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Service Agreement
BETWEEN
NISOURCE CORPORATE SERVICES COMPANY
AND
[Subsidiary Company]
Dated January 1, 2001
(To Take Effect January 1, 2001)
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TABLE OF CONTENTS
ARTICLE I. Definitions.......................................................1
ARTICLE II. Description of Services...........................................1
A. Accounting and Statistical Services........................1
B. Auditing Services..........................................1
C. Budget Services............................................1
D. Business Promotion Services................................2
E. Corporate Services.........................................2
F. Data Processing, Tabulating and Calculating Services.......2
G. Depreciation Services......................................2
H. Economic Services..........................................2
I. Electronic Communications Services.........................2
J. Employee Services..........................................2
K. Engineering and Research Services..........................2
L. Gas Dispatching Services...................................2
M. Geology and Production Services............................3
N. Information Services.......................................3
O. Insurance Services.........................................3
P. Methods Services...........................................3
Q. Office Space...............................................3
R. Officers...................................................3
S. Operation and Planning Services............................3
T. Purchasing and Storage Services............................3
U. Rate Services..............................................3
V. Stationery Services........................................4
W. Tax Services...............................................4
X. Transportation Services....................................4
Y. Miscellaneous Services.....................................4
ARTICLE III. Compensation......................................................4
A. Stationery and Data Processing Services....................4
B. All Other Services and Miscellaneous Services Not
Specifically Provided For...............................4
(1) Specific Direct Salary Charges to Clients..........4
(2) Apportioned Direct Salary Charges to Associates....5
(3) Direct Salary Charges for Services to the Company..5
(4) Apportionment of Employee Benefits.................5
(5) Other Expenses.....................................5
(6) Apportionment of Overhead..........................6
ARTICLE IV. Computation of Salary Charges and Application of Overhead.........6
A. Direct Salary Charges......................................6
B. Suspense Account and Overhead Percentage Factors...........6
ARTICLE V. Billing...........................................................6
A. Monthly Bills and Detail Statement of Charges..............6
B. Information to be Furnished by Associate...................7
ARTICLE VI. Inspection of Records.............................................7
SERVICE AGREEMENT
THIS AGREEMENT made January 1, 2001 between NISOURCE CORPORATE SERVICES
COMPANY, a Delaware corporation (hereinafter called the Company), and
[Subsidiary Company], a [ ] corporation (hereinafter called the
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Client),
WITNESSETH:
Both the Company and the Client are corporate affiliates in the NiSource
Inc. System, which is comprised of NiSource Inc.and its corporate subsidiaries.
The Company, which is one of said subsidiaries, maintains an organization of
specialists who are experienced in the problems and operations of public
utilities and related businesses together with appropriate facilities and
equipment through which it is prepared to furnish services, as hereinafter
provided, to the Client, and to other affiliated corporations in the NiSource
Inc. System (the Client together with such other affiliates are hereinafter
collectively referred to as Clients).
The rendition of such services on a centralized basis enables the Clients
to realize substantial economic and other benefits through (1) efficient use of
personnel and equipment, (2) coordination of analysis and planning, and (3)
availability of specialized personnel and equipment which the Clients cannot
economically maintain on an individual basis.
The Company will render all services performed under all agreements at
cost, including reasonable compensation for necessary capital procured through
the issuance of capital stock, which cost shall be fairly and equitably
apportioned among the Clients. To the extent that any charges for services or
goods are rendered to the clients on the basis of estimated cost, they shall be
readjusted to actual costs at least annually except in cases of construction, in
which event such charges shall be adjusted upon completion of the individual
projects in compliance with the Securities and Exchange Commission's Rule 90
promulgated under the Public Utility Holding Company Act of 1935.
WITNESSETH THAT the Company and the Client in consideration of the premises
hereby agree as follows:
1. Agreement to Furnish Services. The Company agrees to furnish to
the Client, upon the terms and conditions set forth in Schedule A, which is
attached hereto and constitutes a part hereof, such of the services
described in Article II of said Schedule A, at such times, for such periods
and in such manner, as the Client may from time to time request. The
Company will maintain an organization sufficient to render with efficiency
and reasonable promptness such of the services described in Article II of
said Schedule A as the Client may reasonably request, but it shall not be
obligated to perform any services hereunder without reasonable notice.
