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EXHIBIT 10.5
CORPORATE SERVICES AGREEMENT
THIS CORPORATE SERVICES AGREEMENT ("Agreement"), by and between EAST
COAST POWER L.L.C., a Delaware limited liability company ("East Coast"), and
ENRON CAPITAL & TRADE RESOURCES CORP., a Delaware corporation ("ECT"), is
effective as of February 5, 1999.
WHEREAS, ECT and East Coast desire by their execution of this Agreement
to evidence their understanding about ECT's providing certain Services (as
defined below) to East Coast.
NOW, THEREFORE, in consideration of the foregoing premises, and the
mutual promises and covenants contained herein, the parties agree as follows:
SECTION 1. SERVICES PROVIDED BY ECT
In exchange for the compensation described herein, ECT agrees to provide or
cause its affiliates to provide East Coast and/or its subsidiaries certain
corporate, administrative and staffing services (the "Services") to the extent
such Services may be reasonably requested by East Coast from time to time. If
such services are requested by East Coast, the Services provided hereunder shall
be those described below.
A. GENERAL SERVICES
(i) Tax Returns for East Coast. ECT shall prepare tax returns,
information statements, and related filings and reports
(collectively, "Returns"), and shall provide tax accounting
and processing services for East Coast. East Coast shall be
responsible for the accuracy of information provided to ECT
and the content of all Returns for East Coast and its
subsidiaries. East Coast shall be solely responsible for
verifying the accuracy of the Returns and for making all
tax-related decisions.
(ii) Human Resources Advisory Services. ECT will provide human
resources services, including advice as to human resources
matters and staffing support (including recruiting
activities such as applicant screening, reference checking,
drug testing, and related activities). All personnel
decisions, such as hiring, termination, and compensation,
shall be made by East Coast management.
(iii) Legal Services. ECT will provide East Coast legal services.
(iv) Office and Related Shared Services. ECT will provide East
Coast with office space for East Coast personnel in office
space that ECT owns, controls, or leases, as well as
incidental services related to the provision of office
space, such as maintenance, security, building services,
operations, construction, churn/relocation, communications
and telephone systems, audio visual and locks, bus/parking
subsidies, utilities, office services, shipping/receiving,
copy center, mail center, concierge services, convenience
copiers, and other such services.
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(v) Cash Management/Treasury Services. ECT will provide
cash management and treasury services to East Coast,
including maintenance of accounts, check
disbursement, execution of wire transfers, and the
short-term investment of funds in accordance with
East Coast's investment policy. All disbursements of
funds shall be authorized and approved by East Coast.
(vi) Information Technology Services. ECT will provide
information technology services to East Coast.
(vii) Structuring and Technical Support Services. ECT will
provide technical support to review and/or develop
capital and maintenance projects, as well as
assistance in the structuring and development of such
projects.
(viii) Liability Insurance. ECT will assist East Coast in
obtaining and maintaining insurance coverage for East
Coast and its subsidiaries.
(ix) Corporate Records. ECT will maintain East Coast's
corporate records on behalf of East Coast. East Coast
shall be responsible for providing information to ECT
and for verifying the accuracy of any documents or
reports maintained by ECT or its designee.
B. EMPLOYEE-RELATED SERVICES
In addition to the human resources advisory services described in
Section 1(A)(ii) above, ECT will do the following:
1. ECT will provide East Coast with payrolling services
for all employees of East Coast, including check
processing and disbursement, direct deposit
processing, issuance of W-2 forms, and related
services.
2. ECT will cause eligible employees of East Coast to be
permitted to participate in the following employee
welfare or benefit plans: Retirement benefits (under
the Enron Corp. Savings Plan and the Enron Corp. Cash
Balance Plan), Long Term Disability Benefits
(pursuant to the terms of the Enron Corp. Long Term
Disability Plan), Medical Benefits (to eligible East
Coast employees and their qualified beneficiaries
under the Enron Corp. Medical Plan for Active
Employees), Dental Benefits (under the Enron Corp.
