to the Assets shall be assigned to
Buyer.
C. Consents. ACN in cooperation with the Buyer shall use
commercially reasonable efforts to obtain appropriate vendor
consents for ACN and ACN Service Providers to use any software
needed by Buyer to conduct the Business, provided; that, until the
earlier to occur of (i) the consent of Excelergy is obtained or (ii)
expiration of the Excelergy licenses, ACN shall provide Buyer with
the use or benefit of such software in a mutually agreeable manner
and at no cost.
D. Security Measures. ACN shall continue existing security measures
under the circumstances which restrict access to the Energy
Companies' information, data and software used in the performance of
the Transition Services to ACN and the ACN Service Providers'
employees performing such services and any other individuals
authorized by the Buyer in writing.
E. Access. The Energy Companies shall provide access to its computer
equipment, hardware, software and employees as reasonably necessary
for ACN and the ACN Service Providers to provide the Transition
Services.
F. Assets Acquired in Connection with the IT Services and Call
Center Services. Any assets that are acquired in connection with the
provision of the IT Services, Call Center Services or other services
described in the Migration Plan for the benefit of the Buyer
(including any purchased hardware or software and any licenses to
use software or other intellectual property) shall, to the extent
the purchase price or acquisition costs thereof are included in the
Migration Plan Costs or the assets are otherwise included in the
Acquired Assets under the Purchase Agreement, be the property of the
Buyer. ACN agrees that it shall, at the request of the Buyer, and at
the sole cost of the Buyer, cooperate with the Buyer to ensure that
the Buyer has good and valid title or a valid license to such
assets.
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G. Termination of IT Services. The Buyer may elect to terminate any
of the IT Services in accordance with Section 4(b), if the Buyer
will not require any of the functions within that IT Service and any
Call Center Services on at least 60 days' prior notice.
(c) Buyer-Related Transition Services.
(i) Definition. Buyer hereby agrees to provide or cause to be provided to
ACN and its Affiliates during the Service Period services requested by ACN or
any of its Affiliates (A) that were provided to ACN or its Affiliates by the
Energy Companies during the period from December 1, 2004 through the Closing
Date, including, without limitation, services relating to financial and
accounting services relating to ACN or its Affiliates' financial reporting
obligations with respect to the Energy Companies and (B) Buyer is able to
provide such services with employees hired by Buyer from ACN and the Acquired
Assets (the "Buyer-Related Transition Services"). Notwithstanding anything in
this Agreement to the contrary, Buyer-Related Transition Services shall not
include providing legal or auditing services (without limiting ACN's and its
Affiliates' rights to access legal records) or procurement or maintenance of
insurance or surety bonds.
(ii) Scope of Buyer-Related Transition Services. During the Service
Period, ACN and the Buyer agree to consult with each other at regular
intervals and at such times as may be reasonably requested by the other party
with respect to the performance by the Energy Companies of the Buyer-Related
Transition Services, the Energy Companies providing specific Buyer-Related
Transition Services, the timing of the early termination of, or desirability
for an extension of the Service Period with respect to any specific
Buyer-Related Transition Services, the occurrence of any events or
circumstances negatively affecting the Energy Companies' continued ability to
provide any specific Buyer-Related Transition Service and other matters
specifically relating to, or impacting, the provision of the Buyer-Related
Transition Services.
(d) Buyer Covenants.
(i) Buyer's Ability to Provide Buyer-Related Transition Services. Buyer
shall use commercially reasonable efforts to maintain sufficient personnel
and facilities to provide the Buyer-Related Transition Services at all times
in accordance with this Agreement.
