Document:

exhibit10_1.htm

  

  

  

Contract No. C 0600559 C

CONTRACT FOR TXU ENERGY COMMUNICATING THERMOSTAT PROGRAM

EXHIBIT 10.1

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

 

 

 

*** Indicates material 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.

REDACTED AGREEMENT

                                                Confidential

  

  

  

Contract No. C 0600559 C

CONTRACT FOR TXU ENERGY COMMUNICATING THERMOSTAT PROGRAM

The effective date of this Agreement is April 15, 2009.

PARTIES

A.           COMPANY

TXU Energy Retail Company LLC, a Texas limited liability company.

6555 Sierra Dr

Irving, Texas 75039

B.           CONTRACTOR

Comverge Inc.

120 Eagle Rock Ave S190

East Hanover, NJ 07853

PURPOSE

The purpose of this Agreement is to provide for the performance of the Work described in the Statement of Work attached provision for and in consideration of the mutual obligations set forth in this Agreement.

DEFINITIONS

A.           COMPANY Group

The term "COMPANY Group" means COMPANY, its parent corporation, Energy Future Holdings Corp., and all subsidiaries and affiliates of Energy Future Holdings Corp., and all officers, directors, shareholders, associates, related firms and entities, employees, servants and agents of both COMPANY and each such subsidiary or affiliate.

B.           Contract Coordinator

The term “Contract Coordinator” means a representative of each party named in this Agreement to act in matters related to performance of this Agreement as it is written.  Actions of the Contract Coordinators regarding the day-to-day interaction between the operations of the parties, the issuance and approval of invoices, the issuance and approval of procedures, drawings, schedules and documents of any type, and other decisions made in managing this Agreement will not operate as a waiver or compromise of any provision of this Agreement.

C.           Contract Administrator

The term "Contract Administrator" means representatives of both parties named in this Agreement to act in matters relating to the revision of contract language, the adjustment of compensation or time and the resolution of issues regarding the meaning of contract language.

	
D.

	
Contractor

The term “Contractor” means Comverge Inc. and as designated in this Agreement, with respect to the Work to be performed by such Contractor hereunder.

E.           CONTRACTOR Group

The term "CONTRACTOR Group" means the respective CONTRACTOR, all subcontractors of any tier employed by CONTRACTOR, and all affiliated or related firms and entities, officers, directors, partners, limited partners, shareholders, associates, employees, servants and agents of each.

F.           Parties

The term “Parties” means collectively, COMPANY and CONTRACTOR.

G.           Work

The term "Work" means all labor, materials, equipment, transportation, facilities or services necessary for each respective Contractor to perform its portion of the Statement(s) of Work described in this Agreement.

H.           Work Site

The term "Work Site" means location(s) where the Work will be performed as specified in the applicable Statement of Work.

SCOPE OF WORK

CONTRACTOR will perform its portion of the work according to the applicable attached Statement of Work.

TERM OF AGREEMENT

The term of this Agreement shall commence on the Effective Date and shall continue through December 31, 2009 (the “Initial Term),” and then shall automatically renew for successive one-year terms (each such one-year term a “Renewal Term”), unless the Agreement is terminated earlier pursuant to the other provisions of this hereof or unless at least 30 calendar days prior to the end of the Initial Term or any Renewal Term, COMPANY provides PROFESSIONAL written notice that COMPANY elects not to renew the Agreement, in which case this Agreement will terminate at the end of the Initial Term or Renewal Term then in effect.  The foregoing notwithstanding, in no event shall this Agreement continue in effect for longer than 10 years after the Effective Date. 

 

COMPENSATION

As full compensation for the satisfactory performance by CONTRACTOR of this Agreement, COMPANY will compensate each CONTRACTOR in accordance with the attached Statement of Work.

 

 

INVOICES AND PAYMENT

CONTRACTOR will submit invoices for fees and expenses on a monthly basis.  COMPANY will make payments within thirty (30) days after receipt of invoice or within thirty (30) days after resolution of invoice errors or disputes, whichever is later.  Invoices must be supported by documentation deemed sufficient by COMPANY's Contract Coordinator to verify the charges.

All invoices will be sent to:

                                                      TXU Energy Retail Company LLC

                   6555 Sierra Drive

                   Irving, Texas 75039

                                                      Attn: Patrick James

TAXES

CONTRACTOR will comply with all federal, state, or municipal laws, rules and regulations regarding taxes and the payment of taxes, until the Services have been completed, including, without limitation, social security, state unemployment insurance, gross receipts taxes, withholding taxes, and income tax.  CONTRACTOR will furnish, upon request by COMPANY, satisfactory evidence of its compliance.  COMPANY shall pay all sales and applicable use taxes.

 

 

INDEPENDENT CONTRACTOR RELATIONSHIP

CONTRACTOR will act as and be deemed to be an independent contractor.  Neither CONTRACTOR nor any of its employees will act as, nor be deemed to be, an agent or employee of COMPANY.  CONTRACTOR will have the sole right to control and directly supervise the method, manner and details of the Services.

ASSIGNMENT

CONTRACTOR will not assign, transfer or otherwise dispose of any of its obligations or duties without the prior written approval of COMPANY.  Any assignment or transfer made without the express written approval of COMPANY will be null and void.

SUBCONTRACTING

*** (provided that the foregoing prohibition on subcontracting shall not apply to Digi International), and CONTRACTOR will not be relieved of any duty or liability relating to any Work by reason of subcontracting.  Notwithstanding the forgoing, except as expressly provided herein with respect to Digi International, there will be no contractual relationship between COMPANY and any subcontractor by virtue of this Agreement.

BINDING ON SUCCESSORS AND ASSIGNS

This Agreement will inure to the benefit of and be binding upon the undersigned parties and entities, and their respective legal representatives, successors and assigns.

CONDITIONS AFFECTING WORK

CONTRACTOR will investigate and acquaint itself with the conditions affecting the Work. CONTRACTOR's failure to acquaint itself with any conditions affecting the Work or any available related information will not relieve it from responsibility for properly estimating the difficulty or cost of successfully performing the Work.

COMPANY is not responsible for any conclusions or interpretations made by CONTRACTOR from the information made available by COMPANY, other than information contained in or referenced in this Agreement.  CONTRACTOR will draw its own conclusions from its review of any and all data and information provided by COMPANY.

CONTRACTOR assumes full responsibility for investigating conditions and determining the existence and magnitude of any hazards to the physical well-being of property of CONTRACTOR, the employees, agents, and servants of CONTRACTOR, or any other person or entity who is or may become involved in the performance of Work, and any and all other persons in the vicinity of the Work.  CONTRACTOR will advise all of the above-specified persons or entities of any hazards relating to Work, and will ensure that those persons or entities are advised of and fully understand the nature of the hazards and safety precautions that can be taken to eliminate or minimize dangers relating to the hazards.

PERFORMANCE STANDARDS

In performing the Work for COMPANY, CONTRACTOR will conform and otherwise ensure that the Work conforms to the specifications and output and delivery standards set forth in this Section and all other warranties and standards of performance provided for in the applicable Statement of Work (the “Performance Standards”).

CHANGES IN WORK

COMPANY may by written notice, make changes in, additions to, or deletions from the Work.  If any change significantly increases the time required to perform the Work, an equitable adjustment will be made in the schedule and pricing for the performance and completion of the Work.  If the Work is being performed on a fixed price basis, and if any change significantly increases or decreases the cost to CONTRACTOR of performing the Work, then an equitable adjustment will be made in the price.

In order to receive an equitable adjustment in price or schedule, CONTRACTOR must provide a written request for that adjustment within five (5) working days after receiving COMPANY's notice of a change in the Work.  CONTRACTOR will continue to perform the changed Work prior to or pending Agreement on an equitable adjustment and will not halt or delay performance of the Work because of any failure to reach an Agreement on an adjustment.

BACKGROUND CHECKS/DRUG SCREENING

Prior to personnel performing Work for COMPANY hereunder and at least annually thereafter, CONTRACTOR will conduct (i) 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 (ii) drug tests on all CONTRACTOR Agents and applicants utilized in connection with the Work hereunder. No person shall perform services for COMPANY if such person has a prior felony conviction or if such person tests positively for illegal substances. 

 

 

 

IDENTITY OF CONTRACTOR GROUP PERSONNEL

 

Upon request by COMPANY, CONTRACTOR shall promptly make known to COMPANY the names and identity of any CONTRACTOR Group person interacting with COMPANY’s customers or performing Work at COMPANY’s customers’ locations.

 

NO THIRD-PARTY RIGHTS

 

Nothing in this Agreement (including any attachments) shall create, or be construed as creating, any express or implied rights in any person or entity other than the Parties except that the members of COMPANY Group are express third-party beneficiaries of any section that specifically names it.

 

 

 

FORCE MAJEURE

If either party becomes unable, either wholly or in part, by an event of Force Majeure, to fulfill its obligations under this Agreement, the obligations affected by the event of Force Majeure will be suspended only during the continuance of that inability.  The party so affected will give written notice of the existence, extent and nature of the Force Majeure to the other party within *** hours after the occurrence of the event.  The party so affected will remedy its inability as soon as possible.  Failure to give notice will result in the continuance of the affected party's obligation regardless of the extent of any existing Force Majeure.

The term "Force Majeure" as used in this Agreement means acts of God (except as excluded herein), any event outside of the reasonable control of the party (and which could not be reasonably anticipated and prevented through the use of reasonable measures), including without limitation, strikes, lockouts, or other industrial disturbances, acts of public enemies, wars, blockades, insurrections, riots, epidemics, earthquakes, fires, priority allocations of pipe or other materials or orders, restraints or prohibitions by any court, board, department, commission or agency of the United States or of any States, any arrests and restraints, civil disturbances, explosions and inability despite reasonable diligence to obtain materials essential to the Work.  Rain, snow, ice or other adverse weather conditions will not be considered events of Force Majeure.

 

 

SUSPENSION FOR CONVENIENCE

COMPANY may, by notice in writing to CONTRACTOR, suspend *** the performance of *** to be performed under this Agreement.  Upon receipt of such notice, CONTRACTOR will, unless the notice requires otherwise:

	
a)

	
immediately discontinue Work on the date and to the extent specified in the notice;

	
b)

	
place no further orders or subcontracts for material, services or facilities with respect to suspended Work other than to the extent required in the notice;

	
c)

	
promptly make every reasonable effort to obtain suspension upon terms satisfactory to COMPANY of all orders, subcontracts and rental agreements to the extent they relate to performance of suspended Work; and

	
d)

	
take any other reasonable steps to minimize costs associated with such suspension.

As full compensation for suspended Work, CONTRACTOR will be entitled to an equitable adjustment in its compensation as follows:

	
a)

	
A *** to *** for ***, to the extent required by the *** and *** to the Work; and

	
b)

	
*** associated with *** and *** of *** (to the extent that such *** in such event, *** have the *** to *** and ***;

Upon receipt of notice to resume Work, CONTRACTOR will immediately resume Work in accordance with the notice to resume Work.  If CONTRACTOR intends to assert a claim for equitable adjustment, it must, within seven (7) days after receipt of notice to resume Work, submit to COMPANY a written statement setting forth the schedule impact and the monetary amount of the claim in sufficient detail to permit thorough analysis.

 

 

SUSPENSION FOR CAUSE

 

In addition to the other remedies provided COMPANY in this Agreement, COMPANY has the right to order the temporary suspension of any Work when it determines, in its reasonable discretion, that performance of the Work is not being conducted in a safe or lawful manner, the specified quality of the Work is not being met, or the Work is not otherwise being performed in accordance with the requirements of this Agreement. (However, COMPANY will not use any diminished performance occurring during a suspension hereunder in order to invoke a subsequent suspension due solely to such diminished performance occurring during the prior suspension hereunder.)