2. Termination. This Agreement may be terminated, upon not less than
thirty days' written notice, by either the Company or the Client; provided,
however, that this Agreement shall be terminated automatically (i) to the
extent that performance under this Agreement may conflict with any rule,
regulation or order of the Securities and Exchange Commission adopted
before or after the making of this Agreement, or (ii) if this Agreement
shall become invalid or illegal under any state law or under any rule,
regulation or order of any state commission or other state body having
jurisdiction in the premises.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year first above written.
NISOURCE CORPORATE SERVICES COMPANY
By:
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Name:
Its:
[Subsidiary Company]
By:
------------------------------------
Name:
Its:
NISOURCE CORPORATE SERVICES COMPANY
Services Available to Clients
Methods of Charging Therefor and
Miscellaneous Terms and Conditions of Service Agreements
ARTICLE I. Definitions
A. The term "Company" shall mean Nisource Corporate Services Company and its
successors.
B. The term "Parent" shall mean Nisource Inc. and its successors.
C. The term "Associate" shall mean any subsidiary corporation of the Parent
which is a party to a service Agreement with the Company.
D. The term "Service Agreement" shall mean an agreement, of which this
Schedule A constitutes a part, for the rendition of services by the
Company.
E. The term "Client" shall mean any corporation to which services may be
rendered by the Company under a Service Agreement.
ARTICLE II. Description of Services
The services and facilities which the Company is prepared to render and
furnish, as requested from time to time by the Clients, are set forth in general
terms below. The details listed under each heading are intended to be
illustrative rather than inclusive and are subject to modification from time to
time in accordance with the state of the art and the needs of the Clients.
A. Accounting and Statistical Services. The Company will advise and assist the
Clients in accounting and statistical matters, including the preparation
and furnishing of financial, statistical and other related reports and
analyses; and in addition, will advise and assist the Clients in matters
related to cash requirements.
B. Auditing Services. The Company will conduct periodic audits of the general
records of the Clients, will supervise the auditing of local and field
office records of the Associates, and will coordinate the audit programs of
the Clients with those of the independent accountants in the annual
examination of their accounts.
C. Budget Services. The Company will advise and assist the Clients in matters
involving the preparation and development budgets and budgetary controls.
D. Business Promotion Services. The Company will advise and assist the
Associates in the preparation and use of advertising, in the development of
residential, commercial and industrial business, and in the rendering of
aid to local appliance distributors and dealers in the advertising and
promotion of appliance sales. 1.
E. Corporate Services. The Company will advise and assist the Clients in
connection with corporate matters and with proceedings involving regulatory
bodies.
F. Data Processing, Tabulating and Calculating Services. The Company will
process data for the Clients by means of electronic, punch-card, magnetic
tape, or other tabulating or calculating equipment maintained on a
centralized basis. These services will include the computing, preparing and
processing of service bills, and other bookkeeping, accounting, analytical,
calculating and related functions.
G. Depreciation Services. The Company will advise and assist the Associates in
matters pertaining to depreciation practices, including (1) the making of
studies to determine the estimated service life of various types of plant,
annual depreciation accrual rates, salvage experience, and trends in
depreciation reserves indicated by such studies; (2) assistance in the
organization and training of the depreciation departments of the
Associates; and (3) dissemination to the Associates of information
concerning current developments in depreciation practices.
H. Economic Services. The Company will advise and assist the Clients in
matters involving economic research and planning and in the development of
specific economic studies.
I. Electronic Communications Services. The Company will advise and assist the
Clients in connection with the planning, installation and operation of
radio networks, remote control and telemetering devices, microwave relay
systems and all other applications of electronics to the fields of
communication and control.
J. Employee Services. The Company will advise and assist the Clients in
connection with employee relations matters, including recruitment, employee
placement, training, compensation, safety, labor relations and health,
welfare and employee benefits.
K. Engineering and Research Services. The Company will advise and assist the
Associates in connection with the engineering phases of all construction
and operating matters, including estimates of costs of construction,
preparation of plans and designs, standardization of engineering
procedures, and supervision and inspection of construction. The Company
will also conduct both basic and specific research in fields related to the
operations of the Associates.
L. Gas Dispatching Services. The Company will advise and assist the Associates
in the dispatching of the gas supplies available to the Associates, and in
determining and effecting the most efficient routing and distribution of
such supplies in the light of the respective needs therefor and the
applicable laws and regulations of governmental bodies. If requested by the
Associates, the Company will provide a central dispatcher or dispatchers to
handle the routing and dispatching of gas.
M. Geology and Production Services. The Company will advise and assist the
Associates in matters of geology and production, including the estimation
of available reserves of the Associates and their suppliers, the selection
of acreage to be leased or surrendered, the selection of storage areas, the
location of xxxxx, and methods of drilling and of oil and gas recovery.
