exhibit10_5.htm


Exhibit 10.5


 


***  Indicates material has been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission.  A complete copy of this agreement has been filed separately with the Securities and Exchange Commission


 







 







 







 


AMENDMENT NO. #04


 


EFFECTIVE JULY 1, 2010


 


TO


 


PROFESSIONAL SERVICES AGREEMENT


 


FOR


 


TXU ENERGY’S


 


2009 iTHERMOSTAT PROGRAM


 


AN INTERNET BASED LOAD MANAGEMENT SYSTEM


 


WITH ZIGBEE HOME AREA NETWORK


 







 


BY AND BETWEEN


 


COMVERGE INC.


 


AND


 


TXU ENERGY RETAIL COMPANY LLC


 







 


DATED APRIL 15, 2009


 


CONTRACT NO. C 0600559 C


 







 







 


Redacted Agreement


 


 




  





  











  






 


No. C 0600559 C


 


AMENDMENT NO. #04



	
The Effective Date of the Amendment is July 1, 2010

	
EFFECTIVE DATE


	
This Amendment modifies, alters or changes specific terms and conditions of Contract No. C 0600559 C (the “Agreement”) that exists between the parties hereto. Except as modified in this Amendment or previous amendments, the Agreement will remain in full force and effect.

	
PURPOSE


	
The Agreement is modified as follows:

	
MODIFICATIONS


	
•  The provisions of the Article titled “INVOICES AND PAYMENT” is modified by deleting the first reference to the term *** and inserting in lieu thereof the term ***.” In addition, the following sentence is added, “Any invoices not paid when due shall bear interest at the rate of *** per month or at the highest rate permitted by law (whichever is less), from the date due until paid and COMPANY shall pay such additional interest rate. In addition, this provision is modified by deleting the attention line on the invoice address “Attn: Patrick James” and inserting in lieu thereof “Attn: Sr. Manager, DSM Program Management.”

	
INVOICES AND PAYMENT


	
•  The provisions of the Article titled “BACKGROUND CHECKS/DRUG SCREENING” is deleted and replaced with the following:

	
BACKGROUND CHECKS/DRUG SCREENING


	
CONTRACTOR will conduct frequent background checks (covering such matters as dictated by COMPANY from time to time, but in no case less than what COMPANY is required to conduct with respect to its own employees under applicable laws and regulations) and drug tests on all CONTRACTOR Agents and applicants. No person shall perform services for COMPANY if such person has a prior felony conviction or if such person tests positively for illegal substances. Background Screening and Drug screening will be in accordance with Attachments 8 and 9.

	  
	
•  A new additional Statement of Work is incorporated into the Agreement as Attachment 1A “Statement of Work (#2)”, which will supersede and replace certain applicable portions of Attachment 1 (the original Statement of Work), with regard to the purchase of certain CONTRACTOR products and the installation of such products.

	
STATEMENT OF WORK


	
•  The following attachment are incorporated into the Agreement:

	
ATTACHMENTS


	
o  Attachment 8. Background Screening


o  Attachment 9. Drug Screening


o  Attachment 1A:  Statement of Work (#2)

	  





 


 




  





  











  






No. C 0600559 C


 


AMENDMENT NO. #04


 


The parties have signed this Amendment acknowledging their agreement to its provisions as of the Effective Date.


 



	
Comverge Inc.

	
TXU Energy Retail Company LLC


	
By:             /s/ Ed Myszka                                                         


Name:        Ed Myszka                                                         


Title:          COO                                                         


Date:          6-17-10                                                         

	
By:               /s/ Jim Burke                                                                


Name:           Jim Burke                                                                


Title:             CEO                                                                


Date:             7-30-10                                                                












 


 


 


 


 


 




  





  











  











 


Attachment 8


 


BACKGROUND SCREENING:


 


Criminal history background screening checks shall be performed on each individual prior to their being allowed to work on COMPANY’s account, and on a semi-annual basis thereafter. At each such time, the individual shall be provided a pre-adverse action disclosure notice that includes a copy of the individual’s consumer report and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act” and should be given ten business days to take action to correct any inaccurate information. Background screening applies to any and all Schedules A, in the aggregate, attached to the Agreement.


 


Consistent with the requirements of the Fair Credit Reporting Act, after an adverse action is taken based on information from a criminal background check done by a third party, the individual should be provided with (i) an adverse action notice including contact information for any third party reporting agency involved, (ii) a statement that that CONTRACTOR and not the reporting agency made the adverse decision, and (iii) notice of the right to dispute the accuracy of completeness of the information in the report.


 


Criminal history background checks should include a lifetime country-wide search of public records for federal, state, and county/local misdemeanor and felony convictions, deferred adjudications and probation. Background checks must be conducted by a COMPANY approved third party reporting agency (see attachment for list of approved vendors). Individuals must not be allowed to work on COMPANY’s account if information is reported to CONTRACTOR through the background check process indicating that the individual has failed to disclose or misrepresented information requested at any time about their criminal background history.