 

If any unsatisfactory condition of a portion of any Work performed hereunder is brought to CONTRACTOR's attention, and is corrected by CONTRACTOR (e.g., retraining its personnel) to COMPANY’s reasonable satisfaction, COMPANY will authorize CONTRACTOR to resume the Work.  Should CONTRACTOR fail to promptly correct the unsatisfactory condition to COMPANY’s reasonable satisfaction, CONTRACTOR will be considered in breach of this Agreement.

 

 

TERMINATION

COMPANY may terminate this Agreement, in whole or in part, at any time, at its sole discretion, by providing written notice of termination to CONTRACTOR.  The notice of termination will specify the effective date of any termination, and the Work or any part of the Work to be terminated, or alternatively, that this Agreement is terminated in its entirety.

CONTRACTOR will discontinue Work in accordance with COMPANY's termination instructions.  Upon receiving notice of termination, CONTRACTOR will place no further orders, or enter into further subcontracts for services, materials or equipment related to the terminated Work.  In addition, CONTRACTOR will delay or terminate all existing orders and subcontracts, insofar as those orders and subcontracts relate to the performance of the Work terminated.  For any termination for convenience by COMPANY where COMPANY provides less than forty five (45) days prior written notice, COMPANY shall pay to CONTRACTOR all reasonable costs associated with demobilization of CONTRACTOR’s ordered products (to the extent that such products can be resold; in such event, COMPANY shall have the right to receive all such products paid for), subcontractors, plant, forces and equipment.  In addition but without duplication, for any termination for convenience by COMPANY where COMPANY provides less than 90 days prior written notice, COMPANY shall pay to CONTRACTOR amounts owing by COMPANY under all outstanding purchase orders as of the date of termination (to the extent that such products cannot be resold; in such event, COMPANY shall have the right to receive all such products paid for).

If COMPANY fails to pay when due any undisputed amount owed by COMPANY to CONTRACTOR hereunder, then CONTRACTOR shall be entitled, as its sole remedy, to terminate this Agreement and take any action allowed by law to collect such amounts owed by COMPANY, provided CONTRACTOR has first provided thirty (30) days written notice to COMPANY specifying the failure, during which time COMPANY will have the right and opportunity to cure the failure prior to such termination.

Either Party may terminate this Agreement if the other Party breaches in any material respect any of such other Party’s obligations under this Agreement, provided such terminating Party has first provided thirty (30) days written notice to such breaching Party specifying the failure, during which time such breaching Party will have the right and opportunity to cure the failure prior to such termination.

Except as expressly provided in the second  paragraph above, in the event this Agreement or the Work is terminated, COMPANY's only liability will be to pay CONTRACTOR the unpaid balance due CONTRACTOR for Work actually performed.

There will be deducted from any unpaid balance due CONTRACTOR the amounts of all claims of COMPANY against CONTRACTOR, including, but not limited to, claims on account of defect in materials and workmanship.

 

 

WARRANTY

CONTRACTOR agrees and warrants that its employees, agents and subcontractors will perform the Work in a good and workmanlike manner, in accordance with high professional standards, with a level of care, skill, knowledge and judgment required or reasonably expected of firms or persons performing comparable services, and in strict accordance with this Agreement, including but not limited to, all specifications made a part of this Agreement. Further, CONTRACTOR warrants that all Work will be free from defects in design, materials and workmanship for the *** of a period of *** from the date of  *** or *** from the date of *** (“Warranty Period”), except where specific Work items have been specified to have a longer warranty, unless the failure was the result of, *** or *** of *** or *** or an *** of ***.

Upon written notice from COMPANY that any of the Work performed by CONTRACTOR fails to conform to any of the above-specified warranties, CONTRACTOR will, at no additional cost to COMPANY, properly remedy the failure and reperform any Work necessary so that the Work conforms to those warranties. CONTRACTOR further warrants any and all corrected or reperformed Work to be free from defects in design, materials and workmanship for the greater time period of either (i) the remaining Warranty Period or a period of *** months following the corrected or re-performed Work.

 THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE. COMPANY'S SOLE REMEDY FOR ANY BREACH OF THIS WARRANTY IS THE REPAIR OR REPLACEMENT, AT CONTRACTOR’S OPTION, OF THE FAILED ITEM. CONTRACTOR SPECIFICALLY DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, TO CUSTOMERS OF COMPANY.

 

RECORDS AND RIGHTS TO AUDIT

(a)           CONTRACTOR will keep accurate and complete books of accounts, records, documents and other evidence related to the charges for and performance of any Work (including records and documents related to CONTRACTOR’s compliance with its drug testing and background check requirements) (collectively, “Records”), and of any change or modification to the Work.  COMPANY may inspect those records and CONTRACTOR’s facilities at any time during normal business hours.

 

(b)           All Records required for an audit and inspection will be made available at the offices of CONTRACTOR, at all reasonable times, for inspection, audit or reproduction, until four years from date of final payment for any Work.  COMPANY will bear the expenses incurred by it in supporting any such inspection or audit; provided, however, that should any audit or investigation produce evidence that CONTRACTOR has knowingly overstated charges or units of measure upon which charges are based, or provided gifts, gratuities or other benefits to employees of COMPANY in violation of the terms of this Agreement, CONTRACTOR will be liable to COMPANY for actual damages, including cost of audit and investigation.

 

 

 

BUSINESS ETHICS

CONTRACTOR represents and warrants that neither it nor any person or entity associated in any manner with CONTRACTOR has, or during the term of this Agreement will:

	
1)

	
Provide or offer any compensation or benefit of any type, including any gift or gratuity, other than advertising mementos of nominal value or reasonable business meals and business entertainment, to any COMPANY System employee;

	
2)

	
Maintain or establish any undisclosed business affiliation that could constitute or give the appearance of a conflict with the interests of the COMPANY System.

If, during the term of this Agreement, CONTRACTOR knows or becomes aware of any facts or circumstances contrary to the representations and the warranties above, CONTRACTOR will immediately notify COMPANY and provide sufficient information for COMPANY to take appropriate protective or corrective actions.  CONTRACTOR further agrees to cooperate fully in any investigation undertaken by COMPANY.

CONTRACTOR, if requested by COMPANY, agrees to require its employees to execute an ethics/nondisclosure agreement at any time.

 

 

CONFLICT OF INTEREST

CONTRACTOR will not engage in any activity that will adversely affect or impair its ability to perform the Work in an independent and reliable manner.  CONTRACTOR warrants that it has no professional or contractual obligations that will conflict with its performance of any Work.

 

 

PROTECTION AGAINST LIENS AND ENCUMBRANCES

CONTRACTOR will not at any time permit any lien, attachment or other encumbrance ("Encumbrance") by any person or persons whosoever or by reason of any claim or demand against CONTRACTOR to be placed or remain on the property of COMPANY or COMPANY’s customers, including, but not limited to, the Work Site upon which Work is being performed or equipment and materials that are being furnished.  To prevent an Encumbrance from being placed on the property of COMPANY or COMPANY’s customers, CONTRACTOR will furnish during the progress of any Work, as requested from time to time, verified statements showing CONTRACTOR's total outstanding indebtedness in connection with the Work.

If CONTRACTOR allows any indebtedness to accrue to subcontractors or others and fails to pay, discharge, or institute corrective measures that promptly rectifies that indebtedness, within five (5) days after demand, then COMPANY may withhold any money due CONTRACTOR until that indebtedness is paid or pay the indebtedness and apply that amount against the money due CONTRACTOR.

If CONTRACTOR allows any Encumbrances, whether valid or invalid to be placed on the property of COMPANY or COMPANY’s customers, any and all claims or demands for payment to CONTRACTOR will be denied by COMPANY until the Encumbrance is removed.  If the Encumbrance is not removed immediately, COMPANY may pay that claim on demand and deduct the amount paid, together with all related expenses, including attorneys' fees, from any further payment due CONTRACTOR, or at COMPANY's election, CONTRACTOR will, upon demand, reimburse COMPANY for the amount paid and all related expenses.  Any payment made in good faith by COMPANY will be binding on CONTRACTOR.

 

 

WAIVER OF CONSEQUENTIAL DAMAGES

Neither party will be liable to the other in contract, tort, or on any other basis, for any consequential damages of any nature, including, but not limited to, lost profits or revenues, loss of customer goodwill, business interruption costs, overhead costs, lost profits, costs of capital, or loss of use of money.  Consequential damage also includes attorneys' fees, except as otherwise specifically provided for, in this Agreement and it is expressly understood that this paragraph will be subjugated to, and will not limit or otherwise affect in any manner, the obligations to indemnify and hold harmless as provided for in the Confidentiality, Indemnity, Compliance with Laws, Restrictive Covenant and Intellectual Property provisions of this Agreement or the obligations as provided for in the Warranty of this Agreement.

 

 

INDEMNIFICATION

CONTRACTOR agrees to and will defend, protect, indemnify and hold harmless COMPANY Group from and against all claims, losses, expenses, attorneys’ fees, damages, demands, judgments, causes of action, suits, and liability in tort, contract, or any other basis and of every kind and character whatsoever (hereinafter in this and the following paragraphs collectively referred to as "CLAIMS"), for personal injury, death, or property damage of any member of CONTRACTOR Group, arising out of or incident to or related in any way to, directly or indirectly, this Agreement, or the Work, services, or materials to be performed or supplied thereunder, or to any activities of any member of CONTRACTOR Group while on any premises actually or allegedly owned, controlled, or operated by COMPANY,  including, but not limited to, CLAIMS arising out of or resulting from (1) any condition of the premises, (2) separate operations being conducted on the premises, or (3) the imperfection or defective condition, whether latent or patent, of any material or equipment sold, supplied, or furnished by COMPANY; and further, IT IS THE EXPRESS INTENT OF THE PARTIES THAT, FOR THE PURPOSES OF THIS PARAGRAPH, CLAIMS, AND CONTRACTOR's OBLIGATIONS TO DEFEND, PROTECT, INDEMNIFY, AND HOLD HARMLESS, WILL INCLUDE, BUT NOT BE LIMITED TO, CLAIMS ARISING OUT OF OR RESULTING FROM COMPANY GROUP's CONCURRENT (1) NEGLIGENCE, (2) STRICT LIABILITY, OR (3) OTHER FAULT OF ANY NATURE PROVIDED THAT CONTRACTOR GROUP IS AT LEAST 50% AT FAULT.

For all CLAIMS except those for personal injury, death, or property damage of any member of CONTRACTOR GROUP within the scope of the preceding paragraph, CONTRACTOR agrees to and will defend, protect, indemnify, and hold harmless COMPANY Group from and against any and all CLAIMS due to CONTRACTOR Group’s negligence, gross negligence, or willful misconduct arising out of or incident to or related in any way to, directly or indirectly, this Agreement, or the Work, services, or materials to be performed or supplied thereunder.

To the extent necessary to permit COMPANY to enforce any term, clause, or condition of this Agreement, CONTRACTOR agrees that with respect to any CLAIMS brought against COMPANY Group, CONTRACTOR will and does hereby waive as to COMPANY Group any defense it may have by virtue of the workers’ compensation laws of any state.

REDACTED AGREEMENT

                                                Confidential

  

  

  

Contract No. C 0600559 C

CONTRACT FOR TXU ENERGY COMMUNICATING THERMOSTAT PROGRAM

INTELLECTUAL PROPERTY

CONTRACTOR will obtain permission to use any and all intellectual property, derived in whole or part that may be required in order for CONTRACTOR to perform the Work.  This permission will include all necessary licenses and other governmental approvals.

