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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
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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 (B) Buyer
