Master Environmental Management Services Agreement

The redacted portions indicated by this symbol are the subject of a
confidential treatment request and have been filed separately with the
Securities and Exchange Commission.


EXECUTION COPY


MASTER ENVIRONMENTAL MANAGEMENT SERVICES AGREEMENT


THIS AGREEMENT is made and entered into on this day of April 24th, 2000, effective as of the 1st day of January, 2000, by and between Atlanta Gas Light Company ("AGLC"), a Georgia corporation, ThermoRetec Consulting Corporation ("ThermoRetec"), a Delaware Corporation, and solely for purposes of Article 6 hereof, ThermoRetec Corp., a Delaware corporation.


RECITALS


WHEREAS, AGLC, on behalf of itself and as agent for certain of its affiliates, manages the environmental investigation and remediation of certain properties where manufactured gas plants ("MGPs") formerly operated and at which certain investigation and clean-up activities ("Remediation Activities") are now or may be necessary or appropriate; and


WHEREAS, AGLC desires to retain ThermoRetec to perform environmental management services at such sites and other duties as assigned by AGLC from time to time, and ThermoRetec is willing to provide such services as more specifically described below; and


WHEREAS, the parties acknowledge that their mutual objective is to perform, or cause to be performed, such environmental management services in a sound and cost-effective manner that is in compliance with all applicable legal requirements and that reduces or eliminates the need for such services as expeditiously as practicable; and


WHEREAS, AGLC has required as a condition to entering into this Agreement that ThermoRetec Corp. be a party to this Agreement for the limited purpose of providing indemnification under Article 6 below, and ThermoRetec Corp. has agreed to be a party to this Agreement solely for such purpose;


NOW THEREFORE, in consideration of the premises and the material covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, AGLC and ThermoRetec agree as follows:


1. Term. The effective date of this Agreement shall be January 1, 2000 ("Effective Date"). Subject to the early termination as set forth in Section 8, this Agreement shall expire on the close of business on January 31, 2005 (the "Initial Term"), or such later date as the parties may agree; provided, however, that upon sixty (60) days prior written notice, AGLC may extend the term of this Agreement as reasonably necessary to complete the Remediation Activities.


2. Scope of Services.


2.1 The Services. Subject to the terms and conditions of this Agreement, ThermoRetec is being retained to provide the environmental management services ("Services") as more specifically set forth in Exhibit 1 attached hereto for the real properties listed in Exhibit 2 attached hereto ("Sites"), and ThermoRetec hereby agrees to perform such Services. Additional Sites and Services may be added to or removed from Exhibits 1 or 2 (as applicable) at any time by mutual agreement of the parties. In the event that such Sites or Services are added or deleted, the Annual Budget (as defined in Section 3.1) will be adjusted by a mutually agreed upon amount. AGLC agrees to use its best efforts to ensure completeness of, access to, and availability of files, data, records, personnel and systems for the performance by ThermoRetec of the Services.


2.2 Change Orders. AGLC reserves the right, by written notice to ThermoRetec, to make changes in the Services so long as such changes do not materially expand the scope of the Services described herein. ThermoRetec shall proceed with the Services, as changed, immediately after receipt of said notice. If such changes cause a material increase or decrease in the cost of performing the Services or time of performance, an equitable adjustment in the Annual Budget and/or schedule shall be made by AGLC within 30 days after the giving of such notice. If the parties cannot agree to the equitable adjustment to either the price and/or the schedule, then the party seeking relief may do so under the provisions of Article 16.


2.3 Additional Services. (a) AGLC may from time to time during the term of this Agreement request that ThermoRetec perform a service that is outside the scope of the Services ("Additional Services"). Upon receipt of such a request from AGLC, ThermoRetec shall provide AGLC with:


(i) a written description of the work ThermoRetec anticipates
performing in connection with such Additional Services, if
any;


(ii) a schedule for commencing and completing such Additional
Services;


(iii) ThermoRetec's prospective charges for such Additional
Services, including a detailed breakdown of any applicable
charges, and any proposed additional or modified terms and
conditions; and


(iv) an estimate of the human resources necessary to provide the
Additional Services.


(b) ThermoRetec shall not begin performing any Additional Services until AGLC has provided ThermoRetec with authorization to perform the Additional Services. If AGLC authorizes ThermoRetec to provide the Additional Services, then the parties shall execute a change order, which shall incorporate by reference the terms of this Agreement and set forth the additional terms and conditions applicable to the provision of such Additional Services.