CONTRACTOR will hold harmless and indemnify COMPANY Group from and against, and at COMPANY's option, defend COMPANY Group against, any and all fines, penalties, losses, liabilities, damages, claims and costs (including reasonable attorneys' fees and court costs), arising out of or incurred as a result, directly and indirectly, of any alleged or actual infringement or violation of any right, or alleged right, relating to intellectual property, including, but not limited to, patent, copyright or trade secret.  This indemnification shall not extend to any claim based on any alleged infringement to the extent that it is caused by (a) ***, or *** to the*** or *** by or on behalf of anyone other than those performed or authorized by ***, (b) *** of the *** any other *** or ***or (c) ***, by ***, of the *** or *** this Agreement.

In addition, if any claim is brought alleging infringement or the violation of any intellectual property right, CONTRACTOR will avoid any further possible infringement of the intellectual property right, and will seek to resolve the claim in consultation with COMPANY, either by means of alternative arrangements for the Services, or by obtaining permission to use the intellectual property in question.

COMPLIANCE WITH LAWS

CONTRACTOR represents that it is knowledgeable of and will comply with all federal, state, and local laws, rules, decrees, orders, regulations, by-laws, ordinances and codes that may, in any manner, affect the conduct of the Work. CONTRACTOR further represents and warrants that it has read and will comply with “Rule 25.474 of the Public Utility Commission of Texas” (the current version of which is attached as Attachment 3).  Any violations of the Customer Protection rules by CONTRACTOR, as well as any conduct in performance of this Agreement, that is in violation of any federal, state, or local enactment, as specified above, is a breach of this Agreement.

CONTRACTOR, with regard to its employees, assumes and retains sole and complete responsibility and liability for compliance with any and all federal, state, and local antidiscrimination statutes, including, but not limited to, Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Equal Pay Act of 1963; the Age Discrimination in Employment Act of 1967, as amended; the Energy Reorganization Act of 1974; the Texas Commission on Human Rights Act; the Americans with Disabilities Act; and the Older Workers Benefit Protection Act of 1990.  CONTRACTOR will promptly advise COMPANY of any action required to be initiated by COMPANY in order to comply with those statutes.

If fines, penalties or legal costs are assessed against COMPANY Group by any court or governmental agency or third party due to CONTRACTOR Group's failure to so comply with the provisions of this Compliance with Laws section, or if the Work of CONTRACTOR, or any part thereof, is delayed or stopped by any court or governmental agency, due to CONTRACTOR Group's failure to comply with its obligations, CONTRACTOR will indemnify and hold harmless COMPANY from and against any and all fines, penalties, losses, liabilities, damages, claims, and costs (including reasonable attorneys' fees and court costs) arising out of or incurred as a result, directly or indirectly, of that failure.

CONFIDENTIAL AND PROPRIETARY INFORMATION

The parties ("Non-Disclosing Party") shall keep confidential and secret any and all Confidential Information disclosed to it by the other party ("Disclosing Party").   "Confidential Information" shall include, but not be limited to, pricing, trade secrets, know-how, proprietary information, formulae, processes, techniques, customer information, product design and marketing activities that may be disclosed, whether orally or in writing, to Non-Disclosing Party by Disclosing Party and/or Disclosing Party's parent, subsidiary or affiliate companies, or that may be otherwise received or accessed by Non-Disclosing Party in the course of performing this Agreement.  Non-Disclosing Party expressly agrees that it (a) shall use such Confidential Information solely and exclusively in connection with the discharge of its obligations under this Agreement and (b) not disclose such Confidential Information to any other person without the Disclosing Party's prior written consent, unless: (1) the information is known to Non-Disclosing Party prior to obtaining it from Disclosing Party; (2) the information is, at the time of disclosure by Non-Disclosing Party, then in the public domain; or (3) the information is obtained by Non-Disclosing Party from a third party who did not receive it directly or indirectly from Disclosing Party and who has no obligation of secrecy with respect to that information.  Non-Disclosing Party's obligations not to disclose Confidential Information to third parties and otherwise not to use Confidential Information shall survive the termination of this Agreement. Non-Disclosing Party acknowledges that, in the event of its breach of the provisions of this section, Disclosing Party shall suffer damages that are not easily determinable, and shall be entitled to equitable relief, including, without limitation, an injunction or an order for specific performance, in addition to all other remedies available to Disclosing Party at law or in equity.

If so requested by COMPANY, CONTRACTOR further agrees to require its employees to execute a nondisclosure agreement prior to performing any services under this Agreement.

Upon written request from Disclosing Party all Confidential Information in tangible form will be, at the Disclosing Party’s discretion, either returned promptly to Disclosing Party or destroyed promptly by Receiving Party, and in either case not retained by Receiving Party in any form (and regardless of whether Receiving Party returns, destroys or retains such information, Receiving Party will continue to be bound by its obligations of confidentiality and other obligations hereunder).  The rights and obligations of the Parties under this Agreement will survive any return of Confidential Information.

 

Notwithstanding any other provision of this Agreement, CONTRACTOR’s obligations to maintain and not use or disclose Confidential Information will apply perpetually, and without limit in duration, as to any Confidential Information disclosed by COMPANY or its Affiliates which makes possible the identification of any individual customer of COMPANY or its Affiliates, by matching such information with the customer’s name, address, account number, type or classification of service, historical electricity usage, expected patterns of use, types of facilities used in providing service, individual contract terms and conditions, price, current charges, or billing records.  Notwithstanding any other provision of this Agreement to the contrary, CONTRACTOR further agrees that it and its Affiliates will protect Confidential Information consisting of proprietary customer information from disclosure as required by Public Utility Commission of Texas Substantive Rule 25.472 and will comply with the customer confidentiality provisions set forth in Rule 25.472 promulgated by the Public Utility Commission of Texas (as updated from time to time) as if CONTRACTOR were a retail electric provider (as required under Rule 25.472 because CONTRACTOR will have access to proprietary customer information of COMPANY and COMPANY is a retail electric provider).  CONTRACTOR further represents and warrants that it has read Attachment 5 to this Agreement entitled “Rule 25.472 of the Public Utility Commission of Texas.”

 

All Confidential Information that is disclosed by Disclosing Party to Receiving Party will remain property of Disclosing Party.  Nothing in this Agreement will be construed as granting a license, franchise or similar right, expressly or impliedly, for any invention, discovery or improvement made, conceived or acquired in relation to the Confidential Information or otherwise, or under any patent, trademark, copyright or other intellectual property right, except as necessary for Receiving Party’s authorized use of the Confidential Information.  Disclosing Party makes no representation or warranty with respect to any information furnished hereunder but will furnish information in good faith to the best of its knowledge and ability.  The Disclosing Party will not have any liability or responsibility for errors or omissions in, or any business decisions made by the Receiving Party in reliance on, any Confidential Information.

 

CONTRACTOR further acknowledges that it has read Attachment 4 entitled “Principles for Privacy of Customer Data” and Attachment 6 entitled “Privacy, Confidentiality and Information Security Provisions” and that it will comply with all provisions thereof with respect to Confidential Information relating to Company’s customers.

REDACTED AGREEMENT

                                                Confidential

  

  

  

Contract No. C 0600559 C

CONTRACT FOR TXU ENERGY COMMUNICATING THERMOSTAT PROGRAM

RIGHTS TO DATA

Any ideas, know-how, techniques, developments, designs, or data, including without limitation the equipment, software, hosting system, and IP communication techniques, which may be developed by CONTRACTOR that are not COMPANY Developed Intellectual Property as defined below (collectively, “CONTRACTOR Developed Intellectual Property”), shall be the property of CONTRACTOR, and shall not be deemed to be a work for hire for COMPANY, and CONTRACTOR shall retain ownership of and unrestricted right to use any such CONTRACTOR Developed Intellectual Property.  ***  CONTRACTOR  grants to COMPANY a *** hereunder, solely for COMPANY’s use of that deliverable for ***.  The ***.

 

As a normal course of business in the software development life-cycle, CONTRACTOR will be exposed to and will be aware of ideas, concepts, drawings, diagrams, and designs generated in part or whole by COMPANY.  CONTRACTOR agrees that any and all ideas, concepts, drawings, diagrams and designs, created or generated by COMPANY (“COMPANY Intellectual Property”) are the sole property of COMPANY, except as provided below as to Co-Developed Intellectual Property.  Any and all patent applications (whether provisional or regular), filed by either Party in the United States or elsewhere, if derived in whole or in part from COMPANY Intellectual Property will name COMPANY as an equal equity named owner.  CONTRACTOR shall have no rights to use such COMPANY Developed Intellectual Property without COMPANY’s prior written consent, except as provided below as to Co-Developed Intellectual Property.  In no event may CONTRACTOR ever disclose COMPANY’s confidential and/or proprietary information and/or business processes, either directly or indirectly.

 

To the extent any *** are *** by *** shall *** and may *** and *** and *** for *** (including, but not limited to, *** the *** and *** into ***. The Parties shall provide written notification to the other Party for all items it deems to be *** within a *** after such an item is *** make a *** to *** in *** to what is ***.  Each Party agrees to not use or allow such *** to be *** in any way that would ***.  With the exception of *** or ***, pursuant to or relating to *** will become *** when *** or *** any *** contained therein, *** request, those *** and *** will be delivered ***, and *** that it will not maintain any copies of any *** except as may be required by *** for its internal record-keeping and analysis.  *** to protect and maintain *** by using the same degree of care, but no less than a reasonable degree of care, *** uses to protect its own similar confidential and proprietary information.

Notwithstanding anything contained herein to the contrary, any and all End-User related information, including, but not limited to, customer names, addresses, phone numbers, aggregate customer information, or data that CONTRACTOR may ascertain, either directly or indirectly from COMPANY, End-Users, or third parties or while performing under the terms of this Agreement or that CONTRACTOR may prepare, gather, or generate or related to or in any manner associated with providing services (“End-User Data”), shall remain the sole and exclusive property of COMPANY and CONTRACTOR shall not use the COMPANY Data, or any part thereof in any manner for any purpose other than in connection with fulfilling the terms of this Agreement.  To the extent CONTRACTOR does ascertain or develop COMPANY Data, in any manner, CONTRACTOR hereby irrevocably assigns to COMPANY its complete right, title, and interest to any and all such COMPANY Data.  Upon termination of this Agreement or when requested by COMPANY, CONTRACTOR will surrender to COMPANY all COMPANY Data held in any form whether written, electronic, or otherwise stored or ascertainable, and CONTRACTOR agrees that it will not maintain any copies of any such COMPANY Data.  CONTRACTOR agrees to protect and maintain COMPANY Data in confidence by using the same degree of care, but no less than a reasonable degree of care, as CONTRACTOR uses to protect its own similar confidential and proprietary information.

 

 

 

REMOVAL OF PERSONNEL

COMPANY may, at its sole discretion, and for whatever reason it deems appropriate, remove any person from performing the Work, and the person will not again be employed on the Work without the express prior written consent of COMPANY.