Dental Plan for Active Employees), Life Insurance
Benefits and Accidental Death and Dismemberment
Benefits (under the Enron Corp. Life and Accidental
Death and Dismemberment Plan), Section 125 Spending
Accounts (under the Enron Corp. Flexible Compensation
Plan), and other benefit or compensation plans that
East Coast may adopt. Nothing in this Agreement,
however, shall require ECT or Enron Corp. to maintain
the plans described in this paragraph; ECT and/or its
affiliates may cancel, modify, or revoke any of these
plans at any time.
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C. SERVICE PROVIDERS
At ECT's election, and with East Coast's prior consent, ECT may cause a
third party contractor to provide the Services requested by East Coast under
this Agreement; provided, however, that ECT shall remain responsible for
providing Services in accordance with this Agreement.
SECTION 2. PERFORMANCE OF SERVICES
2.1 NATURE/QUALITY OF SERVICES. ECT shall perform the Services in a
good and workmanlike manner, and the nature and quality of the Services provided
by ECT shall be similar in quality to comparable services provided by ECT to its
affiliates. East Coast will not provide ECT with any training or instructions
with respect to the Services. Similarly ECT is responsible for providing any
equipment, materials, or supplies that ECT determines is necessary to perform
the Services. ECT has all necessary licenses, permits, and registration required
to perform the Services.
2.2 PROVISION OF INFORMATION. Any data, information, equipment, or
general directions necessary for ECT to perform the Services shall be submitted
in a timely manner.
2.3 LAWS AND REGULATIONS.
(a) East Coast represents and agrees that it will use the
Services provided hereunder only in accordance with all applicable federal,
state, and local laws and regulations, and in accordance with the conditions,
rules, regulations, and specifications that may be set forth in any manuals,
materials, documents, or instructions in existence on the date of this Agreement
and furnished or communicated by the parties on an ongoing basis throughout the
term of this Agreement. ECT reserves the right to take all actions, including
termination of any particular Service, that it reasonably believes to be
necessary to assure compliance with applicable laws and regulations. ECT shall
provide written notice if any such actions will affect the Services.
(b) ECT certifies that it will comply with all applicable
laws, statutes, and regulations relating to providing the Services, including
but not limited to the Foreign Corrupt Practices Act, environmental laws,
employment laws, safety regulations, securities laws and regulations, antitrust
laws, intellectual property laws, and any other applicable laws, statutes, or
regulations.
SECTION 3. COMPENSATION
3.1 PRICE OF THE SERVICES. East Coast, in consideration for the
Services provided by ECT to East Coast or any of its subsidiaries, including,
but not limited to, the entities identified on Schedule "A" hereto, agrees to
pay ECT for the fair market value of the Services provided. The parties agree
that the fair market value of the Services is ECT's cost of providing the
Services plus five percent (5%) of such cost. If, at any time during the term of
this Agreement, a party reasonably and in good faith believes that this method
of determining fair market value no longer accurately reflects the fair market
value of the Services, then upon notice the parties shall negotiate to attempt
to resolve their differences and agree upon an alternate means of determining
fair market value. If no agreement is reached within thirty (30) days after such
notice, the parties will submit the matter to a nationally recognized
independent accounting firm (the "Accountants"), for a determination of an
alternate means to calculate fair market value. The determination by the
Accountants, as set forth in a notice delivered to both parties by the
Accountants, will be binding
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and conclusive on the parties, and the method or formula to determine fair
market value prescribed by the Accountants shall be applied from the date of
determination by the Accountants.
3.2 THIRD PARTY EXPENSES. East Coast agrees to reimburse ECT for the
actual cost, without any premium or margin payable to ECT, of any goods or
materials purchased for East Coast by ECT in the course and scope of performance
of the Services, and all expenses actually incurred by ECT for outsourced
Services or other goods, services or utilities provided by third party
providers.
SECTION 4. PAYMENT OF CHARGES AND REIMBURSEMENTS
4.1 PAYMENT FOR SERVICES. On or before the 15th day of each month
during the term of this Agreement, ECT shall submit an invoice for the Services
provided during the immediately-preceding calendar month. East Coast shall remit
payment of such invoice to ECT within 30 days of the date such invoice is
received.