2.4 MGP Strategic Plan. Prior to the date hereof, ThermoRetec has prepared and submitted to AGLC for its review a comprehensive MGP strategic plan. Within five business days after the date on which this Agreement is entered into, the parties will mutually agree upon a comprehensive MGP strategic plan (the "Plan"), which shall describe (A) the overall goals of the Services to be provided by ThermoRetec hereunder, (B) a schedule for the completion of the Services on a Site by Site basis, (C) a software tool for collaborative communications between the parties, (D) a master schedule and detailed budget for the period from January 1, 2000 through June 30, 2000 (the "Initial Year Budget"), and (E) a plan for communications with external stakeholders. Except as otherwise agreed by AGLC, ThermoRetec will comply with the schedule for the completion of the Services and the plan for communications with stakeholders contained in the Plan.


3. Pricing and Payment Terms.


3.1 Annual Budget. At least 90 days prior to the end of the period covered by the Initial Year Budget and at least 90 days prior to the end of each 12-month period thereafter, ThermoRetec will submit to AGLC a detailed budget for the Services for such upcoming 12-month period, which shall reflect costs which are anticipated to be incurred for performance of the Services at each Site and for any Additional Services requested by AGLC. Each budget shall also include all assumptions upon which ThermoRetec relies. Within 30 days of receipt of the budget, AGLC shall review and comment on the same, and ThermoRetec shall promptly submit a revised draft of the budget to AGLC. If the parties' respective Program Directors (as defined in Section 5.1) cannot agree upon the budget within 60 days of AGLC's receipt thereof, then any unresolved issues shall be submitted to the Management Committee (as defined in Section 5.3) for resolution. The budget, after modifications are made thereto and after approval thereof by AGLC and acceptance by ThermoRetec, shall constitute the "Annual Budget". The Annual Budget shall not be modified unless a Site or Service is added or deleted pursuant to Section 2, a change order for Additional Services (as described in Section 2.3) is issued or a material change in Site conditions or Service requirements has occurred. All approved modifications to the Annual Budget shall be documented in the form of a change order.


3.2 Compensation. In consideration for ThermoRetec's prompt, faithful and complete performance of this Agreement to the satisfaction of AGLC and subject to the conditions precedent to and as described in this Agreement, AGLC will pay or reimburse ThermoRetec an amount equal to the total of (a) the actual costs ("Actual Costs") of the Services as defined in Exhibit 4 and (b) the Aggregate Performance Fees described in Exhibit 3. Actual Costs shall be the actual costs incurred by ThermoRetec plus a provision for indirect costs based on the provisional burden rates approved by the Gas Research Institute ("GRI") and confirmed by audit by GRI at the end of each fiscal year. If GRI no longer provides such audit of ThermoRetec's indirect costs, ThermoRetec shall continue to use the GRI-established cost principles to develop provisional rates for the following fiscal year. Such rates are subject to audit by a firm of certified public accountants designated by ThermoRetec and acceptable to AGLC. Any cost of said provisional rate review or audit will be a ThermoRetec expense. The initial performance fee for the AGLC-Lead Sites (as identified on Exhibit 1) has been estimated and shall be set forth in the Initial Year Budget.


3.3 Description of Actual Costs. Actual Costs consist solely of
the types of costs incurred in the performance of the Services
that meet the definitions set forth in Exhibit 4. The
following are not Actual Costs:(A) costs, services and
expenses generated by any of ThermoRetec's officers,
supervisory personnel or employees related to legal (except
for negotiation of agreements with subcontractors to perform a
portion of the Services), labor relations, insurance and tax,
and all other related expenses required to maintain and
operate ThermoRetec's offices other than any costs and
expenses for operating any field office directly associated
with one or more Sites. Costs and expenses incurred by
ThermoRetec officers related to the duties of the Management
Committee are considered Actual Costs;


(B) costs incurred as a result of the negligence or
willful misconduct of ThermoRetec and/or its
agents, subcontractors, suppliers or employees; and


(C) any other costs not directly related to, and reasonably
and necessarily incurred in ThermoRetec's performance of, the
Services.