 

 

GOVERNING LAW

THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF TEXAS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF TEXAS.  THE PARTIES MUTUALLY CONSENT TO THE JURISDICTION OF THE FEDERAL AND STATE COURTS IN DALLAS COUNTY, TEXAS AND AGREE BECAUSE THIS AGREEMENT IS PERFORMABLE IN PART IN DALLAS COUNTY, TEXAS, THAT ANY ACTION, SUIT OR PROCEEDING CONCERNING, RELATED TO OR ARISING OUT OF THIS AGREEMENT OR THE NEGOTIATION OF THIS AGREEMENT WILL BE BROUGHT ONLY IN A FEDERAL OR STATE COURT IN DALLAS COUNTY, TEXAS AND THE PARTIES AGREE THAT THEY WILL NOT RAISE ANY DEFENSE OR OBJECTION OR FILE ANY MOTION BASED ON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE, INCONVENIENCE OF THE FORUM OR THE LIKE IN ANY CASE FILED IN A FEDERAL OR STATE COURT IN DALLAS COUNTY, TEXAS.

 

 

 

NON-WAIVER OF RIGHTS

A waiver by either party of any breach of this Agreement or the failure of either party to enforce any of the articles or other provisions of this Agreement will not in any way affect, limit or waive that party's right to enforce and compel strict compliance with the same or other articles or provisions.

 

 

INSURANCE

CONTRACTOR will, at its sole expense, purchase and maintain, and require their subcontractors to purchase and maintain, during the term of this Agreement, insurance policies with substantial and sound insurers, having coverage of the types and in the amounts specified in Attachment 2 to this Agreement titled “TXU Contractor’s Minimum Insurance Requirements” submitted by CONTRACTOR  prior to the execution of this Agreement.

 

 

SURVIVAL

Neither the completion of any Work nor any termination or cancellation of this Agreement will relieve either Party of any obligations under this Agreement that by their nature survive the completion of the Work, including, but not limited to, Confidential and Proprietary Information, Compliance with Laws, Protection Against Liens and Encumbrances, Records and Rights to Audit, Rights to Data, Warranty, Intellectual Property, Restrictive Covenant and Indemnification clauses.

 

SEVERABILITY

In the event any provision of this Agreement is held to be void, unlawful or otherwise unenforceable, that provision will be severed from the remainder of the Agreement and replaced automatically by a provision containing terms as nearly like the void, unlawful, or unenforceable provision as possible; and the Agreement, as so modified, will continue to be in full force and effect.

 

 

PUBLICITY

No information relating to this Agreement will be released for publication, advertising or any other purpose without the prior written approval of COMPANY except as required by Federal Law.  CONTRACTOR is expressly prohibited from using COMPANY’s name in any publication, advertising, or promotion without COMPANY’s prior written consent.

 

 

RESTRICTIVE COVENANT

During the term of this Agreement ( and, if COMPANY has fulfilled its purchase obligations under the Statement of Work, for an *** following termination of this Agreement for whatever reason), *** will *** the *** and *** as contemplated by the Statement of Work, *** or its affiliates, contractors, business partners or agents, for use by or at such other REP’s customers as part of *** within areas of the *** where  *** is authorized.

The Parties acknowledge that they have *** only to the extent necessary to protect ***.  However, the Parties hereby agree that, if the scope or enforceability of the restrictive covenant is in any way disputed at any time, a court or other trier of fact may modify and enforce the covenant to the extent that it finds the covenant to be reasonable under the circumstances then existing.

CONTRACTOR further acknowledges that: (1) in the event this Agreement is terminated for any reason, CONTRACTOR will be able to remain in business without violating the foregoing restrictions; and (2) that CONTRACTOR’s ability to remain in business without violating such restrictions is a material condition to its retention by COMPANY.

 

IMMIGRATION

All individuals employed by CONTRACTOR who perform Work under this Agreement will be employed consistent with the employment policies of the Immigration Reform and Control Act of 1986.  The failure of CONTRACTOR to follow the employment policies of the Immigration Reform and Control Act of 1986, with respect to individuals who perform Work under this Agreement, will be a breach of this Agreement.

 

NOTICES

All notices from one party to the other will be deemed to have been delivered if hand delivered or sent by regular United States mail, postage prepaid, as follows:

If to CONTRACTOR:

Comverge Inc.

3950 Shackleford Road, Suite 400

Duluth, GA 30096

	
Attention:

	
James Vu, Project Manager

	
  

	
(With a copy to Matthew Smith, VP and General Counsel)

If to COMPANY:

TXU Energy Retail Company LLC

6555 Sierra Drive

Irving, Texas 75039

Attn: Retail Contract Administration

With a copy to:

TXU Energy Retail Company LLC

6555 Sierra Drive

Irving, Texas 75039

Attn: Legal Department

REPRESENTATIVES

COMPANY's Contract Coordinator and is Patrick James, phone ***.

CONTRACTOR's  Contract Coordinator is Robert Duval, phone ***.

COMPANY's Contract Administrator is Beckie Hoyt, phone ***.

 CONTRACTOR's (Comverge) Contract Administrator is Bert Brock, phone ***.

 

	
  

	
AMENDMENTS

Except as otherwise provided in this Agreement, no changes, modifications, amendments or supplements or any other provisions will be valid unless agreed to in writing and signed by the parties.

 

 

*** Indicates material 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.

 

 

ATTACHMENTS

The following attachments are incorporated into this Agreement:

	
1.  

	
Statement of Work for Communicating Thermostat Program and Customer Service

	
2.  

	
TXU’s Contractor Minimum Insurance Requirement

	
3.  

	
Rule 25.474 of the Public Utility Commission of Texas

	
4.  

	
Principles for Privacy of Customer Data

	
5.  

	
Rule 25.472 of the Public Utility Commission of Texas

	
6.  

	
Privacy, Confidentiality and Information Security Provisions

	
7.  

	
Complaints/Violations

ENTIRETY OF AGREEMENT

This Agreement, together with any and all attachments, constitutes the entire agreement between the parties, and all prior negotiations, undertakings, understandings and Agreements between the parties relating to the Work are merged into this Agreement.

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

CONTRACTOR                                                                           COMPANY

Comverge Inc.                                                                           TXU Energy Retail Company LLC

By:           /s/ Ed Myszka                                                            By:             /s/ Tom Leverton                                           

                    Signature                                                                                           Signature

Name:       Ed Myszka                                                          Name:             Tom Leverton                                           

Title:         COO – CLEAN ENERGY SOLUTION              Title:              COO 

GROUP

Date:         04.13.09                                           

REDACTED AGREEMENT

                                                Confidential

  

  

  

SCOPE OF WORK DOCUMENT

FOR

TXU ENERGY’S

2009 iTHERMOSTAT PROGRAM

AN INTERNET AND AMI BASED LOAD MANAGEMENT SYSTEM

WITH ZIGBEE HOME AREA NETWORK

BY AND BETWEEN

COMVERGE INC

AND

TXU ENERGY RETAIL COMPANY LLC

APRIL 15, 2009

 Confidential

  

  

  

INTRODUCTION AND BACKGROUND

CONTRACTOR will be providing hardware, software and professional services for the COMPANY iThermostat project.  The program will be targeted to have enrolled *** homes in the greater Dallas market (Oncor service area) by the *** order to achieve *** load.  *** Regardless of geographic location all customers will be residential COMPANY customers that have high speed Internet service or have an AMI Energy Service Interface (ESI) provisioned meter.

This project is intended to expand the existing ***.

CONTRACTOR will provide the following program services in 2009 to support the project and are described in greater detail in the sections below.

	
1.  

	
Hardware

	
a.  

	
***

	
b.  

	
***

	
2.  

	
Software

	
a.  

	
***

	
b.  

	
***

	
c.  

	
***

	
3.  

	
Professional Services

	
a.  

	
***

COMPANY will provide ***, including ***. COMPANY will *** and will be responsible for ***. COMPANY will be ***.

  

  

  

*** Indicates material 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.

	
TXU Energy iThermostat Program

	
2009 Deployment Schedule – Forecast

	
Total

	
Month

	
Monthly

	
Program Cumulative

	
# New Accounts

	
# New Thermostats

	
# of Accounts

	
# of Thermostats

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

	
***

The pricing in this scope of work is based on the COMPANY forecasted program schedule above with the following assumptions:

	
1.  

	
COMPANY will ***, and

	
2.  

	
CONTRACTOR will ***, COMPANY will utilizing the current stock of BASIC stats and Digi gateways thru May.

1. HARDWARE

PROGRAMMABLE COMMUNICATING THERMOSTATS (“PCT”)

***  This existing inventory will be used to support the program thru May.  All new hardware starting thereafter will be the ***.  All new hardware must ***.  

COMPANY may elect to incorporate up to two additional Smart Energy certified type of PCTs into the iThermostat program.   In such event CONTRACTOR will incorporate these additional PCTs into the iThermostat program, which includes the incorporation into both the Utility Web Portal and the Customer Web Portal.

PCT Specifications

	
·  

	
SuperStat PRO chassis

	
·  

	
ZigBee Smart Energy Certified with all security keys necessary to connect Smart Energy AMI networks ***

	
·  

	
Capable of communicating with exterior Smart Meters, ***

	
·  

	
Capability of operating in non-sleep (always on / router) mode in order to communicate with other SuperStats or Smart Energy devices

	
·  

	
Remote firmware and software upgrade capability for the radio and communication board, not including the chasis

	
·  

	
Capable of supporting various ***(i.e., ***, etc.)

	
·  

	
Gas Heat / Electric Heat / Heat Pump Compatible

	
·  

	
Maintains room temperature differential within  +/- one degree

	
·  

	
TXU Energy branded

	
·  

	
***

IP GATEWAYS

CONTRACTOR will work directly with Digi to ensure gateway equipment will be available according to schedules at the fulfillment facility.  CONTRACTOR will also be responsible to ensure that the IP gateways will be fully integrated and operational with the programs PCTs and the Advanced Meter Infrastructure (AMI) networks.

IP Gateway Specifications:

	
·  

	
Ethernet IP to ZigBee communications

	
·  

	
ZigBee Smart Energy Certified with all security keys necessary to join Smart Energy AMI networks ***

	
·  

	
Capable of communicating with exterior Smart Meters, ***

	
·  

	
Capability of working with *** through a ***

	
·  

	
Ethernet (TCP/IP) connection to router

	
·  

	
*** and ***

	
·  

	
TXU Energy branded

	
·  

	
***

	
·  

	
Once the *** are available and *** into these *** completed, COMPANY will have the *** the *** as*** for *** to the ***.  *** will incorporate *** and the   *** has already been *** through the ***.

 

 

 

2. SOFTWARE

CONTRACTOR will develop and maintain a service platform which includes *** and ***requirement design that affords *** the *** in *** any *** or *** as illustrated below. Initially *** will ***, however it is *** that *** by the end of ***.  *** and *** for this *** shall be discussed by the Parties as required.

***

LOAD MANAGEMENT SOFTWARE

CONTRACTOR represents and covenants as follows:

	
•  

	
CONTRACTOR systems will have the capability in the future to communicate with both *** and *** into the ***. The CONTRACTOR *** that provides a ***.

	
•  

	
CONTRACTOR intends to utilize the *** which is being used to support the current program.  This system is located on a dedicated server in CONTRACTOR’s ***which will be ***and has ***.  By utilizing this existing system, COMPANY will ***.  To accommodate *** and *** for both the *** and ***, an approximately*** is reflected in the ***.

 

	
•  

	
*** will be configured as a *** with *** should the ***.  The *** will be *** to the *** and with this *** is capable *** the *** as the ***.  The system *** there is *** the *** into *** by providing it *** over the *** and connection to the ***.

	
•  

	
CONTRACTOR is in the process of developing ***be a ***and will include many *** and ***.  *** will be available to *** in a *** application.  CONTRACTOR intends to use *** for the *** once it is ***.

