EXHIBIT 10.18
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS DOCUMENT.
CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
[THE ▇▇▇▇▇▇▇▇ GROUP LETTERHEAD]
January 1, 1998
Green Mountain Energy Resources L.L.C.
Att'n: Mr. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. Box 2206
South Burlington, VT 05407-2206
Ladies and Gentlemen:
This agreement is made effective as of January 1, 1998, and supersedes and
replaces our Agreement for the Provision of Consulting Services, dated June 3,
1996.
1. Assignment
Our assignment shall relate to the following product, project or service:
Green Mountain Energy Resources marketing efforts with respect to retailing
electricity, natural gas and related products and services.
During the term of this agreement, we shall be the sole company charged
with the responsibility of creating, preparing, and executing marketing
communications plans and projects and placing advertising with respect to such
product, project or service,except in internet media, including your website. If
additional products, projects or services are assigned to us, all terms and
conditions hereof shall apply in the same manner as with respect to the
originally assigned product, project or service. We agree that services in
connection with ▇▇▇▇▇ ▇▇▇▇▇▇▇ or another general spokesperson and the hotair
balloon operating agreement shall be governed under separate agreements and
shall not be subject to the terms of this agreement.
2. Agency Services
A. In accordance with the above, we will perform the following services for
you professionally and in a manner consistent with that expected of other
national advertising agencies. :
(1) Study your products and services;
(2) Analyze your present and potential markets;
(3) Apply our knowledge of sales and distribution channels, methods and
operations, and available media, targeted communications, advertising,
promotion, public relations and other means of marketing communications which
can profitably be used to market your products and services; and
(4) Acting on the study, analysis and knowledge described above, formulate and
recommend definite communications plan(s).
B. In the execution of the plan(s), we will do the following:
(1) Conceive, write, design, produce, illustrate and otherwise prepare, and
submit to you for your approval, your advertisements and other marketing
communications in the appropriate forms for your message, including print and
broadcast;
(2) Recommend and, with your prior approval, place orders for space, time or
other means for your advertising, exercising due care in selecting media and
suppliers and endeavoring to secure the most advantageous rates available;
(3) Recommend and, with your prior approval, enter into agreements with
subcontractors providing strategic services such as fulfillment, direct mail
consulting, mail processing and brand identity services. We may hire other
subcontractors without your prior approval, provided that such contracts shall
include provisions defining required performance standards, confidentiality
provisions, rights upon termination and ownership rights in all Work Product (as
hereafter defined) in a manner consistent with the terms of this agreement. You
shall retain the right to advise us of unsatisfactory performance by any of our
sub-contractors, which we will take reasonable steps to correct, including but
not limited to terminating an unsatisfactory sub-contractor;
(4) Properly incorporate the message in mechanical or other form and forward
it with proper instructions for fulfillment;
(5) Verify insertions, displays, broadcasts or other means used to such degree
as is usually performed by agencies;
(6) Audit all invoices; and
(7) Cooperate with your marketing and sales staff and other marketing
consultants to help make your advertising and other marketing communications
effective.
3. Charges
A. Minimum Monthly Retainer
You agree to pay us a minimum monthly fee, due by the first of each month, of
$30,000 during the term of this agreement ("Minimum Monthly Retainer"). The
Minimum Monthly Retainer will be credited against charges incurred on your
behalf for all agency services/purchases except: a) media time/space, and b)
direct response postage charges.
B. Quarterly Budgets and Monthly Advance Payments
Prior the the commencement of each calendar quarter, we shall agree upon a
budget for monthly expenditures during such quarter. You agree to make monthly
advance payments, due by the first day of each month, in the amount of
anticipated prepaid expenses, including media time/space and direct response
postage, for such month as reflected in the quarterly budget less the amount of
the Minimum Monthly Retainer described above ("Monthly Advance Payments").
Within 15 days of the end of each month, we will provide you with an invoice for
the actual charges by job incurred during such month in excess of the Monthly
Advance Payment and such amount shall be due and payable by you within 30 days
of your receipt of such invoice. During any quarter, you may amend the budget as
you deem appropriate and we will implement the budget as amended. We agree not
to exceed approved quarterly budgets by more than ten percent in any quarter
without your prior written approval. The budget for the period January 1, 1998
though March 31, 1998 is set forth on Exhibit A attached hereto.