 


Initial background checks will be paid for by CONTRACTOR without reimbursement from COMPANY. Subsequent background checks will be paid for by the COMPANY.


 


Timing and Number of Background Checks


 


Three (3) background checks shall be performed before an individual is allowed to work on COMPANY account — national criminal check, state criminal check, and check of Sex Offender Registry. A Social Security Number trace with a validation must be included (trace reveals past and present addresses associated with issuance).


 



	
  

	
оSame three (3) background checks shall be repeated every six (6) months on all then current individuals working on COMPANY’s account







 


 




  





  











  






 


Background Check Results Criteria


 


Any felony constituting a violent crime, crime against a person, sexual offense or fraud, regardless of when it occurs, disqualifies an individual. Any other felony committed within the past ten (10) years, or incarceration for a felony within the past ten (10) years, disqualifies an individual. In other words, for these felonies there must be а 10-year lapse in time from the later of (i) the conviction or (ii) the end of any period of incarceration.


 


The only misdemeanors permitted are the following:


 



	
  

	
•

	
Traffic tickets







 



	
  

	
•

	
No more than one (1) DUI conviction and it must have occurred at least two years prior to the date of the background check







 



	
  

	
•

	
No more than one (1) theft by check under $100 in the last 48 months







 



	
  

	
•

	
No drug related convictions of any kind in the last 48 months







 


For purposes of both felonies and misdemeanors, deferred adjudication or probation will be considered a conviction.


 


Compensation Reduction


 


***


 


***


 


Note that each individual who is working, or has worked, on COMPANY’s account and is found lacking the proper background check documentation will constitute a separate occurrence.


 


Files Audit


 


At any time, COMPANY may randomly review the files of the individuals working, or who have worked, on COMPANY’s account to ensure they include complete background check documentation. If any required information is missing, the individual shall not be allowed to work on COMPANY’s account until all documentation is completed by CONTRACTOR, and CONTRACTOR will be subject to compensation reduction as provided in the section above entitled “Compensation Reduction.” If an individual’s file is not corrected or is not able to be corrected, that individual shall not be allowed to work on COMPANY’s account in any manner.


 


 




  





  











  






 


Approved Vendors


 



	
•

	
Lexis/Nexis: Full background







 



	
•

	
HireRight: Full background







 



	
•

	
PSI, Inc.: Full Background (PSI is located in Dallas. Contact is ***







 



	
•

	
PublicData.com: Supplemental/secondary Checks







 


 


 


 


 


 


 


 




  





  











  






 


Attachment 9


 


DRUG SCREENING


 


Pre-employment testing for intoxicants, drugs and narcotics shall be performed on every individual who will be selling COMPANY products. All drug testing conducted will be performed using the Universal Toxicology four part “Non-DOT” Chain of Custody and Request Form with white and blue top page. Drug testing will be completed by an independent third- party organization. Drug screening applies to any and all Schedules A, in the aggregate, attached to the Agreement.


 


А.Pre-employment Testing


 


Each individual prior to representing COMPANY will be drug tested for the following substances including:


 



	
  

	
Marijuana; cocaine; opiates; phencyclidine; amphetamines; barbiturates and benzodiazepine.







 


Any individual who receives a verified positive test result shall not be allowed to be a sales agent selling COMPANY products.


 


В.Random testing


 


In accordance with CONTRACTOR’s policy.


 


Testing criteria:


 



	
  

	
А.All drug tests performed will include urinalyses to detect the presence of specific drugs or drug metabolites in a specimen at or above the specified cutoff level.







 



	
  

	
В.Specimens collected will be analyzed by Department of Health and Human Services (DHHS) certified laboratory to identify the presence of any of the following substances:







 



	
Substance

	
Initial Screen Cutoff Levels (ng/ml)*

	
Confirmation Screen Cutoff Levels (ng/ml)*


	
Amphetamines

	
1,000

	
500


	
Cannabinoids (Marijuana)

	
50

	
15


	
Cocaine

	
300

	
150


	
Opiates

	
2,000

	
2,000


	
Phencyclidine

	
25

	
25


	
Barbiturates

	
300

	
300


	
Benzodiazepine

	
300

	
300


	  	  	
*nanograms/milliliter












 


Drug testing will be paid for by CONTRACTOR without reimbursement from COMPANY.


 


 




  





  











  






 


All specimens will be initially tested using an immunosassay for the above listed substances.  All specimens below the initial screen cutoff levels for all substances will be eliminated from further analysis unless tampering by the individual who rendered the specimen is suspected. All such analysis results will be reported as negative.