	
•  

	
One of the key features included with *** and *** use both the *** and *** to *** their ***.  CONTRACTOR has already accomplished *** and *** through the ***.  Additionally CONTRACTOR will *** facilitated *** to *** the *** with the ***.  In the future other ***identified by COMPANY could be ***  and agreement of the parties regarding applicable terms.

	
•  

	
Once the *** is *** will provide the following ***:

	
1.  

	
Provide COMPANY the ability to *** in the ***and to the *** on any *** that confirms to the ***, including *** and ***.

	
2.  

	
Provision with the *** any *** device that *** to the ***, including ***.

	
3.  

	
Provide *** with ***thru the *** with any ***.

	
4.  

	
Provide COMPANY the ability to execute *** with *** with *** the *** and the *** and schedules in the *** and to the *** on any *** that *** including*** and ***.

 

 

 

POWERPORTAL SOFTWARE

CONTRACTOR represents and commits to the following:

	
•  

	
The COMPANY *** will have the*** to ***.  There are *** included in *** & ***.  The following are features to be included in each release:

Version 1

	
·  

	
***

	
·  

	
Capability to *** or ***

	
·  

	
*** and ***

	
·  

	
*** to ***

	
·  

	
*** to *** and ***

	
·  

	
*** to ***

	
o  

	
*** and ***

	
o  

	
***

	
o  

	
***

	
·  

	
*** and *** are ***, but not all *** in the ***)

	
o  

	
*** and

	
o  

	
***and ***

	
·  

	
*** and ***

	
·  

	
*** for any ***

Version 2

	
·  

	
*** and ***

	
o  

	
***

 

	
·  

	
*** and ***

	
·  

	
Communicate with other ***.  CONTRACTOR ***will be ***.

	
·  

	
*** to *** and *** to *** if this is *** and ***.  COMPANY to provide *** and *** on *** and.

	
·  

	
*** with *** or ***, and *** in a *** and *** format.  *** to provide CONTRACTOR the *** and *** this information.

The *** will evolve through out ***.  Below is a proposed schedule for the various phases of that roll out.  COMPANY and CONTRACTOR will collaborate on specific details for the features listed above, timelines and customer acceptance plans:

	
·  

	
***

	
·  

	
***

	
·  

	
***

***

*** will be *** for any and all associated ***or *** and will ***.  To compensate for *** already *** for the ***, an approximate *** is reflected in the ***. CONTRACTOR will be responsible for *** and *** and ***, which includes the ***.

3. PROFESSIONAL SERVICES

SCHEDULING AND CUSTOMER CARE CALL CENTER SERVICES

All *** and *** shall initially be provided hereunder by ***.  Such services will include the following:

*** will be focused on answering questions from participants, enrolling participants in the program according to TXU approved scripts, creating tickets and field services requests for TXU or their subcontractor and reporting on results.

 

 

It is COMPANY’s intention, within *** to itself *** for *** and ***.  If COMPANY does not transfer within *** on a *** for ***.  The actual date of such *** shall be provided by *** by written notice delivered to ***.  CONTRACTOR will work with COMPAANY to *** for working with COMPANY and their ***.

on and after the ***, the CONTRACTOR call center will be responsible for installation scheduling through the *** involving the program once customers have enrolled in the program.

*** will ensure that issues are *** or will escalate ***.  COMPANY will be responsible for ***.

In addition to the foregoing, CONTRACTOR scheduling and customer care call center service requirements after the Call Center Transfer Date will include the following:

 

	
1.  

	
Provide *** center services for *** or ***.

	
2.  

	
Staff the *** with *** and ***, who have received detailed training on program specific support requirements.

	
3.  

	
Staff with ***with limited access to *** accessible if needed

	
4.  

	
Provide each *** with a *** allowing access to the customer database, tracking system and support personnel.

	
5.  

	
Maintain current and create *** to be provided to ***.

	
6.  

	
Staff with *** may elect to *** these *** to accommodate more ***.

	
7.  

	
Attempt to solve any problem over the phone by asking the customer a series of scripted questions about the problem, escalating to CONTRACTOR ***.  If the problem cannot be solved over the phone, the issue will be sent to *** or their vendor as directed by COMPANY for resolution and will be documented in the BIS system.

	
8.  

	
COMPANY may request for its review, from time-to-time, recorded unfiltered calls for any specific day.

	
9.  

	
CONTRACTOR WILL develop and maintain live customer care Web chat capability during the hours of live agent operation.

	
10.  

	
Manage, respond and track in BIS all customer care communications that are generated thru the current iThermostat e-mail box and respond to customers within 24hrs.

	
11.  

	
COMPANY or its sales center will manage and fulfill all enrollments generated by COMPANY thru its sales call center, web site, or BRCs generated thru COMPANY marketing activities. Customers will have the ability to schedule appointments on-line or over the phone.

	
12.  

	
CONTRACTOR will provide customers with the ability to schedule appointments on-line or over the phone.

 

 

PERFORMANCE

Below are COMPANY’s performance expectations for the iThermostat program in 2009.  Comverge will make best efforts to meet these expectations.    CONTRACTOR Project Management will review with COMPANY these performance metrics.

 

 

	
A.  

	
Problem disposition calls/tickets                                                                                ***

	
B.  

	
First call resolution                                                                      ***

	
C.  

	
Tier 2 resolution                                                                      ***

	
D.  

	
Defective product                                                                                ***

	
E.  

	
System Availability                                                                      ***

 

 

REPORTING

The following is a listing of minimum reporting requirements that will be required on a weekly and monthly basis.

 

 

	
·  

	
Call Center Performance and Metrics

	
·  

	
Tier 2 Support and Trouble Tickets

	
·  

	
Inventory Management

	
·  

	
Installation

	
·  

	
Warranty and Returns

	
·  

	
Provisioning

	
·  

	
Connected Load and Gateway / Stat Status

	
·  

	
Customer Portal Usage and Activities

 

 

PRICING / BUDGET

***

The following are Notes regarding Pricing and Budget forecasts by line item:

 

	
1.  

	
PRO quantities are estimated only and will be executed in separate POs with units specified by TXU.  The initial equipment PO will be for an estimated *** stats and *** gateways.  The standard lead time for equipment is ***.  CONTRACTOR will make commercially reasonable efforts o deliver up to *** stats and *** gateways to the COMPANY warehouse by ***, or on an agreed upon *** weekly schedule that will accommodate COMPANY sales.  CONTRACTOR will make commercially reasonable efforts to delver the remaining equipment by *** or on an agreed *** weekly schedule that will accommodate COMPANY sales.  CONTRACTOR will provide a weekly update hardware status, and forecasted delivery dates with quantities.

	
2.  

	
Gateway quantities are estimated only and will be executed in separate POs with units specified by COMPANY.

	
3.  

	
COMPANY plans to bring hosting services in house by end 2009 with transition services to be negotiated by the Parties.  Once transitioned, hosting services will not be required by CONTRACTOR.

	
4.  

	
The 2nd server ownership is transferable to COMPANY once hosting is brought in-house (targeted to be by year end ***).

	
5.  

	
LMS / Apollo / License fees are *** for *** number of users. COMPANY will pay *** upon complete delivery of LMS/***, with a balance *** after such delivery of LMS/Apollo.  In future years, annual maintenance fees will be ***.

	
6.  

	
ConnectWare License fees are *** for *** users.  COMPANY will *** upon complete delivery of ConnectWare, with the balance ***after such delivery of ConnectWare.  In future years, annual maintenance fees will be ***.  Any and all *** and *** associated with Licensing fees paid by ***.

	
7.  

	
AMI integration for CenterPoint network has been funded and completed under the CCET contract no S0551041.  Included above is the integration for the Oncor network.

	
8.  

	
CONTRACTOR will build a software integrated scheduling tool for on-line and call center scheduling.  COMPANY will integrate this technology based scheduling service with the COMPANY sales process by end of 2009.  Once transitioned, ***.

	
9.  

	
Once BIS, scheduling, Apollo, LMS, PowerPortal, ConnectWare and inventory management all have been fully integrated, the need for CONTRACTOR *** will be readdressed by *** and ***.Lease Option Agreement

  

 LEASE OPTION AGREEMENT
 

 

 

 
 This Indenture made on the 14th
 day of January
  , 2011 
 

 BETWEEN: WILLIAM STEER, of Regina, in the Province of Saskatchewan,
 

  (herein after referred to as “the “Optionor” or “the Lessor”)
 - AND -
 

 ALLIANCE PETROLEUM CORPORATION
 

 (herein after referred to as “the Optionee” or “the Lessee”)
 

 WHEREAS the Optionor is registered as owner or entitled to become registered owner of the following lands (the
 “Lands”):
 

 ALL MINES AND MINERALS WITHIN UPON OR UNDER - MERIDIAN 2 RANGE 02 TOWNSHIP 26
 SECTION 8
 ALL THAT PORTION OF THE NORTH HALF
 

 

 OPTIONOR AND OPTIONEE HEREBY COVENANT AND AGREE AS FOLLOWS:
 

 In consideration of the sum of $10.00 dollars paid to the Optionor (the receipt and sufficiency of which is hereby acknowledged) and a further sum of --- Four Thousand ---($4,000.00) Dollars, to be delivered or mailed postage prepaid (by deposit in any mailbox or post office) within   90   days of the date of this Agreement by the Optionee to the Optionor at the address specified in paragraph 21 of the Lease (as hereinafter defined), and the covenants of the Optionee hereinafter contained, the Optionor hereby grants to the Optionee the sole and exclusive option (the “Option”), irrevocable for the period hereinafter specified, to acquire a lease in the form set forth as Schedule “A” to this Option Agreement (the “Lease”) of all leased substances (as defined in the Lease) within, upon or under the Lands upon the terms and conditions and in the form set forth as Schedule “A” to this agreement, which Lease has been executed by the Optionor with the date thereof left blank for completion as hereinafter provided.
 

 The Option may be exercised by the Optionee at any time from and after the date hereof to and including  April 30,
 2012.
 

 The Option may be exercised by the Optionee delivering to the Optionor, or mailing postage prepaid in an envelope addressed to the Optionor, at the address specified in paragraph 21 of the Lease, written notice of its exercise of the Option and the ten dollar ($10.00) initial consideration referred to in the Lease.  If mailed, the Optionee’s notice of its exercise of the Option and payment of the said consideration shall be deemed to have been received on the post-marked date of the envelope.
 

 Upon exercise of the Option, the Optionee shall be entitled to insert in the Lease, as the effective date thereof, the date of such exercise, and the Lease shall thereupon be and become a valid and binding lease. The Optionee shall thereafter deliver to the Optionor or mail, postage prepaid, to the Optionor at the address specified in paragraph 21 of the Lease a duly executed copy of the Lease and the payment of all of the remaining additional consideration referred to in the Lease.
 

 Upon termination,  cancellation,  expiration  or  surrender  of  an existing  lease,  the Optionor  shall forthwith notify the Optionee in writing thereof. Further, the Optionor shall forthwith notify the Optionee in writing of any default known to the Optionor that may occur with respect to any covenant, term, proviso or condition contained in an existing lease and the Optionor shall, at the request and at the expense of the Optionee, take such steps as the Optionee in its sole discretion determines are warranted to effect the termination or cancellation of an existing lease. The Optionor shall not, without prior written consent of the Optionee, agree to any extension, modification, renewals or alteration of an existing lease, shall not waive any default which may occur under an existing lease and shall not grant any right, enter into any agreement or do anything prejudicial to the rights granted to the Optionee under the Option of the Lease.
 

 All notices required herein to be provided by the Optionor shall be delivered to the Optionee, or shall be forwarded to the Optionee by registered mail, at the address specified in paragraph 21 of the Lease. If mailed, such notices shall be deemed to have been received on the post-marked date on the envelope.
 

