EXHIBIT 10.5
MASTER AGREEMENT
BETWEEN
NATIONAL ENERGY SERVICE CORPORATION
AND
CHARTER MANAGEMENT, LLC
This Agreement (the "Agreement") entered into as of the 22 day of September,
2003, by and between NATIONAL ENERGY SERVICE COMPANY, INC. ("NESC") having
offices at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ and
CHARTER MANAGEMENT, LLC ("CHARTER") having offices at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
BACKGROUND OF THE AGREEMENT
CHARTER and NESC (collectively the "Parties" and each a "Party") have
complementary skills and resources and desire to establish a contractual
arrangement for the marketing and development of energy related projects and
services, including but not limited to energy upgrade and retrofit
opportunities, to the long-term care/retirement community industry and any other
industries that may benefit form the programs. Therefore, in consideration of
the respective agreements and conditions set forth in this Agreement and other
good and valuable consideration, including the time, effort and expenses of the
Parties, the receipt and sufficiency of which consideration is hereby
acknowledged, the Parties intending to be legally bound agree as follows:
1. Purpose and Scope of Agreement.
The parties shall cooperate to identify, consider and determine their mutual
interest, if any, in developing energy related projects and services for the
long-term care/retirement community industry. Such projects and services shall
be referred to collectively as the "Projects" and individually as a "Project."
Such Projects may include, but are not necessarily limited to, the following:
a. electric lighting upgrading by the installation of a newly retrofitted
lighting system;
b. energy conversion to natural gas;
c. installation of more efficient natural gas and water heating systems;
d. upgrading and rehabilitation of other energy systems and equipment;
e. assistance in minimization of energy and fuel costs for customers;
f. energy gatekeeper services and the long-term contract for the sale of
natural gas and electricity;
g. assistance in minimizing energy and fuel costs through energy conservation,
efficiency and demand side management.
The additional services provided in connection with such Projects may include
some or all of the following: turnkey services (design/build contracting),
finance and equity services; engineering and design services; technical
consulting services; energy performance contracting; electric, natural gas and
other services procurement and management services.
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2. Areas of Responsibility.
The primary responsibilities of the Parties with respect to the essential
elements of Project development and implementation are allocated as follows:
a. Sales Lead Generation. NESC shall be responsible for generating sales leads
for projects by establishing initial contacts with potential customers and
developing those contacts into Project proposals. However, CHARTER retains
the right to make initial contacts and to generate leads from sources other
than NESC, provided that any such Project sales leads nevertheless are
subject to this Agreement.
b. Pre-screening of Sales Leads. NESC and CHARTER shall develop jointly a
pre-screening checklist and evaluation methodology for Project sales leads
("Pre-Screening Criteria"). The Parties will employ the Pre-Screening
Criteria to pre-screen Project sales leads. The Pre-Screening Criteria will
call for sufficient financial information regarding the potential customer
to allow at least a preliminary evaluation of the potential customer's
credit worthiness, such as a review of available financial information,
credit history and credit references.
c. Technical Development. NESC shall provide or arrange for the furnishing of
the necessary technical expertise in developing all Projects.
d. Customer Contract Development. The Parties shall be jointly responsible for
the negotiation, development, drafting and execution of each contract to
provide services for a particular Project ("Customer Contracts"). Customer
Contracts will address the reasonable concerns of both parties. NESC shall
be primarily responsible for maintaining contact with potential customers
and developing those contacts into Customer Contracts.
e. Financing. CHARTER shall be responsible, in cooperation with NESC, for
providing financing for Projects to NESC at a mutually agreeable rate to be
fixed at the initiation of each Project. NESC shall be responsible for
providing such funds to the customer. A sample loan agreement between NESC
and CHARTER is attached to the Agreement as "Exhibit A" with the
understanding that such Loan Agreements may be modified to take into
account the credit risk of each Project (the "Loan Agreement").
f. Design and Installation Services. NESC will be responsible for the design
and installation of the lighting upgrades and related services and will
perform such design and installation work itself, either directly or
through subcontractors.