 


Should the initial test indicate the potential presence of one or more of the above referenced substances, at or above the initial screen cutoff level or tampering of the specimen, a confirmatory test will be performed. Gas Chromatography/Mass Spectrometry (GC/MS) will be used to confirm the presence of substances in all specimens. Unless there is a legitimate medical explanation for the positive drug test result, then it shall be considered negative.


 


Compensation Reduction:


 


***


 


***


 


Note that each sales agent found lacking the proper drug screen documentation will constitute a separate occurrence.


 


Files Audit:


 


At any time, COMPANY may randomly review the files of the individuals working, or who have worked, on COMPANY’s account to ensure they include complete drug screening documentation. If any required information is missing, the individual shall not be allowed to work on COMPANY’s account until all documentation is completed by CONTRACTOR, and CONTRACTOR will be subject to compensation reduction as provided in the section above entitled “Compensation Reduction.” If an individual’s file is not corrected or is not able to be corrected, that individual shall not be allowed to work on COMPANY’s account in any manner.


 


 


 




  





  











  











 


ATTACHMENT 1A


STATEMENT OF WORK (#2)


iTHERMOSTAT INSTALLATION SERVICES


ATTACHMENT 1A


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




  





  











  






 


iTHERMOSTAT INSTALLATION SERVICES AND HARDWARE PURCHASES


 


STATEMENT OF WORK (#2)


 


OVERVIEW


 


This Statement of Work (SOW) covers installation services and hardware purchases for the TXU Energy iThermostat program for residential and commercial customers in the ***, and to a lesser extent, certain other mutually agreeable geographic areas. The functions that are included in the installation services and are the obligations of Contractor are detailed below in the Installation Services Scope section. The terms and conditions for the Company purchases of hardware from Contractor are defined in the Hardware Purchases section. TXU Energy’s forecasted installation services for *** (from the month following the execution of this Statement of Work), *** and *** are presented in the Installation Services Needs Forecast section below. The method and key criteria by which Contractor’s performance is measured and compensation is determined by Company are detailed in the Service Level Agreement section. The rates paid for installation services performed by Contractor are shown in the Rate Schedule section. Advanced payment and payment reconciliation processes are outlined in the Payment Schedule section. The Appendices contain iThermostat installation and provisioning procedures; checklist, inspection and survey forms; user manuals and reference guides; HVAC system compatibility guidelines; etc.


 







 


I.  INSTALLATION SERVICES SCOPE


 


General


 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 


 




  





  











  






 


Scheduling


 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 


Customer Care


 



	
   

	
***







 



	
   

	
***







 


Inventory


 



	
   

	
***







 



	
   

	
***







 


 




  





  











  






 


Pre-Installation Inspection


 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 


Gateway Installation


 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 


Thermostat Installation


 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 


 




  





  











  






 


Provisioning and Customer Set-Up


 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 


Field Service Requests and Trouble Tickets


 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 


Product and Installation Warranty Issues


 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 


 




  





  











  






 


Reporting


 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 


II.  HARDWARE PURCHASES


 


***


 



	
   

	
***







 



	
   

	
***







 


***


 


 




  





  











  






 


Programmable Communicating Thermostat (“PCT”)


 


***


 


***:


 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 


 




  





  











  






 


IP Gateways


 


***


 


IP Gateway Specification:


 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 



	
   

	
***







 


Product Forecasts and Purchase Agreement


 


***


 



	
*** - ***Product Forecasts


	
Year

	
IP Gateways

	
PCTs


	
***

	
***

	
***


	
***

	
***

	
***


	
***

	
***

	
***


	
Total

	  	  










 


***.


 


***:


 









  





  











  






 







 



	
Minimum “Contractor Made ***” Purchase


	
Year

	
% PCTs


	
***

	
***


	
***

	
***


	
***

	
***












 


***:


 



	
   

	
***







 



	
   

	
***.







 


***.


 


***.


 


 




  





  











  






 


Contractor Product Purchases to Date


 


***.


 



	
Contractor Product Purchases by Company to Date


	
Year

	
IP Gateways

	
PCTs


	
***

	
***

	
***


	
***

	
***

	
***


	
Total

	
***

	
***












 


Contractor Product Pricing


 


***.


 



	
Thermostat Units Purchased

	
Price per Unit


	
ZB SuperStat Pro

	
ZB NextGen PCT


	
***

	
***

	
***


	
***

	
***

	
***













	
Gateway Units Purchased

	
Price per Unit


	
Digi ConnectPort X2


	
***

	
***


	
***

	
***












 




  





  











  






 


III.  INSTALLATION FORECAST


 


***:


 



	
*** -*** Forecasted Installations Total


	
Year

	
Customer  Installations

	
Gateways

	
Thermostats

	
Add-A-Wire

	
Routers/Switches


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
Total

	
***

	
***

	
***

	
***

	
***












 



	
*** - *** Forecasted Residential Installations


	
Year

	
Customer  Installations

	
Gateways

	
Thermostats

	
Add-A-Wire

	
Routers/Switches


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
Total

	
***

	
***

	
***

	
***

	
***












 



	
*** - *** Forecasted Commercial Installations


	
Year

	
Customer  Installations

	
Gateways

	
Thermostats

	
Add-A-Wire

	
Routers/Switches


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
Total

	
***

	
***

	
***

	
***

	
***












 


Company *** are contingent upon the following:


 



	
   

	
***.







 



	
   

	
***.







 


 “***.”