3.4 Invoices; Payment. ThermoRetec shall submit to AGLC within 20 days after the end of each calendar month an invoice for the Actual Costs incurred in the previous month. AGLC shall reimburse ThermoRetec for the amount of the monthly invoice (except for any Disputed Items (as defined in Section 3.6) reflected thereon), plus the corresponding ThermoRetec fee earned in accordance with Exhibit 3 within 30 days of receipt. In addition to the monthly invoice and under separate cover, ThermoRetec shall provide AGLC with a certified listing of all ThermoRetec internal labor costs and third-party vendor invoices (Labor and ODC Reports), together with a summary of the Actual Costs for each Site. Undisputed invoiced amounts not paid within 30 days after receipt shall accrue interest at the rate of 1% per month on any unpaid balance. ThermoRetec shall have the right to stop work if undisputed amounts on invoices are not paid within 60 days from the date of receipt by AGLC.


3.5 Subcontractor Waivers. To the extent ThermoRetec engages subcontractors to perform Services, as a condition of payment of any monthly invoice reflecting final payment by ThermoRetec to such subcontractors, ThermoRetec shall furnish a general release of all claims and final lien waivers from such subcontractor to AGLC in such form and substance as is reasonably acceptable to AGLC.


3.6 Disputed Amounts. AGLC shall be entitled to dispute any item on an invoice that it believes deviates from the Services which ThermoRetec was to perform, the Annual Budget or the requirements of this Agreement (collectively "Disputed Items"). The disputed amount will be deducted from the invoice, and the undisputed portions of the invoice will be paid in accordance with Section 3.4. The Disputed Items shall be subject to resolution pursuant to the procedures described in Section 16.1.


3.7 Setoff. Payments otherwise due ThermoRetec from AGLC may be withheld by AGLC, without payment of interest, on account of Services not performed, defective Services performed and not remedied by ThermoRetec, unpaid labor or materials bills, or unpaid claims of any kind agreed to be paid by ThermoRetec. ThermoRetec agrees to defend, indemnify and hold AGLC harmless from any claims, demands, liabilities and damages arising from any such withheld payment. If and when the cause or causes for withholding payments are remedied or removed without cost to AGLC, and satisfactory evidence of such remedy has been presented to AGLC, the withheld payment will be promptly made by AGLC to ThermoRetec. If ThermoRetec fails to remedy such cause within 30 days after written notice from AGLC, AGLC may remedy the cause and deduct the cost of it from the amount due ThermoRetec; provided, however, AGLC is not obligated to pay any bills of, or claims against ThermoRetec from payments withheld, but may do so at its sole discretion.


3.8 Fees Beyond the Initial Term. If the term of this Agreement is extended beyond the Initial Term, AGLC shall, unless otherwise specified in this Agreement, continue to pay ThermoRetec in accordance with the provisions of this Article 3 or as the parties may otherwise agree.


4. Performance Standards, Warranties and Responsibilities.


4.1 Time. Time is of the essence. In particular, ThermoRetec acknowledges that corrective action plans must be approved for each of the Sites by January 5, 2001, and that soil remediation must be completed at each of the Sites by January 5, 2005. ThermoRetec shall perform all Services in strict accordance with the requirements, technical specifications and, except for any delays caused by AGLC, schedules set forth in, contemplated by or arising from this Agreement, the Plan, and any applicable Governmental Requirements and Orders (as defined in Section 4.4). To the extent applicable, ThermoRetec acknowledges and agrees that the timing of the performance of Services may be dictated by the terms of Governmental Requirements and Orders, and ThermoRetec agrees to obtain a copy of all such Governmental Requirements and Orders applicable to the Sites and to comply with all deadlines and/or other schedule requirements set forth therein. If ThermoRetec believes that AGLC's acts or omissions are causing or are likely to cause ThermoRetec to fail or be unable to perform the Services in accordance with this Agreement, it shall promptly notify AGLC in writing of such fact, which notice shall state the acts or omissions of AGLC which are or are likely to cause such failure.


4.2 Technical Skills. ThermoRetec understands and acknowledges that the Services performed hereunder may involve hazardous or toxic substances, wastes and laws, regulations and government agency policy and guidance documents related thereto. ThermoRetec represents and warrants that it is technically, physically, financially and legally ready, willing and able to perform the Services hereunder and that it is familiar with and knowledgeable about the applicable laws, regulations and government agency policy and guidance documents to the extent necessary to carry out its duties in a professional, complete and competent manner and in accordance with such applicable laws, regulations, and government agency policy and guidance documents.


4.3 Authority. Each party hereby represents and warrants to the other party as follows (subject, in the case of AGLC, to the approval of the Board of Directors of AGL Resources Inc.):


(A) that it has all requisite corporate power and
authority to enter into, and fully perform pursuant
to, this Agreement;


(B) that the execution, delivery and performance of this
Agreement have been duly and properly authorized by
all requisite corporate action on its part; and


(C) that this Agreement has been duly executed and delivered by such party.