Quarterly Budgets shall include the following line items if applicable:
1. Advertising Space and Time
You agree to pay us at current published rates (or at lower rates when
available) plus an amount which (together with commission, if any, allowed by
media) will yield us ***% of our total charge to you before cash discounts, if
any.
2. Direct Response Marketing
To the extent not paid in Monthly Advance Payments, postage relative to direct
response marketing must be paid a minimum of 2 days prior to submission to post
office and will be billed at "Net Cost." As used in this agreement, Net Cost
shall mean our actual cost, net of any realized discounts.
You agree to pay us the Net Cost of all Freight/Shipping materials and services
purchased on your behalf, plus an amount that will yield us ***% of our total
charges to you.
3. Design Materials and Services
You agree to pay us the Net Cost of all design materials and services purchased
from ▇▇▇▇▇▇▇▇ ▇▇▇▇, Inc., on your behalf, plus an amount that will yield us ***%
of our total charge to you.
4. General Agency Services
Except as otherwise noted herein, you agree to pay us the net cost of all
materials and services purchased on your behalf, plus an amount that will yield
us ***% of our total charge to you, except that for all "merchandise" purchased
on your behalf our commission shall be ***% of our total charge to you.
"MERCHANDISE" SHALL MEAN TANGIBLE/DIMENSIONAL ARTICLES, NOT PRINTED, TO INCLUDE:
(A) ADVERTISING SPECIALTIES, SOME BEARING LOGO IMPRINTS; (B) DIMENSIONAL ITEMS
USED IN CONJUNCTION WITH TRADE SHOW EXHIBITS, GOODWILL GESTURES OR PREMIUM
INCENTIVE OFFERS. This fee
***Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.
includes all cost of client services which are clearly defined below the line on
our General Agency Fee Schedule, attached hereto as Exhibit B. We Agree to
renegotiate merchandise compensation on a quarterly basis, if requested by you.
5. Taxes
You agree to pay all sales, use and payroll taxes that we are required by law
to collect or pay in connection with your account for any purchases made or
talent charges incurred on your behalf.
6. Agency Time Charges
You agree to pay us for services rendered on your behalf at our then current
hourly rates. When relative to a specific project, the anticipated charge for
agency services will be incorporated into the project estimate in quarterly
budgets. Consultation and strategic planning of a general nature will be
undertaken at your request and will be charged as incurred at our then current
hourly rates (General Agency Fee Schedule attached hereto as Exhibit B).
7. Miscellaneous
You agree to pay us at our then current rates for color outputs and color copies
related to the production of advertising/marketing materials. You also agree to
pay us for travel and/or incidental costs which you request or which are
connected with the production of your marketing materials.
8. Advertising Placed Outside the U.S.
Since conditions vary from company to company and from country to country, it is
not feasible to establish a policy regarding compensation to us for advertising
you adapt, translate or use in part or whole outside the U.S. If such use
occurs, it is agreed that we will jointly review to determine the amount of
compensation to be paid to us for such use.
4. Terms of Payment
A. Fundamental Principles
Our relationship is based on three fundamental principles:
(1) We will finance our own agency services, but not the advertising of our
clients; and
(2) We are solely liable for payment of media invoices only after we have been
paid for those invoices by you. Prior to payment to us, you are and will remain
solely liable; and
(3) All services obtained or provided by us or our subcontractors to you and
Work Product produced thereby shall, upon payment by you, become your exclusive
property to the extent of property rights otained by us on your behalf which
shall be maintained in confidence as required under this
agreement.
B. Agreement to Pay
Payment of each month's statement is due thirty (30) days following receipt of
the invoice by you and will be past due after that date. A monthly service
charge of 1-1/2% will be added to the outstanding balance of accounts over
thirty (30) days past due. You are liable for any collection charges or attorney
fees incurred by us in collecting your account, if delinquent.
▇. ▇▇▇▇▇▇▇▇▇▇, Print, and Broadcast Production
We will prepare estimates for collateral materials, and print and broadcast ad
production for your approval in quarterly budgets. Based on the estimate
approved by you, which may vary by plus or minus 10%, we will invoice you for
the estimated cost at the inception of a project. You agree to pay these
invoices in accordance with the terms stated above. Estimated charges will be
reconciled to actual costs upon project completion.
D. Advertising Space and Time
We will invoice you for advertising space and time in the month prior to the
flight or circulation, so that your payment to us will coincide, as closely as
possible, with our payment responsibility to media.
E. Right to Change Payment Terms
We reserve the right in case of delinquency in your payments to us, or such
impairment of your credit as in our reasonable opinion might endanger future
payments to us, to change the requirements as to terms of payment under this
agreement.