(ii) Standards for the Provision of Buyer-Related Transition Services. The
Buyer-Related Transition Services will be performed in substantially the same
manner and with at least the same standard of care and timeliness that the
Buyer-Related Transition Services were provided by the Energy Companies to
ACN and its Affiliates during the period between December 1, 2004 and the
Closing Date. EXCEPT AS SET FORTH IN THIS SECTION 2(d)(ii), BUYER MAKES NO
REPRESENTATION, WARRANTY OR GUARANTY, EXPRESS OR IMPLIED, OF ANY KIND
CONCERNING THE BUYER-RELATED TRANSITION SERVICES AND ANY RESULTS OR WORK
PRODUCT AND SPECIFICALLY MAKE NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, AND
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NONE SHALL BE IMPLIED. ALL OTHER REPRESENTATIONS, WARRANTIES OR GUARANTEES,
WRITTEN OR ORAL, EXPRESS OR IMPLIED IN FACT OR IN LAW, AND WHETHER OR NOT
BASED ON STATUTE ARE EXCLUDED.
(e) Certain Covenants. The parties agree to the following additional
covenants:
(i) Access and Record Retention.
A. To the extent allowed by applicable Law, Buyer and its duly authorized
representatives may inspect, review, copy and utilize at reasonable times
and during regular business hours, ACN's and the ACN Service Providers'
files, books, records, accounts, servicing practices, policies and
procedures and quality control policies and procedures relating to the
Energy Companies and to the Transition Services. ACN will, and will cause
the ACN Service Providers to, maintain complete and accurate records
relating to the Transition Services in accordance with ACN and the ACN
Service Providers standard practices and for so long as required for tax
and other regulatory purposes.
B. To the extent allowed by applicable Law, ACN and its duly authorized
representatives may inspect, review, copy and utilize at reasonable times
and during regular business hours, the Buyer's and the Energy Companies'
files, books, records, accounts, servicing practices, policies and
procedures and quality control policies and procedures relating to the
Buyer-Related Transition Services. Buyer will maintain complete and
accurate records relating to the Buyer-Related Transition Services in
accordance with Buyer's standard practices and for so long as required for
tax and other regulatory purposes.
C. Records Retention. Each party shall retain all records relating to this
Agreement for so long as required by any governmental authority or
regulatory authority having jurisdiction.
(ii) No Breach. Notwithstanding anything to the contrary herein, no
Service Provider shall be deemed to be in breach of its obligations hereunder
by reason of any of the following: (a) the failure of a party to grant its
consent to any matter requiring such consent prior to such Service Provider's
performance of its obligations with respect to such matter; (b) the failure
of a party to provide funds which are necessary for a Service Provider to
perform its obligations with respect to such matter; (c) the failure of a
party to enter into a contract or agreement with a third party which is
necessary for such Service Provider to perform its obligations with respect
to such matter; or (d) any acts of a Service Provider based in reliance upon
a direction of, in the case of ACN or a ACN Service Provider, a Buyer
Representative, and, in the case of Buyer, an ACN Representative.
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SECTION 3. Reserved
SECTION 4. Term and Termination.
(a) Term. The term of this Agreement shall begin on the Closing Date
and continue through the Service Period.
(b) Option to Terminate Transition Services. Unless otherwise provided
for hereunder, a party receiving Services hereunder may elect, by giving written
notice to the Service Provider for such Services thirty (30) days in advance, to
terminate the provision by such Service Provider of all or any item or category
of such Services, or to have all or any item or category of such Services
performed by its own employees or any other third party retained by such party
prior to the expiration of the Service Period.
(c) Right to Suspend Performance or to Terminate the Agreement. A
Service Provider shall have the right to suspend the performance of its
obligations under this Agreement in the event of the receiving parties' failure
to make payments due, owing and not disputed in good faith pursuant to Section 5
hereof to such Service Provider as required under this Agreement, and such
failure has not been cured within ten (10) days after written notice of such
failure to such receiving party. If the receiving party cures such payment
default, the Service Provider shall not be entitled to suspend performance
hereunder. The Service Provider shall have the right to terminate this Agreement
in the event such failure to make payment has not been cured within thirty (30)
days after written notice of such failure to the receiving party and the party
failing to make payment is not disputing the payment in good faith.
(d) Effect of Termination. Upon termination of this Agreement, each
Service Provider shall transfer to the party receiving Services hereunder all
materials and supplies procured in connection with the provision of such
Services, the cost of which has been included in Reimbursable Costs already paid
by the receiving party for such Services.