4.4 Applicable Law. ThermoRetec warrants that all Services shall comply with all applicable federal, state and local laws, regulations, ordinances, orders, codes, standards, permits and licenses, in each case as the same are amended from time to time (collectively, the "Governmental Requirements and Orders"). ThermoRetec agrees to obtain all permits, consents and approvals necessary or appropriate to perform the Services in compliance with the Governmental Requirements and Orders, except for those permits, consents and approvals AGLC or its affiliates are specifically required to obtain by virtue of the terms of this Agreement or by Governmental Requirements and Orders, and that if any requests for such permits, consents or approvals are denied, to use its best efforts, after further consultation with AGLC, to obtain such permits, consents or approvals.


4.5 Governmental Orders. ThermoRetec expressly acknowledges, agrees and warrants to comply with the terms of any specific consent order, unilateral order, governmental order, judicial decree, permit or other governmental directive pursuant to which AGLC is contracting for the Services hereunder, including that certain Environmental Response Cost Recovery Rider which was initially adopted by the Georgia Public Service Commission on September 1, 1992 (as amended) (the "Rider").


4.6 Engineering Skills. ThermoRetec warrants that all Services performed hereunder shall be (A) conducted in a manner consistent with the generally accepted level of care and skill ordinarily exercised by professional engineers, remediation contractors and other professionals performing services of a similar nature, taking into account standards, technology, laws and requirements existing at the time the Services are performed, (B) safely, lawfully, timely and properly performed, and (C) in conformity with the requirements of this Agreement.


4.7 Reliance. ThermoRetec acknowledges and agrees that (A) AGLC is relying upon ThermoRetec's special and unique abilities and the accuracy, competence and completeness of ThermoRetec's Services and (B) the Services performed by ThermoRetec will be relied upon by AGLC to satisfy Governmental Requirements and Orders.


4.8 Records. To the extent the Services performed require laboratory analysis, sampling or field services of any kind, ThermoRetec and its subcontractors shall maintain complete copies of records of the chain of custody and control of all hazardous and/or waste materials handled, transported and/or disposed of as a result of ThermoRetec's and its subcontractors' activities under this Agreement, and ThermoRetec shall deliver all such records to AGLC in accordance with instructions from AGLC. ThermoRetec and its subcontractors shall not be considered the generator of any pre-existing waste, nor will ThermoRetec or its subcontractors take title to any waste produced as result of providing Services under this Agreement. ThermoRetec shall have authority to sign waste manifests for any materials removed from a Site as agent for AGLC.


4.9 Hazardous Risks. ThermoRetec understands the currently known and potentially hazardous risks, if any, which are or may be presented to human beings, property and the environment by potentially hazardous substances at or near the Sites and agrees that it shall inform its officers, directors, employees and subcontractors of the nature of such materials and the health and environmental risk associated therewith.


4.10 Governmental Actions. Any condition threatening to adversely affect quality assurance, attainment of schedules, or control of the performance of the Services hereunder shall be immediately brought to the attention of AGLC's Program Director (as defined in Section 5.1). Additionally, ThermoRetec will notify AGLC if it becomes aware of any pending or threatened governmental or third-party action or delay related to the Services performed hereunder or any of the Sites. Likewise, AGLC will notify ThermoRetec if it becomes aware of any pending or threatened governmental or third-party action or delay related to the Services performed hereunder or the Sites.


4.11 Resources. ThermoRetec represents, warrants and covenants that it has or will obtain the requisite personnel, competence, skill and physical resources to perform the Services and that it has and shall maintain the capability, experience, registrations, licenses, permits and government approvals required to perform the Services in accordance with the timetables set forth herein.


4.12 Remedial Actions. If any of the Services fail to conform to the requirements of this Agreement, ThermoRetec will, at its sole cost and expense and without any additional charges to AGLC, promptly perform corrective Services of the type originally required to be performed as may be required to correct such defects of which ThermoRetec is notified by AGLC in writing within one year after the completion of the specific Services at issue or within one year from notice to AGLC by a governmental authority, whichever is later. In addition, upon receipt of a notice from AGLC that ThermoRetec has failed to perform any of the Services in accordance with this Agreement, ThermoRetec shall as soon as reasonably practicable: (A) perform a root-cause analysis to identify the cause of such failure; (B) provide AGLC with a report detailing the cause of, and procedure for correcting, such failure; (C) correct such failure; and (D) provide AGLC with assurance reasonably satisfactory to AGLC that such failure shall not recur after the procedure has been completed.