 The parties hereto will, from time to time and at all times hereafter upon request, without further consideration, do such further acts, execute and deliver all such further assurances, deeds and documents as shall be reasonably required in order to fully perform and carry out the terms of  this Option Agreement.
 

 This Agreement shall enure to the benefit of and binding upon the parties hereto, their respective heirs, executors, administrators, successors and assigns. The right of assignment by either party being hereby granted and understood.
 

 

 

 
 
  This Agreement shall be subject to and enforced in accordance with the laws of the Province of Saskatchewan.
 

 The terms of this Option Agreement express and constitute the entire agreement between Optionor and Optionee and there shall be no implied covenant or liability of any kind.  Any amendment to this Option Agreement shall be in writing and executed by Optionor and Optionee.
 

 IN WITNESS WHEREOF the Optionor and Optionee have executed and delivered this Option as of the date first above written.
 

 SIGNED AND DELIVERED
 in the presence of:
 

 

 
               /s/ Ralph Floyd
 /s/ William Steer
 
 Witness       RALPH FLOYD
  WILLIAM STEER
 Optionor
 

 

 

 

 ALLIANCE PETROLEUM CORPORATION
 

 

 

 Per:
     /s/ Khurram Ijaz
 KHURRAM IJAZ, President
 Optionee
 

 

 

 AFFIDAVIT OF EXECUTION
 

 I,  RALPH FLOYD
 of  REGINA
 , in the Province of SASKATCHEWAN, MAKE OATH AND SAY:
 1.
 THAT I was personally present and did see  WILLIAM STEER named in the within instrument, who is personally known to me to be the person
 named therein, duly sign and execute the same for the purposes named therein.
 
 2.
 THAT the same was executed at  REGINA
 , in the Province of Saskatchewan, and that I am a subscribing witness thereto.
 
 3.
 THAT I know the said  WILLIAM STEER and he is, in my belief, of the full age of eighteen years.
 

 
 SWORN before me at  Regina
 ,) in the Province of Saskatchewan, this         14th
 ) day of  January
 , 2011 
  )
 

 

       [signature illegible]
 

 

  /s/ Ralph Floyd
 (witness signature)
 

 A Commissioner for Oaths in and for the Province of 
 Saskatchewan
 

 

 

 A Commissioner for Oaths in and for the Province of 
 Saskatchewan
 My Commission expires Aug. 31, 2013
 

 

 

 

  

 

 
 
  THE FOLLOWING PAGES COMPRISE SCHEDULE “A” TO AN OPTION TO LEASE AND GRANT MADE BETWEEN NAME OF WILLIAM STEER AND ALLIANCE PETROLEUM CORPORATION.
 

  

 

 
 
  

 PETROLEUM AND NATURAL GAS LEASE
 

 This Indenture made on the  
 day of  
 , 20
 

 
 BETWEEN  
 WILLIAM STEER, of Regina, in the Province of Saskatchewan 
  (herein called the “Lessor”)
 -AND-
 

  
 ALLIANCE PETROLEUM CORPORATION 
 (herein called the “Lessee”)
 

 THE LESSOR, being registered as owner, or entitled to become registered as owner of the leased substances (as hereinafter defined) within, upon or under that certain parcel or tract of land legally described as follows:
 

 ALL MINES AND MINERALS WITHIN UPON OR UNDER - MERIDIAN 2 RANGE 02 TOWNSHIP 26
 SECTION 8
 ALL THAT PORTION OF THE NORTH HALF
 

 

 In consideration of the sum of $10.00 paid to the Lessor by the Lessee, the receipt of which is hereby acknowledged by the Lessor, and of an additional consideration of  --- Twenty Four Thousand   --- Dollars ($24,000.00) to be paid within 90 days of the date hereof and  in  consideration of the covenants of the Lessee hereinafter contained, HEREBY GRANTS AND LEASES exclusively unto the Lessee all the leased substances (as hereinafter defined) subject to the royalties hereinafter reserved, within, upon or under the said lands, together with all of the present or future right, title, estate and interest, if any, of the Lessor in and to the leased substances or any of them within, upon or under any lands excepted from the said lands and any roadways, lanes or rights of way adjoining the said lands; together with the exclusive right and privilege to explore for, drill for, operate for, produce, win, take, remove, store, treat and dispose of the leased substances and the right to  inject substances into the said lands for the purpose of obtaining, maintaining or increasing production from the said lands, the pooled lands or the unitized lands and to store and recover any such substances injected into the said lands.
 

 

 TO  HAVE AND ENJOY the same for the term of Three (3) years (herein called the “primary term”)  commencing on the date hereof and continuing so long thereafter as operations (as hereinafter defined) are conducted upon the said lands, the pooled lands or the unitized lands with no cessation, in the case of each cessation of operations, of more than 90 consecutive days.
 

 THE LESSOR AND THE LESSEE HEREBY COVENANT AND AGREE AS FOLLOWS:
 

 1.   INTERPRETATION
 In this Lease the following expressions shall have the following meanings:
 (a)   “anniversary date” means the date corresponding to the date first above written in each year during which this Lease remains in force;
 (b)  “commercial production” means the output from a well of such quantity of the leased substances or any of them as, considering the costs of drilling and production operations and price and quality of the leased substances, after a production test of suitable duration and nature in accordance with good oil field practice, would commercially and economically warrant the drilling of a like well in the vicinity thereof;
 (c)   “force majeure” means any cause beyond the Lessee’s reasonable control and, without limitation, includes an act of God, strike, lockout, or other industrial disturbance, act of any public enemy, war, blockade, riot, lightning, fire, storm, flood, explosion, unusually severe weather conditions, government restraints, including road bans, but shall not include lack of finances;
 (d)   “lease year” means a period of one year commencing on the date first above written or any anniversary date and ending at midnight of the day immediately preceding the next anniversary date;
 (e)   “leased substances” means all petroleum, natural gas, and related hydrocarbons (except  coal) and all materials and substances (except valuable stone), whether   liquid, solid or gaseous and  whether hydrocarbons or not, produced in association with petroleum, natural gas, or related hydrocarbons or found in any water contained in any reservoir;
 (f)   “offset well” means any well, drilled subsequent to the effective date hereof on any spacing unit laterally adjoining the said lands, which spacing unit does not include lands owned by the Lessor or, if owned by the Lessor, not under lease to the Lessee;
 (g)   “operations” means any of the following:
 (i)    drilling, testing, completing, reworking, recompleting, deepening, plugging back or repairing a well or equipment on or in the said lands or injecting substances by means of a well, in search for or in an  endeavor to obtain, maintain or increase production of any leased substance from the said lands, the pooled lands or the unitized lands;
 (ii)   the production of any leased substance;
 (iii)  the recovery of any injected substance; or
 (iv) the extraction of water or water and natural gas in an endeavor to obtain, maintain or increase production of coal bed methane;
 or
 (v)  any acts for or incidental to any of the foregoing;
 (h)    “pooled lands” means all or any portion of the said lands and such other lands as may have been pooled, which pooling shall not exceed a spacing unit, in accordance with the terms hereof or pursuant to any agreement,  or any statute, regulation, order or directive of any government or any governmental agency;
 (i)   “rental” shall have the meaning given in paragraph 2;
 (j)  “said lands” means all the lands and all zones and formations underlying the lands described above as the “said lands”, or such portion or portions thereof as shall not have been surrendered;
 (k)    “spacing unit” means the area allocated to a well from time to time on or in the vicinity of the said lands, for the purpose of drilling for or producing, as the case may be, the leased substances or any of them, as defined or prescribed by or under any statute, regulation, order or directive of any government or any governmental agency;
 (l) “suspended well payment” shall have the meaning given in paragraph 3;
 (m)   “unitized lands” means all or any portion of the said lands and such other lands as may have been unitized in accordance with the terms hereof or pursuant to any agreement, statute, or any regulation, order or directive of any government or any governmental agency;
 (n)   “Unit Agreement” means any agreement for the development or operation of all or any portion of the said lands together with other lands as a single unit without regard to separate ownership and for the allocation of costs and benefits on a basis as defined in the agreement.
 

 2.   RENTALS 
 Lump Sum
 The Lessee shall, on or before the date on which the additional consideration provided for above is payable, pay to the Lessor a sum (herein
 
 called the “rental”) equal to the sum of  
 --- Five Hundred --- 
 Dollars ($500.00) which sum represents payment in full of all rental payments which the Lessee may be entitled to make to the Lessor during the Primary Term hereof.
 

 3. SUSPENDED WELLS
 If, at the expiration of the primary term or at any time or times thereafter, there is any well on the said lands, the pooled lands, or the unitized lands, capable of producing the leased substances or any of them, and all such wells are shut-in or suspended, this Lease shall, nevertheless, continue in force as though operations were being conducted on the said lands, for so long as all the said wells are shut-in or suspended and so long thereafter as operations are conducted upon the said lands, the pooled lands or the unitized lands, with no cessation, in the case of each cessation of operations, of more than 90 consecutive days.  If no royalties are otherwise payable hereunder during a lease year after the primary term within which such shut-in period or periods occur and during such lease year no other operations are conducted on the said lands, the pooled lands, or the unitized lands then the Lessee shall pay to the Lessor an amount equal to    --- Three Hundred Fifty ---   Dollars ($350.00) within 90 days after the expiry of such lease year (herein called the “suspended well payment”).
 

 

 4. ROYALTIES
 

  

 

 
 
  (a)   The Lessee shall pay the Lessor a royalty in an amount equal to the current market value at the wellhead as and when produced of  Sixteen percent (16%) of all the leased substances produced, saved and sold, or used by the Lessee for a purpose other than that described in subclause (b) hereof, from the said lands; provided that in computing the current market value at the wellhead of all the leased substances produced, saved and sold, or used by the Lessee for a purpose other than that described in subclause (b) hereof, the Lessee may deduct any reasonable expense incurred by the Lessee (including a reasonable rate of return on investment) for separating, treating, processing, compressing and transporting the leased substances to the point of sale beyond the wellhead or, if the leased substances are not sold by the Lessee in an arm’s length transaction, to the first point where the leased substances are  used  by the  Lessee  for a purpose  other than that  described in  subclause (b)  hereof;   provided further, however, that the  royalty  payable to the  Lessor hereunder shall not be less than     Eighty   percent (80%) of the royalty that would have been  payable to the Lessor if no such expenses had been incurred by the Lessee.  In no event shall the current market value be deemed to be in excess of the value actually received by the Lessee pursuant to a bona fide, arm’s length sale or transaction.  The royalty as determined under this clause shall be payable
 on or before the 15th   day of the second month following the month in which the leased substances, with respect to which the royalty is payable, were produced, saved and sold, or used by the Lessee for a purpose other than that described in subclause (b).  No royalty shall be payable to the Lessor with respect to any substance injected into and recovered from the said lands, other than leased substances originally produced from the said lands for which a royalty has not been paid or payable.
 (b)   Notwithstanding anything to the contrary herein contained or implied, the Lessee shall be entitled to use such part of the production of leased substances from the said lands as reasonably may be required and used by the Lessee in its operations hereunder on the said lands, the pooled lands or the unitized lands and the Lessor shall not be entitled to any royalty with respect to leased substances so used.
 (c)  The Lessor agrees that the royalty reserved and payable hereunder in respect of the leased substances  shall be inclusive of any prior disposition of any royalty or other interest in the leased substances, and agrees to make all payments required by any such disposition out of the royalty received hereunder and to indemnify and save the Lessee harmless from its failure to do so; provided, however, that the Lessee may elect by notice in writing to the Lessor to make such payments on behalf of the Lessor and shall have the right to deduct any such payments made from the royalty, rental and suspended well payments otherwise payable to the Lessor.
 (d)   The Lessee shall make available to the Lessor during normal business hours at the Lessee’s address for  notice, the Lessee’s records relating to the leased substances produced from or allocated to the said lands.
 