SECTION 5. Billing and Payment of Costs of Services; Invoices for Services.
(a) Payment. Subject to the following sentence, on or before the
fifteenth (15th) day of each month, ACN shall provide to Buyer one or more
written invoices setting out the total amount due for Reimbursable Costs
provided by ACN for the prior month, showing for each category the Reimbursable
Costs for the period covered by such invoice, together with such supporting
documentation for all such costs as shall be reasonably requested by Buyer.
Items properly invoiced and not disputed in good faith by the owing party are
due and payable within fifteen (15) days following the date of such invoice. No
costs or fees shall be charged for Transition Services by either party except as
provided in the definition of Reimbursable Costs, provided that if ACN
reasonably anticipates significant software programming costs as part of the
Migration Plan, the parties shall agree on reasonable compensation for ACN
before ACN will be obligated to perform such significant software programming
pursuant to the Migration Plan.
(b) Audit Rights. The owing party on any invoice shall have the right,
at any time within six (6) months after the date of any such invoice to audit
those books and records of the invoicing party with respect to the Services
reflected on such invoice, which books and records
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relate to the Services covered by such invoice, to verify the Reimbursable Costs
reflected on such invoice. Any such audit shall be conducted during normal
business hours by the auditing party or its designated auditor after ten (10)
days prior written notice to the invoicing party, at such auditing party's sole
cost and expense, in the offices of the invoicing party or such other location
as may be mutually agreed. The invoicing party shall cooperate with and provide
reasonable assistance to the auditing party and/or its auditor in connection
with the performance of any such audit. The auditing party shall assert any
claim for refund of costs of Services under the audited invoice within sixty
(60) days after the completion of the audit. The invoicing party shall have
ninety (90) days from receipt of the auditing party's claim for refund to
respond. If the invoicing party does not dispute the auditing party's refund
claim, the invoicing party shall offset the overpayment against future invoices;
or, if there are no additional invoices to be paid, the invoicing party shall
pay such refund within such 90-day period; such offset or refund shall be
credited or paid together with interest at the Interest Rate from the date of
the auditing party's overpayment to the invoicing party until the date of such
offset or refund of such overpayment is credited or paid. If the invoicing party
disputes the claim and refuses to pay any refund claim by the auditing party
resulting from the exercise of the auditing party's audit rights, each of the
parties shall be entitled to seek any remedy with respect to such matter
available at law or in equity.
SECTION 6. Administration of Agreement.
ACN and the Buyer shall each designate in writing person(s) to act as
contract administration officers ("Contract Administration Officers"), who shall
perform the following functions under this Agreement for their respective
principals:
(a) reporting to senior management of their respective principals with
respect to matters relating to the administration of this Agreement, the
provision of Services hereunder and any outstanding invoice disputes;
(b) monitoring the costs of Services; and
(c) serving as sole recipients of notices between the parties.
(d) The initial Contract Administration Officers for each party shall
be their respective Chief Financial Officers. Each party may replace its
Contract Administration Officers from time to time upon written notice to the
other party.
SECTION 7. Relationships Among the Parties.
Each Service Provider shall be an independent contractor with respect
to the Services it performs hereunder. Nothing in this Agreement shall cause the
relationship between ACN and the ACN Service Providers on the one hand, and
Buyer on the other hand, to be deemed to constitute an agency, partnership or
joint venture. The terms of this Agreement are not intended to constitute a
joint employer for any purpose between any of the parties and their affiliates.
No Service Provider shall have or hold itself out as having, any authority to
enter into any contract or create any obligation or liability on behalf of, in
the name of, or binding upon the party receiving Services from such Service
Provider under this Agreement or such party's Affiliates except as provided in
this Agreement.
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SECTION 8. Other Agreements
(a) ACN Regulatory Covenant. During the Service Period, ACN will
cooperate, and will use its commercially reasonable efforts to cause the ACN
Service Providers to cooperate, with the Buyer and any Governmental Authority
that regulates the Buyer, solely at Buyer's cost and expense, to satisfy any
regulatory requirements applicable to entities that provide services to Buyer or
the Governmental Authority.