4.2 DISPUTES OF INVOICES. In the event of a dispute as to the propriety
of invoiced amounts, East Coast shall pay all undisputed amounts on each
invoice, but shall be entitled to withhold payment of any amount in dispute and
shall notify ECT within ten (10) business days from receipt of the disputed
invoice of the disputed amount and the reasons for each such charge. ECT shall
provide East Coast with records relating to the disputed amount so as to enable
the parties to resolve the dispute. So long as the parties are attempting in
good faith to resolve the dispute, ECT shall not be entitled to terminate the
Services by reason of the disputed charge.
SECTION 5. RECORDS AND AUDITS
For at least two years after the termination of any Service or of this
Agreement, as well as for the time period required by applicable laws, each
party shall maintain records and other evidence sufficient to accurately and
properly reflect the performance of the Services and the amounts due in
accordance with this Agreement. Each party or its representatives shall have
access at all reasonable times to such records for the purpose of auditing and
verifying the accuracy of the invoices. Any audits performed by or on behalf of
a party shall be at that party's sole cost and expense. Each party shall have
the right to audit the other party's books for a period of two years after the
termination of this Agreement, except in those circumstances where contracts
with third parties limit the audit period to less than two years.
SECTION 6. TERMINATION; CANCELLATION OR REDUCTION OF SERVICES
6.1 TERMINATION OF AGREEMENT. Either party may terminate this Agreement
for any reason whatsoever by giving the other party at least 30 days' prior
written notice to that effect. Each party shall pay for all charges determined
pursuant to Section 4 and incurred up to the date of termination.
6.2 CANCELLATION OR REDUCTION OF SERVICES. At any time, either party
may terminate or reduce the level of any one or more of the specific Services by
giving at least 30 days' prior written notice. The termination of any one or
more of the specific Services shall have no impact on a party's obligation to
continue to provide any other Service(s).
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SECTION 7. INDEMNIFICATION
SUBJECT TO SECTION 8.12 BELOW, EAST COAST AGREES TO PROTECT, DEFEND,
INDEMNIFY AND HOLD HARMLESS ECT AND ITS EMPLOYEES, OFFICERS, DIRECTORS, AGENTS,
AND REPRESENTATIVES, AT EAST COAST'S COST AND EXPENSE, FROM AND AGAINST ANY AND
ALL CLAIMS, DEMANDS OR CAUSES OF ACTION (COLLECTIVELY, "CLAIMS") ARISING OUT OF
THE SERVICES PROVIDED UNDER THIS AGREEMENT, EXCEPT FOR (A) CLAIMS THAT ARISE AS
A RESULT OF ECT'S FAILURE TO COMPLY WITH THE TERMS AND CONDITIONS OF THIS
AGREEMENT AND (B) CLAIMS THAT ARISE AS A RESULT OF THE NEGLIGENCE OR WILLFUL
MISCONDUCT OF ECT. EAST COAST WILL REIMBURSE ECT FOR ANY AND ALL COSTS,
LIABILITIES, JUDGMENTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES) REASONABLY
INCURRED BY ECT IN CONNECTION WITH THE INVESTIGATING, PREPARING FOR, AND
DEFENDING AGAINST ANY SUCH CLAIM, DEMAND, OR CAUSE OF ACTION, WHETHER OR NOT
RESULTING IN ANY LIABILITY, AND ANY AMOUNT PAID IN SETTLEMENT OF ANY LITIGATION,
COMMENCED, OR THREATENED, OR OF ANY SUCH CLAIM, DEMAND, OR CAUSE OF ACTION IF
SUCH SETTLEMENT IS EFFECTED WITH THE WRITTEN CONSENT OF EAST COAST.
SECTION 8. MISCELLANEOUS
8.1 INDEPENDENT CONTRACTOR.
(a) The Services performed by ECT shall be as an independent
contractor.
(b) ECT is not an agent, partner, or joint venturer of East
Coast, and nothing in this Agreement will cause ECT to be an agent, partner, or
joint venturer of East Coast. In its capacity as provider of the Services under
this Agreement, ECT shall not represent itself to third persons to be other than
an independent contractor of East Coast, nor shall ECT offer or agree to incur
or assume any obligations or commitments in the name of East Coast or for East
Coast without the prior written consent and authorization of East Coast.
(c) ECT shall be responsible for payment of all taxes arising
out of ECT's activities under this Agreement, including, by way of illustration
but not limitation, federal and state income tax, Social Security tax,
unemployment insurance taxes, and any other taxes or business license fees as
required, but not any sales tax assessed for the performance of the Services.