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3. Profits and Expenses.
a. Design and Installation. NESC will be entitled to any profit from the
Projects.
b. Principal and Interest Payment. The principal and interest payment to
service the financing portion of the Project will be a fixed payment
calculated to amortize the amount financed over an amount of time set forth
in the customer contract in equal monthly payments and such payments will
be due to CHARTER irrespective of any future variation in the amount of
monthly energy savings calculated to be available to the customer. As may
be necessary for CHARTER to protect its financing interest in the Project,
CHARTER shall have the right to record the Energy Service Agreement and the
Loan Agreement or, in lieu thereof, a notice of such contract or other
document adequate to secure CHARTER's interest in the financing.
e. Design, Engineering and Installation Work. NESC shall bear the cost and
expenses associated with the performance of its technical consultant,
design, engineering, installation, and related work for any Project.
4. Term.
This Agreement shall become effective as of the date first written above and
shall remain in full force and effect until the date thirty days after CHARTER
has provided notice to NESC of CHARTER's election to have the Agreement
terminate upon the expiration of such thirty day notice (the date of either such
termination being the "Termination Date"). However, if, as of the Termination
Date, a Customer Contract has not been executed for an outstanding selected
Project, then this Agreement shall remain in full force and effect as to such
selected Project until the earlier of the execution of a Customer Contract or
the Parties elect not to pursue such selected Project. With respect to any
Customer Contract which is in effect as of the Termination Date, this Agreement
shall remain in full force and effect as to such Project and shall govern the
respective rights and responsibilities of the Parties as to such Project. Upon
the Termination Date, except as to a selected Project which remains outstanding
as set forth in this section, the rights and responsibilities of the Parties as
to exclusivity under this Agreement shall no longer exist. However, if CHARTER
elects to terminate this Agreement for other than a default by NESC or other
good cause, then CHARTER agrees not to compete with NESC directly or indirectly,
to an affiliate or subsidiary, with respect to Projects within the scope of this
Agreement until the earlier of the following:
a. two years from the date CHARTER's notice of termination for other than a
default by NESC or other good cause;
b. the date upon which this Agreement would otherwise have automatically
terminated.
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5. Insurance.
a. Required Insurance Coverage. Each Party represents that it now carries and
will carry and maintain during the term of this Agreement, both with
respect to itself and any entity performing the services for it under this
Agreement, insurance covering Worker's Compensation/Employer's Liability in
minimum amounts of $500,000, Commercial General Liability (including
specific coverage for contractual liability and completed operations) in
the amount of $2,000,000 aggregate and $1,000,000 per occurrence and
Business Automobile Liability in the amount $1,000,000. The required
coverage may be provided in a combination of primary and umbrella or excess
liability insurance policies.
6. Forum.
This Agreement and any claim, dispute or other matter in question between the
Parties, is governed by the laws of the State of Ohio without reference to its
choice of law rules. Any such dispute shall be decided in any Ohio court having
appropriate jurisdiction.
7. Permits and Approvals.
Each Party shall be responsible for obtaining at its expense from the
appropriate governmental authorities or other entities having jurisdiction, all
required permits and approvals necessary for the performance of such Party's
work or services.
8. Notices.
Unless otherwise specified, any notice, request, demand, statement or other
communication provided for in this Agreement or any notice which a Party may
desire to give to the other, shall be effective upon receipt and shall be in
writing and personally delivered or mailed, first class mail, postage prepaid,
or sent by fax (followed with a confirmation by mail unless the receiving Party
acknowledges the receipt by a return fax) at the following address or such other
address as may be later designated by the Party:
a. Notices to National Energy Service Corporation:
National Energy Service Company, Inc.
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▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: ▇-▇▇▇-▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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b. Notices to Charter Management, LLC:
Charter Management, LLC
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇'▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
9. Indemnification.
Each Party hereby agrees to indemnify and hold harmless the other Party from and
against any and all claims, demands, and actions, and any liabilities, damages
or expenses resulting therefrom, including court costs and reasonable attorneys
fees arising out of or relating to the work and services performed by the
indemnifying Party. Nothing in this section is intended to relieve either Party
from any funding, payment or reimbursement obligation set forth in this
Agreement. The obligations of this section shall survive the termination of this
Agreement.