(b) Buyer's Regulatory Covenant. During the Service Period, Buyer will
cooperate with ACN and the ACN Service Providers and any Governmental Authority
that regulates ACN and the ACN Service Providers, solely at ACN and the ACN
Service Providers cost and expense, to satisfy any regulatory requirements
applicable to entities that provide services to ACN or the Governmental
Authority.
SECTION 9. Indemnification; Release; Limit on Liability.
(a) Transition Services.
(i) Indemnification by ACN. ACN shall indemnify and hold harmless
the Buyer, and each of its officers, directors, employees, agents, and
affiliates (and the officers, directors, employees and agents of such
affiliates) (each, a "Buyer Indemnified Party") if any such Buyer
Indemnified Party shall at any time or from time to time suffer any
damage, judgment, fine, penalty, demand, settlement, liability, loss,
cost, expense (including reasonable attorneys', consultants' and
experts' fees), claim or cause of action (each, a "Loss") arising out
of, relating to or resulting from ACN's or ACN Service Providers'
performance of Transition Services under this Agreement, to the extent
such Loss results from the gross negligence or willful misconduct of
ACN or a ACN Service Provider in performing the Transition Services.
(ii) Indemnification by Buyer. Buyer shall indemnify and hold
harmless ACN and ACN Service Providers, and each of their officers,
directors, employees, agents, and affiliates (and the officers,
directors, employees and agents of such affiliates) (each, an "ACN
Indemnified Party") if any such ACN Indemnified Party shall at any time
or from time to time suffer any Loss arising out of, relating to or
resulting from Buyers' performance of Transition Services under this
Agreement, to the extent any such losses result from the gross
negligence or willful misconduct of Buyer in performing the Transition
Services.
(b) Survival. The provisions of this Article 9 shall survive the
termination of this Agreement for a period of two (2) years.
(c) Limit of Liability. Neither ACN nor the ACN Service Providers for
their part nor Buyer nor the Buyer Service Parties for their part shall be
liable to the other, and each hereby releases the other and their Affiliates,
and each officer, director, employee and agent of the other and/or any of its
Affiliates from, any Loss arising from any act, omission, or other fault of the
other in connection with the Transition Services, except to the extent any such
Loss results from gross negligence or willful misconduct. NOTWITHSTANDING
ANYTHING IN THIS AGREEMENT TO THE CONTRARY, THE AGGREGATE LIABILITY OF A PARTY
TO
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THE OTHER UNDER THIS AGREEMENT SHALL NOT EXCEED THE AGGREGATE AMOUNT OF PAYMENTS
RECEIVED HEREUNDER BY THE PARTY NOT EXPERIENCING THE LOSS. IN NO EVENT SHALL ANY
PARTY BE LIABLE TO THE OTHER PARTY FOR SPECIAL, INDIRECT, INCIDENTAL
CONSEQUENTIAL OR PUNITIVE LOSS, DAMAGES OR EXPENSES (INCLUDING LOST PROFITS OR
SAVINGS) ("CONSEQUENTIAL DAMAGES") ARISING FROM THIS AGREEMENT OR THE
PERFORMANCE OR NON-PERFORMANCE OF SERVICES HEREUNDER.
SECTION 10. Headings. The headings in this Agreement are for reference only, and
shall not affect the interpretation of this Agreement.
SECTION 11. Schedules. All references herein to Articles, Sections, subsections,
paragraphs, subparagraphs, clauses and Schedules shall be deemed references to
such parts of this Agreement, unless the context shall otherwise require.
SECTION 12. Required Insurance.
(a) Until expiration of the Service Period, ACN or each ACN Service
Provider, and Buyer shall maintain a level of insurance coverage substantially
similar to that held by each prior to Closing with financially sound and
reputable insurance companies.
(b) Upon request of one party under this Agreement, certificates of
insurance evidencing the above-required insurance shall be provided to the other
party under this Agreement.
