Exhibit B-4
GPU SERVICE, INC.
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SERVICES AGREEMENT
As of June 12, 2001
TO: GPU Diversified Holdings LLC
("Company")
GPU Service, Inc. (hereinafter called "Service Company") is a company
engaged in the rendering of services to companies in the GPU, Inc. holding
company system. The organization, conduct of business and method of cost
allocation of Service Company are designed to meet the requirements of Section
13 under the Public Utility Holding Company Act of 1935 and the rules and
regulations promulgated thereunder to the end that services performed by the
Service Company for said associate companies will be rendered to them at cost,
fairly and equitably allocated. Services will be rendered by Service Company
only upon receipt from time to time of specific or general requests therefor.
Said request may always be modified or canceled by the serviced company at its
discretion. The parties hereto agree as follows:
1. Service Company agrees to furnish the Company and any subsidiaries of
the Company including those to be formed or acquired in the future (collectively
and individually referred to as "You"), upon the terms and conditions herein set
forth, such of the services described in Schedule I hereto as You may from time
to time request. Service Company will also furnish, if available, such services
which are not described in Schedule I but which are generally related to such
services as You may request.
2. If You so request, Service Company will act as Your agent,
attorney-in-fact and representative to sign such instruments and do such things
as You may from time to time authorize in connection with the services to be
furnished hereunder.
3. Service Company has and will maintain a staff trained and experienced
in the analysis and evaluation of investment opportunities and their structure
and implementation. In addition to the services of its own staff, Service
Company will, after consultation with You concerning services to be rendered
pursuant to your request, arrange for services of non-affiliated experts and
consultants. If You so request, Service Company employees performing Operations
Division functions will be leased to You. The lease of such employees will be at
the actual cost thereof as provided in Sections 4 and 5.
4. All of the services rendered under this agreement will be at the actual
cost thereof, and paid for in accordance with the provisions set forth in
paragraph 5 hereof. Direct charges will be made for services where a direct
allocation of cost is possible. The methods of determining such costs and the
allocation thereof are set forth in Schedule II hereto. These methods are
reviewed periodically as deemed appropriate by You and Service Company. Such
methods may be modified or changed by Service Company without the necessity of
an amendment of this agreement, provided that in each instance
all services rendered hereunder will be at actual cost thereof, fairly and
equitably allocated, and all in accordance with the requirements of the Public
Utility Holding Company Act of 1935 and the rules and regulations and orders
thereunder. You will be advised from time to time of any material changes in
such methods.
5. Bills will be rendered as soon as practicable after the close of each
month and will be payable within ten days after receipt. This agreement may be
terminated at any time by either party giving at least thirty days' written
notice to the other of such termination as at the end of any month.
6. Service Company shall arrange for a working capital account ("Working
Capital Account") to be established for You, from which Service Company shall
make payments for all costs incurred in providing its services and in
discharging its responsibilities hereunder. You agree to fund your Working
Capital Account by providing or transferring funds promptly on receipt of
telephone or other notice or direction from or on behalf of Service Company of
your obligation therefor.
Upon termination of this agreement, as hereinafter provided, any residual
unexpended balance in the Working Capital Account after payment of the costs
actually incurred, and reasonable commitments therefor, as set forth in Section
4 hereof shall be credited to You.
7. This agreement will be subject to termination or modification at any
time if and to the extent its performance may conflict with any federal or state
law or any rule, regulation or order of a federal or state regulatory body
having jurisdiction. This agreement will be subject to approval of any federal
or state regulatory body whose approval is a legal prerequisite to its execution
and delivery of performance.
GPU SERVICE, INC.
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President-
Corporate Affairs
Accepted:
GPU Diversified Holdings LLC
By:
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▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
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SCHEDULE I
Description of Services which are available from
GPU SERVICE, INC.
Accounting and Auditing.
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The keeping of accounts and collateral activities, including ▇▇▇▇▇▇▇▇,
collections and payments, preparation of reports and preservation of records,
review of internal controls and audits, preparation of statistical data and
reports and analyses.