N. Information Services. The Company will advise and assist the Clients in
matters involving the furnishing of information to customers, employees,
investors and other interested groups, and to the public generally,
including the preparation of booklets, photographs, motion pictures and
other means of presentation, and assistance to Clients in their advertising
programs.
O. Insurance Services. The Company will advise and assist the Clients in
general insurance matters, in obtaining policies, making inspections and
settling claims.
P. Methods Services. The Company will advise and assist the Clients in the
formulation of accounting practices and methods of procedure, in the
standardization of forms, and with respect to the purchase, rental and use
of mechanical and electronic computing equipment. The Company will also
conduct such special studies as may be requested by the Clients.
Q. Office Space. As may from time to time be available, the Company will
provide suitable space in its offices for the use of the Clients and their
officers and employees.
R. Officers. Any Client may, with the consent of the Company, elect to any
office of the Client any officer or employee of the Company whose
compensation is paid by the Company. Services rendered to the Client by
such person as an officer shall be billed by the Company to the Client and
paid for as provided in Articles III, IV and V, and the Client shall not be
required to pay any compensation directly to any such person.
S. Operation and Planning Services. The Company will advise and assist the
Associates in connection with estimates of gas requirements and gas
available, gas transmission, measurement, storage and distribution,
construction requirements, negotiation of gas purchase and sale contracts,
and other operating matters.
T. Purchasing and Storage Services. The Company will render advice and
assistance to the Clients in connection with the standardization, purchase
and storage of equipment, materials and supplies, and, upon request of the
Client, the negotiation of purchases and the placing of purchase orders for
account of the Client.
U. Rate Services. The Company will advise and assist the Associates in all
rate matters, including the design and preparation of schedules and
tariffs, the analysis of rate filings of producers and pipeline suppliers,
and the preparation and presentation of testimony and exhibits to
regulatory authorities.
V. Stationery Services. The Company will maintain centralized equipment,
facilities and personnel to purchase or produce, store and distribute to
the Clients, as required by them, forms, stationery, charts, maps,
pamphlets and other printed material.
W. Tax Services. The Company will advise and assist the Clients in tax
matters, in the preparation of tax returns and in connection with
proceedings relating to taxes.
X. Transportation Services. The Company will advise and assist the Clients in
connection with the purchase, lease, operation and maintenance of motor
vehicles and the operation of aircraft owned or leased by the Company or
the Clients.
Y. Miscellaneous Services. The Company will render to any Client such other
services, not hereinabove described, as may properly be rendered by the
Company to such Client within the meaning and intent of the Public Utility
Holding Company Act of 1935 and any other applicable statutes and the
orders, rules and regulations of the Securities and Exchange Commission and
any other governmental bodies having jurisdiction, as from time to time the
Company may be equipped to render and such Client may desire to have
performed.
ARTICLE III. Compensation
The amounts which the Client shall pay to the company shall be determined
as provided in this Article III.
A. Stationery and Data Processing Services.
The Stationery Department and the Data Processing Department shall operate
as separate units and the Client shall be charged directly by each such
department for its services, at cost, which shall include all applicable
overhead. In the alternative such departments may recover the costs of any
service (including all applicable overhead) from the Client on the basis of
fixed unit prices, adjusted from time to time, as required, to provide a
reasonable balance between revenues and expenses. The same system shall apply to
any other department having similar characteristics if the Company shall deem it
appropriate.
B. All Other Services and Miscellaneous Services Not Specifically Provided
For.
(1) Specific Direct Salary Charges to Clients
To the extent that time spent by the officers and employees of the Company
engaged in rendering such other services and in rendering services not
specifically provided for is related to services rendered to a specific Client,
a direct salary charge, computed as provided in Article IV, shall be made to
such Client.
(2) Apportioned Direct Salary Charges to Associates
To the extent that the time spent by such officers and employees is
related to services rendered to the Associates generally, or to any specified
group of the Associates, a direct salary charge, computed as provided in Article
IV, shall be made to the Associates generally, or to such specified group of the
Associates, and allocated to each such associate upon such equitable basis or
bases as the Board of Directors of the Company may from time to time specify,
subject to concurrence of the Securities and Exchange Commission.
(3) Direct Salary Charges for Services to the Company
To the extent that time spent by any officer or employee of the Company is
related to services rendered to the Company, a direct salary charge computed as
provided in Article IV shall be made to Overhead.