F. Cash Discounts
Cash discounts from media or other suppliers, to which we may be entitled by
your prompt payment to us, will be passed on to you.
5. General Provisions
A. Mutually Exclusive Arrangement
During the term of this agreement and for a period of six months following its
termination, we agree to refrain from acting as advertising agency for any
environmentally branded products directly competitive with yours, without your
written consent. During the term of this agreement, you agree not to engage the
services of any other advertising agency without first obtaining our written
consent.
Notwithstanding the foregoing, we acknowledge and agree that you have previously
engaged other parties as marketing consultants, including but not limited to
Copernicus with respect to marketing research and strategy and The ▇▇▇▇▇ Group
with respect to public relations and events, and
that you may in the future engage other consultants. We agree to cooperate with
your other consultants.
B. Agent Relationship
With respect to goods and services for which you have given prior approval, we
are acting as your authorized agent in purchasing such goods and services for
you and performing such services required by us under this agreement.
C. Care of Property
We will keep in our care, for a reasonable length of time, advertising and other
materials entrusted to us as your property, and will use reasonable efforts to
secure their return from third parties.
D. Cancellation of Plans
You reserve the right in your discretion, to modify, reject, cancel, delay or
stop any and all plans, schedules or work in process which you previously
approved; and in such event we will take proper steps to carry out your
instructions; but you agree to assume all liability for all commitments, and to
reimburse us for any losses we may sustain or expenses we may incur derived
therefrom, and to pay us any service charges relating thereto.
E. Failure of Suppliers to Perform
To the best of our ability, we will endeavor to guard against loss to you
through the failure of media or suppliers to properly execute their commitments,
but we are not responsible for any failure on their part.
F. Releases
We will obtain all necessary releases, licenses, permits or other authorizations
to use photographs, trademarks, copyrighted materials, artwork or any other
property or rights belonging to third parties obtained by us for use in
performing services for you and we agree to discuss with you the scope of such
rights acquired on your behalf. You will obtain the same for any materials
obtained by you that are used by us in performing our services, and you will be
responsible for any claims with respect to such use.
G. Indemnification of Agency and Client
We agree to exercise our best judgment in preparing and placing advertising,
publicity, and other marketing communications for you, with a view to avoiding
any claims, challenges, proceedings or suits against you or ourselves.
You are responsible for the accuracy, completeness and propriety of information
concerning your products and services that you furnish to us.
We will indemnify and hold you harmless with respect to any claims or actions
against you, based upon material prepared by us, involving any claim for libel,
slander, piracy, plagiarism, invasion of privacy,
infringement of copyright, infringement of trade dress, unfair competition or
deceptive advertising, except (1) where any such claim or action may arise out
of information or material supplied by you to us and incorporated in material
prepared by us, or (2) for any such claim or action arising under regulations
specifically applicable to energy retailers or based on disclosures concerning
the environmental attributes of your products and services.
You will indemnify and hold us harmless with respect to any claims or actions
instituted by a third party which results from the use by us of material
furnished by you or where material created by us is substantially changed by
you. Information or data obtained by us from you to substantiate claims made in
advertising shall be deemed to be "material furnished to us by you."
The terms of this Section shall survive the termination of this agreement.
H. Confidentiality
You and we each shall treat all documentation and data received from the other
that is not publicly known or available ("Confidential Information") as
proprietary and will maintain it in confidence. The Confidential Information
shall not be used for any purpose other than in connection with our services to
you under this agreement. Only those of our and your employees, and those
employees of our sub-contractors, involved in such work shall be afforded access
to the Confidential Information, and all such employees shall maintain its
confidentiality under the terms hereof. Each party shall take all reasonable
steps to ensure that no other persons gain access to the Confidential
Information except as otherwise agreed herein or subsequently consented to in
advance in writing by the disclosing party.
The Confidential Information shall not be provided to any firm, organization or
individual without the prior written consent of the disclosing party unless such
recipient executed an equivalent confidentiality agreement. The receiving party
will instruct employees accessing the Confidential Information regarding
maintenance of the confidentiality of the information so obtained. Only enough
copies of any of the documentation or data to complete a project shall be made
without prior written consent of the disclosing party. At the disclosing party's
option each receiving party employee or agent which is provided access to
Confidential Information shall be required, in advance of being afforded such
access, to read and countersign a facsimile of this provision.
