Management Agreement between Energy Corporation of America and Allegheny Energy, Inc. for Mountaineer Gas Company

Summary

This agreement is between Energy Corporation of America (ECA) and Allegheny Energy, Inc. (Allegheny). Following Allegheny's purchase of Mountaineer Gas Company, ECA will provide management services for Mountaineer and its subsidiaries for up to five years. ECA will supply experienced personnel for key executive roles, and Allegheny will pay ECA an annual management fee of $2.5 million, adjusted for inflation. The agreement requires regulatory approval and can be terminated under certain conditions, including mutual consent, breach, or with notice. The agreement is governed by West Virginia law.

EX-10.33 4 0004.txt MANAGEMENT AGREEMENT THIS MANAGEMENT AGREEMENT (the "Agreement"), dated as of 20th day of December 1999, between ENERGY CORPORATION OF AMERICA, a West Virginia corporation ("ECA") of 4643 South Ulster Street, Suite 1100, Denver, CO 80237, and ALLEGHENY ENERGY, INC., a Maryland corporation ("Allegheny") of 800 Cabin Hill Drive, Greensburg, PA 15601. WHEREAS, by Stock Purchase Agreement of even date herewith (the "Stock Purchase Agreement"), ECA has agreed to sell and Allegheny has agreed to purchase all of the issued and outstanding stock (the "Shares") of Mountaineer Gas Company, a West Virginia corporation ("Mountaineer") upon the terms and conditions set forth therein (the "Stock Sale"); and WHEREAS, in the course of the parties negotiations, the parties also have agreed that, subject to the successful closing of the Stock Sale, Allegheny also will engage ECA to provide management services to Mountaineer for up to five (5) years from the Effective Date, upon the terms and conditions set forth below. NOW THEREFORE, for and in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt of which is hereby acknowledged, Allegheny agrees to engage ECA and ECA agrees to provide natural gas utility management services upon the following terms and conditions: 1. EFFECTIVE DATE. This Management Agreement shall become effective --------------- immediately upon the Closing of the Stock Sale (the "Effective Date"). In the event the Stock Purchase Agreement is terminated this Management Agreement shall be null and void for all purposes. 1 2. TERM. The term of this Management Agreement shall extend for a period of ---- five (5) years after the Closing of the Stock Sale. 3. BUSINESS TO BE MANAGED. ECA shall provide management services to ------------------------- Allegheny to manage Mountaineer and its subsidiaries. 4. MANAGEMENT SERVICES TO BE PROVIDED. All management services to be ------------------------------------ provided hereunder shall be provided by persons experienced in the natural gas business and who are familiar with Mountaineer's operations. The management services will entail those functions and duties customarily performed by persons in the following positions: Chief Executive Officer, Strategic Planning Executive, President, Senior Vice President, Chief Information Officer, Controller/Treasurer, Regulatory Affairs Manager, and Human Resources Manager. ECA and Allegheny shall agree on all personnel providing such management services. In performing its duties and functions hereunder, ECA shall abide by the general directions and guidelines established by Allegheny. ECA shall obtain the prior approval of Allegheny with respect to any changes in the utilities' rates and the execution of any material contract or financing arrangement. In making management judgments and decisions, ECA will execute good business judgment. ECA will perform the services using such care as ECA customarily employed, directly or indirectly through Mountaineer management, in managing Mountaineer. ECA shall, and shall cause its employees to, keep strictly confidential all information concerning Mountaineer's operations and shall not disclose such information to third parties without Allegheny's consent or except as is required by law. All records or reports prepared by ECA concerning the utilities' operations shall remain the property of Allegheny. 2 5. MANAGEMENT FEE. Allegheny shall pay to ECA the sum of $2.5 million --------------- per year for such management services, (the "Management Fee") which amount shall be adjusted for inflation annually based upon the increase in the consumer price index as reported by the Bureau of Labor Statistics of the United States Department of Labor for the area including the city of Charleston, West Virginia. The Management Fee shall be payable in monthly installments due on the first day of each month, with the first monthly installment due at Closing of the Stock Sale. Allegheny shall not be obligated to pay any installment in respect of any month subsequent to the effective date of any termination of this Agreement. 6. GOVERNMENTAL APPROVAL. All parties' obligations hereunder shall be ---------------------- expressly subject to the prior approval of this Management Agreement by the West Virginia Public Service Commission and the Securities and Exchange Commission, if and only to the extent required by the Public Utility Holding Company Act of 1935. 7. TERMINATION. Prior to the expiration of the Term as set forth in ----------- section 2 above, this Agreement may be terminated only: a. upon mutual agreement of ECA and Allegheny; b. by ECA upon thirty (30) days written notice to Allegheny in the event Allegheny fails to pay any amounts due under section 5 above; c. by Allegheny, upon written notice to ECA in the event ECA breaches any of its duties hereunder; provided, however, Allegheny shall first provide ECA written notice of such breach and the right to cure such breach within thirty (30) days after receipt of such notice; or d. by either ECA or Allegheny upon six (6) months written notice to the other party. 3 8. GOVERNING LAW. This Agreement shall be governed by and construed ------------- in accordance with the laws of the State of West Virginia. 9. ASSIGNMENT. This Agreement may not be assigned by operation of law ---------- or otherwise, provided that Allegheny may assign its rights hereunder to any wholly owned subsidiary of Allegheny to which Allegheny assigns its rights and obligations pursuant to the Stock Purchase Agreement without consent of ECA. Any assignment made in contravention of this Agreement shall be null and void. 10. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement ----------------- of the parties with respect to the subject matter hereof and supersedes any and all other prior understanding, contracts, agreements, representations or warranties, oral or written, among the parties hereto with respect to the subject matter of this Agreement. 11. NOTICE. Any notice, request, consent, waiver or other communication ------ required or permitted to be given hereunder shall be effective only if in writing and shall be deemed sufficiently given only if delivered in person or sent by facsimile or by certified or registered mail, postage prepaid, return receipt requested, addressed as follows: IF TO ECA: - ----------- Energy Corporation of America Attn: John Mork, President and CEO 4643 South Ulster Street Suite 1100 Denver, CO 80237 WITH COPIES TO: - ---------------- Goodwin & Goodwin, LLP Attn: Thomas R. Goodwin 1500 One Valley Square P.O. Box 2107 Charleston, WV ###-###-#### 4 IF TO ALLEGHENY: - ----------------- Allegheny Energy, Inc. Attn: Peter Dailey, Director 800 Cabin Hill Drive Greensburg, PA ###-###-#### WITH COPIES TO: - ---------------- Allegheny Power Attn: Thomas K. Henderson, Vice President, Legal 10435 Downsville Pike Hagerstown, Maryland 21740 Sullivan & Cromwell Attn: Matthew G. Hurd 125 Broad Street New York, New York 10004 12. BINDING EFFECT. This Agreement is intended to constitute the --------------- legally binding and enforceable agreement of the parties hereto, their successors and assigns. ENERGY CORPORATION OF AMERICA By: /S/ John Mork --------------------------------------- John Mork Its: President and Chief Executive Officer ALLEGHENY ENERGY, INC. By: /S/ Jay Pifer -------------------------------------- Jay Pifer Its: Senior Vice President 5