SECTION 13. Force Majeure. If by reason of a Force Majeure Event either party is
rendered unable, in whole or in part, to perform its obligations under this
Agreement, other than the obligation to make payments of money then due, such
party shall be excused from such performance to the extent it is prevented by,
and during the continuance of, such Force Majeure Event. The party whose
performance is affected by an Force Majeure Event shall (i) give the other party
notice of the occurrence of such Force Majeure Event as soon as practicable and
(ii) use all commercially reasonable efforts to remedy the cause(s) and
effect(s) of such Force Majeure Event with all reasonable dispatch; provided,
however, that the affected party shall not be obligated to undertake
unreasonable costs or burdens in order to overcome the effects of the Force
Majeure Event and reinstate full performance of its obligations under this
Agreement.
SECTION 14. Notices.
(a) Any notice or other communication required or permitted hereunder
shall be in writing and shall be deemed given if delivered personally, by
facsimile (which is confirmed) or sent by first class notice certified mail or
overnight courier (providing proof of delivery), to the parties at the following
address:
If to ACN:
American Communications Network, Inc.
00000 Xxxxxxxx Xxxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
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Facsimile: (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
Jaffe, Raitt, Heuer & Xxxxx, P.C.
00000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxxx
If to the Buyer:
Commonwealth Energy Corporation
000 Xxxxx Xxxx, Xxx 0000
Xxxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
(b) Any party may, by notice given in accordance with this Section 14
to the other parties, designate another address or person for receipt of notices
hereunder, provided that notice of such a change shall be effective upon
receipt.
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SECTION 15. Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of ACN and Buyer and their respective successors, permitted
assigns and legal representatives. No party may assign this Agreement or any
right or obligation hereunder (whether by acquisition, merger, operation of law,
other transaction constituting a change of control or otherwise) without the
prior written consent of the other party, which consent shall not be
unreasonably withheld, however; any assignment without such consent shall be
void.
SECTION 16. Signatures Counterparts. Facsimile transmission of any signed
original document and/or retransmission of any signed facsimile transmission
shall be the same as delivery of an original. At the request of Buyer or ACN,
the parties will confirm facsimile transmission by signing a duplicate original
document. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall be considered
one and the same agreement.
SECTION 17. Amendments. This Agreement may be amended, modified or supplemented
only by a written instrument executed by ACN and Buyer.
SECTION 18. Governing Law.
(a) This Agreement will be governed by the laws of the state of New
York without regard to conflict of law principles
(b) Any claim, controversy or dispute between the parties shall be
resolved by binding arbitration of the issue in accordance with the following
procedures:
(i) Either party may request arbitration by giving the other
involved party written notice, which notice shall describe, in
reasonable detail, the nature of the dispute, controversy or claim. The
arbitration shall be governed by the rules of the American Arbitration
Association ("AAA") and held in Houston, Texas or other mutually agreed
upon location.
(ii) If both parties agree an arbitrator within 30 days after a
request for arbitration is made hereunder, that arbitrator shall be
selected to hear the dispute in accordance with AAA rules. If the
parties are not able to agree upon an arbitrator within such 30 day
period, then that party who requested arbitration may request that the
AAA select an arbitrator who has business experience in the energy
industry similar to the Business and the selected arbitrator shall hear
the dispute in accordance with AAA rules.
(iii) Each of the parties shall bear its own fees, costs and
expenses of the arbitration and its own legal expenses, attorneys' fees
and costs of all experts and witnesses; provided, however, that if the
claim of either party is upheld by the arbitrator in all material
respects, the arbitrator may apportion between the parties as the
arbitrator may deem equitable the costs incurred by the prevailing
party. The fees and expenses of the arbitration procedures, including
the fees of the arbitrator, will be shared equally by the parties.
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(iv) Any award rendered pursuant to an arbitration proceeding shall
be final, conclusive, non-appealable and binding upon the parties, and
any judgment thereon may be entered and enforced in any court of
competent jurisdiction.
