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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
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
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).
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"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
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