4.13 Subcontracting. Prior to subcontracting any of the Services or the Transfer Assistance (as defined in Section 9), ThermoRetec shall notify AGLC of the proposed subcontractor. ThermoRetec agrees to follow agreed upon bid procedures with respect to awarding any project to a subcontractor and to enter into a written subcontract in substantially the form of the appropriate form subcontract agreement attached hereto as Exhibit 5, as such forms may be modified from time to time by mutual agreement of the parties. AGLC shall, at its sole and absolute discretion, have the right by written notice to ThermoRetec to cause ThermoRetec to terminate a subcontractor. Further, each subcontract shall provide that ThermoRetec may assign the subcontract to AGLC, one of its affiliates or another third party designated by AGLC upon written notice to the subcontractor, and ThermoRetec shall, upon receipt of notice from AGLC, assign any or all specified subcontracts to AGLC, one of its affiliates or another third party designated by AGLC. AGLC hereby approves those subcontractors identified on Exhibit 6 to the extent that such subcontractors continue to provide the services described in Exhibit 6 or elsewhere in this Agreement. ThermoRetec shall remain primarily liable and obligated to AGLC for the timely and proper performance of all of its obligations hereunder, even if such obligations are delegated to third party subcontractors, and for the proper and timely performance and actions of any person or entity to which it delegates or subcontracts any such obligations.


4.14 Conduct of Personnel. While at the Site or otherwise on AGLC's premises, ThermoRetec shall, and shall cause ThermoRetec's employees, agents and subcontractors to, (A) comply with the requests, standard rules and regulations and policies and procedures of AGLC regarding safety and health, security, personal and professional conduct (including the wearing of personal protective equipment and adhering to site regulations and general safety practices or procedures) generally applicable at such location, and (B) otherwise conduct themselves in a businesslike manner. If AGLC determines that a particular member of ThermoRetec's staff is not conducting himself or herself in accordance with this Section 4.14, AGLC may notify ThermoRetec of such conduct. Upon receipt of such notice, ThermoRetec shall promptly investigate the matter and take appropriate action, which may include removing the individual from the provision of the Services and providing AGLC with prompt notice of such removal, or replacing the individual with a similarly qualified individual, or taking such other appropriate disciplinary action to prevent a recurrence.


4.15 Exceptions. Anything in this Agreement (including the Exhibits) to the contrary notwithstanding, the parties acknowledge and agree that (a) ThermoRetec shall not be liable hereunder for failure to meet applicable deadlines if such delays are caused by Force Majeure Events (as defined below) or due to delays caused by AGLC or its decisions and instructions, and (b) with respect to the Non-AGLC Lead Sites, ThermoRetec's obligation under this Agreement shall be to use its best efforts to meet applicable deadlines.


5. Management and Control.


5.1 Program Directors. ThermoRetec and AGLC shall each designate an individual to serve in a project management capacity (the "Program Directors") as well as an alternate Program Director who shall serve in such capacity in the Program Director's absence. The initial Program Director and alternate Program Director for the parties shall be as follows: for AGLC Suzanne Sitherwood and Donna Moore, and for ThermoRetec * and *. The Program Director designated by ThermoRetec shall be a qualified environmental professional and shall have substantial experience providing and managing the provision of services similar to the Services. Each party's Program Director or alternate Program Director shall be available to the other party at reasonable times. ThermoRetec shall not replace its Program Director or alternate Program Director without the prior written consent of AGLC, and ThermoRetec shall use reasonable efforts to maintain its Program Director for a term of at least two years after the Effective Date. Whenever possible, ThermoRetec shall give AGLC at least 60 days advance notice of a change of the Program Director. If AGLC reasonably and in good faith determines that it is not in the best interest of AGLC for the ThermoRetec Program Director to continue to serve in his or her capacity, then AGLC may give ThermoRetec written notice specifying the reasons for its position and requesting that the ThermoRetec Program Director be replaced. ThermoRetec shall immediately investigate the matters stated in such notice and, if it determines that AGLC's concerns are reasonable and not unlawful, then ThermoRetec shall replace its Program Director with the alternate Program Director or a new Program Director meeting the qualifications set forth in this Section 5.1. If AGLC decides at any time that any ThermoRetec employee should not continue in the performance of the Servic ...