SECTION 19. Entire Agreement. This Agreement and the Purchase Agreement and all
Schedules attached thereto constitute the entire agreement between the parties
hereto relating to the subject matter hereof and supersede all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no general or specific
warranties, representations or other agreements by or among the parties in
connection with the entering into of this Agreement or the subject matter hereof
except as specifically set forth or contemplated herein or therein.
SECTION 20. Negotiated Agreement. This Agreement has been negotiated by the
parties and the fact that the initial and final draft will have been prepared by
either party will not give rise to any presumption for or against any party to
this Agreement or be used in any respect or forum in the construction or
interpretation of this Agreement or any of its provisions.
SECTION 21. Waiver. No consent or waiver, express or implied, by any party to or
of any breach or default by any other party in the performance by such other
party of its obligations hereunder shall be deemed or construed to be a consent
or waiver to or of any other breach or default in the performance of obligations
hereunder by such other party hereunder. Failure on the part of any party to
complain of any act or failure to act of any other party or to declare any other
party in default, irrespective of how long such failure continues, shall not
constitute a waiver by such first party of any of its rights hereunder.
SECTION 22. 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, each of ACN and Buyer directs that such court interpret and
apply the remainder of this Agreement in the manner that it determines most
closely effectuates their intent in entering into this Agreement, and in doing
so particularly take into account the relative importance of the term,
provision, covenant or restriction being held invalid, void or unenforceable.
SECTION 23. Interpretation. Whenever the words "include," "includes," or
"including," are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
SECTION 24. No Third Party Beneficiaries. Except for Buyer and ACN Service
Providers, which are intended third party beneficiaries, and except as set forth
in Sections 9 and 15, nothing in this Agreement is intended or shall be
construed to give any person, other than the parties hereto, their successors
and permitted assigns, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
SECTION 25. Specific Performance and Other Equitable Rights.
(a) ACN recognizes and acknowledges that Buyer would not have entered
into the Purchase Agreement unless ACN had agreed to execute this Agreement and
perform the Transition Services in accordance herewith, and that a breach by ACN
of any covenants or other commitments contained in this Agreement will cause
Buyer to sustain injury for which it would not have an adequate remedy at law
for money damages. Therefore ACN agrees that in the event
14
of any such breach, the Buyer shall be entitled to the remedy of specific
performance of such covenants or commitments and preliminary and permanent
injunctive and other equitable relief in addition to any other remedy to which
Buyer may be entitled, at law or in equity.
(b) Buyer recognizes and acknowledges that ACN would not have entered
into the Purchase Agreement unless Buyer had agreed to execute this Agreement
and perform the Transition Services in accordance herewith, and that a breach by
Buyer of any covenants or other commitments contained in this Agreement will
cause ACN to sustain injury for which it would not have an adequate remedy at
law for money damages. Therefore Buyer agrees that in the event of any such
breach, ACN shall be entitled to the remedy of specific performance of such
covenants or commitments and preliminary and permanent injunctive and other
equitable relief in addition to any other remedy to which ACN may be entitled,
at law or in equity.
SECTION 26. Press Release. Except as required by Laws or applicable stock
exchange rules, neither party shall issue any press releases or any other public
disclosure relating to or arising out of the performance of this Agreement
without the prior written consent and approval of the content of such statement
by the other party. The disclosing party shall notify the other party of any
such requirement of Law to disclose and shall promptly provide a copy of the
relevant disclosure to the other.
SECTION 27. Further Assurance. Each of the parties agrees at any time and from
time to time during the Service Period, upon the request of the other party, to
do, or to cause to be done, all such further acts and assurances as may be
required to carry out the terms and conditions of this Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
AMERICAN COMMUNICATIONS NETWORK, INC.
a Michigan Corporation
By: /S/ XXXXX X. XXXXXXX
----------------------------
Name: Name: Xxxxx X. Xxxxxxx
----------------------------
Title: Title: Secretary/Treasurer
----------------------------
COMMONWEALTH ENERGY CORPORATION
a California Corporation
By: /S/ XXXXX XXXXXXX
----------------------------
Name: Name: Xxxxx Xxxxxxx
----------------------------
Title: Title: President
----------------------------
[Signature page to Transition Services Agreement]
