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Exhibit 2.2
TRANSITION SERVICES AGREEMENT
This
Transition Services Agreement (this "Agreement"), dated September
20,
2006, is made and entered into by and among Commerce Energy, Inc.,
a California
corporation ("Owner"), and Houston Energy Services Company, L.L.C.,
a Texas
limited liability company ("Company" and, together with Owner, the
"Parties").
WITNESSETH:
WHEREAS, on this date,
pursuant to an Asset Purchase Agreement of even date
herewith between Owner and Company (the "Asset Purchase
Agreement"), Owner has
purchased and acquired from Company the Acquired Assets;
WHEREAS, Owner and Company have not yet notified all counterparties
to the
Assigned Contracts of the assignment thereof by Company to Owner
and Owner's
assumption of certain prospective obligations of Company
thereunder, or, if
notified, one or more of the counterparties to the Assigned
Contracts may not
have been given timely notice within which to effect a transition
of the
benefits and obligations of Company thereunder to Owner or
otherwise may fail to
recognize Owner as the party in substitution for Company;
WHEREAS, Owner has conditioned its execution of the Asset
Purchase
Agreement and the consummation of the Transactions on, inter alia,
Company's
agreement to provide to Owner certain services necessary for the
conduct of the
Business during the transitional period following the date hereof
(the
"Transition Services");
WHEREAS, in connection with and subject to the consummation of
the
Transactions, Company is entering into an agreement with Pacific
Summit Energy
LLC ("Pacific Summit") with respect to Company's resale to Pacific
Summit of the
gas supply purchased by Company for the month of September, 2006,
which
corresponds to deliveries of gas pursuant to the Customer Contracts
during such
month and the novation to Pacific Summit of the Company's existing
positions
with gas suppliers for future deliveries of gas;
WHEREAS, Owner is entering into an Operating Agreement with Pacific
Summit
on this date (the "Pacific Summit Agreement"), pursuant to which
Pacific Summit
Energy will provide certain gas supply to Owner necessary for the
conduct of the
Business following the date hereof; and
WHEREAS, Company has conditioned its execution of this Agreement
and the
provision of the Transition Services on, inter alia, Owner's
causing of (i) the
issuance and delivery of a letter of credit in favor of Company and
(ii) a
corporate guaranty in favor of Company, all as more particularly
set forth in
Section 2.08;
NOW,
THEREFORE, in consideration of the foregoing and the
representations,
warranties and covenants herein contained, and for other good and
valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the
Parties agree as follows:
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ARTICLE I
DEFINITIONS
1.01
The following capitalized words or terms utilized in this
Agreement
shall have the respective meanings set forth below:
"Company" has the meaning set forth in the Preamble of this
Agreement.
"Company Parties" shall have the meaning set forth in Section
4.01.
"LDC" shall mean a local distribution company engaged primarily in
the
retail sale and/or delivery of natural gas through a distribution
system.
"Nominations" shall mean a precise listing of the quantities of gas
to be
transported during any specified time period, including all custody
transfer
entities, locations, compressor fueled and other volumetric
assessments, and the
precise routing of gas through the pipeline network.
"Owner" has the meaning set forth in the Preamble of this
Agreement.
"Parties" has the meaning set forth in the Preamble of this
Agreement.
"Pacific Summit" has the meaning set forth in the fourth recital
paragraph
of this Agreement.
"Pacific Summit Agreement" shall have the meaning set forth in the
fifth
recital paragraph of this Agreement.
"Transition Period" shall mean the period commencing on the date
hereof and
ending 90 days hereafter; provided, however, that Owner may elect
to extend the
Transition Period by an additional 30 days if, (a) following
Owner's
commercially reasonable efforts to enter into pooling agreements
with all of the
LDCs necessary for the operation of the Business, on the 90th day
after the date
hereof Owner shall not have entered into a pooling agreement with
each such LDC,
and (b) on or prior to such 90th day after the date hereof, Owner
shall have
paid Company the sum of twenty thousand dollars ($20,000.00) for
the services to
be rendered by Company to Owner during such additional 30 day
period pursuant to
the terms of this Agreement.
"Transition Services" has the meaning set forth in the third
recital
paragraph of this Agreement.
1.02
For purposes of this Agreement, capitalized words or terms not
otherwise defined in this Agreement shall have the same meanings as
set forth in
the Asset Purchase Agreement.
2
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ARTICLE II
SERVICES TO BE PROVIDED BY THE COMPANY
2.01
Office Space. Until October 31, 2006, Company shall provide
office
space and associated facilities and services for the Transferred
Employees, at
no cost to Owner, to the same extent such office space and
associated facilities
and services were provided to the Transferred Employees in the
conduct of the
Business as of the Closing. Notwithstanding the foregoing, to the
extent, if
any, that Company enters into a sublease or similar arrangement
with an
unaffiliated third party of any such office space and associated
facilities
requiring Company to make such office space and associated
facilities available
to such third party prior to October 31, 2006 (but no earlier than
October 1,
2006), then Company (a) shall not be so obligated to provide office
space and
associated facilities and services for the Transferred Employees
but (b) shall,
at no cost to Owner, assist Owner in promptly relocating the
tangible personal
property located in such office space and associated facilities and
previously
used in the conduct of the Business to another facility obtained by
Owner.
2.02
Assistance. During the Transition Period, Company shall render
such
assistance to the Transferred Employees as Owner may reasonably
request from
time to time, at no cost to Owner, in connection with the operation
of the
Business, including the following:
(a) notification of Customers, the gas suppliers of the Business
and
the
LDCs applicable to the Business of the acquisition of the Business
and
Company's assignment of the Assigned Contracts to Owner;
(b) facilitation of September nominations;
(c) preparation and delivery of invoices to customers of the
Business;
and
(d) integration of the Business into Owner's business,
including,
without limitation, the transfer to Owner of all electronic and
printed
books, records, accounts, ledgers, files, documents,
correspondence, lists,
employment records, operating and/or procedural manuals, end-user
customer
records, sales and promotional materials, studies and reports of
the
Business.
2.03
Change Over of Assigned Contracts. Company represents and warrants
to
Owner that it has left in place its counterparty credit with
existing LDCs and
pipelines of the Business from and after September 1, 2006 through
the date of
this Agreement and covenants that it shall continue to leave such
counterparty
credit in place as may be necessary during the Transition Period in
order to
facilitate gas deliveries by Owner pursuant to the Customer
Contracts during
such period. To the extent, if any, that Owner does not pay any
amounts payable
under