Corporate and Corporate Records.
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Cooperation with officers and counsel of associate companies on corporate
matters, regulation, contracts, claims, litigation, financial affairs, and
investments, including debt and equity securities, leveraged leases and private
placements. Services in connection with stockholders' and directors' meetings
and keeping of corporate records.
Data Processing.
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Maintenance and operation of a data processing center and equipment for
accounting, engineering, administration and other functions, and development of
systems therefor.
Executive and Administrative.
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Consultation and services in management and administration of all aspects
of financial and investment transactions.
Financing.
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Services in connection with interim and permanent financing of associate
companies, determination of capital needs, cooperation with officers and counsel
of associate companies on financing matters, including registration statements
and regulatory applications; cash management; budgeting; preparation of
financial and statistical reports.
Insurance and Employee Benefit Programs.
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Development, placement and administration of insurance coverage and
employee benefit programs, including group insurance, pensions, hospitalization
and similar programs; property inspections and valuations for insurance.
Investment Operations.
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Receipt, review, evaluation of investment opportunities and ways and means
to utilize capital resources, communications with investment, merchant and
commercial bankers, broker-dealers, investment advisors, portfolio managers,
economists and other representatives of investment and financial institutions
and funds; negotiation, structuring and implementation of investment decisions
and the preparation and execution and delivery of agreements therefor.
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Operations Division.
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The operation and maintenance of the transmission and distribution
facilities.
Personnel.
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Assistance relating to wage and salary administration, employment
procedures and policies, employee training and safety and recruitment.
Retail Energy Sales and Services.
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Review, evaluation and analysis of opportunities to develop, market and
sell energy and energy-related services, including arrangements with and for
associate companies.
Public Information and Relations.
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Services relating to information to and relations with the public,
including customers, security holders, employees, financial analysis, rating
agencies, investment firms and employees.
Purchasing.
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Services with respect to purchase of materials, supplies, equipment and
fuel reference works. Inventorying same for resale to associate companies.
Research.
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Services relating to research of financial and investment opportunities
and ways to utilize capital resources.
Taxes.
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Services relating to federal, state and municipal taxes, preparation of
federal returns and handling of federal return audits and claims.
Legal.
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Services related to general corporate legal matters and affairs including
supervision of inside and outside counsel legal services.
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SCHEDULE II
Determination of Cost of Service
and Allocation Thereof
Cost of service will be determined in accordance with the Public Utility
Holding Company Act of 1935 and the rules and regulations and orders thereunder,
and will include all costs of doing business incurred by Service Company.
Records will be maintained by each core business or support process of the
Operations Division of Service Company in order to accumulate all costs of doing
business and to determine the cost of service. These costs will include wages
and salaries of employees and related expenses such as insurance, taxes,
pensions and other employees welfare expenses. In addition, the Corporate
Division of Service Company will maintain records of general administrative
expenses, which will include the costs of operating Service Company as a
corporate entity.
Where appropriate, charges for services rendered or personnel assigned or
leased to a particular GPU Energy Company and related expenses and non-personnel
expenses (e.g., use of automotive equipment, etc.) relating to a particular GPU
Energy Company will be billed directly to the owner of such GPU Energy Company.
When a service is rendered for the benefit of two or more companies, the
costs will be shared by the receiving companies in proportion to the average of:
(1) gross transmission and distribution plant, (2) energy delivered to ultimate
consumers in KWH, and (3) operating and maintenance expense excluding purchase
power.
All other costs will be fairly and equitably allocated in accordance with
Rules 90 and 91 of the Public Utility Holding Company Act of 1935. Calculations
under these allocation formulae will be reviewed periodically and revised as
appropriate to fully allocate all costs by each year-end.
All charges for services will be determined from the time records of
employees. Records of such related expenses and will be maintained and subjected
to periodic review.
Out-of-pocket expenses which are incurred for a GPU Energy Company will be
billed at cost. Charges for non-personnel expenses, such as for use of
automobiles not assigned exclusively to the GPU Energy Companies, will normally
be computed on the basis of costs per hour.
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