East Coast will neither pay unemployment taxes on, nor withhold employment taxes
from, any compensation it pays ECT. Rather, East Coast will report the amounts
it pays ECT on IRS Form 1099, to the extent required to do so under applicable
Internal Revenue Code provisions.
8.2 ASSIGNMENT. Except as provided herein with regard to outsourcing,
neither party shall assign, in whole or in part, any of the rights, obligations,
or benefits arising under this Agreement without the prior written consent of
the other party, except by operation of law, except that either party may assign
its rights, obligations and benefits hereunder to any entity controlled by,
under common control with, or which controls such party, provided the assigning
party shall continue to remain jointly and severally liable for all of its
assignee's obligations hereunder.
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8.3 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
8.4 FORCE MAJEURE. The parties shall not have any obligation to perform
any specific Service hereunder if its failure to do so is caused by or results
from any act of God, governmental action, natural disaster, strikes, failure of
essential equipment, or any other cause or circumstance beyond the control of
the parties. During the term of the force majeure, no party will have to pay for
the specific Service which is subject to the force majeure.
8.5 NOTICES. All notices under this Agreement shall be in writing and
shall be sent by hand delivery, telecopy, or certified mail, return receipt
requested as follows:
If to ECT: If to East Coast:
Enron Capital & Trade Resources Corp. East Coast Power L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (fax) (▇▇▇) ▇▇▇-▇▇▇▇ (fax)
Attn: ▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
If notice is given by hand delivery or telecopy, such notice shall be deemed
received on the date of delivery or telecopy. Notice by certified mail shall be
deemed received on the tenth day after mailing. Either party may change its
address by giving the other party written notice of the new address in the
manner set forth above.
8.6 SEVERABILITY. In the event any portion of this Agreement shall be
found by a court of competent jurisdiction to be unenforceable, that portion of
this Agreement will be null and void, and the remainder of this Agreement will
be binding on the parties as if the unenforceable provisions had never been
contained herein.
8.7 WAIVER. No waiver by either party of any term or breach of this
Agreement shall be construed as a waiver of any other term or breach hereof or
of the same or a similar term or breach on any other occasion.
8.8 AMENDMENT. No modification or amendment of this Agreement shall be
binding upon either party unless in writing and signed by the parties hereto.
8.9 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter hereof, and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties hereto regarding the subject matter hereof.
8.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
8.11 NO THIRD PARTY BENEFICIARY. The provisions of this Agreement are
enforceable solely by the parties to this Agreement, and no other shall have the
right to enforce any provision of this Agreement or to compel any party to this
Agreement to comply with the terms of this Agreement.
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8.12 LIMITATION OF LIABILITY. NEITHER ECT OR EAST COAST SHALL BE LIABLE
TO THE OTHER FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE LOSSES OR
DAMAGES, INCLUDING LOST PROFITS AND GOODWILL. EACH PARTY'S MAXIMUM LIABILITY TO
THE OTHER WITH RESPECT TO ALL CLAIMS ARISING OUT OF THIS AGREEMENT SHALL BE
LIMITED IN THE AGGREGATE TO THE AMOUNT PAYABLE HEREUNDER. THE FOREGOING
LIMITATION OF LIABILITY WILL NOT APPLY WITH RESPECT TO (A) THE PAYMENT OF COSTS,
DAMAGES, EXPENSES, AND ATTORNEY'S FEES PAYABLE BY EITHER PARTY, OR (B) CLAIMS
ARISING OUT OF ECT'S OR EAST COAST'S ACTS OF GROSS NEGLIGENCE OR INTENTIONAL
MISCONDUCT.
8.13 ARBITRATION. Except for disputes to be resolved in accordance with
Section 4.2(b) hereof, any claim or dispute arising out of or relating to this
Agreement or the performance of the Services shall be submitted to binding
arbitration. Arbitration shall be conducted in Houston, Texas, under the
Commercial Arbitration Rules then in force of the American Arbitration
Association. The arbitration proceedings shall be conducted before a panel of
three arbitrators. Each party shall designate one arbitrator. If a party fails
to designate an arbitrator, the other party may have an arbitrator appointed by
applying to the senior active United States District Judge for the Southern
District of Texas. The two arbitrators shall select a third arbitrator. If the
two arbitrators chosen by the parties fail to agree upon the third arbitrator,
both or either of the Parties may apply to the senior active United States
District Judge for the Southern District of Texas for the appointment of a third
arbitrator. The parties agree that discovery shall be limited and shall be
handled expeditiously. Discovery proceedings available in litigation before the
courts shall not apply in an arbitration conducted pursuant to this Agreement.