(4) Apportionment of Employee Benefits
The employee benefit expenses which are related to direct salary charges
made pursuant to sub-paragraphs (1), (2) and (3) of this paragraph B shall be
apportioned among the several Clients and Overhead, as applicable, in the
proportions which the respective direct salary charges made pursuant to the
rendering of such services to each such Client and Overhead bear to the
aggregate of such direct salary charges.
(5) Other Expenses
All expenses, other than salaries and employee benefit expenses incurred by
the Company in connection with services rendered to a specific Client shall be
charged directly to such Client. All such expenses incurred by the Company in
connection with services rendered to the Associates generally or to any
specified group of Associates shall be apportioned in the manner set forth in
sub-paragraph (2) of paragraph B of this Article III for the apportionment of
salary charges. All other such expenses shall be charged to Overhead, which
shall include: the rents; depreciation; amortization; interest; taxes;
non-productive time of officers and employees; compensation of employees
performing office service functions; costs of general office supplies; charges
for utility, maintenance and similar services; legal fees and fees of
independent accountants; and all other such expenses normally treated as
Overhead.
(6) Apportionment of Overhead
The Overhead shall be allocated, among the Clients in the same proportions
which the direct salary charges to such Clients made pursuant to Sub-paragraphs
(1) and (2) of this paragraph B, for services of officers and employees, bear to
the aggregate of such direct salary charges.
ARTICLE IV. Computation of Salary Charges and Application of Overhead
A. Direct Salary Charges
The direct salary charge per hour which shall be made for the time of any
officer or employee for services rendered in any calendar month shall be
computed by dividing his total compensation for such month by the aggregate of
(1) the number of scheduled working hours for which he was compensated,
including hours paid for but not worked, and (2) hours worked in excess of his
regular work schedule, whether or not compensated for.
B. Suspense Account and Overhead Percentage Factors
The apportionment of overhead among Clients pursuant to subparagraph (6) of
paragraph B of Article III shall be effected by debits and credits to an
Overhead Suspense Account to be maintained on the books of the Company as
follows:
(a) Such account shall be debited with the amounts of all Overhead.
(b) Such account shall be credited, and each Client to which a direct
salary charge is made pursuant to sub-paragraphs (1) and (2) of
paragraph B of Article III for services of officers and employees
shall be charged, with an amount representing a uniform
percentage of each such direct salary charge. Such percentage
shall be initially estimated, and from time to time adjusted, if
required, in such manner that on an annual basis the credits made
pursuant to this clause will substantially equal the debits made
pursuant to foregoing clause (a).
ARTICLE V. Billing
A. Monthly Bills and Detail Statement of Charges
As soon as practicable after the close of each month the Company will issue
to the Client an Invoice and Detail of Charges which will itemize the amounts
due from the Client for services, overhead and expenses for such month, computed
pursuant to Articles III and IV. All amounts so billed shall be paid by the
Client within fifteen days after the receipt of the xxxx therefor.
To the extent required by law, all bills rendered by the Company to the
Client shall be accompanied by a statement showing the manner in which such
charge was determined and the cost to the Company of the service rendered.
B. Information to be Furnished by Associate
The Associate will forward to the Company from time to time, as requested,
such financial and statistical information as the Company may need to compute
the charges payable by such Associate upon such basis as may have been specified
pursuant to Article III B(2) of this Schedule A.
ARTICLE VI. Inspection of Records
The Company agrees to keep its books and records available for inspection
at all reasonable times by representatives of the Client in order that the
correctness of the charges made by the Company for services to the Client may be
verified by the Client.
METHODS OF ALLOCATION
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The following Basis of Allocation have been approved by the SEC as a method
of allocating Job Order charges and convenience payments directly to Associate
Companies.
Basis 1 - Total Gross Fixed Assets and Total Operating Expenses
Basis 2 - Total Gross Fixed Assets
Basis 3 - Total Distribution Property and Distribution Expenses
Basis 4 - Total Production Property and Expense
Basis 5 - Total Storage Property and Expense
Basis 6 - Transmission Property and Transmission Expenses
Basis 7 - Total Operating Expenses and Gross Depreciable Property
Basis 8 - Gross Depreciable Property
Basis 9 - Number of Automobile Units Owned and Leased
Basis 10 - Number of Retail Customers
Basis 11 - Number of Regular Employees
Basis 12 - Company Direct
Basis 13 - Fixed Allocation
Basis 14 - Number of Transportation Customers
Basis 15 - Total Employees and Customers
Basis 16 - Total Plant, State Employees and Customers
Basis 17 - Total Tariff and Transportation Customers
Basis 20 - Direct Costs