 


 




  





  











  






 


Wind Down Fees


 


***.


 



	
Wind Down Fee*


	
Year

	
Schedule


	
***

	
***


	
***

	
***


	
***

	
***












 


***.


 


Monthly Forecasted Installation Services for ***


 


***.


 



	
*** Forecasted Residential Installation Services


	
Month

	
Customer Installations

	
Gateways

	
Thermostats

	
Add-A-Wire

	
Routers/Switches


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
Total

	
***

	
***

	
***

	
***

	
***












 



	
*** Forecasted Commercial Installation Services


	
Month

	
Customer Installations

	
Gateways

	
Thermostats

	
Add-A-Wire

	
Routers/Switches


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
***

	
***

	
***

	
***

	
***

	
***


	
Total

	
***

	
***

	
***

	
***

	
***












 


***.


 


 




  





  











  






 


IV.  SERVICE LEVEL AGREEMENT


 


***.


 


Key Performance Metrics


 



	
1)

	
***.







 



	
2)

	
***.







 



	
3)

	
***.







 


Service Level Performance Tables for *** through ***


 



	
Key Performance Metrics

	
Performance Levels ***


	
***


***

	
***

	
***

	
***

	
***


	
***


***

	
***

	
***

	
***

	
***


	
***


***

	
***

	
***

	
***

	
***


	
***


***

	
***

	
***

	
***

	
***













	  	
Performance Levels ***


	
Key Performance Metrics

	
***

	
***

	
***

	
***


	
***


***

	
***

	
***

	
***

	
***


	
***


 ***

	
***

	
***

	
***

	
***


	
***


***

	
***

	
***

	
***

	
***













	  	
Performance Levels ***


	
Key Performance Metrics

	
***

	
***

	
***

	
***


	
***


***

	
***

	
***

	
***

	
***


	
***


***

	
***

	
***

	
***

	
***


	
***


***

	
***

	
***

	
***

	
***












***.


 


 




  





  











  






 


Service Level Performance and Rate Schedule Tiers


 


***.


 


***.


 


***.


 


***:


 



	
§  

	
***







 



	
§  

	
***







 



	
§  

	
***







 



	
§  

	
***







 



	
§  

	
***







 



	
§  

	
***







 



	
§  

	
***







 


***.


 


 




  





  











  






 


V.  RATE SCHEDULE


 


***:


 



	
Installation Services

	
Rate Schedule (per customer)


	
      ***


***:


–       ***


–       ***


–       ***


–       ***


 

	
 


 


***


***


***


***


	
      ***


–       ***


–       ***


–       ***


 

	
 


***


***


***


	
 ***


 ***


 ***


 

	
***


 


 


***


***












 


***:


 



	
Installation Services

	
Rate Schedule (per customer)


	
      ***


***:


–       ***


–       ***


–       ***


–       ***


 

	
 


 


***


***


***


***


	
      ***


–       ***


–       ***


–       ***


 

	
 


***


***


***


	
 ***


 ***


 ***


 

	
***


 


 


***


***












 


 




  





  











  






 


***:


 



	
Installation Services

	
Rate Schedule (per customer)


	
      ***


***:


–       ***


–       ***


–       ***


–       ***


 

	
 


 


 


***


***


***


***


	
      ***


–       ***


–       ***


–       ***


 

	
 


***


***


***


	
 ***


 ***


 ***


 

	
***


 


 


***


***







---------------------------------------------------------


 


***.


 


***.


 


***


 


***.


 


**.


 


***.


 


***.


 


***.


 


***:


 



	
§  

	
***







 



	
§  

	
***







 


 




  





  











  






 


Fixed Installation Fees


 


***:


 








	
Fixed Installation Fees


	
Month

	
***

	
***


	
***

	
***

	
***


	
***

	
***

	
***


	
***

	
***

	
***


	
***

	
***

	
***


	
***

	
***

	
***


	
***

	
***

	
***


	
***

	
***

	
***


	
***

	
***

	
***


	
***

	
***

	
***


	
***

	
***

	
***


	
***

	
***

	
***


	
***

	
***

	
***


	
Total

	
***

	
***













	
§  

	
***.







 



	
§  

	
***.







 



	
§  

	
**.







 


VII.  EXCLUSIVITY


 


***.