At the conclusion of performance of this agreement, or upon demand by the
disclosing party, the Confidential Information and any copies made thereof shall
be immediately returned to the disclosing party, notwithstanding the existence
of any claim or dispute between the parties, or the availability of any legal or
equitable basis, including any lien, upon which either party or its successors
or assigns might assert a claim to continued possession thereof.
The parties and their employees and agents agree that disclosure of any
Confidential Information except as authorized in this provision, or any
violation of this provision, will cause the disclosing party immediate and
irreparable harm remediable by preliminary and permanent injunctive relief, in
addition to any actual damage caused by such disclosure or violation.
Notwithstanding the preceding, this provision and the restrictions contained
therein shall not apply to any data and documentation:
a) which is independently developed by either party without the involvement of
the other; or
b) which becomes known to either party from a source other than the other party
without breach of any agreement relating to such information; or
c) pursuant to any order of a regulatory body or a court, after five (5) working
days notice to the disclosing party.
The terms of this provision shall survive the termination or expiration of this
agreement.
I. Authorized Representative
Until otherwise notified by you in writing, we will direct all inquires
regarding your account to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, who shall have full authority to grant
your approval and to act for you with respect to this agreement.
6. Term of Agreement
▇. ▇▇▇▇ of Agreement and Notice of Termination
This agreement will start on January 1, 1998, and will continue in force until
terminated by 90 day notice (the "Notice Period") in writing sent by registered
or certified mail to our or your principal place of business, but in no event
may this agreement be terminated effective earlier than twelve (12) months from
the commencement of the term.
Notwithstanding the foregoing, you shall have the right at any time to terminate
this agreement for causewhen the breach, action or inaction continues for more
than 30 days after written notice by you to us. Cause shall include our material
breach of this agreement.
Notwithstanding the foregoing you shall also have the right to terminate this
agreement by giving thirty days prior written notice prior to January 1, 1999
that you have abandoned your plans to participate in the retail market for
electricity, natural gas and related products and services, after which you
shall refrain from such business for not less than one year.
Upon any such termination, you shall have no further obligation to us, other
than as set forth below.
B. Placing Advertising and Compensation During Period of Notice
This agreement will continue in full force during the Notice Period including
the ordering and billing of advertising in media whose closing dates or
broadcast dates fall within such period, and we are entitled to all commissions
and any other compensation relating to such advertising, regardless of who
places it.
After the Notice period, no rights or liabilities will arise out of our
relationship with one another, regardless of any plans that may have been made
for future advertising, except that any uncancelable contract(s) made on your
authorization, and still existing at the expiration of the Notice Period, will
be carried to completion by us and paid for by you unless mutually agreed in
writing to the contrary. In the event of termination of this Agreement, we agree
to assign to you,upon your request, any STRATEGIC subcontract As defined in
section 2.B.3 hereof entered into by us on your behalf and to insure that such
agreements are so assignable. In such circumstances, our rights to commissions
on such assigned contracts shall cease as of the date of termination of this
agreement.
C. Payment for Purchase and Work Done
Any materials, services, etc. we have committed ourselves to purchase for your
account, with your approval, will be paid for by you in accordance with the
provisions of this agreement.
D. Disposition of Property and Transfer of Contracts With Media
Upon the termination of this contract, we will assign and make available to you
or your representative, all property in our possession or control belonging to
and paid for by you, and all information regarding your advertising. We also
agree to give all reasonable cooperation toward transferring with approval of
third parties in interest all reservations, contracts, and arrangements with
advertising media or others, for advertising space, broadcasting time, or
materials yet to be used and all rights and claim thereto, upon being duly
released from the obligation thereof.
E. Work Product
As used in this agreement, "Work Product" means all plans, specifications,
calculations, reports and other output whether in written, electronic or other
form, including source code, resulting from providing services by us or by our
sub-contractors under this agreement. The Work Product shall become your
property to the extent of property rights obtained on your behalf upon payment
in full of all outstanding invoices. No licenses or rights under any patent,
trademark or copyright are granted by this agreement. We hereby assign to you
all property rights in the Work Product.
F. Commissions on Short Rate Bills and Refunds
In the event that contracts with advertising media are transferred to another
advertising agency, it is understood that after the Notice Period, we will
retain no rights to commissions on short rate bills nor have the obligation to
pay back commissions or refunds made by reason of the earning of a lower rate,
unless agreed to the contrary.
G. Examination of Records
You may at any time during the term of this agreement, upon reasonable notice,
examine our records directly pertaining to the handling of your account.