However, each party shall produce relevant and non-privileged documents or
copies thereof requested by the other party within the time limits set and to
the extent required by order of the arbitrators. All disputes regarding
discovery shall be promptly resolved by the arbitrators. Strict rules of
evidence shall not apply in such arbitration. The parties may offer such
evidence as they desire and the arbitrators shall accept such evidence as the
arbitrators deem relevant to the issues and accord it such weight as the
arbitrators deem appropriate. In rendering the award, the arbitrators shall
determine the respective rights and obligations of the parties according to the
laws of the State of Texas. The arbitrators shall award to the prevailing party,
if any, as determined by the arbitrator all of the prevailing party's costs and
fees. "Costs and fees" shall include the reasonable pre-award expenses of the
arbitration, including arbitrator's fees, administrative fees, witness fees and
attorney's fees. The parties and arbitrators shall treat all aspects of the
arbitration proceedings, including without limitation, discovery, testimony and
other evidence, briefs and the award, as strictly confidential. The arbitrators'
decision may include any remedy contemplated by this Agreement. It is the intent
of the parties that, excepting extraordinary circumstances, any arbitration
shall be concluded within four months of the date arbitration is commenced. The
parties may, upon agreement, extend the time limits or the arbitrators may
determine that such an extension is necessary in the interest of justice.
8.14. CONFIDENTIALITY. ECT acknowledges that in connection with its
performance under this Agreement, it may gain access to confidential material
and information that is proprietary to East Coast ("Confidential Information").
Unless otherwise required by law or stock exchange requirement, ECT agrees, to
the extent that any such material and information is provided to ECT or to its
officers, directors, employees, accountants, attorneys, lenders and advisors
(collectively, "Representatives") solely in connection with the provision of
Services under this Agreement:
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(a) to hold Confidential Information in strict confidence and
not make use thereof other than for performance under or enforcement of this
Agreement;
(b) to reveal Confidential Information only to those
Representatives requiring such information in connection with the performance of
the Services; and
(c) not to reveal Confidential Information to any third person
who is not a Representative of ECT, except as necessary in connection with the
performance or evaluation of the Services, and then only to the extent that such
persons agree to be bound by the confidentiality obligations set forth herein.
This confidentiality provision shall survive for a period of five years
following the expiration or termination of this Agreement.
East Coast acknowledges and understands that Enron Capital II Corp. ("ECII"), a
wholly-owned subsidiary of ECT, is General Partner of Enron Capital Management
II Limited Partnership, which is General Partner of Joint Energy Development
Investments II Limited Partnership ("JEDI II"), which is the Class A Member (and
managing member) of East Coast Power Holding Company L.L.C., which is the sole
member of East Coast. In its capacity as an indirect owner of East Coast, and
being responsible for management of East Coast, ECT will be provided with
Confidential Information which may or may not be related to the performance of
the Services under this Agreement. Notwithstanding subparagraphs (a) and (b) of
this Section 8.14, ECT shall not be subject to the limitations set forth in
subparagraphs (a) and (b) of this Section 8.14 to the extent that ECT deems it
necessary to use Confidential Information to evaluate and oversee its investment
in East Coast and to ensure that ECII fulfills its fiduciary responsibility to
the equity owners of JEDI II with respect to management of East Coast.
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IN WITNESS WHEREOF, the parties have executed this Agreement, to be
effective as of February 5, 1999.
ENRON CAPITAL & TRADE RESOURCES CORP.
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇
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Name: W. ▇▇▇▇▇ ▇▇▇▇▇
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Title: Vice President
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Date: July 29, 1999
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EAST COAST POWER L.L.C.
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇.▇. ▇▇▇▇▇▇▇▇▇
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Title: President/ECP Generating
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Date: July 28, 1999
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