 5. LESSER INTEREST
 If the Lessor’s interest in the leased substances is less than the entire and undivided fee simple estate, the royalties, rentals and suspended well payments herein provided shall be paid to the Lessor only in the proportion which such interest bears to the entire and undivided fee.
 

 6. TAXES PAYABLE BY THE LESSOR
 The Lessor shall promptly pay all taxes, rates and assessments that may be assessed or levied, directly or indirectly, against the Lessor by reason of the Lessor’s interest in production of leased substances obtained from the said lands, or the Lessor’s ownership of the leased substances.
 

 7. TAXES PAYABLE BY THE LESSEE
 The Lessee shall pay all taxes, rates and assessments that may be assessed or levied in respect of the operations of the Lessee on, in, over or under the said lands, and shall further pay all taxes, rates and assessments that may be assessed or levied directly or indirectly against the Lessee by reason of the Lessee’s interest in production of leased  substances from the said lands.   The Lessee shall on the written request of the Lessor, accompanied by such tax receipts, statements or tax notices as the Lessee may require, reimburse the Lessor for  Eighty-five percent (85%) of any taxes assessed or imposed on the Lessor while this Lease remains in force by reason of the Lessor being  the  registered owner of the leased substances or being entitled to become such owner; provided that the Lessee  shall, at the written request of the Lessor, pay the Lessor’s said percentage of said tax and be reimbursed from any sums payable to the Lessor under this Lease.
 

 8. OFFSET WELLS
 If commercial production is obtained after the date of this Lease from an offset well, then unless (i) a well has been or is being drilled on the spacing unit of the said lands laterally adjoining the spacing unit of the offset well and into the zone or formation from which commercial production is being obtained from the offset well, or (ii) all or part of the spacing unit of the said lands laterally adjoining the spacing unit of the offset well has been pooled or included in a unit in which the pooled or unitized substances include production from the same zone or formation from which production is being obtained from the offset well, the Lessee shall within 6 months from the later of the date of the offset well being placed on commercial production or, if information with respect to the amount of production from the offset well is restricted pursuant to any statute, regulation, order or directive of any government or governmental agency and such information is unknown to the Lessee, until one month after such information is made public:
 (a)   commence or cause to be commenced operations for the drilling of a well on the spacing unit of that  portion of the said lands which comprises or is included in the spacing unit laterally adjoining the spacing unit of the offset well and thereafter drill, or cause to be drilled the same to the zone or formation from which production is being obtained from the offset well;
 (b)   pool or unitize that portion of the said lands which comprises or is included in the spacing unit laterally adjoining the spacing unit of the offset well, such pooling or unitization to include production from the same zone or formation from which the offset well is being produced;
 (c)  surrender all or any portion of the said lands pursuant to the provisions hereof, provided that the surrender shall include but may be limited to the zone or formation from which production is being obtained from the offset well  underlying that portion of the said lands which comprises or is included in the spacing unit laterally adjoining the spacing unit of the offset well; or
 (d)   pay to the Lessor at such times as royalty would be payable pursuant to the provisions of this Lease, until the provisions of paragraphs (a), (b) or (c) of this clause are met, a royalty which shall be proportionately equivalent on an acreage basis to such royalty as would have been payable to the Lessor if the leased substances produced from the  offset well were actually being produced from a well on the said lands which commenced production on the last day of the said 6-month period; provided however, that should any spacing unit of the said lands laterally adjoin more than one spacing unit upon which is located an offset well from which commercial production is being obtained, the royalty which the Lessee may elect to pay to the Lessor pursuant to this subclause shall be calculated on the average of the production from the said offset wells, such average to be calculated by dividing the total production from all of the said offset wells by the number of all of the said offset wells.
 Notwithstanding anything herein contained, the obligations imposed by this clause shall be deemed not to have arisen if (a) the offset well shall cease to be capable of or ceases commercial production during the said 6-month period, or (b) the offset well is productive primarily or only of natural gas and the Lessee has not previously arranged an adequate and commercial market for the natural gas which might be produced from any well to be drilled pursuant to this clause.
 

 9. POOLING AND UNITIZATION
 (a)   The Lessee is hereby given the right and power at any time and from time to time during and after the primary term to pool the said lands, or any portion thereof, or any zone or formation underlying the said lands or any portion thereof, or any of the leased substances therein, with any other lands or any zone or formation underlying such other lands or any portion thereof, or any of the leased substances therein, but so that the other lands or any zone or formation  thereof, together with the said lands or any zone or formation thereof, shall not exceed one spacing unit.  The Lessee shall thereafter give written notice to the Lessor describing the extent to which the said lands are being pooled and describing the spacing unit with respect to which they are so pooled.  In the event of pooling there shall be allocated to that portion of the said lands included in the spacing unit that proportion of the total production of the leased substances from the spacing unit, after deducting any leased substances used in operations on the pooled lands, which the surface area of that portion of the said lands placed in the spacing unit bears to the total surface area of the lands in the spacing unit.  The production so allocated shall be considered for all purposes, including the payment of royalty, to be the entire production of the leased substances from the portion of the said lands included in the pooling in the same manner as though produced from the said lands under the terms of this Lease.
 (b)   The Lessee may terminate any pooling pursuant to subclause (a) of this clause and thereafter shall give written notice to the Lessor.
 (c)  If the spacing unit pooled under this clause is varied or terminated by any statute, regulation, order or  directive of any government or governmental agency, or if the pooling is terminated or invalidated by reason of the termination or expiration of a lease covering any lands, other than the said lands, within the spacing unit, or any other cause beyond the Lessee’s reasonable control, and this Lease would otherwise terminate as a result of such variation or termination of the spacing unit or such termination or invalidation of the pooling, this Lease shall nonetheless continue in force for a period of 90 days after the Lessee receives notice that the spacing unit has been varied or terminated or the pooling has been terminated or invalidated  and  the  term  of  the  Lease  may  be  extended  further  pursuant  to  other  provisions  of  this  Lease,  including  without  limitation  the commencement of operations, within the said 90-day period.
  d)   The Lessee is hereby given the right and power at any time and from time to time during and after the primary term to include the said lands or any portion thereof or any zone or formation underlying the said lands or any portion thereof, or any of the leased substances therein, in a Unit Agreement for the unitized development or operation thereof with any other lands, or any zone or formation underlying such other lands, or any of the leased substances therein, if such becomes necessary or desirable in the opinion of the Lessee.  The Lessee shall thereafter give written notice to the Lessor stating that the said lands are being or have been unitized.  The basis and manner of any such unitization, the manner of allocating unitized production among the several tracts of unitized lands, and the contents of any such Unit Agreement shall be in the sole discretion and determination of the Lessee, exercised bona fide, and when so determined shall be binding upon the Lessor.
 

  

 

 
 
  (e)   In the event of unitization, the production of leased substances which are unitized shall be allocated to that portion of the said lands included in the unit in accordance with the terms of the Unit Agreement.  The production so allocated shall be considered for all purposes, including the payment of royalty, to be the entire production of the leased substances from the portion of the said lands included in the unit in the same manner as though produced from the said lands under the terms of this Lease.  Upon notice from the Lessor, the Lessee shall provide the Lessor with a copy of the Unit Agreement within a reasonable time after the right and power granted hereunder has been exercised.  The Lessee shall also have the right and power to withdraw the said lands, or any portion or portions of the said lands or the leased substances, from the Unit Agreement and shall give the Lessor written notice thereof.
 (f)   Any operations conducted on the pooled lands or the unitized lands, whether conducted before, after or during the exercise of the rights and powers granted under this clause, or the presence of a shut-in or suspended well on the pooled lands or the unitized lands, shall have the same effect in continuing this Lease in force and effect during the term hereby granted or any renewal or extension thereof as if such operations were upon the said lands, or as if said shut-in or suspended well were located on the said lands.
 

 10. CONDUCT OF OPERATION
 The Lessee shall conduct all operations on the said lands in a diligent, careful and workmanlike manner and in compliance with the provisions of any statutes, regulations, orders or directives of any government or governmental agency applicable to such operations, and where such provisions conflict with the terms of this Lease, such provisions shall prevail.
 

 11. INDEMNIFICATION
 The Lessee shall indemnify the Lessor against all actions, suits, claims and demands by any person or persons whomsoever in respect of any loss, injury or damage arising out of or connected with any operations carried out by the Lessee on the said lands, the pooled lands, or the unitized lands unless such loss, injury or damage was caused by the act or omission of the Lessor, its agents, employees or contractors.
 

 12. DISCHARGE OF TAXES AND ENCUMBRANCES
 The Lessee may at the Lessee’s option pay or discharge the whole or any portion of any withholding or other tax, charge, mortgage, lien or encumbrance payable, incurred or created by the Lessor or the Lessor’s predecessors or successors in title or interest which may now or hereafter exist on or against or in any way affect the said lands or the leased substances, in which event the Lessee shall be subrogated to the rights of the holder or holders thereof and, at  the Lessee’s option, may reimburse itself by applying the amount so paid by the Lessee against the consideration payable hereunder, the rentals, suspended well payments, royalties, or other sums accrued or accruing to the Lessor under the terms of this Lease, and any sums so applied shall, for all purposes of this Lease, be deemed to have been paid to and received by the Lessor in payment of the consideration payable hereunder, rentals, suspended well payments, or royalties, or other sums accrued or accruing to the Lessor under the terms of this Lease, as the case may be
 

 13. SURRENDER
 (a)   Notwithstanding anything herein contained, the Lessee may, at any time or from time to time, by written notice to the Lessor, surrender this Lease as to the whole or any part of the leased substances or the said lands or both of them, and this Lease shall thereupon terminate as to the whole or any part of the leased substances or of the said lands or both of them so surrendered.
 (b)   Upon the said termination, the Lessee shall be released from all obligations accrued or to accrue respecting the said lands or the leased substances or both of them so surrendered excepting accrued royalty, rentals, suspended well payments, taxes and assessments.  Any rentals paid shall not be refunded.
 (c)  Upon the said termination, suspended well payments and the obligation to pay rental and royalties shall be extinguished or proportionately reduced as the case may be; provided that if the Lessee surrenders all or any part of  the said lands by zone or formation the rental hereinbefore specified shall not abate.
 

 14. REMOVAL OF EQUIPMENT
 The Lessee shall have at all times during the currency of this Lease and for a period of 6 months after its termination, the right to remove from the said lands all or any of its machinery, equipment, structures, pipelines, casing and materials whether placed upon, within or under the said lands.
 