H. Arbitration
The sole remedy for the resolution of disputes between us under this agreement
will be arbitration before one arbitrator, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, such arbitration to
be held in Burlington, Vermont. Any arbitration under this agreement may be
consolidated with any arbitration between either party and any third party which
relates to the services provided under this agreement, and in that event the
arbitrator(s) shall have the authority to determine the site for the
consolidated arbitration.
I. Governing Law
This agreement will be interpreted in accordance with the laws of Vermont.
ACKNOWLEDGMENT OF ARBITRATION
YOU AND WE UNDERSTAND THAT THIS AGREEMENT CONTAINS AN AGREEMENT TO ARBITRATE.
AFTER SIGNING THIS AGREEMENT, YOU AND WE UNDERSTAND THAT NEITHER OF US WILL BE
ABLE TO BRING A LAWSUIT CONCERNING ANY DISPUTE THAT MAY ARISE WHICH IS COVERED
BY THE ARBITRATION AGREEMENT, UNLESS IT INVOLVES A QUESTION OF CONSTITUTIONAL OR
CIVIL RIGHTS. INSTEAD, YOU AND WE AGREE TO SUBMIT ANY SUCH DISPUTE TO AN
IMPARTIAL ARBITRATOR.
ACCEPTED AND AGREED BY CLIENT GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
Title: President & CEO Title: Mgr. Mktg. Op.
Date: 2-18-98 Date: 2-18-98
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Manager, Marketing Operations
Date: 2-18-98
ATTACHED SCHEDULES:
1.) Exhibit A - Approved Budget (January 1, 1998 - March 31, 1998)
2.) Exhibit B - General Agency Fee Schedule
Exhibit A
---------
Exhibit A: Approved Budget (January 1, 1998 - March 31, 1998)
Item Jan. '98 Feb. '98 Mar. '98
---- -------- -------- --------
TV Production 150,000 - -
Radio Production 20,000 - -
Newsp. - Production 35,000 - -
Direct Marketing - 266,750 252,500
List Acquisition 135,000 125,000 85,000
Fulfillment 55,000 50,000 50,000
Welcome Package 10,000 10,000 30,000
Customer Retention - 25,000 25,000
Collateral - 25,000 12,500
▇▇▇▇▇▇▇▇ 30,000 30,000 30,000
Web Site 25,000 75,000
C&I Program 10,000 25,000 15,000
------- ------- -------
Total 470,000 556,750 575,000
Exhibit B
---------
GENERAL AGENCY FEE SCHEDULE
Consultation/Strategic Planning:................................. $***
Day Rate Applicable @............................................ $***
Senior Project Management:....................................... $***
Account Planning:................................................ $***
Research:........................................................ $***
Creative Direction:.............................................. $***
Senior Art Direction:............................................ $***
Art Direction/Layout/Design...................................... $***
Computer Production:............................................. $***
Sr. Copywriting/Editing:......................................... $***
Copywriting/Editing:............................................. $***
Proofreading:.................................................... $***
Production Management:........................................... $***
On-site logistics, three-dimensional, mockups, etc.
Media Planning:.................................................. $***
Public Relations Coordination:
Internal:........................................................ $***
External: cost + Agency Admin. Fee............................... (***%)
Legal:
Internal:........................................................ $***
External: cost + Agency Admin. Fee............................... (***%)
Endorsement Negotiations:
Personalities, Licensing, Sponsorships........................... $***
Plus ***% of Total Fee
Direct Mail Consultation........................................... $***
Computer Color Outputs: $***/original generation Color Copies:.... $***/copy
====
ALL SERVICES BELOW THE LINE ARE PROVIDED AS AN INTEGRAL PART OF OUR AGENCY
SERVICES AND ARE NOT BILLED, BUT ARE ABSORBED AS A COST OF OUR OPERATING
OVERHEAD.
Account Services:
***Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.
Account Executive:............................................ $***
Account Coordinator:.......................................... $***
Print Production: Estimating, Buying and Supervision......... $***
Traffic/Coordination:......................................... $***
Media Placement & Buying...................................... $***
Reporting/Post Analysis...................................... $***
General Agency Services:...................................... $***
Direct Mail Coordinator:.......................................$***
As a standard of our compensation agreement, TCG will add a mark-up to all
outside purchases for printing, collateral and related activities.
Media buying will also return a standard rate of commission in consideration of
our management services rendered.
***Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.