10. Precedence of Documents.
This Agreement and each Loan Agreement and Customer Contract are intended to be
complementary and consistent, unless otherwise specifically noted. However, in
the event of any ambiguity, inconsistency or conflict between this Agreement,
any Customer Contract, and any Loan Agreement the provisions of the Customer
Contract shall have precedence as to that particular Project and shall govern
the Parties' performance of that Project, but shall have no effect on any other
Project. No changes or modifications shall be made to the terms and conditions
of this Agreement itself unless reduced to a writing which clearly states that
it is an amendment or change to this Agreement and is properly executed by the
Parties.
11. Relationship of Parties.
This Agreement grants neither Party the right to bind the other Party to any
commitment, representation, instrument or agreement with respect to any person
or entity, including any customer or potential customer. The Parties do not
intend, nor shall this Agreement be deemed to create any partnership, agency,
joint venture, or trust, or to authorize or cause any Party to be an agent,
servant or employee to the other Party. As between the Parties, each Party (and
its directors, officers, employees, agents and servants) shall be an independent
contractor of the other subject only to the contractual rights and
responsibilities established between them by this Agreement and any Customer
Contracts. Neither Party shall take any action that would result in the
characterization of the other Party or its directors, officers, employees,
agents or servants as other than such an independent contractor.
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12. Assignment.
The rights and responsibilities of either Party under this Agreement may not be
transferred, subcontracted or assigned, in whole or in part, except as
specifically provided in this Agreement or with the prior written consent of the
other Party, which consent shall not be unreasonably withheld. Notwithstanding
the foregoing, CHARTER shall have the right, upon notice to but without the
consent of NESC, to assign this Agreement to any of its subsidiaries or
affiliates.
13. Authorship.
In the event that any dispute rises regarding this Agreement or as
interpretation, each of the Parties specifically agrees that it shall be
considered as a joint author of this Agreement and no provision shall be
interpreted against a Party on the basis of authorship.
14. Headings.
The Headings contained in this Agreement are merely for convenience of reference
only and shall not affect the meaning or interpretation of any provision.
15. Counterparts.
This Agreement may be executed in multiple counterparts, each of which shall
have the same effect, and be deemed as an original executed document.
16. Termination for Default.
Either Party may terminate the Agreement by providing the other Party with a
written notice of termination for default if:
a. the other Party becomes insolvent or makes a general assignment for the
benefit of creditors; or
b. a petition under the United States Bankruptcy Code is filed by or against
the other Party; or
c. material and adverse developments affecting such other Party's business
come to the attention of the non-defaulting Party, including any condition
which would be a violation of any law or governmental regulation or which
could result in the non-defaulting Party itself being in violation of any
law or governmental regulation, and it seeks but fails to receive from the
other Party reasonable assurances as to its ability and intention to
perform and complete its obligations under the Agreement; or
d. the other Party becomes involved in legal proceedings that in the
reasonable judgment of the non-defaulting Party would interfere or would in
the future interfere with the performance of this Agreement; or
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e. the other Party fails to perform a substantial obligation under this
Agreement, repeatedly fails to diligently perform its obligations under
this Agreement, or otherwise substantively breaches this Agreement. Any
failure by the non-defaulting Party to insist upon strict observance or
performance by either Party of the provisions of this Agreement shall not
be deemed a waiver or a "course of dealing".
17. Invalid Provisions.
If any provision of this Agreement is held to be illegal or invalid, the
validity of such provision shall not affect any of the remaining provisions and
this Agreement shall be construed and enforced as if such illegal or invalid
provision had not been contained herein and the Agreement shall be then
interpreted as reasonably required to fulfill the mutual intent and purpose of
the Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representatives, as of the date and year first above
written.
NATIONAL ENERGY SERVICE COMPANY, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
CHARTER MANAGEMENT, LLC
By: /s/ ▇▇▇▇ ▇. ▇'▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: President
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