 15. DEFAULT
 (a)   If, before or after the expiry of the primary term, the Lessor considers that the Lessee has not complied with any provision or obligation of this Lease, including but not limited to a failure to give notice or to pay in the manner specified any rental, suspended well payments, royalty or other sums for which specific provision is made in this Lease, the Lessor shall notify the Lessee in writing, describing in reasonable detail the alleged breach or breaches.  The Lessee shall have 30 days after receipt of such notice to:
 i)      remedy or commence to remedy the breach or breaches alleged by the Lessor, and thereafter diligently continue to remedy the same; or
 ii)     commence and diligently pursue proceedings for a judicial determination as to whether the alleged acts or omissions constitute a breach or breaches on the part of the Lessee.
 (b)   The performance of any act by the Lessee intended to remedy all or any of the alleged breaches shall not be deemed an admission by the Lessee that it has failed to perform its obligations hereunder.  If the Lessee fails to remedy or commence to remedy a breach or breaches within the 30- day period, or if having so commenced to remedy a breach or breaches thereafter fails to continue diligently to remedy the same, and if proceedings have not been commenced for a judicial determination as aforesaid, this Lease, except for the Lessee’s right with respect to the removal of equipment and its obligation to remove any registered document in relation to this Lease, shall thereupon terminate and it shall be lawful for the Lessor to re-enter the said lands and to repossess them.  If proceedings for a judicial determination are commenced within the aforesaid period of time, this Lease shall not terminate until the existence of such breach has been finally judicially determined; nor shall it terminate if the Lessee within 30 days of such final determination has  remedied or commenced to remedy the breach or breaches, and having so commenced to remedy the breach or  breaches, thereafter diligently continues to remedy the same.
 (c)  Notwithstanding anything contained in this Lease, this Lease shall not terminate nor be subject to forfeiture or cancellation if there is located on the said lands or on the pooled lands or on the unitized lands a well capable of producing leased substances or any of them, or on which operations are being conducted; and, in that event, the Lessor’s remedy for any default under this Lease shall be for damages only.
 

 16. FORCE MAJEURE
 (a)   If operations are interrupted or suspended or cannot be commenced as a result of force majeure, this Lease shall not terminate during any such period of interruption, suspension or inability to commence caused thereby or for 30 days thereafter.
 (b)   If the Lessee is unable, in whole or in part, by force majeure to carry out its obligations hereunder, other than any obligation to make payment of any monies due hereunder, then the obligations of the Lessee, so far as they are affected by such force majeure, shall be suspended during the continuance of any inability so caused; and the cause of the force majeure so far as possible shall be remedied with all reasonable dispatch.
 (c)  Nothing herein shall require the settlement of strikes, lockouts or other labour disturbances except in the sole discretion of the Lessee.
 

 17. QUIET ENJOYMENT
 The Lessor covenants and warrants that, subject only to such mortgages and encumbrances contained in the existing Certificate of Title, the Lessor has not disposed of the Lessor’s interest in all or any part of the said lands and the leased substances, and has the right and full power to enter into this Lease and to grant and demise the said lands and the leased substances, and that the Lessee, upon observing and performing the covenants and conditions on the Lessee’s part to be observed and performed, shall and may peaceably possess and enjoy the same during the primary term of this Lease and any extensions thereof without any interruption or disturbance from or by the Lessor or any person claiming under or through the Lessor.
 

 18. FURTHER ASSURANCES
 The Lessor and the Lessee shall each do and perform all such further acts and execute and deliver all such deeds, documents and writings and give all such further assurances as may be reasonably required in order to fully perform and carry out the terms of this Lease.
 

 19. MANNER OF PAYMENT
 (a)   All payments to the Lessor provided for in this Lease shall, at the Lessee’s option, be paid or tendered  either to the Lessor or to the depository named in or pursuant to this clause, and all such payments or tenders may be made by cheque or draft of the Lessee either mailed or delivered to the Lessor or to said depository, which cheque or draft shall be payable in Canadian funds.  If payment is made by the Lessee to the depository, the Lessor does hereby appoint
 DIRECT TO LESSOR AT ADDRESS FOR SERVICE as the sole depository for the receipt of all monies payable under this Lease, and the Lessor agrees that said depository and its successors shall be and continue as its agent for the receipt of any and all sums payable hereunder,  regardless of changes of ownership (whether by assignment, succession or otherwise and whether in whole or in part) of the said lands or the leased substances or of the consideration payable hereunder, rentals,
 suspended well payments or royalties to accrue hereunder.  Any payment mailed to the Lessor or to the depository shall be deemed to have been paid
 4 days (excluding Saturdays, Sundays and statutory holidays) after deposit in any mail box or post office.
 

  

 

 
 
  (b)   The Lessor may not cancel the appointment of a depository without designating a successor but may at any time designate a new depository by giving written notice to the Lessee specifying the name and address of such new depository; provided that
 (i)    only a bank, trust company, credit union, or treasury branch in Canada may be designated as a depository,
 (ii)   only one depository shall be designated at any one time, regardless of whether or not any monies payable hereunder are, or become, payable to more than one person, and
 (iii)  the Lessee shall not be required to recognize any new depository until the expiration of 45 days from the receipt by it of the notice in writing, but this shall not prohibit the Lessee from making payment to the new depository prior to the expiration of the 45-day period.  All payments or tenders made to such new depository shall be deemed to have been made in accordance with the terms of this Lease.
 (c)  If any depository shall at any time resign, or fail or refuse to act as the depository hereunder and a new depository is not designated by the Lessor pursuant to the terms of this clause within 10 days from such resignation, failure or refusal to act, then the Lessee at its option may designate a depository hereunder, which depository shall be entitled to charge its usual fees and collect same from the Lessor, and said depository shall be the depository to all intents and purposes as if originally appointed by the Lessor.
 (d)   Should the Lessor be a non-resident of Canada, the Lessor acknowledges and agrees that the Lessee may deduct income, withholding or other taxes from any payment to the Lessor in compliance or intended compliance with the provisions of the Income Tax Act, tax agreements or treaties or other statutes of Canada or its Provinces as are from time to time enacted and amended, whereupon the timely remittance by the Lessee of the balance of the payment to the Lessor shall be deemed to constitute full performance by the Lessee in respect of such payment.
 

 20. ASSIGNMENT
 Each of the parties hereto may delegate, assign, sublet or convey to any other person, firm or corporation all or any of the property, powers, rights and interests obtained by or conferred upon them respectively by this Lease and may  enter into all agreements, contracts and writings and do all necessary acts and things to give effect to the provision of this clause; provided that no assignment by the Lessor shall be binding upon the Lessee, notwithstanding any actual or constructive notice or knowledge thereof, unless and except when the same be for the entire interest of the Lessor.  The Lessee need not act on any assignment until 45 days after the Lessee has been actually furnished with evidence satisfactory to it of such assignment. All payments made within the aforesaid period to the party or parties who would have been entitled to the same in the absence of such assignment shall be deemed to have been made in accordance with the terms of this Lease.  The foregoing shall not, however, prohibit the Lessee from acting upon the assignment prior to the expiration of the aforesaid 45-day period and all payments or tenders made in accordance with such assignment shall be deemed to have been made in accordance with the terms of this Lease; provided further that if the Lessee shall assign this Lease as to any part or parts of the said lands, then the rental, suspended well payments  and royalties shall be apportioned among the several lease holders rateably according to the surface area of each and should the assignee or assignees of any such part or parts fail to pay the proportionate part of the rental, suspended well payments and royalties payable by him or them, such failure to pay shall not affect this Lease insofar as it relates to and comprises the part of parts of the said lands in respect of which the Lessee or its assignees shall have made due payment.
 

 21.  NOTICES
 (a)  All notices, communications and statements (herein called “notices”) required or permitted hereunder shall be in writing.  Notices may be served:
 (i)    personally by delivering them to the party on whom they are to be served at that party’s address hereinafter given, provided such delivery shall be during normal business hours.  Personally served notices shall be deemed received by the addressees when actually delivered as aforesaid; or
 (ii)   by telegraph or telecommunication (or by any other like method by which a written and recorded message may be sent) directed to the party on whom they are to served at that party’s address hereinafter given.    Notices so served shall be deemed received by the respective addressees thereof (1) when actually received by them if received within the normal working hours of a business day, or (2) at the commencement of the next ensuing business day following transmission thereof, whichever is the earlier; or
 (iii)  by mailing them first class (air mail if to or from a location outside of Canada) post, postage prepaid, to the party on whom they are to be served.   Notices so served shall be deemed to be received by the addressee at noon, local time, on the earlier of the actual date of receipt or the 4th   day (excluding Saturdays, Sundays or statutory holidays) following the mailing thereof.  No notice shall be effective if mailed during any period in which postal workers are on strike or if a strike of postal workers is imminent and may be anticipated to affect normal delivery of the notice.
 (b)  The address for service of notices shall be as follows:
 

 	 	 	 	
	 Lessee:
	 112 North Curry Street 
	 Lessor:
	 4246 Albert Street  

	  
	 Carson City, Nevada 
	  
	 Regina, Saskatchewan 

	  
	 USA 89703 
	  
	 S4S 3R9

 (c)   Any party may change its address for service by notice to the other party served as aforesaid.
 (d)  Nothing herein shall in any way affect the method of the payment of monies as set out in clauses 19 and 20 of this Lease.
 

 22. ENTIRE AGREEMENT
 The terms of this Lease constitute the entire agreement between the parties, and no implied covenant or liability of any kind is created or shall arise by reason hereof or anything contained herein.   This Lease supersedes and  replaces all previous oral or written agreements, memoranda, correspondence or other communications between the parties relating to the subject matter hereof.  The parties recognize that the terms of this Lease may be modified or affected by statute, regulation, order, or directive of any government or governmental agency.
 

 23. NO AMENDMENT EXCEPT IN WRITING
 No amendment or variation of the terms of this Lease shall be binding on any party unless it is evidenced in writing executed by the parties.
 

 24. TIME OF THE ESSENCE
 Time shall be of the essence.
 

 25. ENUREMENT
 This Lease shall enure to the benefit of and shall be binding upon the parties hereto and their respective  heirs,  executors, administrators, successors and assigns.
 

 26. SEVERABILITY
 If any provision hereof becomes illegal or unenforceable, the provision will be deemed to be severed and the Lease shall continue as amended.
 

  27. PERSONAL INFORMATION CONSENT
             By providing personal information to the Lessee, the Lessor consents to the Lessee’s collection, use, retention and disclosure of that information
    for any and all purposes and uses as permitted or contemplated under the above-described Lease and as needed to comply with any legal requirements.
    The Lessee may retain this information so long as is reasonable to fulfill those purposes.
 

  

 

 
 
  

 IN WITNESS WHEREOF the Lessor and the Lessee have executed and delivered this Lease on the date first above written.
 

 SIGNED AND DELIVERED
 in the presence of:
 

 

     /s/  Ralph Floyd                                                                             /s/ William Steer                                                                              
 
 Witness       RALPH FLOYD
        WILLIAM STEER
 Lessor
 

 

 

 

 ALLIANCE PETROLEUM CORPORATION
 

 

 

 Per:
   /s/ Khurram Ijaz
 KHURRAM IJAZ, President
 Lessee
 

 

 

                    AFFIDAVIT OF EXECUTION
 

 I,  RALPH FLOYD
 of  REGINA
 , in the Province of SASKATCHEWAN, MAKE OATH AND SAY:
 1.
 THAT I was personally present and did see  WILLIAM STEER named in the within instrument, who is personally known to me to be the person
 named therein, duly sign and execute the same for the purposes named therein.
 
 2.
 THAT the same was executed at  REGINA
 , in the Province of Saskatchewan, and that I am a subscribing witness thereto.
 
 3.
 THAT I know the said  WILLIAM STEER and he is, in my belief, of the full age of eighteen years.
 

 
 SWORN before me at  Regina
 ,)
 
  in the Province of Saskatchewan, this         14th
 ) 
 
 day of  January
 , 2011 
  )  
         /s/ Ralph Floyd
   
   (witness signature)
 

 

        [signature illegible]
  A Commissioner for Oaths in and for the Province of 
 Saskatchewan
 

 

 

 A Commissioner for Oaths in and for the Province of 
 Saskatchewan
 My Commission expires Aug. 31, 2013

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